Rethinking Bretton Woods | Thu, Jun 30, 2016
On July 17-22, 2016, UNCTAD member countries will meet for UNCTAD XIV, a conference that will decide the work program of the institution for the next four years. Center of Concern joined organizations of the Civil Society International Steering Committee towards UNCTAD XIV in a letter calling for governments to ensure that the UNCTAD 14 mandate is consistent with supporting developing countries in using trade for their own development purposes.
The letter contains recommendations addressing the current draft of the outcome on areas like trade and development, debt, private finance and international investment agreements.
Please send organizational endorsements, with country, to email@example.com no later than July 13, 2016.
Dear UNCTAD Member States,
We are writing you out of concern regarding the current negotiations towards the outcome document of the upcoming conference of the United Nations Conference on Trade and Development, UNCTAD 14, which will be held in July in Nairobi. We believe that UNCTAD can play a unique role in the panorama of international economic institutions thanks to its focus on the interdependence of trade, finance, investment, macroeconomics, and technology as they affect the growth and development prospects of developing countries. However, to live up to its name and promises, its role must be development-centered, and not tied to the liberalization goals of other institutions.
Following directly after the adoption of the 2030 Sustainable Development Agenda, governments made important commitments during the Financing for Development (FfD) process and the 10th Ministerial meeting of the World Trade Organization (WTO). We urge you to ensure that the UNCTAD 14 mandate is consistent with ensuring that UNCTAD can support developing countries in using trade for their own development purposes. Thus:
- As an institution with a long history of helping developing countries to use trade for their development, it would be self-defeating if UNCTAD were transformed into solely an implementation mechanism for trade agreements concluded elsewhere. While a multilateral system of trade rules is preferable to a fragmented system, the rules must be fair and balanced, taking into account the various levels of development across the UN membership, rather than focused on trade liberalization or simply increasing trade flows. UNCTAD must play an active role in assisting developing countries to advocate for a fair multilateral trading system (Paras 8, 13), Special and Differential Treatment (SDT) for all developing countries (Paras 5 bis, 25, and 40 (bb)), addressing the imbalances in the current trade regime (40 (bb primus)), particularly in agriculture (Para 40 (c)) and cotton (Para 60 (d) bis). It is not ‘new approaches’ (Paras 8 and 14) which are needed but the fulfillment of the development mandate of the Doha Development Agenda (Paras 8, 9, and 25). The phrase “new approaches” will be seen as importing WTO debates about the “Singapore issues” into the UN system, and has no place in the outcome document.
- Trade and investment agreements do not support development without the right policy environment (Paras 12 and 48), which necessitates policy space (Para 14 bis), an effective and developmental state able to sustain its own resource base responsible for safeguarding people’s human rights (Para 71), and a more coherent, inclusive and representative global architecture for sustainable development. Also required is more responsive, inclusive, participatory and representative international decision-making through effective, accountable and inclusive international institutions, with broader and stronger participation by developing countries (Para 88.)
- Common but Differentiated Responsibilities (CBDR) and SDT are long-standing multilaterally-negotiated principles that recognize that developed and developing countries cannot be treated in the same manner because of their differing development and economic circumstances. Thus they have different levels of responsibility with respect to environmental degradation, climate change and sustainable development. Failing to take this into account would be self-defeating, as the aspiration to promote universal advances in development and trade would be undermined.
- The integrated approach of UNCTAD to the evolution and management of globalization and on the interdependence of trade, finance, investment and technology as they affect the growth and development prospects of developing countries is absolutely critical and must be continued and strengthened (Para 40 (b)); just as the linkages between international trade, financial and macroeconomic issues, with particular emphasis on issues related to crisis management is a critical role of UNCTAD (Paras 40 (t) and 40 (aa)). The United Nations would be failing its responsibility to the many countries that need this service if it does not take a more robust role in this regard.
- Likewise, UNCTAD must continue and strengthen its mandate to ensure that the trading system enhances the integration of developing countries including Least Developed Countries (LDCs) first on a regional level, the structural transformation of African economies (Para 61), gender equality and women’s rights (Para 60 (y)) in relation to the structural and global issues in trade and finance; and the promotion of sustainable development, centered in the promotion of a higher self-sufficiency in basic food staples, and by ensuring decent work, and peasant, Indigenous, and worker’s rights. These goals necessitate that UNCTAD undertake a review of proposed and existing trade agreements with a view to promoting sustainable industrialization and equitable transitions to a low-carbon economy, reversing the reductions of labor’s share of income, supporting the implementation of agreements regarding LDCs, and strengthening the negotiating capacity of developing countries in trade negotiations.
-In addition to work on the multilateral trading system, UNCTAD’s trade work must continue and strengthen its mandate to support developing countries in their processes towards forms of regional integration (Para 26) that primarily work for the people most affected by development challenges, as well as helping them assess the increasingly complex (positive or negative) implications of pluri-lateral and mega-regional trade agreements for their own development (Para 40 (n)) as well as advancing their interests within those negotiations.
