| 15th January | |
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Morning Session Afternoon Session |
Financing for Development PrepCom Tuesday, 15th of January, 2002 Morning Session 10:30 – 1:15pm Co-Chair Shamshad: Called together the morning session, which was going to contain a discussion of chapter one of the FfD draft, paragraphs 7 – 17. It had been decided earlier that general statements were not going to be made, and only specific changes to each paragraph in order would be presented. He announced the OECD Executive Secretary General. The Intervention by the OECD Exec. Secretary General: The OECD enforces the efforts for Development. Develepment needs global solutions – the world will be looking toward Monterrey to meet all of the Millennium objective goals. The key proposals in the stress the importance of: a) domestic policies and domestic resources, b) strong government at national and international levels, c) interlinkages and coherence, d) effective partnership and accountability. The OECD can contribute in three important ways to FfD: 1) DAC 2) OECD global and regional forums 3) new efforts to strengthen development work – in the areas of trade, agriculture, sustainable development, and economic issues. In conferences arranged by OECD on these topics, the countries will discuss their needs and solutions – OECD will not dictate. Co-Chair Shamshad: Thanked OECD rep, and reiterated paragraph-by-paragraph approach to be used for the rest of the session. He commented that developing countries recognize the need to improve their governments and their social sector investments, revise their economies … etc. Developed countries at the same time realize they must ensure macroeconomic stability, avoid economic problems, and assist the developing world reach a higher economic level and standard of living. Both groups know that they have work to do. Started the work on Paragraph 7, with the G-77 representative. G-77: Mobilizing
enough domestic savings is important, but the way the section is drafted
leaves some questions. A clearer message to the governments
involved is needed. “… a critical challenge is to ensure the
necessary internal conditions for mobilizing enough domestic
savings to sustain adequate levels of investment in productive and
human capacity.” What is “enough?” The capacity for saving
of some countries is marginal. As an amendment, G-77 offers:
“…for mobilizing Spain (for the EU): There is a close relationship between Paragraphs 7 and 8, poverty eradicatoin and good governance. So, this statement will be on both 7 and 8. Stable and favorable environment is crucial to the mobilization of resources. Developing countries themselves must put in practice sound economic practices. The sentence “Good governance is essential for sustainable development.” (P8) Is approved by the EU. However, there is no explicit reference to democracy as a condition – there should be a reference to the key role of democratic systems in development. Also, there needs to be a recognition of the role of conflict prevention and peace building in development. Japan: Mobilizing domestic resources is one of the most important parts. Sustainaing stable resources for development is part of that. Capacity building is especial important, and human resources development is the most important ingredient for capacity building. As part of human resources, technological know-how, brought about by a good education is paramount. The importance of education must be noted in the mobilization of domestic resources section. A further note on paragraph 17 will be made later. Belarus:
Paragraph 7 very important. Part of the paragraph should be
strengthened, so as to maintain adequate levels of investment:
“… to sustain adequate levels of investment in Honduras: Supports G-77 and China. Social equity is very important, and aspect of this meeting link with Agenda 21 that the secretary general implemented yesterday. Poverty eradication, social equity and productive investment are important in our common pursuit of growth. Domestic and international support is needed for the reaction of a good financial environment. United States:
P. 7. 1) No reference to the private sector is made, and most
domestic resources are mobilized through the private sector.
