UN Member States discussed how international trade, the international financial system, external debt sustainability, and commodities can contribute to development, in its discussion of macroeconomic policy questions.
It also addressed the follow-up to and implementation of the outcomes of the International Conferences on Financing for Development.
28 October 2015: UN Member States addressed how international trade, the international financial system, external debt sustainability and commodities can contribute to development during a discussion of macroeconomic policy questions. Delegates also addressed the follow-up to and implementation of the outcomes of the International Conferences on Financing for Development.
The UN General Assembly’s (UNGA) Second Committee (Economic and Financial) considered its agenda items 18 and 19 from 26-28 October 2015, at UN Headquarters in New York, US.
On trade, South Africa, for the Group of 77 and China (G-77/ China), supported by Jamaica for the Caribbean Community (CARICOM) and Ecuador for the Community of Latin American and Caribbean States (CELAC), called for: implementing the principle of special and differential treatment of developing countries, as outlined both in the Addis Ababa Action Agenda (AAAA) and the 2030 Agenda for Sustainable Development; eliminating trade barriers and trade-distorting export subsidies, such as in agriculture; addressing World Trade Organization (WTO) reform; urgently concluding the Doha Round to achieve concrete outcomes in agriculture, increasing market access and Aid for Trade; and ensuring that trade rules do not subvert developing countries’ development financing prospects. He called to: respect developing countries’ policy space; increase their participation in formulating their own development strategies, and integrate developing countries’ micro, small and medium enterprises (MSMEs) into global value chains.
Zambia, for the Landlocked Developing Countries (LLDCs), urged development partners to provide increased support, including: market access; capacity building; Aid for Trade assistance; technical assistance; and improvement of trade- and transit-related logistics to enable LLDCs to fully participate in multilateral trade. CARICOM and CELAC called for devising methodologies that account for the complex and diverse realities of Middle Income Countries (MICs). Several countries, including Cuba, Iran, the Russian Federation and Sudan, called for eliminating unilateral trade measures.
Whereas the G-77/ China, CELAC, CARICOM, Malaysia for the Association of Southeast Asian Nations (ASEAN), and the LLDCs focused on growth, development and the economic pillar, the EU, supported by Canada, Australia, and New Zealand (CANZ), Papua New Guinea for the Pacific Small Islands Developing States (PSIDS), and Maldives for the Alliance of Small Island States (AOSIS), placed special emphasis on development that is sustainable and integrates the environmental, economic and social pillars, underscoring the need to address climate change for achieving sustainable development.
On trade, the EU called for including sustainable development provisions in trade agreements and for making trade an effective tool to promote sustainable development worldwide.
The EU said international public finance, including official development assistance (ODA), will continue to play a role, in particular in countries most in need. PSIDS and AOSIS stressed the need to follow up on financing for development commitments and ensure that adequate linkages are made between the AAAA and SAMOA Pathway, with AOSIS “applauding” the separate follow-up and review mechanism for financing for development established under the AAAA. ASEAN, AOSIS, CELAC and Bangladesh for the Least Developed Countries (LDCs) said ODA remains the main source of international financing for development for many developing countries, and called on developed countries to fulfill their ODA commitments.
Supported by CANZ, the US, Japan and the Republic of Korea, the EU highlighted the importance of: domestic resource mobilization; the private sector as a key driver for growth and job creation; and establishing a conducive domestic business environment. The EU also stressed the need for good governance, democracy, the rule of law, fighting corruption and illicit financial flows, and accountable and inclusive institutions.
Supported by PSIDS and many developed countries including Japan, the EU underscored science, technology and innovation (STI) as drivers of sustainable and inclusive growth. The EU, PSIDS, AOSIS, Japan and Brazil specifically welcomed the creation of the TFM.
The EU, CANZ, PSIDS, and AOSIS highlighted the need to address climate change for achieving sustainable development, with the EU calling for: phasing out fossil fuel subsidies; moving forward on carbon pricing; and creating the right incentives for low-carbon development.
PSIDS and many developing countries, including India and Pakistan, said climate finance should not be double-counted as ODA, but needs to be separate from and additional to ODA. India called for ensuring that lack of climate finance “is not obfuscated by convenient accounting and inventive methodologies.” PSIDS called for developed countries to meet the goal of mobilizing US$100 billion by 2020 to meet the needs of developing countries in adapting to and mitigating the effects of climate change.
