New International Economic Order (NIEO) Encyclopedia Entry

New
International Economic Order

(NIEO)
Giorgio Sacerdoti
Content Product: Max Planck

type: Encyclopedia entries Encyclopedia of Public
Article last International Law [MPEPIL]
updated: September 2015
Subject(s):
Most-favoured-nation treatment (MFN) — Developing countries
Published under the auspices of the Max Planck Foundation for International Peace and the Rule of Law
under the direction of Rüdiger Wolfrum.
From: Oxford Public International Law (http://opil.ouplaw.com). (c) Oxford University Press, 2015. All Rights Reserved. Subscriber:
Symbiosis Law School; date: 15 March 2018
A. Concept
1 The establishment of a New International Economic Order (‘NIEO’) was officially endorsed by
consensus of the UN General Assembly at its Sixth Special Session on 1 May 1974. In Resolution
3201 ‘Declaration on the Establishment of a New International Economic Order’, UN members
‘solemnly’ proclaimed their ‘united determination to work urgently for the Establishment of a New
International Economic Order based on equity, sovereign equality, interdependence, common
interest and cooperation among all States, irrespective of their economic and social systems which
shall correct inequalities and redress existing injustices, make it possible to eliminate the widening
gap between the developed and developing countries and ensure steadily accelerating economic
and social development and peace and justice for present and future generations’.
2 The Declaration went on to state that, notwithstanding the independence achieved by a large
number of → peoples and nations over the previous decades, and the potential for improving the
well-being of all peoples arising from technological progress in all spheres of economic activity,
such benefits were not shared equally by all members of the → international community. In
particular, the remaining vestiges of alien and colonial domination (→ Colonialism), foreign
occupation, racial discrimination, → apartheid, and neo-colonialism in all its forms ‘continue to be
among the greatest obstacles to the full emancipation and progress of the developing countries
and all of the peoples involved’ (at para. 1). The Declaration noted that while the developing world
constituted 70% of the → world population, it accounted for only 30% of global income
(→ Developing Countries). As a result, ‘it has proved impossible to achieve an even and balanced
development of the international community under the existing international economic order’.
3 Observing that the present international order was ‘in direct conflict with current developments in
international and political relations’, the Declaration stated that changes in the relationship of
forces since 1970 required ‘active, full and equal participation of the developing countries in the
formulation and application of all decisions that concern the international community’ (at para. 2).
On the basis of the existing ‘close interrelationship between the prosperity of the developed
countries and the growth and development of the developing countries’, the Declaration
pronounced that the political, economic, and social well-being of the world’s peoples ‘depends
more than ever on cooperation between all the members of the international community on the
basis of sovereign equality and the removal of the disequilibrium that exists between them’ (at
para. 3). The Declaration also proclaimed that the NIEO should be founded on full respect of a list of
twenty principles spelled out in the operative part of the Declaration.
4 With a view to ensuring the successful application of the Declaration, Resolution 3202 of the
same date set forth in considerable detail a Programme of Action ‘to bring about maximum
economic cooperation and understanding among all States, particularly between developed and
developing countries, based on the principles of dignity and sovereign equality’.
B. Origin and Background

