UN LDC Conference Endorses 10-Year Plan, But Criticised for Lack of Accountability Mechanisms

18 May 2011

After several months of negotiations and five days of talks in Istanbul last week, the UN conference on Least Developed Countries (LDCs) adopted a plan of action on 13 May aimed at helping the world's poorest countries combat poverty during the upcoming decade.

The discussions had promised a "paradigm shift" from the traditional development approach, but many expressed disappointment with the final ‘plan of action', since it lacks binding implementation and monitoring mechanisms.  The Finnish official who chaired the ‘Committee of the Whole', the body in charge of the negotiating process, described the deliberations as "difficult and strenuous."

The plan's main goal is to halve the number of LDCs by 2020, through a combination of strong economic growth, greater gender equality, decreased vulnerability to economic shocks and natural disasters, and better governance. Since the 1970s, the United Nations has identified LDCs as states which, for reasons of very low income, poor human development, and high economic vulnerability, face more structural handicaps than other countries in rising out of poverty. But the increased focus on LDCs' challenges has not been matched by solutions. In the three decades since the first UNLDC conference in 1981, the number of LDCs has almost doubled from 25 to 48. Only three countries have graduated from LDC status: Botswana, Cap Verde and the Maldives.  Despite substantial progress in recent years as compared to the 1990s, with more growth and exports, and fewer macroeconomic imbalances, LDCs remain home to more than 800 million people, and represent the poorest and weakest segment of the international community. The Istanbul Plan of Action sets out specific objectives: 7 percent annual growth, driven by strengthened productive and human capacities, reduced vulnerability, increased financial aid, and better governance.

Cheikh Sidi Diarra, the UN High Representative for the LDCs, says that the picture for LDC graduation is looking better. He foresees Samoa, Tuvalu, Vanuatu passing the threshold in the coming years, along with Equatorial Guinea, Angola and East Timor, Nepal and Bangladesh.

Participants agreed that the development strategy adopted at the last UNLDC conference, in Brussels in 2001, had not been fully achieved. Known as the the Brussels Plan of Action (BPoA), that strategy focused mainly on social, human and environmental issues. In contrast,  the Istanbul Plan of Action (IPoA) emphasises the strengthening of productive capacities in agriculture, manufacturing and services to allow LDCs to integrate effectively into global trade markets. "It is the best way to achieve sustained growth in LDCs" said Cheick Sidi Diarra, referring productive capacities.

The Istanbul plan calls on LDCs to assume the responsibility for their own development, and stresses the role of the state in stimulating the private sector for the purposes of "[...] generating employment and investment and enabling high, sustained and inclusive economic growth [...]."  At the opening ceremony of the Istanbul summit, UN Secretary-General Ban Ki-moon called the "enthusiastic engagement" of the business community "one of the most significant aspects of this conference." Some civil society groups, however, disapproved of the summit's focus on the private sector, viewing it as a pretext for developed countries to shirk their responsibilities on providing additional aid.
With regards to agriculture, the text calls for fulfilling the pledge made by governments during the WTO's Doha Round negotiations to ensure the elimination of all forms of agricultural export subsidies, which are especially trade-distorting.  To that end, Stephen O'Brien, the UK minister of international development, called for a successful conclusion to the Doha Round, stressing that the conference must send a strong signal that the opportunity to reach an accord in the long-struggling talks could not be missed.  He also urged all members of the Group of 20 leading developed and developing economies to extend duty-free, quota-free (DFQF)  market access to all LDC exports, without any exceptions.

Trade proved to be the most controversial issue of the negotiations. The final plan of action calls only for a "timely implementation of duty and quota free market access, on a lasting basis for all LDCs" in line with the Hong Kong Ministerial Declaration, and "the abolition or reduction of arbitrary or unjustified trade barriers."

