as published in fourwinds10.com

CONSTITUTION OF THE UNITED NATIONS
INDUSTRIAL DEVELOPMENT ORGANIZATION

Treaty Doc. No. 97-19
The White House, October 5, 1981,
Transmittal letter of the President of the United States to the Senate of the United States:
With a view to receiving the advice and consent of the Senate to ratification, I transmit herewith a copy of the Constitution of the United Nations Industrial Development Organization (UNIDO). This Constitution was adopted by the United Nations Conference on the Establishment of the United Nations Industrial Development Organization as a Specialized Agency on April 8, 1979, and signed on behalf of the United States of America on January 17, 1980. The report of the Department of State with respect to the Constitution is also transmitted for the information of the Senate.
The Constitution would establish UNIDO as an independent specialized agency of the United Nations system. It does not create a new entity, but rather revises UNIDO’s existing legal framework in a way that significantly improves the position of the United States and other major donors in budget, program and assessment determinations.
UNIDO’s principal purpose is to foster the industrialization of developing countries. It is currently the third largest executing agency for the United Nations Development Program. UNIDO’s wide-ranging activities are geared to aid developing countries in establishing the technical and institutional skills necessary for the industrialization. Many of these activities are consonant with the United States development of indigenous entrepreneurial and productive capabilities in the private sector. United States commercial and academic interests also benefit from UNIDO activity.
In recent years, there has been growing recognition of the need to formulate more effective institutions within the United Nations system to deal with the problems of development in an increasingly interdependent world. Such institutions need to serve the interests of all member nations and to be governed in a manner that realistically reflects the political and economic situation in the world today.
The Constitution would give UNIDO a new governing machinery that will make it more responsive to its member governments and that will give greater recognition to the special role of major donors, including the United States, other industrial democracies, and the Soviet bloc. If they act together, the major donors will be able to block decisions on UNIDO’s program and budgets. In this respect, the Constitution is a precedent-setting document.
The Constitution would also provide a specific right to withdrawal for UNIDO if the United States should ever determine that its interests are not served by continued membership. This could not be accomplished under UNIDO’s current statute without withdrawal from the United Nations.
While the Constitution refers to the objectives of helping establish a new international economic order, the United States has made clear its view that this does not refer to any preconceived notion of such an order as outlined in some UN resolutions to which the United States has taken exception.
The Constitution offers the United States important advantages over UNIDO’s current status. It provides an opportunity to increase UNIDO’s effectiveness in promoting economic development in the developing countries and, thus, its contribution to a more equitable and peaceful, international environment. In addition to helping create a better institutional framework, ratification of the Constitution by the United States will be a strong reaffirmation of our commitment to the industrial development of the less developed countries and demonstrate our political will to pursue beneficial relations with these countries.
I recommend that the Senate give prompt consideration to the Constitution and advise and consent to its ratification.
RONALD REAGAN

LETTER OF SUBMITTAL
_____
Department of State,
Washington, September 12, 1981
THE PRESIDENT: I have the honor to submit to you, with a view to its transmission to the Senate for advice and consent to ratification, the Constitution of the United Nations Industrial Development Organization (UNIDO), adopted by the United Nations Conference on the Establishment of the United Nations Industrial Development Organization as a Specialized Agency on April 8, 1979, and signed on behalf of the United States of America on January 17, 1980.
The Constitution would establish UNIDO as an independent specialized agency of the United Nations system. UNIDO now exists as an organization formally within the United Nations itself, reporting to the General Assembly.
UNIDO has a mandate to provide developing countries with industrial related technical assistance (worth $76 million in 1980), including programs in industrial planning, institutional infrastructure, factory establishment and management, training, feasibility studies, and investment promotion. Virtually all of UNIDO’s technical assistance expenditures are funded by voluntary sources, primarily the United Nations Development Program. UNIDO activities funded by the United Nations regular assessed budget ($47 million in 1980) are largely in support of its technical assistance activities, and include: macro-economic studies of factors affecting industrialization; advice to LDC governments on development policies; industrial sector, regional, country and case studies; statistical data collection and analysis; expert group meetings including sectoral Consultations; information processing and investment promotion. UNIDO’s highly diversified activities include many which are congenial to United States development priorities such as: employment generation, private sector development, basic human needs, appropriate technology, and rural and agricultural related development. American commercial and academic interests also benefit from UNIDO activity.
