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United Nations Audiovisual Library of International Law
DECLARATION ON THE ESTABLISHMENT
OF A NEW INTERNATIONAL ECONOMIC ORDER
by Ahmed Mahiou
Member of the International Law Institute
Former member and Chairman of the International Law Commission
A. Emergence of the new international economic order
It is rather difficult to know exactly who conceived of a “new international
economic order” or when the term was first used. On the other hand, official recognition of
the notion can be accurately dated because it followed from two resolutions of the United
Nations General Assembly of 1 May 1974 concerning, respectively, the Declaration on the
Establishment of a New International Economic Order (resolution 3201 (S-VI)) and the
Programme of Action on the Establishment of a New International Economic Order
(resolution 3202 (S-VI)). Beyond this official recognition, it can be traced back to the
United Nations strategies for development launched in the early 1960s, the debates on
international trade and international development law. The new international economic
order testifies first and foremost to the determination of the new States that emerged from
decolonization to participate effectively in international life and, if not to discredit, at least
to radically overhaul the global economic system put in place in the aftermath of the
Second World War. They believed that such a system (represented by the International
Monetary Fund, the World Bank, and the General Agreement on Tariffs and Trade
(GATT)), based on liberal principles and completely dominated by a few Western Powers
led by the United States, no longer met contemporary needs. In an attempt to change it,
they set up the Group of 77 to coordinate their positions and demands vis-à-vis the
developed countries.
The reservations and criticisms directed at the liberal economic order can be traced
back mainly to economists who gave some thought to what had given rise to
underdevelopment and how it could be tackled. They began by criticizing the dominant
theory according to which underdevelopment is essentially an endogenous problem
internal to the countries themselves; it is the consequence of some lack, inadequacy or
deficiency (in qualified professionals, capital, technology or know-how) that must be
overcome before the countries concerned can be in a position to take off economically.
Although that is certainly not an incorrect assessment, it seemed inadequate. To really
explain the inadequacies and deficiencies discerned, their root causes must be analysed,
and these resided essentially in the imbalance in international economic relations, where
domination by the developed countries was the established order. Thus, to break the
vicious circle of underdevelopment, the first order of business should be to address the
dependence/domination relationships that prevented the countries of the South from
shaping a true development strategy. This, then, was what started the debate on the
prevailing economic order and the need to recast it entirely or to reject the principles and
rules that governed it.
Although at the outset the economists were very engaged in the debate, it was taken
up by the jurists, who introduced a new approach, that of international development law,
which had the advantage of taking into consideration the rights and interests of the
countries of the South and thereby making a first dent in the conventional analysis of
development issues. Nevertheless, the third world countries were of the opinion that while
this approach was interesting, the thinking did not go far enough, especially in considering
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the changes needed to meet their demands. They therefore rallied at the beginning of the
1970s around the idea of a new international economic order.
The legal debate on the new international economic order carried the analysis
forward by advancing a whole series of proposals regarding North-South relations,
especially concerning the changes to be made in the matter of international relations and
development policies. Typically, third world economies were disjointed and the economic
sectors operated in total separation, under a variety of unrelated legal regimes and
according to rules that made them subject to outside interferences. What was therefore
needed was international action to restructure each economy, putting the different sectors
in touch with each other in a mutually reinforcing arrangement, in short, creating an
integrated national economic space capable of being on the receiving end in the world
market under better conditions, rather than enduring only its negative effects. To bring that
about, the first step was to gain control of the economic levers and the exploitation of
natural wealth and resources by taking steps such as nationalization of industries, control
of investments and oversight of transnational corporations. The countries of the South did
in fact militate in those terms, individually or collectively, in favour of a new international
economic order, thus running into the opposition of the developed countries, which
regarded the concept as a radical challenge to the traditional rules of international law.
B. The strategy for achieving a new international economic order within the
framework of the United Nations
In the third world, there was a tendency to think that the international order could
not be improved within the prevailing system, using traditional methods and techniques
that were likely to hobble attempts at reform. As the action by the Group of 77 on the
world scene took a more radical turn, the 1970s witnessed a whole series of meetings and
decisions specifying the demands the South was making on the North. The action took
place essentially within the United Nations system, in particular the General Assembly and
the United Nations economic commissions in Latin America and Africa; and it was taken
up by the regional associations of the countries of the South (the Non-Aligned Movement,
the Organization of African Unity, the Organization of American States, the League of
Arab States, and the like). The goal was to lay the groundwork for a new order, a more
equitable one, and efforts fluctuated between trying to reform or to overthrow the sources,
institutions, principles and norms of traditional international law.
