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NGO ISSUE CAUCUS ON MOBILIZING INTERNATIONAL PRIVATE RESOURCES FOR SUSTAINABLE DEVELOPMENT Delivered by Monica Vincent, World Council of Churches-Ecumenical Team The Facilitator’s draft discussion of the issues and challenges of mobilizing international private resources emphasizes the significant, potential benefits of foreign direct investment in promoting sustainable development and suggests ways of promoting its flows and other forms of capital to developing countries. This involves, among others, improving the investment climate in these countries and ensuring a stable international financial system. This section, in line with the guiding principles of social and economic governance urges the business sector to consider “the social and environmental implications of their enterprises and encourages civil society organizations to help ensure adequate attention to these aspects”. The members of this NGO Issue Caucus are among the NGOs that take on this challenge and task. However, the critical priority of achieving sustainable human development is not specifically referred to in the section of FDI. The FDI Issue Caucus finds it of utmost importance that the matter of mobilizing international resources is approached in a holistic manner which takes into account the cross-cutting concerns of the environment, gender equity, social rights, labor rights, minorities rights, and indigenous rights, and the concerns of marginalized sections of societies. To this end we maintain that any and all actions to mobilize and commit international resources must be done within the already existing framework of the UN Conferences and Summits and their Plans for Action and the body of Human Rights Mechanisms. GAPS in the REPORT We find it highly disturbing the Facilitator’s Report advocates more FDI without discussing the quality of capital flows. The draft does not point out the potential dangers of inequality, exploitation and lack of participation that come with FDI. Neither does the draft provide specific recommendations as to how international private flows could be made to serve people-centered development. Moreover, the main emphasis is placed on investors’ rights in host countries without giving adequate consideration of how FDI affects the host country or adequate emphasis to its needs. Investors must be made to realize that social responsibility comes with rights. We also must underline that FDI cannot be seen as a substitute to ODA and mobilization of domestic financial resources. FDI is concentrated in a smaller number of developing countries (only 12 developing countries received over 70% of FDI in 1997/98). FDI targets profit and interest accumulation and often undermines domestic markets and thereby livelihoods of large sectors of populations in developing countries. Neither is the transfer of technology and knowledge to host countries ensured. RECOMMENDATIONS: We strongly recommend that corporate sectors comply with the principles of transparency, information access, and accountability. Foreign investors must comply with the principles of corporate social and environmental responsibility including those established by the ILO Tripartite Declaration of Principles concerning multinational enterprises and social policy, the recently updated OECD Guidelines on Multinational Enterprises which incorporate the observance of core labor standards and benchmarks initiated by Civil Society to assist in monitoring FDI and other capital flows. This compliance should be formulated and formalized in codes of conduct or framework agreements at state and international levels. These should promote gender-balanced socially and environmentally responsible investments based on Sustainability Impact Assessments that integrate the cross-cutting concerns of gender, social, environmental, and core labor standard analyses in designing activities and cooperation. They should also foster good corporate citizenship and responsibility. This should include rules concerning re-investment of a fair share of profits and capital accumulation in the host country’s formal and informal economies. Civil Society Organizations must be involved in the decision-making and monitoring processes on FDI on the international and national levels. Governments should establish public participation forums, monitoring mechanisms, and instruments that can help assess the quality of engagement of foreign capital in support of gender equality, women’s empowerment goals, and other cross-cutting concerns of a country’s sustainable development plan. A gender desk in the finance ministry could be an element of this. Governments should undertake measures in source and destination countries to mitigate excessive market volatility, develop gender-aware regulatory frameworks, and establish mechanisms to provide social protections to those who are displaced and adversely affected by capital flows - particularly women and children in poor households. Existing multilateral instruments, such as the ILO Tripartite Declaration of Principles on Multinational Enterprises, should form the basis of gender-sensitive guiding rules and policies in employment practices of foreign investors. We believe that these comments will serve to bring the guiding principles mentioned in the facilitator’s report to the fore in the discussion about mobilizing international private resources. They are also intended to restore some balance to this section of the report, which was far more about finance than about development. |
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