The EU, along with Canada, Australia and New Zealand (collectively dubbed CANZ) expressed support for giving LDCs unrestricted market access (as they already do for most products), and urged all countries to do so. Prior to the conference, there had been hopes that the US and Japan, both of which still maintain significant trade barriers on exports from many LDCs, would announce new concessions under their respective Generalised System of Preference (GSP) schemes for LDCs. But no such promises were made by the two industrialised countries during the talks in Istanbul.  In general, developing countries did not make any concrete proposals to advance the WTO Hong Kong decision of 2005 on on market access for LDC exports, which mandated all developed countries, and "developing-country members declaring themselves in a position to do so" to grant DFQF access to LDC products covering at least 97 percent of all tariff lines. LDCs argue that the 3 percent exception is enough to cover the limited handful of tariff lines in which they are internationally competitive, rendering  the 97% DFQF scheme useless.
The plan of action's section dealing with preferential treatment for LDC services exports - provisions that had been eagerly awaited by LDCs, particularly with regard to ‘Mode 4', which covers temporary cross-border movement by workers -- was struck from the draft for want of consensus: the EU, Canada, Australia, New Zealand, and the US refused. One source close to the negotiations said the issue had been controversial throughout the negotiations, since tradable services are important to LDCs, in particular to small island LDCs that have a limited capacity for merchandise production.

The final text, like earlier drafts, did not reflect the request made by LDCs for increased and predictable Aid for Trade funding, despite the potential for such assistance to increase exports and diversification.

Another source of dissatisfaction for the LDC group are the unchanged provisions on rules of origin, despite their push to obtain preferential, simplified rules of origin that would have enabled their products to qualify more easily for access to key markets.
On technology transfer to LDCs - which is mandatory under Article 66.2 of the WTO Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPS) - the US refused any form of binding commitment. The text therefore remains vague, only calling for development partners to provide enterprises with incentives to encourage technology transfer.

The low level of LDCs' exports as a percentage of international trade - a mere 1 percent of world trade -- and their relatively undiversified export baskets were echoed by many speakers during the conference.  "Aid can alleviate poverty but only trade can allow LDCs leave poverty behind" said Peter Lilley, a UK member of parliament, during one of the high level debate organized during the conference.

In terms of climate change, there was no new progress in Istanbul on mobilising finances for climate change adaptation. Nor did the plan of action feature any mention of commitments from developed countries to undertake greenhouse gas emissions cuts.  LDCs are asked to "mainstream and implement national adaption programmes of action [...] and national mitigation actions, and integrate these into national plans."
Turning to development assistance, the plan articulates different modalities according to donors' existing aid levels: donor countries providing more than 0.20 percent of their GNP as Official Development Assistance (ODA) to LDCs will "continue to do so"; and donors which have met an earlier 0.15 percent target will "undertake to reach 0.20 per cent expeditiously." All other donor countries that have committed themselves to the 0.15 percent target undertook to try to achieve the target by 2015. Developed countries highlighted the need for better governance and accountability for the use of the funds allocated to LDCs, resulting in a section requiring LDCs to enhance "aid transparency and combat corruption."

An additional respect in which the Istanbul Plan of Action differed substantially from the Brussels plan of ten years before was its emphasis on the importance of South-South cooperation. The text specifies that "South-South cooperation is not a substitute to North-South cooperation", but that support from developing countries to LDCs should play a "complementary role in the implementation of the plan". About $9.6 billion in ODA was granted through South-South cooperation in 2008, according to the Paris-based Organisation for Economic Co-operation and Development.

According to Debapriya Bhattacharya, Bangladesh's former ambassador to the WTO and a distinguished fellow at the Centre for Policy Dialogue in Dhaka, the Istanbul strategy replicated one of the chief failings of the Brussels plan by failing to include improved mechanisms for implementation and monitoring. "What is lacking is some serious political will to support the targets set in the Istanbul Plan," he said.

Representatives of several civil society organisations expressed frustration during the closing ceremony, stating that the plan of action has been "undermined by the developed countries systematically having removed any targets, timetables and delivery mechanisms that may have been used to hold them to account."

UNLDC IV brought together more than 7000 participants including government delegates, UN officials and representatives from other international organisations and NGOs. A comprehensive mid-term review is scheduled for 2015 in Istanbul.

ICTSD reporting.

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