-Given UNCTAD’s long history encouraging developing countries to sign International Investment Agreements (IIAs) and the negative impacts developing countries have experienced, particularly due to the Investor to State Dispute Settlement (ISDS) mechanisms, UNCTAD’s mandate should be intensely invested in helping developing countries craft investment policies that will contribute to development (Paras 60 (p) and 60 (w)), rather than just ‘balance the interests’ of investors and development (Para 21); as well as to unwind and reform these agreements (Paras 26 and 60 (ii)). UNCTAD’s mandate to support not the attraction of investment as a goal in itself (60 (w)) but rather its contribution to development (Para 55, 60 (w)) must be strengthened. The establishment of an Intergovernmental Expert Group (IGEG) on Trade and Investment Rules and Policy Reform (Para 40 v) would be helpful in this regard. This IGEG should develop a mechanism to engage civil society organizations to develop a framework for IIAs that would establish investors’ legal responsibility and adequate procedures for accountability, including mandatory due diligence assessments across supply chains, as well as developing policy options to increase tax transparency in the operations of multinational enterprises.
- The above work necessitates research and policy analysis including positive and negative impacts of trade rules on development (Para 40 (n)) and on the achievement of the SDGs in the Trade and Development Report (40 (d)) and independently of the WTO, which does not share the developmental mission of UNCTAD (Para 40 (k)).
- UNCTAD should be involved in monitoring the role of the private sector, particularly foreign investors and their impacts (positive or negative) on mobilization of domestic resources and debt sustainability, development (Paras 40 (aa), 54, and 60 (dd)) human rights, and the SDGs (Para 40 (k)). Supporting Public Private Partnerships (PPPs) should also be conditional upon such requirements rather than addressed as ends in themselves (Para 46 and 60 (x)).
- The document must continue and strengthen UNCTAD’s mandate on curbing tax evasion and aggressive tax avoidance including in commodities markets (Para 27) and through investment policies (Para 55 (bis)). More broadly, the issue of changing international tax rules and closing loopholes which facilitate and enable international tax evasion and aggressive avoidance cannot just be ‘dealt with’ by the OECD, which excludes the vast majority of developing countries. It must be at the centre of a multilateral intergovernmental process under the auspices of the United Nations. As part of its contribution to curbing tax dodging internationally, UNCTAD must play a vital role in the development of a normative definition of ‘illicit financial flows’ (Para 40); in developing guidelines and building global consensus towards public country by country reporting; in providing policy support and and capacity building to enhance the involvement of developing countries in addressing Base Erosion and Profit Shifting to safeguard their taxing rights. This would go a long way towards countries being able to sustain their own development needs (Paras 22 and 27) as would the establishment of an IGEG on global tax issues (Para 40 (z)).
- UNCTAD’s work on debt workout mechanisms and responsible lending and borrowing (Paras 15, 20, 32, 33, 40 (e), 40 (e) bis, 40 (f), 53, and 107 (e)) has been uniquely useful and should be strengthened, including by supporting further work on these issues at the UN General Assembly level. UNCTAD should also follow up on its conceptual work, support the implementation of responsible lending and borrowing practices in Member States and monitor progress. Moreover, UNCTAD should develop an alternative and development-oriented methodology on debt sustainability analysis and support national vulture funds legislation in line with the Addis Ababa Action Agenda (AAAA). It is important to restate the shared responsibility of creditors and debtors in achieving debt sustainability.
-Technology transfer is essential to the enabling of sustainable development in developing countries and UNCTAD should continue to take a lead role in supporting these efforts by developing countries (Paras 48, 60 (l), 82 (dd)) rather than in enforcing intellectual property rules that benefit protectionist patent- and copyright- holders in developed countries (Para 60 (q)).
-UNCTAD’s important role in Financing for Development (FfD) should be affirmed and expanded, including through the creation of an IGEG on Financing Development (Para 40 (w)), as well as monitoring the implementation of commitments on ODA (Paras 40 (y), 46, 47, 52, and 107 (r)). ODA is a long-standing but essentially unfulfilled commitment by the developed countries; it is central to North-South cooperation; and it must be differentiated from, and not substituted by South-South cooperation and other sources of international public finance.
-Finally, there is a need to scale up the international financial and human resource support of member governments towards UNCTAD and its overall mandate. As the organization becomes more dependent on project-based funding from developed countries, priorities shift in the direction of donor states rather than the agreed-upon mandate, and this tendency must be curbed by robust renewed general support funding from the member states.
We believe that the further UNCTAD moves toward seeing developing countries mainly as engines to increase trade -- and thus deviating from its mission to support the use of trade for development, the more it risks redundancy and irrelevancy. As civil society organizations deeply committed to human rights and social justice, the achievement of the SDGs and sustainable development for all, we urge you to adopt the above positions and ensure that UNCTAD continues and strengthens its role in trade, finance, investment, macroeconomics, and technology as they affect the growth and development prospects of all developing countries.
International Steering Group towards UNCTAD XIV:
Asia Pacific Movement for Debt and Development - APMDD
Center of Concern
European Network on Debt and Development -EURODAD
Financial Transparency Coalition
Latin American Network on Debt, Development and Rights - LATINDADD
Our World Is Not For Sale Network -OWINFS
Public Services International
Society for International Development
Southern and Eastern Africa Trade Information and Negotiations Initiative- SEATINI (Uganda)
Tax Justice Network Africa -TJN-A
Third World Network-Africa