30 January 2015: As part of preparations for the Third International Conference on Financing for Development (FfD), UN Member States conducted the first of three drafting sessions on the Conference outcome document. The session was devoted to discussing elements of the eventual outcome document, in response to the ‘Elements Paper’ circulated by the co-facilitators, Geir Pedersen of Norway and George Talbot of Guyana. The Co-Facilitators announced that they will prepare a zero draft for circulation by the end of February, before the second drafting session, in April 2015.

UN agencies, development banks, and business and civil society organizations also participated in the session, which took place from 28-30 January 2015, in New York, US. Participants commented on, inter alia, domestic public finance, domestic and international private finance, international public finance, trade, technology, innovation and capacity building, sovereign debt, systemic issues, monitoring, follow-up, and synergies with the post-2015 development agenda.

The Group of 77 and China (G77/China) emphasized public over private funding, urged an equitable multilateral trading system, called for addressing the technology, knowledge and capacity-building gaps between developing and developed countries, and welcomed the upcoming first working session of the Ad Hoc Committee on sovereign debt restructuring.

The EU underscored the need to rebalance the “outdated” donor-recipient relationship, the role of good governance and an enabling environment, and the importance of domestic action.

Several countries, including Ghana, Mexico and Venezuela, called for a focus on Middle-income Countries (MICs), noting challenges in addressing inequalities, and saying that international support should not disappear after countries graduate to higher levels of income. The US opposed any language on concessional loans for MICs.

On international finance, G77/China expressed concerns that private sector finance was being proposed as a substitute for public sector commitments, and pointed to the limitations of the private sector in actively generating social and environmental impact. The African Group urged listing official development assistance (ODA) as a separate category, and called for a binding timetable. China supported the idea of a timetable, and noted the need to democratize the use of ODA. Several countries called for developed countries to fulfill their commitments, while a few countries, such as Serbia and Republic of Korea, said ODA should increase. Indonesia, Rwanda, Venezuela and others urged the inclusion of the principle of common but differentiated responsibilities (CBDR) in the outcome document, with Cabo Verde noting that CBDR should be considered in trade.

The EU called the private sector “the principal creator of long-term jobs and promoter of sustainable development,” while Germany signaled its preference for “partnerships” in place of “aid” to reflect a more nuanced approach to the donor-recipient relationship. The EU and several countries, including France, Germany and the Netherlands, reiterated their commitments to 0.7% of GNI for ODA. Many countries, including Australia, Canada, Denmark and the UK, noted that ODA should be used to leverage private finance, with Switzerland calling this “smart ODA.”

On South-South Cooperation, the African Group, Caribbean Community (CARICOM), China and Brazil underscored that it is not a substitute for North-South cooperation. Several countries, including China, Mexico and South Africa, stressed their opposition to redefining ODA to include South-South cooperation. Japan called for including all official flows that have an impact on development outcomes in the FfD discussions, including South-South cooperation and triangular flows.

On debt restructuring, the African Group called for reinforcing coordination between the UN system and the Bretton Woods Institutions (BWIs), while the EU and US favored separating debt financing discussions under FfD and the BWIs, from the UN debt restructuring discussions.

On trade, several countries called for retaining substantive discussions on trade within the World Trade Organization (WTO). G-77/China expressed concern that regional and inter-regional trade agreements could fragment the international policy environment, and undermine poverty reduction strategies of developing countries. Several developed countries worried that the co-facilitators’ elements paper overemphasizes the negative effects of regional trade agreements, and pointed to their ability to foster development and complement the existing trade regime. These delegations objected to singling out the subsidies that distort trade only in the case of developed countries.

On technology, G77/ China called for a technology facilitation mechanism (TFM). EU urged going beyond technology transfer to include language on the role of intellectual property rights (IPR), research and development, and domestic enabling environments. Japan highlighted the importance of IPR and domestic investment environments, while the US welcomed the inclusion of a new pillar on innovation.

On climate, the African Group and several countries, including Bangladesh, Brazil, Morocco, Serbia and South Africa, said climate finance should be additional to ODA. Peru stressed that financial commitments already made under the UNFCCC are separate from the commitments to be made towards the implementation of the post-2015 development agenda. Emphasizing that the post-2015 development agenda will be “universal in its goals and in its financing,” EU noted the need to include, not separate, climate benefits. Norway called for enhancing synergies between ODA and climate finance through carbon pricing and removal of fossil fuel subsidies.

Many countries, including Albania, Austria, Bulgaria, Cabo Verde, Denmark, Germany, Iceland, Norway, Romania, Rwanda, Tonga, Switzerland, United Arab Emirates and Uruguay, highlighted the need for women’s empowerment and gender-responsive trade and financial systems.

Several countries, including Colombia, Denmark, France, the Netherlands, Papua New Guinea, Peru, Romania and Switzerland, said the “paradigm shift” from the Millennium Development Goals (MDGs) to Sustainable Development Goals (SDGs) should be paired with a shift “from financing for development to financing for sustainable development.”

On building synergies with the post-2015 development agenda, David Donoghue, Permanent Representative of Ireland to the UN and Co-Facilitator of the post-2015 development agenda process, identified areas of overlap between the FfD and the post-2015 negotiations, including: the indicators for SDG 17 (on the Means of Implementation (MOI) and the global partnership for sustainable development); the section on the global partnership; and the section on follow-up and review. Donoghue added that each set of negotiations has a strong interest in ensuring the success of the other track, as they are “in effect, two sides of the same coin.” The common objective, he concluded, he to help all countries to eradicate poverty and promote sustainable development.

Amina Mohammed, the UN Secretary-General’s Special Adviser on Post-2015 Development Planning, said the SDGs “could serve as the center of gravity” for the new development and financing framework, while Wu Hongbo, UN Under-Secretary-General for Economic and Social Affairs, noted that “the financing framework for sustainable development […] should be relevant to the implementation of the SDGs.”

Developed countries expressed their wish for a single monitoring framework and global partnership for both the post-2015 development agenda and FfD, while developing countries noted that FfD’s mandate goes beyond the post 2015 development agenda – the FfD framework should remain valid after 2030 – and thus they should be separate. China said, “We don’t need to have a separate monitoring framework in the Addis document to avoid duplication.”

Many delegations called for a joint session with the negotiations on the post-2015 development agenda.

Closing the first drafting session, Co-Facilitator Pederson noted agreement to: build on the Monterrey Consensus, with the addition of a “plus;” balance the three dimensions of sustainable development; pay special attention to infrastructure; and achieve synergies with the post-2015 development agenda. The areas where he said further clarity is needed include the outcome of the conference, in particular its “deliverables,” and the treatment of SDG 17.

The FfD conference will take place from 13-16 July 2015, in Addis Ababa, Ethiopia. The second drafting session on the outcome document is scheduled for 13-17 April 2015, in New York, US. [IISD RS Meeting Coverage] [IISD RS Sources]