The developing countries were greatly dissatisfied with the working of the GATT. The principles and procedures underlying it were regarded as the fundamental cause of the weak bargaining position (in tariff reduction negotiations) of the less developed countries.
Thus, though, GATT had made a very significant contribution to the liberalization of international trade in the postwar era, it was condemned since most of its benefits accrued to the advanced nations. Hence, it was desired to have some new institutional arrangements of international economic co-operation to deal with problems of world trade and development, especially, those which may reduce the ‘trade gap’ of developing countries. Consequently, the UNCTAD was created.
The first United Nations Conference on Trade and Development (UNCTAD) met in March 1964 in Geneva. It was an ad hoc gathering of representatives of about 120 states which were members of the United Nations.
It, however, marked a turning point in international economic relations and ushered a new era in the evolution of world trade and development, since it represented the first major endeavour to examine all the problems of international economic relations, with special reference to the needs of developing countries.
Organisation of the UNCTAD
The UNCTAD is established as a permanent organ of General Assembly of the United Nations. However, it has its own subsidiary bodies and also a fulltime secretariat to service it.
It has a permanent organ called Trade and Development Board as the main executive body. The Board
functions between the plenary sessions of the Conference. It meets twice annually. It is composed of 55 members, elected by the Conference from among its members on the basis of equitable geographical distribution.
The Trade and Development Board has four subsidiary organs to assist it in its functions. These are: (1) The Committee on Commodities; (2) The Committee on Manufactures; (3) The Committee on Shipping; and (4) The Committee on Invisible Items and Financing related to Trade.
Generally, these committees meet annually. However, they may be called in special session to consider urgent matters.
Main Functions of UNCTAD
The main intention of the Conference was to assist the developing countries achieve accelerated economic development by helping them to control economic forces instead of being dominated by them.
The principal functions of the Conference are:
1. To promote international trade all over the world – between developed and developing countries with different socio-economic systems, and thus, to accelerate economic development.
2. To formulate principles and policies on international trade and related problems of economic development.
3. To make proposals for putting the said principles and policies into effect.
4. Generally, to review and facilitate the co-ordination of activities of the other institutions within the U.N. system in the field of international trade.
5. To be available as a centre for harmonious trade and related documents in development policies of governments.