5 The NIEO had its immediate origins in the Summit Conference of the → Non-Aligned Movement
(NAM) held in Algiers in September 1973. That conference took place shortly before the ‘Yom
Kippur War’ and the decision by the → Organization of the Petroleum Exporting Countries (OPEC)
to increase the price of oil and to boycott certain Western countries with close ties to Israel. But the
call for a new international economic order was far older. Developing countries had become
increasingly dissatisfied with the governance and principles of the liberal economic order
established at the end of World War II. The → United Nations Charter recognizes the importance of
promoting ‘conditions of economic progress and development’ as well as ‘solutions of international
economic, social, health and related problems’ (Art. 55 UN Charter). However, it grants few powers
to the UN for implementing that mandate, relying instead on the pledge of members ‘to take joint
and separate action in cooperation with the Organization for the achievement of the purposes set
forth in Article 55’ (Art. 56 UN Charter). The post-World War II system was rather founded on two
institutions established at the → Bretton Woods Conference (1944): the → International Monetary
Fund (IMF), which was endowed with financial resources to pursue monetary cooperation and
stability; and the → International Bank for Reconstruction and Development (IBRD) (or World
Bank), which was established to provide development assistance through advice and financing of
long-term projects. Because these financial institutions rely on capital contributions from their
members, participation is based not on equal representation in the decision-making process, but on
the amount of capital subscribed by each of them. As a result, major economies have a decisive
voice in the management of the two institutions, even when no formal voting takes place. The post-
World War II economic order did not entrust any organization with the power to plan global
economic development. In fact, the basic principles (multilateralism and non-discrimination)
reflected market-based disciplines. These were aimed at restricting unilateral and uncoordinated
recourse to domestic policies that would negatively affect the conduct of international trade by
private business—such as the imposition of barriers, manipulation of exchange rates, and the
discouragement of investment—depriving consumers of the benefit of foreign products, and
generally hampering the functioning of markets and competition world-wide. This market-based
approach was a reaction to the negative experience of protectionism in the 1930s, but became
more dominant with the refusal of the centrally planned economies of the Soviet bloc to join the IMF
and the World Bank. Moreover, the International Trade Organization, an institution that might
otherwise have addressed some of these concerns, was never established.
6 When most of the world’s colonies attained independence in the years that followed, the
international community consisted of a majority of States that lacked the means to devise and
implement independent economic policies, and whose level of development was hopelessly far
behind those of the industrialized world. Developing nations objected to the existing imbalance
between, on the one hand, their political status as sovereign nations formally equal to all other
members of the international community and, on the other hand, their lack of economic means and
ability to influence the world economic system so as to make it more responsive to their
development needs. Customary rules on the protection of foreign property, established when many
developing countries were not yet in existence, also came under challenge for unduly preventing
developing countries from defining and regulating domestic economic systems in accordance with
their interests. Hence the call for ‘permanent sovereignty’ on national wealth, resources, and
economic activities that would allow developing countries to sacrifice foreigners’ rights and
disregard past obligations to that end. The belief that underdevelopment was the result of capitalist
colonial and post-colonial exploitation was widespread in developing nations.
7 Developing countries sought actively to promote new principles of economic relations and
cooperation in order to redress those imbalances, and found such efforts facilitated by the
evolution of the international community. Following the → Bandung Conference (1955), developing
countries formed the ‘Non-Aligned’ group, which developed independent policies and positions in
respect of both the Western camp and the Soviet bloc in various areas of international politics.
Developing countries were able to vote as a group at the United Nations, commanding an
‘automatic majority’ at the General Assembly through the formation of the so-called → Group of 77
(G77). The UN agenda was thus expanded to include certain economic matters in support of
developing country claims. Given that the General Assembly lacks legislative or treaty-making
powers, developing countries sought to influence the development of international law through the
adoption of principles that would direct transnational business activities and inter-State economic
cooperation to the benefit of developing countries. Developing countries made use in this respect
of ‘declarations of principles’ of the General Assembly, a non-binding type of recommendation that
had been used to solemnly proclaim legal principles in the area of international political relations,
peace, general cooperation, and security. Developing countries intended that the declarations
pertaining to the NIEO would be adopted unanimously or by consensus whenever possible
pursuant to negotiations with the developed countries (generally taking the political support of the
Soviet Union and its allies for granted in such matters).
8 Developing countries also sought to shift global financial management and governing power
from the Bretton Woods institutions to the United Nations through the creation of subsidiary bodies
of the General Assembly, notably the → United Nations Conference on Trade and Development
(UNCTAD). When it first convened in New Delhi in 1964 UNCTAD called for new rules for trade
relations involving developing countries. This resulted in 1965 in the addition of a new Part IV
(‘Trade and Development’) to the 1947 GATT (→ General Agreement on Tariffs and Trade [1947
and 1994]). Though comprising provisions of a mostly programmatic nature, the new GATT articles
recognized for the first time in a binding instrument the principle of non-reciprocity (→ Reciprocity)
between developed and non-developed contracting parties, as the basis of future trade
liberalization and → concessions. This was the first, albeit modest, acceptance of the claim by
developing nations that, in the regulation of North–South trade, unequal treatment in favour of
developing country interests was justified because of the economic inequality and different stages
of development among the parties involved. Non-reciprocal treatment thus served the aim of
rebalancing such existing differences and inequalities.
9 The furtherance of that strategy was initially favoured by a variety of factors. The perception
that the existing economic order and principles were inadequate in tackling underdevelopment was
widely shared among leftist Western intellectuals. Many economists pointed to a structural ‘unequal
exchange’ between the terms of trade of technology, capital goods, and services sold by
developed economies, and raw materials (commodities) and labour-intensive goods supplied by
developing countries. They recommended protection and import substitution to developing
countries in order to advance a self-sustaining path towards development. Other analysts, such as
the influential but controversial Club of Rome Report of 1974 on ‘The Limits to Growth’, pointed to
the overuse and waste of natural resources (mineral and agricultural) in the industrialized world.
The Report took the position that a situation of scarcity would ensue in a relatively short period of
time if the explosion of the world population was not curbed.
10 Other political and economic developments helped to tilt the balance of power in favour of
developing countries. First, the external deficit of the United States and the ensuing monetary crisis
of 1971 forced the US to de-link the dollar from gold, leading to a floating exchange rate system
that accentuated the lack of coordination among industrialized nations. Secondly, the success of
the OPEC cartelization of the oil market in 1973 showed the power that commodities producers
could exercise. This suggested that the price of raw materials could be managed by such
producers, mostly through State-owned enterprises in developing countries, rather than be left to
the law of supply and demand.
C. Resolutions 3201 and 3202

