UN talks on new development financing text advance
UN members meeting amid a snowstorm in New York last week began to make progress on a text geared towards assessing and strengthening development financing. The gathering was the first in a series of sessions building up to a high-level July conference in Addis Ababa, Ethiopia, where the document is set to be agreed.
Delegates decided last week that the outcome document of this Third International Conference on Financing for Development (FfD3) should build on the 2002 “Monterrey Consensus,” with some additions to ensure coordination with another ongoing UN process on elaborating a post-2015 development agenda.
Despite these advances, reports indicate that some key areas will still need to be hammered out in the two remaining drafting sessions before the July FfD3 meet, such as how the outcome document will interact with the post-2015 process, including the planned sustainable development goals (SDGs), and the role of private finance.
Negotiations for a post-2015 outcome document began last month, with that text due for adoption at a high-level summit in September. The SDGs would replace the Millennium Development Goals (MDGs) when they expire later this year and a draft list of these goals was put forward by a UN group last July. (See Bridges Weekly, 29 January 2015)
Development and trade finance
After years of multilateral discussions on financing for development, the first FfD3 conference in Monterrey, Mexico in March 2002 resulted in an outcome document consisting of six general issues on development financing.
These included mobilising domestic financial resources; mobilising international resources for development; trade; international financial cooperation for development; debt; and systemic issues such as enhanced coherence in the international monetary system vis-à-vis development outcomes.
The Monterrey Consensus set out various trade policy priorities, such as the importance of the multilateral trading system; reducing agricultural trade distortions; facilitating WTO accession; improving market access; enhancing the role of regional trade agreements; and the need to build productive capacity in low-income countries.
A second FfD conference was held in 2008 in Doha, Qatar in the aftermath of the global economic slump. That outcome document updated several trade priorities, underlining the need to conclude the WTO’s Doha Round and to implement the Aid for Trade initiative. The document also called on developing countries in a position to do so to provide duty-free, quota-free (DFQF) market access for least developed country (LDC) exports.
Trade for sustainable development?
Discussions last week were guided by a non-paper on possible elements to include in the final outcome document prepared by the FfD3 Co-Facilitators, Ambassador George Talbot of Guyana and Ambassador Geir Pedersen of Norway.
The elements outline seven potential building blocks for future development finance and monitoring – including on the role of trade – that might be included in the final text. A series of policy ideas were also presented in each block. These built on previous FfD3 outcomes along with the various finance aims in the proposed SDGs.
Trade finance elements largely feature in the proposed SDGs as means of implementation (MoI) for achieving the overall framework, as well as specific targets within certain goals.
Reflecting on trade elements in the Co-Facilitators’ paper, some delegates called for leaving substantive discussions on trade to the WTO, where members are working to meet a July deadline for inking a work programme to conclude the Doha Round.
Divisions appeared on the framing of regional trade agreements (RTAs) in the Co-Facilitators’ elements paper, which says that a proliferation of such deals may not always take into account social impacts, financial stability, and environmental sustainability.
Some UN members said that this wording might overemphasise the negative effects of RTAs, suggesting instead that these agreements could foster development and complement existing trade regimes.
Some trade watchers say that the FfD process may enable a broader discussion about the new realities of the global trading system, in contrast to the proposed SDGs, which mostly refer back to the existing multilateral system under the WTO.
Other ideas in the Co-Facilitators’ paper would expand on the proposed SDG targets. For example, the section on possible trade finance policy options calls for DFQF treatment for LDC products in all high and upper-middle-income country markets. Proposed SDG 17 refers to WTO decisions in this area, which encourage developed countries, and developing countries in a position to do so to improve DFQF treatment of LDC exports.
Some suggestions appear aimed at filling gaps in the proposed SDGs. The paper’s reference to trade-facilitating infrastructure brings trade facilitation back into the discussion, which has lately been absent from the SDG preparatory process.
The FfD elements paper also included ideas that point to a nuanced discussion about how trade can be harnessed as an engine not just for development – as the Monterrey and Doha outcomes termed it – but for meeting sustainable development objectives, such as by addressing trade liberalisation’s social and environmental impacts.
For example, one other trade policy option put forward would be strengthening public interest exemptions for health and climate-related technologies under the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs).
The July Addis Ababa conference will be the first in a series of major international meets scheduled for the coming year aiming to craft a new vision for sustainable development.
Along with last week’s talks on the relevant links to the planned post-2015 development agenda, delegates also asked questions around the relationship between FfD3 and the UN climate talks scheduled for Paris, France in December for a new global climate agreement.
The Co-Facilitators aim to prepare a zero draft for the Addis Ababa outcome document by the end of February. The next drafting session will be held from 13-17 April.
ICTSD reporting; “Summary of the First Drafting Session of the Outcome Document of the Third International Conference on Financing for Development, 28-30 January 2015,” IISD REPORTING SERVICES, 2 February 2015.