The main sources of traditional international law are treaties and custom, and they
answer to well-established procedures. International development law distances itself from
this arrangement in order to temper the excessive formalism and rigidity of treaties and the
slow pace at which custom is formed, favouring instead other, more flexible rules
represented by the different acts of international organizations (resolutions, declarations,
charters, programmes, etc.), thus reviving the debate on the binding nature of all such texts.
Cooperation among States and the institutions it engenders are real and meaningful only if
they confront the essential problem of the day: underdevelopment. The international
organizations have thus been given a clear objective, and that yardstick should be applied
in assessing what they are doing to radically reform the existing economic institutions or,
failing that, to create new institutions that will act in the service of development.
Two principles form the cornerstone of international law: equality and sovereignty.
These abstract, theoretical principles mask the reality of the great inequality among States.
The new international economic order is a valuable concept because it introduces the
economic factor and the level of development into legal analysis and the appraisal of
relations among States; it situates each State in the context of international exchanges,
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taking its capacities and contributions into consideration. For the old system of a single set
of rules with exceptions, we must substitute a dual system that makes a distinction
between, on the one hand, the rules applicable as between developed countries that follow
the traditional rules of international economic law and, on the other, the rules applicable as
between developed and developing countries, which purport to redress the inequalities of
development by introducing a compensatory inequality in favour of the countries of the
South. The new international economic order in effect challenges the postulate of abstract
legal equality by bringing it face to face with actual objective situations showing that
States do not all play the same role in international society, because some of them have a
very strong presence and weigh decisively on the course it takes while others have
virtually no voice whatsoever. Here we have an approach that takes justice into account
and endeavours to give real substance to a development strategy.
C. The contents of the Declaration and Programme of Action on the Establishment of
a New International Economic Order
The Declaration on the Establishment of a New International Economic Order is
relatively brief. It consists of seven paragraphs structured around the most important one,
paragraph 4, which accounts for about half of the resolution. While the first three
paragraphs provide a kind of assessment of the existing international order, marked by a
discrepancy between a minority of developed countries and a majority of developing
countries, underparticipation by developing countries in international activities and
relations of economic interdependence within the international community, the three final
paragraphs are a tribute to international development strategies and the role of the United
Nations in the establishment of a new international economic order.
Paragraph 4 sets forth a long list of principles which should form the basis of the
new international economic order, including the following:
- The sovereign equality of all States, with non-interference in their internal affairs, their
effective participation in solving world problems and the right to adopt their own economic
and social systems;
- Full sovereignty of each State over its natural resources and other economic activities
necessary for development, as well as regulation of transnational corporations;
- Just and equitable relationship between the prices of raw materials and other goods
exported by developing countries, and the prices of raw materials and other goods exported
by the developed countries;
- Strengthening of bilateral and multilateral international assistance to promote
industrialization in the developing countries through, in particular, the provision of
sufficient financial resources and opportunities for transfer of appropriate techniques and
technologies.
The Declaration is supported by a Programme of Action on the Establishment of a
New International Economic Order, a far longer and more detailed text that reflects the
commitment of the developing countries to go beyond a mere declaration — however
solemn — to set forth ways and means of making the Declaration on the Establishment of
a New International Economic Order effective by means of implementation measures. The
main reforms that are urgently needed are outlined below:
- An overhaul of the rules of international trade, especially those concerning raw materials,
food, the system of preferences and reciprocity, commodity agreements, transportation and
insurance;
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- A reform of the international monetary system and other financing mechanisms to bring
them into line with development needs;
- Both financial and technology transfer incentives and assistance for industrialization
projects in developing countries;
- Promotion of cooperation among the countries of the South, with a view to greater
individual and collective autonomy, broader participation and enhanced involvement in
international trade;
- Strengthening of the role of various United Nations bodies, particularly that of the
General Assembly, in the implementation of the Programme of Action on the
Establishment of a New International Economic Order.
D. The new international economic order: results achieved
Although the origins of the new international economic order date back nearly 40
years, assessments of the results are mixed. Roughly speaking, there are two opposing
tendencies: one that exalts the contribution of the new international economic order by
stressing the claims of third world countries and the slight progress made in international
economic relations, while the other notes only the failures of a strategy which has been
deemed hazardous to economic liberalism and Western domination.