11 As noted, Resolution 3201 urged that the new international economic order ‘should be
founded’ on a list of twenty principles, which can be grouped according to certain core principles,
namely:
(i) the right of States to choose their own economic and social system on the basis of
sovereign equality;
(ii) permanent sovereignty over natural resources and economic activities free from external
coercion, and the right to nationalize foreign property and regulate the activities of
‘transnational’ [ie ‘multinational’] corporations in countries where they operate;
(iii) participatory equality of developing countries in international economic relations, and the
broadest cooperation of all States so that the prevailing disparities in the world be banished;
(iv) the preferential and non-reciprocal treatment for developing countries in all fields of
international economic cooperation whenever possible;
(v) a just and equitable relationship between the prices of raw materials, primary
commodities and goods exported by developing countries, and of those materials,
commodities and goods imported by them;
(vi) entitlement of developing countries to development assistance and to the transfer of

financial resources and technology.
12 The Programme of Action, set out in Resolution 3202, focused on ten areas where ‘all efforts’
should be made to ensure the application of the Declaration, according to a detailed description of
measures envisaged. These areas included the ‘fundamental problems’ of raw materials and
primary commodities as related to trade and development; the reform of the international monetary
system; industrialization; transfer of technology; regulation of transnational corporations; prompt
adoption of the → Charter of Economic Rights and Duties of States (1974) (UNGA Res 3281 [XXIX]
[12 December 1974]); promotion of cooperation among developing countries; assistance in the
exercise of permanent sovereignty over natural resources; the strengthening of the role of the
United Nations system in the field of international economic cooperation; and the launching of
‘special programmes’ by the United Nations to mitigate the difficulties encountered by specific
developing countries.
13 Two general features stand out. First, international cooperation should not be neutral, in the
sense that it should not be dependent on the variable outcomes of negotiations and agreements; it
should be focused instead on satisfying specific needs as determined by developing countries. The
law was thus supposed to acquire a planning dimension (droit programmatoire). Equity and
solidarity should be guiding principles, and preferential non-reciprocal treatment should be the
appropriate means to further those principles and achieve substantive equality in the economic
relations between developed and developing countries. Increased participation by all countries in
international trade to be conducted under different rules was advocated, instead of reliance on aid
in order to overcome underdevelopment. Secondly, as to governance and procedures, the
establishment of the NIEO should be pursued through collective action in the United Nations rather
than through specialized multilateral organizations. As the concluding part of the Declaration
states: ‘The United Nations as a universal organization should be capable of dealing with problems
of international economic cooperation in a comprehensive manner and ensuring equally the
interest of all countries. It must have an even greater role in the establishment of a new
international economic order’. In this respect, a centralized or authoritative allocation of resources
was envisioned as a replacement or correction to the existing market-based private allocation.
14 The focus of the Declaration and of the Programme of Action was thus on national sovereignty
and the ‘democratization’ of inter-State relations and decision-making in international
organizations. The underlying assumption was that weak developing countries had to be assisted
by industrialized nations to achieve sustained development on terms chosen by developing
countries themselves. At the same time, developing countries should not be subject to reciprocal
obligations and should be protected from external interference. ‘Compensatory inequality’ in
economic relations should become the norm.
D. Legal Relevance of the NIEO Principles