There should be an enabling environment that encourages the private
sector. 2) In the last sentence of paragraph 7, “ … and attracting
and making Russian Federation: This chapter should serve on the fundamental chapter in this document – it has to do with national policy. P 7: Agrees with the US and Belarus, particularly on the role of the private sector. But, if all suggestions are incorporated into the paragraph, it will be quite lengthy. The most important changes should be focused on. Australia: This document recognizes the importance of the roles that developed and developing countries both play – a good balance. One suggestion – the efficient use of resources is very important. In the second sentence “A crucial task is to achieve effective use of the available resources, and enhance the appropriateness, coherence, and consistency of macroeconomic and structural policies.” Canada: Will provide in writing short, textual changes proposed. Paragraph 7 is the most important paragraph, particularly in linking the importance of mobilizing domestic resources to the achievement of the shared millennium objective goals. Bangladesh: Agree with G-77 on the issue of international support. One of the major sources of domestic resources is taxes on international trade. An enabling international environment is essential for harnessing domestic resources. Move on to paragraph 8: G-77: Improving
Domestic governance is an important issue. Good governance is
a central element, therefor, it needs to be built on. “good
governance” must be defined. Also, national policies shuld be
identified. Stability and the fight against corruption are important,
at the same time, the recognition of interdependence should be included:
a) “ Spain for the EU: A copy of the statement will be distributed. United States:
Suggestions: 1) " … and solid institutions are the
basis for Co-Chair Shamshad: Moving on to paragraph 9, the G-77 will offer a specific comment on paragraph 9, and then as it appears that others are offering opinions that pertain to the rest of the section, the discussion will be opened to other areas. G-77: It is good that paragraph 9
includes empowering women, protecting labor rights and the environment
… that should be kept in the text, and even enriched. 1) “We
will consolidate appropriate policy and regulatory frameworks at
our respective national levels to encourage public and
private Mexico: Delete the reference to market-oriented policies in that paragraph. In the 2nd line, Refer to local initiative and decentralized decision making. At the end of the paragraph, not only specific cirucmstances: the needs, constraints and potentials leading to differentiated … US:
“We will Russia: The last sentence should remain in place. The EU: disagrees with the G-77. “Good governance” has been defined at the international level, and does not need to be changed. EU would like the paragraph to read: “Consolidating appropriate policy and regulatory frameworks to encourage …” Saudi Arabia: Supports the G-77 statement. The last sentence is important, and should be kept. Also supports the G-77 change. Moved to paragraph 10: G-77: Paragraph on developing countries and corruption. Corruption is a big and complex problem, and has been effecting developed countries as well. However, there is a section devoted to systemic matters. The ideas in paragraph 10 should be transferred to that section. Co-Chair Shamshad: Agrees, doesn’t fit in current location. Spain, delegate for the EU: At the beginning of facilitators document corruption is addressed. For the EU, it is a priority issue in development and foreign investment in these countries. The language in the docutmen shouldbe reinforced especially concerning corruption. Managing corruption could result in: - better functioning markets, - attracting foreign investors better access to resources for the poor. In agreement with the WTO on transparency. Canada: Language: In consideration of the UNs stand on corruption. Many states have made progress in generating and mobilizing domestic savings. Un, IMF, WB, WTO should organize a south-south meeting for countries to exchange views and plans for mobilizing domestic resources – the results could be published and shared with donor institutions. A sentence should be added to that effect – a paper will be provided with the recommended amendments. Co-chair Shamshad: In the interest of time, if countries disagree with their member groups, then they should speak. If they agree, then they should refrain. Honduras: Transparency and fighting corruption is a priority for sustainable development. Have to start with transparency first. The Inter-American Convention against Corruption and other instruments could be used to implement the UN discussion on that topic. Honduras supports G-77: at the end of the paragraph on systematic issues, and proposes the use of the inter-american convention as a model for methods to fight corruption. US:
The paragraph in a broader context: - encouraging responsibility
for rule of law. “… including stronger cooperation to eliminate
money laundering, Norway: Financial conflicts should be included. No strong feelings, but no reference is made elsewhere. Fiji: Agrees with G-77 on corruption. Specific reference is made to include illegal, but not necessarily corrupt activities. Russia: We will give our proposal in relation to the entire document. Fighting corruption is a priority, and we support the proposal to negotiate the UN convention on corruption. Also, think this should remain in this section. Co-chair Shamshad: Repatriate = to countries of origin. Sudan: In my opinion, now is the best time to negotiate a convention, if all agree for the need to negotiate that convention. Any additions or linkages would amount to pre-judging the outcome of that convention. Look for legal advice. Also, different recommendations aren’t ususally included in one section – should see if can fit other suggestions elsewhere. Business Sector spokesperson: The business sector would like to be a constructive part of the process – will try to develop specific mechanisms. Canada – suggested mechanism to share South-South learning experiences. Important to enhance information and analytics – it is a precondition for “getting it right.” Bus. Sector supports cost-effective plans, accountability, enforcing the 2 round-table themes, and the coordination between public and private sectors. Co-chair Shamshad interrupted Business-sector spokesperson. NGO caucus on mobilization
of domestic resources: Convention against
corruption = legally binding. Paragraph 7: mob.