UNIDO was established as an organ of the United Nations General Assembly pursuant to United Nations General Assembly Resolutions 2089 (XX) and 2154 (XXI), adopted in 1965 and 1966, respectively. In 1975, the United Nations General Assembly, endorsing the recommendation of the Second General Conference of UNIDO, adopted Resolution 3362 (S-VII) which established an intergovernmental committee of the whole followed by a conference of pleni-potentiaries to draft and consider a constitution to transform UNIDO into a specialized agency of the United Nations. The intergovernmental committee of the whole met five times over a two-year period and was succeeded by the Conference on the Establishment of UNIDO as a Specialized Agency.
The Constitution, while not creating a new entity, revises UNIDO’s existing legal framework, significantly improving the provisions relating to control of budget and programming. Under the current regime, UNIDO’s work program is decided upon by its governing body, the Industrial Development Board, while its program budget is set by the United Nations General Assembly as one component of the overall United Nations Program Budget. Thus, UNIDO’s budget is currently not subject to intergovernmental review by a body directly responsible for UNIDO activities; nor do the present institutional arrangements, by which all questions are decided by majority vote, adequately reflect the special interest of major donors.
The Constitution seeks to correct these defects by providing that the program and budget of UNIDO shall both be acted upon by three governing bodies in succession: the Program and Budget Committee (the Committee), the Industrial Development Board (the Board), and the General Conference (the Conference). Each body must decide on the program and budget by a two-thirds majority vote.
In the Committee and the Board, the industrial democracies and the Soviet bloc (ie., the major donors) hold substantially more than a third of the vote and thus could, if most of them agree, block adoption of a program or budget. (The Soviets have traditionally taken a very conservative position on budgetary issues.) The Constitution thereby enables for the first time in the United Nations system, outside of the banking institutions, a special recognition of the essential role of major donor states in United Nations affairs. The Constitution is therefore a precedent setting document, responsive to the political realities of the 1980’s and beyond.
The Constitution and the related resolutions on transition to specialized agency status also achieve another objective of the United States in that they do not mandate any increase in United States contributions to UNIDO, but only change the method of assessment and payment in ways beneficial to the United States. Currently, United States assessed contributions to UNIDO are determined and paid indirectly through the mechanism of the United Nations assessed budget, making it difficult for the United States to achieve a degree of influence within UNIDO concomitant with the level of those indirect contributions. The Constitution will move toward correcting this situation by instituting direct assessed budget payments to UNIDO and providing for assessments to be determined in a manner similar to the determination of the program and budget, with major donor States holding more than a third of the vote in the Board which must decide on assessments by a two thirds majority.
It is also noteworthy that United Nations General Assembly Resolutions 96 (XXXIV) on Transitional Arrangements on the Establishment of the United Nations Industrial Development Organization as a Specialized Agency provides for the termination of United Nations funding for UNIDO from the United Nations regular program budget and a budget upon establishment of UNIDO as a specialized agency.
The Constitution consists of a preamble, twenty-nine articles (in six chapters) and three annexes. The Preamble states that the States Parties, while bearing in mind the “broad objectives” of resolutions adopted by the sixth and seventh special sessions of the United Nations General Assembly and the Second General Conference of UNIDO pertaining to the establishment of a new international economic order, make certain declarations regarding economic development. The declarations include the necessity of establishing a just and equitable economic and social order; the essential role of industrialization to rapid economic and social development; the right of all countries to pursue industrialization; the necessity of concerted measures to promote the development, transfer and adaptation of technology internationally; and a determination to promote the common welfare through expanding international economic cooperation. The Preamble is basically hortatory, and contains no operational links to the rest of the Constitution.
The objectives and functions of UNIDO are contained in Chapter I, Article 1 states that the primary objective of UNIDO will be the promotion and acceleration of industrial development in the developing countries with a view to assisting in the establishment of a new international economic order. The language used in the Constitution, as indicated in the statement of the United States at the time of adoption of the Constitution, can be interpreted to make clear that Article 1 refers to UNIDO’s participation in an evolutionary and truly consensual process to achieve a new international economic order and that Article 1 does not refer to any preconceived notion of a new international economic order as outlined in certain General Assembly sixth and seventh special sessions, regarding which the United States has reservations.