15 The NIEO Declaration was forward-looking and was intended to establish a new economic order
through the actions envisaged in the Programme of Action. The Declaration was typical of a → soft-
law instrument; the core principles outlined were more in the nature of agreed policy guidelines for
future action by UN members than statements of binding rules. Some statements confirmed
principles already recognized by the UN Charter and previous declarations, such as the → Friendly
Relations Declaration (1970) (UNGA Res 2625 [XXV] [24 October 1970]). However, in specifying
the content of such principles (such as the economic dimension of sovereignty), or in emphasizing
that international cooperation includes an obligation for developed countries to assist developing
countries under specified terms, the Declaration went beyond a restatement of existing principles.
Indeed, this was the intent of its promoters. Thus, on the one hand, the Declaration reflected in part
a political consensus on certain actions to be undertaken in the future; on the other, it spelled out
principles whose legal force would inevitably depend upon future treaty-making, the acceptance of
binding obligations in other instruments, and State practice confirming elements of opinio iuris that
could be deduced from the Declaration.
16 One of the first actions following the conception of the NIEO was that of establishing ‘generally
accepted norms to govern international economic relations systematically’ with a view to promoting
‘a just order and a stable world’ through a ‘charter to protect the rights of all countries, and in
particular the developing States’. This objective was affirmed by the General Assembly in the
controversial Charter of Economic Rights and Duties of States by Resolution 3281 XXIX of 12
December 1974, the draft of which had been elaborated by the G77 without taking into account the
proposals of → Organization for Economic Co-operation and Development (OECD) members. A
legal evaluation of the NIEO principles cannot be undertaken without considering the catalogue of
28 economic rights and duties of States that formed the central part of the Charter.
17 Unlike the NIEO Declaration and Programme of Action, the Charter was not unanimously
adopted; on the contrary, the Charter’s overall approach and key tenets were opposed by many
industrial powers. The consensus that supported the adoption of the founding NIEO documents on 1
May 1974 had collapsed six months later once UN members were presented with a text that was
intended to further the principles reflected in those documents by recognizing the rights of
developing countries, while imposing duties on developed countries. As a result, six developed
States voted against the Charter and ten abstained. They comprised the main addressees of the
obligations spelled out in the Charter, thus evidencing the lack of opinio iuris. Moreover, Art. 2
Charter of Economic Rights and Duties of States, which spelled out the right of host countries to
nationalize foreign property, remitting to their law and jurisdiction to grant ‘appropriate
compensation’ was the object of a separate vote in which sixteen industrialized States dissented.
Other controversial issues included the right of primary producers to associate themselves in
associations (cartels) to be respected by other countries, and the call for an international system to
manage the use of the sea bed, ocean floor, and subsoil thereof, taking into account the particular
interests and needs of developing countries in line with UNGA Resolution 2749 (XXV) of 17
December 1970.
18 The legal value of the principles and rules spelled out in the NIEO Declaration and the Charter
depended, and would still depend, first of all on whether they effectively reflected existing
principles and rules. Where these documents contained ‘new’ statements, the analysis has
focused on detecting whether, and to what extent, subsequent statements and declarations, and
especially State practice (including in furtherance of the Programme of Action), have reaffirmed
and implemented those principles, thus leading to the formation of new rules based on their actual
observance by States.
19 Where State practice and international cooperation in economic matters and the furtherance of
development has departed from the NIEO framework and the Charter statements, as has
undoubtedly occurred in most key areas, these founding documents are mostly of historical
interest for international relations.
20 A series of initiatives was undertaken at the United Nations in the years subsequent to the
adoption of the Declaration and the Charter in order to elaborate further the legal principles and
rules contained therein for the purpose of the ‘consolidation and progressive development of the
principles and norms of international economic law relating in particular to the legal aspects of the
NIEO’. The task was finally entrusted to the United Nations Institute for Training and Research
(‘UNITAR’), which presented, in 1984, an analytical study (prepared by Georges Abi-Saab) that
organized the principles of the NIEO in eight core principles or clusters. These were: the right of
States to choose their economic system; permanent sovereignty over natural resources;
participatory equality of developing countries; preferential treatment for them; stabilization of their
export earnings; the right to benefit from science and technology; entitlement to development
assistance; and the → common heritage of mankind. No further elaboration of the process of
codification of these principles succeeded thereafter, notwithstanding various subsequent
resolutions by the General Assembly calling for States to submit proposals.
E. UN Action in Furtherance of the NIEO