Domestic resources is not enough by itself to alleviate poverty and
sustain growth. It can be improved, bu tonly with more flexible
aid and investment. Paragraph 8: Good governance is essential.
The last sentence: “ Freedom, peace and security, respect for
human rights … are also On to Paragraph 11: G-77:
1st sentence: “We recognize the need to pursue
Peru: On paragraph 10: Corruption: Paragraph is very substantial. The facilitators proposal does respond to our expectations. Agree with G-77 on their concern about re-patriation of funds. It should go to the country of origin. Supports the proposals in this paragraph, but should also conatin general punitive measures. US:
“…policies geared to high sustainable EU: Include reference to favor the poor, and agrees with the US. Turkey: Macroeconomic policies: today’s international market – each government has responsibility to its own governance and others. Last sentence should include a reference to structurally enhanced design of exchange rate regimes, and early warming systems acknowledged. Recommended changes will be supplied to the secretary in writing. On to Paragraph 12: G-77:
Fiscal sustainability: 2nd sentence:
“We recognize the Spain: Paragraph 12: supports the references in the document to the need to have adequate fiscal frameworks. Need to make specific reference to the need for administrative and judicial means to comabt tax evasion. And a reference to international tax cooperation in the paragraph – alongside the points made by the G-77. NGO Caucus, ICFTU representative: Paragraph 12: Put a paragraph between 11 and 12 international system must provide enabling environment so that individual countries can succeed. Maximize both earnings and savings of workers in addition. 11bis – “we recognize the importance of active labor market policies …” To focus on issues illustrating – a focus on decnt work – skills training – fundamental rights at work, etc. There is a lakc of mechanisms for enforcing workers rights. US: P. 12 – 1st sentence. “An effective, efficient, and transparent accountable system for mobilizing public resources …” AND “… the need to secure fiscal sustainability through medium-term and prudent management fiscal frameworks, based upon equitable and efficient tax systems…” G-77: It is the only paragraph supporting fiscal sustainabiltiy – why move it to the end? Co-chair moves discusion on to paragraph 13: G-77:
Paragraph 13: social security and safety nets.
National and international cooperation is needed. 1st
sentence: “National Investments supported by international
corporations in developing Spain for the EU: Agree with G-77 on importance of the paragraph. The EU believes in the importance of implementing policy on sustainable use of natural resources – it should be mentioned. Mexico: Paragraphs 13 and 14 should be inverted, so that 14 becomes 13 and 13 becomes 14. The strengthening of the financial sector is important. US: The paragraph is about how to spend, not make money – should be careful about heading in that direction. Already have a section on that, and don’t want to repeat it. G-77 proposal on international coopeartion and support: The US thinks it is important to keep domestic action separate from international support. If it is put in this section, we have to go back and put domestic in all of the international parts as well … we will lose the focus of the document. ILO:
Need to clarify the 3 concepts: 1) social security, 2)
social protection, 3) Basci social infrastructure. Title of
paragraph: “Social security and safety Representative of the Business Sector: investing in basic economic infrastructure – especially health. Investments in health will: encourage public/private partnerships, environment will encourage private sector to do business, and the representative urges the assembly to endorse the report on macroeconomics and health. NGO Caucus: On paragraphs 12 and 13: Reducing taxes on labor and productivity. Little attention has been paid to wider access to housing, and security of tenure. Moving on to Paragraph 14: Venezuela for G-77:
1st sentence: “ We recognize the need to strengthen