On debt, G-77/China, supported by CELAC, called for debt relief, including debt cancellation and debt restructuring for achieving sustainable development. Supported by Brazil, he welcomed the work of the UN’s Ad Hoc Committee on Sovereign Debt Restructuring Mechanism, and the adoption of UNGA Resolution 69/ 319 on the Basic Principles on Sovereign Debt Restructuring Processes. He underlined the voluntary implementation of the nine Basic Principles “in accordance with national policies and circumstances.” ASEAN and the LDCs called for debt relief for LDCs, with Bangladesh underscoring the need for concessional funding for LDCs, including grants.
Noting its participation in 350 debt treatments for states in distress through the Paris Club, while working collectively with other creditor nations, the US invited Member States to find a way to discuss these issues “without getting bogged down in well-documented disagreements about sovereign debt restructuring.”
On the international financial system, G-77/China, supported by CELAC, the LDCs, Brazil and India, stressed the need to strengthen the international financial architecture and ensure fair and equitable representation of developing countries in leadership positions, decision-making and norm-setting at international financial institutions. ASEAN called for strengthening multilateral economic surveillance, particularly in the international banking and financial sectors, and promoting fiscal soundness for sustainable economic development.
Brazil stressed that the AAAA “fell short of expectations” with regard to an agreement on upgrading the Tax Committee to an intergovernmental body, which India called “a missed historical opportunity.”
Several reports have also been presented to the Second Committee. Alfredo Suescum, UN Conference on Trade and Development (UNCTAD), introduced the Report of UNCTAD’s Trade and Development Board (A/70/15), which finds that trade policy will not empower women by itself, and complementary policies are needed: social policies; gendered rural development policies; and education policies. The report also stresses the need for: tighter financial regulation; major investments in transport, logistics and energy infrastructure; intensifying intra-African trade; making trade policies more inclusive; actively addressing the Sustainable Development Goals (SDGs) by promoting poverty reduction, food security, and safeguarding the natural environment; integrating developing countries, in particular the least developed countries (LDCs), into global and regional value chains; improving access to land, fertilizers and finance to support the sustainability and profitability of smallholdings; and reforming the international investment agreement regime.
Guillermo Valles, UNCTAD, introduced the Report on International Trade and Development (A/70/277). He called for a coherent policy mix including trade, development, employment, health, energy, water, education, gender, transport, finance, technology, the environment and migration. He stressed the need to: mitigate the risks of trade adjustment mechanisms, especially for the poor; make global trade governance consistent with the SDGs; and revitalize the multilateral trading system for improved credibility and relevance. The stressed the need for coherence between multilateralism and regional trade agreements and policy space, including through special and differential treatment, so that trade can contribute to broad-based development and reduce inequalities among and within economies.
Alexander Trepelkov, Financing for Development Office, UN Department of Economic and Social Affairs (DESA) introduced the UN Secretary-General”s report, ‘Outcome of the Third International Conference on Financing for Development (FfD3)’ (A/70/320) (FfD3). He highlighted the concrete deliverables contained in the Addis Ababa Action Agenda (AAAA): a compact to provide basic social services for all; a global infrastructure forum to bridge the infrastructure gap; an LDC package to support the poorest countries; a Technology Facilitation Mechanism (TFM); strengthening the UN Committee of Experts on International Cooperation in Tax Matters; and mainstreaming women’s empowerment into financing for development. These actions are complemented, he noted, by more than 65 initiatives launched during the FfD3’s 182 side events The initiatives address domestic resource mobilization, infrastructure and financing for small and medium-sized enterprises (SMEs), social needs, environmental concerns and data.
Trepelkov also introduced the report of the Secretary-General on the ‘International financial system and development’ (A/70/311). The report emphasizes that global economic governance structures must continue to evolve, in order to broaden and strengthen the participation of developing countries and countries with economies in transition, in international economic decision-making and norm-setting. Trepelkov added that the implementation of the 2010 International Monetary Fund (IMF) quota and governance reforms would represent an important step forward and clear the way for a new agreement on the redistribution of voting power, in accordance with the current realities.
On external debt sustainability, Dusan Zivkovic, UNCTAD, said developing countries’ external debt is considerably more vulnerable today to economic policy changes in advanced economies, than a few years ago. He said innovative financing mechanisms such as GDP-indexed and catastrophe bonds may help mitigate this growing vulnerability. Zivkovic further stressed the need for international support to ensure the effective management of day-to-day public liabilities, through financial and technical assistance and institutional capacity-building for public debt management, so developing countries can manage and assess the market-based risks to debt sustainability.
The Second Committee is convening until late November 2015. [IISD RS Sources] [Meeting Details and Webcast, 26 October] [Meeting Summary, 27 October] [Second Committee Documents] [IISD RS Story on UNGA Adoption of Sovereign Debt Restructuring Principles] [UNCTAD Press Release]