21 Notwithstanding the lack of consensus concerning the 1974 Charter, initiatives to implement
key features of the NIEO programme proceeded for some time, supported by a North–South and
East–West consensus. Under the auspices of the General Assembly and UNCTAD, specific actions
were carried out in the area of trade relations, transfer of technology, regulation of multinational
(transnational) companies, stabilization for commodities prices, and industrialization. As to the
trade sector, the principle of non-reciprocal trade relations and the establishment of a system of
generalized non-reciprocal preferences had been accepted before 1974 through a temporary
waiver of the most-favoured-nation treatment obligation of the GATT (→ Most-Favoured-Nation
Clause), which was adopted by the GATT contracting parties in 1971. The authorization for
developed members to extend trade preferences to developing members, although on variable
terms unilaterally decided by each of the grantors, became a permanent exemption (referred to as
the ‘enabling clause’) at the conclusion of the Tokyo Round of negotiations in 1979. Thus, the
‘differential and more favourable treatment’ to developing countries became a basic feature of the
multilateral trading system and has remained so since.
22 Parallel but separate negotiations were carried out at the United Nations over several years
with a view to establishing a Code of Conduct for the Transfer of Technology (UNGA Res 40/184
[17 December 1985] GAOR 40th Session Supp 53, 146) and a Code of Conduct on Transnational
Corporations (UNGA Res 45/186 [21 December 1990] GAOR 45th Session Supp 49 A, 114).
Developing countries sought, by these instruments, to ensure that multinational corporations based
in the North would operate internationally for the benefit of developing host countries. Given that
the latter lacked effective controls over the conduct of multinational corporations, it would be
incumbent on home countries to ensure that such corporations abide by certain agreed rules
(including towards private counterparts such as workers, unions, and consumers) and would
respect the sovereignty of host countries. Neither exercise met with success and they were
abandoned in the late 1980s. Not even the issue whether those instruments should have been
binding or of a soft law type had been agreed by then.
23 With regard to the stabilization of commodities prices, efforts to regulate the price of certain
commodities for which developing countries were the main producers was directed at ensuring
stability of income to producers through centralized market intervention, the establishment of buffer
stocks, and other devices. For this purpose, the Agreement Establishing the Common Fund for
Commodities (→ Common Fund for Commodities [CFC]) as a distinct international organization was
adopted on 27 June 1980. Although it entered into force in 1989, the CFC later dropped the
ambitious goal to regulate prices and sustain producers’ income. It transformed itself subsequently
into an institution, albeit with limited resources, mainly devoted to financing the social and
economic development of producers of mostly agricultural commodities.
24 With respect to industrialization, the → United Nations Industrial Development Organization