the domestic financial sector, EU: Agrees with the rep. For G-77. Ps 14 and 15 are related, and should be merged. P 16 is also linked to strengthening the financial sector, so all 3 should be merged. Australia: Make comment on 13: difficulties in linking national efforts and international support – agree with the US that it should be left as drafted. US:
Merging the 3 paragraphs is fine. P 15: the concept of
finance is not clear. “… a strong central bank and a G-77: P 16 has important points, and should be separate. Break-down of different issues in P 16: Maximize contribution of finance to: 1) promote the creation of micro-finance access to credit including in rural areas especially to women and small to medium enterprises. 2) promote savings institutions, such as postal savings. 3) Support development banks: they can be good to ensure finance to small-medium sized businesses. 4) Develop pensioning schemes that maximize their dual roles. Belarus: Agree with EU on merging 14 and 15. 16 should remain separate. It has an important part relating to migrant workers. Would like to reinforce that the transfer costs of migrant worker’s remittances should be reduced. Honduras: On P 14, 15, and 16. The government shoud establish an enabling environment for private financial markets. To promote equity in the market, investors request full information. Also, should use good corporate governance (including protection of shareholder rights), and the role of the stockholdre in corporate government. Remittance is very important. Multi-lateral investment fund, very active on remittances – which is very important to central american coutnreis. So, agree with G-77 on this. Should use the remittances for productive investment. Mexico: P 16: 1st and 2nd lines: add a reference to micro-enterprises – which have a different structure from small and medium enterprises. 2nd line – saving institution … there are other savings institutions that are not mentions – a general reference is preferred. Postal savings’ success dpeneds on each country. Rep. Of Korea: P 14 and 15 can be merged. P 16 – transfer costst of migrant workers remittances: can be a discouraging measure against domestic workers. Switzerland:
In favor of merging Ps 14, 15 and 16. P 15: voluntary
implementation: linked to analysis of individual countries.
A) micro-finance, include micro (agree with Mexico). B) “Well managed
development banks …” agree with US replacement of “guarantee”
with “ facilitate” or similar word. C) Technological innovations
(mobile banking) D) Importance of reducing transaction
costs of both banks and clients. E) Not just micro-credit
institutions, but should also include micro-leasing, which is also
important. F) End of P 16 – “It is also important to reduce
the transfer costs of migrant workers’ remittances China: P 14, 2nd line: “… encouraging the orderly development of capital markets and well-designed banking system through institutional arrangements that…” Also approves of merging of 14 and 15. Turkey: 13 and 14 can be merged. P 16, last sentence, informal sector “Wherever feasible, the informal sector must be incorporated into the formal economy.” “Feasible” sounds undecided, and should be changed to “ insistant efforts” or “concerted efforts” or the like. Spain: Comments refer to P 14, 15, 16, but does not want to merge the 3. Merge 14 and 15, but if possible, keep all 3 separate. Because: P 15, a strong central bank is important (monetary autonomy). In favor of keeping the last line in P 15. Refers on to systemic issues, but is also relevant here. Agree with the US that some references in P 16 to financial good practice and models. (OECD) Bus. Council with the UN:
Private sector is not mentioned. P1: recognized
need to add private sector investments including debt and markets.
P 16: agrees with replacing “guarantee” with “facilitate.”
2nd sentence: “well-managed development banks can
be an effective instrument in parternship with the domestic sector
to Co-chair Shamshad: Any comments remaining? P 17 will be discussed in the afternoon session. Close of AM Session.