Article 2 lists the functions of UNIDO, all related to promoting industrial development and basically similar to the functions specified in UNIDO’s current statute, General Assembly resolution 2152 (XXI). The more important functions include” coordinating United Nations industrial development activities; providing technical assistance for industrialization, including training and pilot facilities; managing an industrial information clearinghouse; advising and assisting developing countries in formulating and executing development plans; assisting in the establishment and operation of industries, to achieve full utilization of local human and natural resources; and as requested by the countries concerned, providing a forum for contacts and negotiations.
Chapter II provides for participation in UNIDO. Membership is open to all States members of the United Nations or a specialized agency. Article 6 provides for withdrawal from membership, not possible now without withdrawing from the United Nations, subject to providing a reasonable period of notice. The right of withdrawing from UNIDO alone may provide useful leverage, although actual withdrawal would entail a different decision.
Chapter II establishes the organs of UNIDO. Article 8 specifies a General Conference composed of all members which will act upon the reports of the Board and the Director-General and determine the guiding principles and policies of the organization. Article 9 provides for the Board to be composed of 53 members elected by the Conference, with the following distribution of seats: 33 members elected from the G-77 (developing countries), 15 members elected from Group B (industrialized democrats) and 5 members elected from Group D (the Soviet bloc). Article 10 establishes a Programme and Budget Committee to consist of 27 members elected by the Conference with the following distribution: 15 from the G-77, 9 from Group B, and 3 from Group D.
Chapter IV delineates the process for approval of the program of work and the regular budget (i.e., the budget expenditures to be met from assessed contributions) and the operational budget (i.e., budget expenditures to be met from voluntary contributions). Article 14 stipulates that the Director-General shall prepare and submit a draft work program, regular budget and operational budget to the Board through the Committee. The Committee will consider the DIrector General’s proposals and make recommendations to the Board by a two thirds majority vote of those present and voting. The Board will examine the Director General’s proposals and the recommendation of the Committee and adopt the program of work, regular budget and operational budget, for submission to the Conference, by a two-thirds majority of those present and voting. The Conference will approve the submission of the Board by a two-thirds majority vote of those present and voting. The Conference may make no decision or amendment involving expenditures unless the Committee and the Board have had an opportunity to act as indicated above. By commanding more than a third of the votes in the Board and the Committee, the major donor States (i.e., Groups B and I), which share a common desire to keep United Nations agency budgets to a reasonable level, will be back to block work programs and budgets of which they disapprove, if they act together.
Article 15 provides that the scale of assessments for members shall be established by the Conference by a two thirds majority of the members present and voting, upon a recommendation of the Board adopted by a two-thirds majority of the members present and voting. The Board’s recommendation is to be based on a draft prepared by the Committee. The Constitution thereby provides a mechanism for the majority donors as a group to veto a scale of assessments which they disapprove. Article 15 also stipulates that the scale of assessments shall be based to the extent possible on the scale most recently employed by the United Nations and no member shall be assessed more than 25 percent of the regular budget.
Chapter VI covers legal matters. Article 23 provides for amendments, with special, stringent provisions for amendments to financial articles. Financial amendments must be approved by two-thirds majorities of the Board and Conference respectively and must be ratified by three-fourths of the Member States. This provision projects the blocking more than a third of the votes which major donors command in the Committee and the Board.
Article 25 stipulates that the Constitution shall enter into force when at least eighty States that deposited instruments of ratification notify to the Secretary General of the United Nations that they have agreed, after consultations among themselves, that the Constitution shall enter into force. However, for States that had deposited instruments of ratification but did not participate in such notification, the Constitution shall come into force on such later date as they choose.
The practical effect of the entry into force provisions is that the Constitution will not enter into force without the agreement and participation of major donors, including the United States. Once the Senate has given its advice and consent to ratification, this provision will afford the United States a strong position to ensure that the basic concerns of the United States, such as budgetary restraint, are taken into account.
Article 27 states that no reservations may be made to the Constitution.
A major problem in the constitutional negotiations was to balance the desire of major contributing countries for control over the regular budget with the insistence by developing countries that funding for technical assistance activities continue to be available on an assured basis. Under current arrangements, a portion of UNIDO’s activities in the field of technical assistance is financed by assessments from the regular budget of the United Nations. Under Annex II of the Constitution, 6% of the regular budget of UNIDO will be set aside for technical assistance activities which have heretofore been financed by assessed contributions to the United Nations budget. The six percent figure sets a constitutional ceiling on the portion of the new organization’s regular budget which can be devoted to technical assistance. All other technical assistance activities must be financed by voluntary contributions. Since the United States together with the other major contributing countries will have more than a third of the votes in the Board, which must approve the regular budget by a two-thirds majority vote, we will have substantial influence on the overall figure with regard to which the 6% technical assistance figure will be calculated and, therefore, over the absolute amount of technical assistance expenditures from the regular budget.