(UNIDO), which had been established in 1966 as a subsidiary body of the General Assembly,
became a specialized UN agency in 1985 with the primary objective of promoting and accelerating
industrialization in the developing countries.
F. The Demise of the NIEO and New Approaches to International
Economic Cooperation in Furtherance of Development
25 By the end of the 1970s, new economic policies and a new assertiveness in international
affairs emerged among industrialized nations. The governments of Margaret Thatcher in the United
Kingdom and Ronald Reagan in the United States directed their countries’ domestic and
international economic policies towards privatization and deregulation, following neo-liberal
economic thinking. The NIEO approach, which had failed to bring normative or economic results
after many years, was eclipsed on the international stage, and the centre of economic initiative in
international relations reverted to the industrialized world. Legal insecurity regarding the status of
foreign investment under NIEO principles contributed to the slowing of private investment flows to
developing countries in the 1970s. In the context of falling commodity prices and the scarcity of
unconditional development assistance (that never reached the OECD target of 0.7% of domestic
GNP), this led many developing countries to rely on financing at commercial terms, which in turn
created massive debt. IMF debt relief and support from the World Bank became crucial. Both
institutions focused on sound monetary policies and ‘structural adjustment’, emphasizing the
reduction of fiscal imbalances, budgetary discipline, and the scaling back of the public sector as a
condition for their support (later known as the ‘Washington Consensus’). By the mid-1980s, infant
industry models that focused on protectionism and import substitution as a tool for growth had
given way in most developing countries to privatization, opening of the domestic economy to
international competition, and inward direct investment. To counter the legal instability experienced
by foreign investors due to host country policies based on permanent economic sovereignty, an
extensive network of bilateral treaties for the protection and promotion of foreign investment was
established starting in the late 1970s. Multinational companies were no longer viewed as a threat to
the independence of developing countries, but rather as an engine for development and a precious
source of capital and technology. The political and economic unity among non-oil exporting
developing countries foundered. With the disappearance of the Soviet bloc of countries and the
collapse of their centrally-run economies, the appeal that this model had in the developing world
faded away. Certain large developing countries, among them China, experienced remarkable
growth leading to their progressive integration into the world economy. New distinctions were
drawn between developing countries in order to establish priorities in assistance, based on
individual average income, the percentage of population living in extreme poverty, and other
social-economic indicators. The category of the Least Developed Countries was recognized as
being entitled to special treatment in economic relations and development assistance.
26 This evolution led many commentators to differentiate between the principles and rules
governing international trade, finance, and investment, and those dealing with international
development assistance. In the former sector market principles clearly prevail, in that basic
choices are left to private actors, and sectoral governance and regulation are provided
increasingly by regional organizations. ‘International economic law’ covers this area of
international law. On the other hand, international cooperation for development, including
development financing and assistance aimed at alleviating the causes and effects of extreme
poverty, has emerged as a specialized sector and is the subject of ‘international development law’.
Main actors here are individual donor countries, the United Nations and specialized international
organizations, as well as → non-governmental organizations.
27 Thus a certain ‘duality’ of regimes replaced the unity of the NIEO project as to the rules
governing international economic intercourses. At the same time, the international community
started focusing on issues of common concerns that were not central in the inter-State approach of
the NIEO. They were defined by the Declaration on the Right to Development (UNGA Res 41/128 [4
December 1986] GAOR 41st Session Supp 53, 186; → Development, Right to, International
Protection); the 1987 World Commission on Environment and Development Report ‘Our Common
Future’ (‘Brundtland Report’ [4 August 1987] UN Doc A/42/427), calling for the adoption of a
strategy for → sustainable development; and the Rio Declaration on Environment and
Development ([14 June 1992] UN Doc A/CONF 151/26/Rev 1 vol I, 3; → Stockholm Declaration
[1972] and Rio Declaration [1992]). The abandonment of the NIEO approach was formalized by the
Declaration on International Economic Co-operation, in particular the Revitalization of Economic
Growth and Development of the Developing Countries (UNGA Res S-18/3 [1 May 1990] GAOR 10th
Spec Session Supp 2, 5) adopted by consensus of a Special Session of the General Assembly. In
contrast with the NIEO the 1990 Declaration does not aim at setting rules or binding principles. It
instead spells out guidelines for effective cooperation inspired by different concerns and aims. It
emphasized as guiding principles: the liberalization of international trade; the enhancement of
human rights as elements of human development; the importance of a market economy; the
strengthening of public institutions; the adjustment of developing economies to a changing
economic environment; sustainable development; and environmental concerns.
28 UNCTAD soon abandoned the NIEO framework after this, and adopted as guiding principles
those spelled out by the General Assembly at the Special Session of 1990. At its Eighth Conference
in 1992, UNCTAD undertook a substantial ‘self-reorganization’, relinquishing its previous, ambitious
role as a focal institution for global North–South economic governance, focusing on a more
practical function as a research institution, authoring policy studies, elaborating soft law
instruments, and as a provider of → technical assistance.
29 The 1990s saw a remarkable growth of the world economy, including that of many developing
countries, notwithstanding recurring financial crises and inflation alarms. Market forces were
dominant in trade, investment, and finance. Widespread privatization, domestic deregulation, and
liberalization of barriers to the movements of goods, capital, and investments were not matched
either by harmonization of rules or by coordination and surveillance of domestic economic policies
by international institutions. Instead these tasks were left to the domestic authorities of the major
economies. International coordination was pursued within the periodic Group of Seven (‘G7’) and
→ Group of Eight (G8) summit meetings of leading industrialized nations, to which the governments
of the major emerging economies were later in part associated, forming the Group of Twenty (G20).
Management of the world economy was conducted through the setting of loose policy objectives
and informal economic coordination, rather than quantitative criteria and legal obligations. On the
other hand the establishment of the → World Trade Organization (WTO) in 1995 represented a
major advancement in reinforcing the rules of GATT thanks to an appropriate organizational
framework. The WTO has been the only major multilateral organization, since the creation of UNIDO
in 1980, to address economic issues. It is significant that it was established wholly outside of the UN
system.
30 A final turning point in international cooperation on development occurred at the Millennium