Financing for Development Preparatory Committee Tuesday, January 15th, 2002 Afternoon, Session 3:00pm – 6:00pm Co-chair H.E. Ms. Ruth Jacoby: Opened session for discussion of paras. 16 and 17 before moving on to next section. ILO: Para 16—the prime objective should be social protection. When these schemes are funded they can be invested. Add social and gender budget analysis to para. 17. UNIDO: Inject mention of housing related financing. This is a powerful tool for mobilizing domestic resources. G77: Working international backing to create such capacity. International support is indispensable to capacity building in developing countries. EU: Agrees with statement of G77 and strengthening capacity of developing countries. EU takes view that issue is of absolute priority and will lead to things required, including technical assistance. Bangladesh: Agrees with G77, highlights trade as part of capacity building. Russian Federation: Para 17 is a key section of the doc. Understands G77 additions but at same time thins 1st part of para. after mention of developing countries should include reference to countries in transition. Mexico: Improving technical assistance should be applied. Should involve gender in concepts of budget planning—this should be made explicit. U.S.: Support G77 and Russia if this can be moved to the section on international financial cooperation. NGO Caucus: With regard to capacity building, add manufacturing capacity, resource management and industrial..?. Add short sentence on weapons production—dismantle production designed to generate domestic funds. Mobilizing international resources for development: foreign direct investment and other private flows Paragraph 18 G77: Would draft a new para. 18 that would be related to the old paragraph. Among the amendments which are being submitted is getting rid of the mention of long-term flows. The proposed 18 bis relates to the execution of measures that would stimulate FDI in less developed countries, small island states and Southern countries, as well as a request that that the Secretary General explore with all stake holders ways of strengthening FDI. EU: Agrees with G77 on the importance of flows going to developing countries and that the chief challenger is to attract more FDI but stresses that national sovereignty governs and it is the responsibility of countries to use existing domestic resources. Switzerland: Agrees with EU. FDI is important and private capital flows should be increased and there should be different types of public and private partnerships. ODA could be used for this. Korea: The overall para. is more balanced than previous text by taking profit-making interests into consideration with environmental considerations. Para 18 could be improved by placing more attention on other forms of investment such as portfolio investments. Japan: Regards FDI as very important and that it can’t replace ODA but the total amount of FDI is very important and it is up to those countries to invite FDI and increase the levels. Proposed changes to paras. 19 & 20 will be submitted to the secretariat. Canada: Would like to maintain reference to foreign portfolios but delete that portfolios are less stable. Stress that FDI must be socially and environmentally responsible. U.S.: The G77 used the word “channel” in its redraft. The U.S. delegation prefers the word facilitate. Will not support a negative reference to portfolio investment but will agree to either its deletion or a supportive reference to portfolio investment. Russia: Re: the second section of para. 18 international resources are a vital component. Funds from the external should be used to complement gov’t initiatives. Stressed that new drafting of para. will contain attracting more FDI for developing countries as a major objective. Will submit something to the bureau. Honduras: FDI is imp. To the goals of sustainable development. Agrees with Russia that there must be links between domestic and international. Important to ensure that FDI in nations is socially and environmentally responsible. This conference is linked with the upcoming WSSD because increasing this type of FDI is important for Sustainable Development. There also needs to be a real transfer of technology. Australia: Reference to portfolio investments should be deleted or at least there should be no negative comparison. Mexico: In paras. 18-22 regarding multilateralism, joint cooperation should be established that involves multinational corps., civil society and international institutions. Increase networks for bilateral cooperation. NGO Caucus: FDI can be vital only if socially responsible checks are in place that secure net benefits fro women and men, workers rights, savings, security, etc. Assert that FDI can be beneficial only when host country attains autonomy to manage it. Paragraph 19 G77: Is in general agreement but has some amendments. Among these were to delete “attract stable” to read “enhance stable” instead. In second sentence delete “competition policy” and include “development of human resources.” In the third sentence recommend that references to Doha conference and trade be moved to section on trade. EU: The need to provide technical assistance should be mentioned here or in section on trade. The EU is ready to make its contribution to increasing the dialogue on flows and making financial contributions. Is committed to support work carried out by World Bank and IMF to facilitate implementation of international accepted codes and norms. U.S.: Disagrees with G77 and would like to stay with “attract stable” because goal is to increase flow. Would add “productive in flows of capital.” There were other