The combined effect of the 6 percent ceiling, the major donors having more than a blocking third of the votes, and the withdrawal provisions will provide the United States with much greater capacity than presently exists to ensure that regular budget funds for technical assistance are used for programs which we believe should qualify for such funding. In this connection, the United States representative to the Constitutional Conference placed on the record our view that technical assistance financed by assessments, “must fill gaps which would be difficulty for the UNDP, with its country specific focus, or other voluntary funds to fill. Specifically, such technical assistance would deal with emergency situations and financial activities that primarily benefit the entire international community, not a single country.”
There has been growing recognition in UNIDO of the need to achieve a true consensus of development questions if UNIDO is to cope effectively with development problems. At the same time, there has been growing recognition within the United States of the need for the United Nations to be more responsive to our basic programmatic and budgetary concerns, especially in light of the large concerns, especially in light of the large United States assessed contributions. The Constitution of UNIDO is a product of both of these movements. It gives an already existing institution a new mechanism of decision-making which provides special recognition of the essential role of major contributions, including the United States. In this way, it is truly a precedent setting document for the United Nations system which deserves our earnest and rapid support.
The other agencies most concerned, the Department of Labor, the Agency for International Development, and the Department of Commerce, have no objection to ratification of the Constitution. I hope that you will ask the Senate to consider the Constitution and give its advice and consent to ratification as soon as possible.
Respectfully submitted,
William Clark.
Let us herein repeat the
PREAMBLE
CONSTITUTION OF THE UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION
The States parties to this Constitution, In conformity with the Charter of the United Nations, Bearing in mind the broad objectives in the resolutions adopted by the sixth special session of the General Assembly of the United Nations on the establishment of a New International Economic Order, in the UNIDO Second General Conference’s Lima Declaration and Plan of Action for Industrial Development and Co-operation, and in the resolution of the seventh special session of the General Assembly of the United Nations on Development and International Economic Cooperation, Declaring that: It is necessary to establish a just and equitable economic and social order to be achieved through the elimination of inequalities, the establishment of rational and equitable international economic relations, implementation of dynamic social and economic changes and the encouragement of necessary structural changes in the development of the world economy.
Industrialization is a dynamic instrument of growth essential to rapid economic and social development, in particular of developing countries, to the improvement of the living standards and the quality of life of the peoples in all countries, and to the introduction of an equitable economic and social order.
It is the sovereign right of all countries to achieve their industrialization, and any process of such industrialization must conform to the broad objectives of self-sustaining and integrated socio-economic development, and should include the appropriate changes which would ensure the just and effective participation of all peoples in the industrialization of their countries.
As international co-operation for development is the shard goal and common obligation of all countries it is essential to promote industrialization through all possible concerted measures including the development, transfer and adaptation of technology on global, regional and national, as well as on sectoral levels.
All countries, irrespective of their social and economic systems, are determined to promote the common welfare of their peoples by individual and collective actions aimed at expanding international economic cooperation on the basis of sovereign equality, strengthening of the economic independence of the developing countries, securing their equitable share in total world industrial production and contributing to international peace and security and the prosperity of all nations, in conformity with the purposes and principles of the Charter of the United Nations.
Mindful of these guidelines, Desiring to establish, within the terms of Chapter IX of the Charter of the United Nations, a specialized agency to be known as the United Nations Industrial Development Organization (UNIDO) (hereafter referred to as the “Organization”), which shall play the central role in and be responsible for reviewing and promoting the co-ordination of all activities of the United Nations system in the field of industrial development, in conformity with the responsibilities of the Economic and Social Council under the Charter of the United Nations and with the applicable relationship agreement, Hereby agree to the present Constitution.
CHAPTER I.–OBJECTIVES AND FUNCTIONS
ARTICLE 1 OBJECTIVES
The primary objective of the Organization shall be the promotion and acceleration of industrial development in the developing countries with a view to assisting in the establishment of a new international economic order. The Organization shall also promote industrial development and co-operation on global, regional and national, as well as on sectoral levels.

Advertisements