Summit of world leaders at the UN headquarters in September 2000. The Millennium Declaration
(→ United Nations, Millennium Declaration UNGA Res 55/2 [8 September 2000] GAOR 55th Session
Supp 49 vol 1, 4) spells out the Millennium Development Goals, which are eight international
development goals that the UN members and twenty-three international organizations have agreed
to achieve by the year 2015. They include reducing extreme poverty, reducing child mortality
rates, fighting disease and epidemics such as AIDS, and developing a global partnership for
development. The Declaration comprises eight chapters: Values and Principles; Peace, Security
and Disarmament; Development and Poverty Eradication; Protecting our Common Environment;
Human Rights, Democracy and Good Governance; Protecting the Vulnerable; Meeting the Special
Needs of Africa; and Strengthening the United Nations. These chapters and the key objectives
adopted in the Millennium Declaration represent a completely new framework, and new objectives
and methodologies, from those advocated by the NIEO. Two aspects are especially relevant when
compared with the NIEO approach. First, while the NIEO did not address the recognition and
protection of human rights, the preservation of the environment, the debt problem, the population
explosion, or public health issues (all of which were left to domestic jurisdictions rather than
considered issues requiring concerted global action), the Millennium Declaration intends to
integrate non-economic and non-development concerns and goals into the programme, such as
human rights, democracy, and governance. Secondly, while the NIEO approach ignored some
basic features of the international economic environment it intended to change (such as the fact
that market factors and business choices are at the root of international economic exchanges and
the prominent role of multinationals), public-private partnership is seen as essential in mobilizing
resources and energies for the attainment of the Millennium goals. This was stressed by the
→ Global Compact initiative of the UN launched at the Millennium Summit in July 2000 directly
involving the private sector, and confirmed in the Report of the United Nations Conference on
Sustainable Development (2012). In September 2015 a UN Summit convened as a meeting of the
UNGA adopted the ‘2030 Agenda for Sustainable Development’ (UNGA Res 70/1 [25 December
2015]), setting forth 17 Sustainable Development Goals and providing for 169 targets designed to
attain them.
G. Conclusions: The Legacy of the NIEO