amendments read that will be given to secretariat. Canada: Important to negotiate bilateral rules. Competition to attract FDI can be expensive. Will submit changes in writing. Business Community (Money Matters Inst.): Mistake to think that FD investors make decision on economics alone—they consider social and political situations as well. Mentioned an index created with funding from UN that rates countries through many variables—only 1/3 of which are economic. Will make available to delegates. Rep. of Business Council to UN: propose insertion of new para. to follow para. 20 that encourages new private /public initiatives for new financing mechanisms for developing countries. NGO Caucus: Focus of FfD should be people centered and gender sensitive. Propose inclusion of this in para.19. Paragraph 20 G77: The para. should be enhanced. EU: Agrees with G77 on public/private partnerships. Belarus: Paras. 18, 19, 29 are well crafted. Would add priority areas—countries in need and projects to bridge the digital divide. U.S. : Should be proper separation of mandates on international institutions. Language should reflect that financial institutions are independent of UN. Delete sentence that says “strengthen fin. inst. to perform tasks—they are already capable. Canada: National efforts should be made to provide equitable services and to bridge the digital divide. Russian Federation: Conditions and structures in place have been focused on macroeconomic development. Delegation supports para. 20 by way of reference to international financial institutions. Would like to stress telecommunications. Develop a strategic approach to all countries, therefore a global approach. Azerbaijan: In para. 20 add “in developing countries and countries in transition.” In response to U.S comment, should keep word “increase.” Representative of Business Community: Underscore importance of small/medium enterprises in developing countries. Paragraph 21 G77: No major comments EU: Draw attention to guidelines of OECD for TNCs and global compact for TNC’s to make business sector consider environmental and social aspects. Boosting entrepreneurship is indispensable to development and must include rights in the workplace. Switzerland: Need a comprehensive set of social norms. U.S.: Echoes some of the views f the EU. Idea of TNCs having responsibility is too strong can say instead that firms can make a contribution to societal interests. This is a good time to get into the global compact. Would like to reference OCE guidelines. Stress the value of partnership. Mew sentence—welcome contribution firms can make to training partnerships in developing countries. Azerbaijan: Mention role of multinational enterprises. Increased cooperation between TNC, private sector and government will help achieve long-term goals. NGO Caucus: Re: paras. 19 & 20 propose language which reflects in general the importance of socially responsible development. Support document references to gender sensitive and people centered development as mentioned in para. 5. Re: labor movement, a regulatory framework should be put in place to balance protection of investments and ensure the protection of workers, especially women and children. Paragraph 22 G77: No fundamental differences, but some minor revisions. Would add a para on country measures to enhance investment flows. Developing countries should emulate best practices and devise additional measures. Host and home countries should compile best practices. EU: Need to increase transparency of financial flows—needs to be clarified in facilitators draft. Need strict rules—both developed and developing countries should have interest in nature of this international cooperation. U.S.: Would like to see G77 22 bis for further investigation. Cautions when words “regulatory” used in international context. Amend 2nd sentence—implement international standards and codes and promote transparency—all countries involved, not just developing. Canada: Should promote efficient international and national capital markets. Business: Investment decisions are made by people. Daily they face three factors—forecast return, risk and uncertainty. Provide investment decision-makers with improved info. Improve sovereign risk assessments and transparencies. We lack coherent independent platform for easy access to information. Australia: Focus on creating environment for orderly finance flows. Delete “to design measures” and insert “private financial flows.” Mexico: As per EU, the idea assessment and use of transparent procedure—difficult to grasp this idea. These assessments are carried out by private institutions. Amend the text to urge institutions to adopt other criteria. Turkey: Concept of international financial architecture and design to enhance to growth of both parties (rest unclear). Women’s Caucus: Important that government be allowed to regulate capital inflows. Insert: “It is also important that governments be allowed to regulate inflows and outflows of capital in the interests of domestic financial and social stability. Furthermore, measures must be designed to ensure orderly…Civil society and other major stakeholders should be included in the monitoring of this process. Multilateral…” Co-chair H.E. Ms. Ruth Jacoby: There have been many suggestions and few deletions. Can entertain new paras but some might have to go in order to keep document at agreed upon length. St. Lucia: Concerned over use of time supposed to end at 6:00 and now it is 5:30. Co-chair H.E. Ms. Ruth Jacoby: Following the approved program at work. Some delegations not ready to move on to discussion slated for tomorrow. |
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