In fact, as is the case with any large-scale international initiative, the new
international economic order contains sharply contrasting elements. While certain
significant and clearly identifiable changes have resulted from it, other changes are less so
and have often been easy to overlook in the context of the overall changes in international
society during this period. Moreover, the global contribution of the new international
economic order is difficult to identify, and, in any event, States assess its contribution in
the light of its advantages and disadvantages for each one of them. While the positive
aspects are undeniable, the strategy has not been equally beneficial for all; it has
highlighted the divisions and splits which are a feature of the Group of 77. For, behind the
apparent unity of members’ claims, there are significant differences in their situations that
indicate the need for certain changes.
The primary significant institutional changes that have come about as a result of the
call for a new international economic order include the following:
- The reform of most international trade rules, with the introduction of Part IV (Trade and
Development) of the General Agreement on Tariffs and Trade, and the preservation of this
specific arrangement in the context of the World Trade Organization with the Doha Round,
which is endeavouring to find a solution to the demands of third world countries by
considering, inter alia, the inclusion of agriculture in future international exchange
regulations;
- The relaxation of existing rules or the introduction of new ones to facilitate development
financing and debt management within the World Bank and the International Monetary
Fund, taking increasingly into account the criticisms of those organizations as overly rigid
guardians of the international liberal economic system;
- A shift in the emphasis of international assistance and cooperation mechanisms, whether
multilateral (United Nations Development Programme, United Nations Industrial
Development Organization, United Nations Conference on Trade and Development,
United Nations Commission on International Trade Law, etc.) regional or bilateral and, in
some cases, the establishment of new institutions, including the International Fund for
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Agricultural Development and the Common Fund for Commodities, in addition to existing
commodities agreements;
- The undeniable influence that the new international economic order has had in the
development of certain international legal regimes, including universal ones (such as the
status of the seabed as the common heritage of mankind, technology transfer,
environmental protection and others), regional ones (development agreements between
Europe and the countries of Africa, the Caribbean and the Pacific and incentives for
regional integration among the countries of the South) and bilateral regimes (development
assistance and investment protection agreements).
While the new international economic order has had far from uniform effects on
international law as a whole and on all of the developing countries, it has spurred the
developing countries to win reforms and concessions, mainly in the form of a large number
of resolutions adopted by the General Assembly up until the late 1980s (resolution 3281
(XXIX) of 12 December 1974 on the Charter of Economic Rights and Duties of States,
resolution 3362 (S-VII) of 16 September 1975 on development and international economic
cooperation and resolution 34/150 of 17 December 1979 on the principles of the new
international economic order). However, during the 1980s the developing countries did not
manage to uphold recognition of the right to development (General Assembly resolution
41/128 of 4 December 1986), which could have provided the new international economic
order with the legal foundation it lacked; nor were they able to establish an international
system to oversee the activities of transnational corporations.
The debate on the new international economic order is not entirely closed, as it
remains relevant to some concerns of the United Nations. This leads to attempts to
revitalize the new international economic order in other forms, by linking it to current
developments and controversies arising from globalization. However, the reference to a
radical vision has faded and the strategy of the countries of the South is now focused on
more sectoral and more concrete concerns. The broad range of situations to be found in the
countries of the South, the desire for optimal integration into international trade flows and
the fact that economic liberalism holds sway all mean that the debate on international
economic relations has lost its ideological fervour. The approach is now more pragmatic,
with the aim of making corrections on a case-by-case basis, addressing the difficulties
developing countries are experiencing, rather than seeking a global, abstract solution to
international economic inequalities. Finally, the current debate on sustainable development
has extended things somewhat, as, in a number of ways, the sustainable development
debate is a result of the fact that the environment and development have become closely
linked.
Related Material
Documents
General Assembly resolution 3202 (S-VI) of 1 May 1974 (Programme of Action on the
Establishment of a New International Economic Order).
General Assembly resolution 3281 (XXIX) of 12 December 1974 (Charter of Economic
Rights and Duties of States).
General Assembly resolution 3362 (S-VII) of 16 September 1975 (Development and
international economic cooperation).
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General Assembly resolution 34/150 of 17 December 1979 (Consolidation and progressive
development of the principles and norms of international and economic law relating in
particular to the legal aspects of the new international economic order).
General Assembly resolution 41/128 of 4 December 1986 (Declaration on the Right to
Development). |