31 The NIEO has thus failed to achieve a vision of planned development of the world economy in
keeping with the interests of developing countries and founded on cohesive decision-making at the
United Nations. Several observers have, in hindsight, considered the NIEO a rhetorical effort by
developing countries, in a politically favourable moment, to impose on industrialized countries
biased rules governing their mutual economic relations so as to shift the balance of power in favour
of developing countries.
32 This evaluation seems too political. Although, looking back after more than 40 years, it is
evident that, as a whole, neither customary law nor treaty law has followed the NIEO principles and
approach, some important exceptions stand out. The right to development by States and
individuals has been recognized in general terms, although more as policy guidelines than as
principles with a legally defined content. In addition, the right to development assistance within a
cooperative framework has been at the root of the engagement of the international community
towards developing countries.
33 The most important legacy of the NIEO is found in the legal regime of trade relations between
advanced and developing economies. Trade preferences and non-reciprocity have become
permanent features of the multilateral trading system, but also of regional associations and of most
bilateral North–South trade relations. The WTO has incorporated these principles under the aegis of
‘special and differential treatment’, granted in all fields of trade relations to least developed
countries. This was reaffirmed in the Doha Ministerial Declaration of 14 November 2001
(WT/MIN(01)/DEC/1) as ‘an integral part of the WTO Agreements’. This principle, together with the
individual right to development and with non-reciprocal cooperation in favour of developing
countries, can be considered a legacy of the NIEO, a structural element of the efforts to govern
→ globalization at the beginning of the Third Millennium, beyond responding to recurring economic
and financial crises.
34 Additionally, a number of implications of NIEO can be considered. Among the most important
are two aspects of the law of the sea, which incorporate notions laid down by NIEO. First is the
exclusive right of coastal States to explore and exploit living and non-living resources in waters
adjacent to their territories (→ Exclusive Economic Zone; → Continental Shelf), incorporated in the
1982 United Nations Convention on the Law of the Sea. Second was the establishment under
UNCLOS of the → International Seabed Authority (ISA), responsible for administering mineral
resources in the international seabed area beyond the limits of national jurisdiction. In the case of
the ISA, however, an Implementation Agreement (1994) largely neutralized the most contentious
NIEO-inspired provisions.
35 Another lasting legacy of the NIEO is the notion of permanent sovereignty over natural
resources. While international courts and tribunals have often acknowledged the relevance of this
principle, they have also pointed out that States must exercise their sovereignty with due regard for
their international obligations. In the Aminoil case, an investment tribunal (→ Investments,
International Protection) acknowledged the sovereignty of Kuwait over its natural resources, but
stated that this did not prevent the government from entering into international engagements, which
it was then bound to respect (at para. 90). The WTO panel in China—Rare Earths acknowledged
that a State’s permanent sovereignty over natural resources is ‘a natural corollary of its statehood’,
but also pointed out that China ‘agreed to exercise its rights in conformity with WTO rules’ (at para.
7.270).
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Molybdenum—Reports of the Panel (26 March 2014) WT/DS431/R, WT/DS432/R,
WT/DS433/R.

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International Economic Order

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B. Origin and Background

C. Resolutions 3201 and 3202

(vi) entitlement of developing countries to development assistance and to the transfer of

D. Legal Relevance of the NIEO Principles

E. UN Action in Furtherance of the NIEO

24 With respect to industrialization, the → United Nations Industrial Development Organization

30 A final turning point in international cooperation on development occurred at the Millennium

G. Conclusions: The Legacy of the NIEO

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