Service on WTO and Trade Issues (July09/06)
conference adopts outcome document
in SUNS #6730 dated 30 June 2009
York, 26 Jun (Bhumika Muchhala and Meena Raman) -- The outcome document
of the United Nations Conference on the World Economic and Financial
Crisis was adopted by consensus at a plenary session on 26 June afternoon
held in the General Assembly hall.
the consensus adoption of the document as a first step towards putting
the world on a path towards solidarity, stability and sustainability,
the President of the General Assembly (PGA), Miguel d'Escoto Brockmann,
said the "G-192" had now been established as the central forum
for the discussion of world financial and economic issues. "This
in itself is a major achievement", he said.
added that the historic conference had also called on the Assembly to
follow up on the issues raised -- including global stimulus, the role
of SDRs (special drawing rights), reserve currency, reform of the Bretton
Woods institutions, external debt, and regulation of financial markets
-- through a working group.
54 of the document states: "We invite the General Assembly to establish
an ad hoc open-ended working group of the General Assembly to follow-up
on the issues contained in this outcome document, and to submit a report
on the progress of its work to the General Assembly before the end of
the 64th Session."].
adoption, without re-negotiation, of the document had been a foregone
conclusion since the draft of the two Co-facilitators (the Ambassadors
of the Netherlands and of St. Vincent and Grenadines) had been accepted
by negotiators on 22 June and transmitted to the Conference, and another
decision had been made on the first day of the conference not to set
up a Main Committee to discuss the draft.
it was generally known that the United States
was unhappy with certain paragraphs of the text and that it would raise
its concerns at the final plenary, and that several developing countries
were also dissatisfied with some parts and might also speak up.
indeed happened. Following the adoption of the conference's outcome
document, several countries and groups expressed their views on the
document. The US,
supported by Canada,
had concerns about several paragraphs, while the EU and Japan were generally positive about
the outcome. The G77 and China
accepted the outcome positively. Cuba,
Venezuela and Nicaragua raised
United States welcomed the last three
days as an important opportunity to discuss the global crisis. Its government
had listened with great interest and held discussions with delegations
from all regions. The outcome document offered views in several paragraphs
on the governance and operational aspects of international financial
institutions, and the Bretton Woods institutions in particular.
US said that those bodies had governance
structures independent of the UN. Any decisions on their reform could
only be made by shareholders and their boards of governors. The US did not interpret
the language in the document as endorsing a formal UN role in decisions
regard to paragraph 54 (which establishes an "ad-hoc open-ended
working group of the General Assembly to follow-up on the issues contained
in this outcome document), the US' view is that the UN did not have
the expertise or mandate to provide direction for meaningful dialogue
on a number of issues, such as reserve systems, international financial
institutions or the international financial architecture.
paragraph 15, the US said that when countries faced
an acute shortage of foreign reserves, they should implement efficient
policy and monetary responses. Trade measures would not solve balance-of-payments
problems associated with capital account pressures, a widening fiscal
gap or other corporate failures.
US said that use of them should be
avoided and only resorted to when applied in accordance with WTO rules.
Articles 12 and 18 related to the GATT and the Understanding on the
Balance-of-Payments Provisions. Those conditions included requirements
not included in the outcome. There was no provision under the WTO Agreement
for use of "trade defense measures" to address balance-of-payments
US added that Paragraph 15 also described
temporary capital restrictions and debt standstills as a way to address
foreign reserves shortages. The US did not condone the use of capital
controls. If used, they should be taken only as a last resort on a temporary
basis and in line with existing multilateral and bilateral agreements.
15 states that developing countries "facing an acute and severe
shortage of foreign reserves because of the fallout of the crisis,"
should not be "denied the right to use legitimate trade defense
measures in accordance with relevant WTO provisions, and, as a last
resort impose temporary capital restrictions and seek to negotiate agreements
on temporary debt standstills between debtors and creditors."].
paragraph 20, which encouraged regional reserve currency arrangements,
the US said that such arrangements should be judged by whether they
contributed to regional and global financial stability.
relation to paragraph 25 relating to "protectionist measures",
the US noted that the WTO was engaged
in a monitoring process of such measures by countries. It said that
duplicative efforts should not be undertaken across other bodies. It
was of the view that proposals suggested in the paragraph could undermine
the existing monitoring and reporting process, and all countries needed
to be vigilant about how they responded to the crisis.
paragraph 27, on unemployment, the US said that it
was committed to allowing labour migration to meet labour market needs
but this was subject to domestic law.
paragraph 28 relating to the "urgent need for all donors to maintain
and deliver on their existing bilateral and multilateral Official Development
Assistance (ODA) commitments and targets...," the US
interpreted the reference to ODA targets to mean donor countries' individual
paragraph 34, which focused on the need for a structured framework for
cooperation in the area of debt, the US said such a
framework should be explored in line with existing structures, including
the Paris Club.
paragraph 35, it said that US joined others in supporting a general
special drawing right (SDR) allocation that would inject $250 billion
for global liquidity. However, the SDRs were a monetary asset and not
suitable for development finance.
regard to improved regulation and monitoring of global and national
financial markets in paragraph 37 of the outcome document, the US
stated that it interprets the words "international commitment"
to include internationally agreed and principles-based financial standards
by which each country should regulate its financial markets.
38 referred to promoting double taxation agreements, and this should
apply only in instances when significant double taxation existed between
relevant jurisdictions, said the US.
US added that to be productive, the
working group process should be based on the UN mandate and field presence.
The UN has no expertise or mandate to provide direction on a number
of issues such as reserve systems, international financial institutions
and the international financial architecture.
on behalf of the Group of 77 and China, stated
that for Member States to stand united through the adoption of the outcome
document is a remarkable achievement. The Group welcomed the outcome
document, saying it is a good basis. "We could dwell on its shortcomings
and imperfections, but we refrain from such an ignoble act," said
the group. Being human beings, our efforts would aim high but they will
G77 and China said it would have liked the
outcome to urgently address the issue of mitigation of the crisis. It
called for member states to urgently address the issue of mitigation
of the crisis starting from the first session of the ECOSOC (UN Economic
and Social Council) meeting in Geneva.
Sudan said the task ahead is arduous
and the group had the following key priorities: First is the establishment
of the working group to follow up on the specific decisions and actions
adopted by the outcome document. Second is the establishment of an ad
hoc panel of experts to provide independent technical expertise on the
world crisis, including on issues like global reserve system, SDRs and
debt workout mechanism. Third is the strengthening of the capacity and
effective leadership of the UN in the coherence and coordination of
policies and actions in the global economy and finance, including a
speedy review of the implementation of the cooperation agreement between
the UN and the BWIs.
European Union said that the conference had been an important event
especially because developing countries have had the opportunity to
voice themselves for the first time since the beginning of the financial
EU also said that the outcome document is a very "ambitious"
document which provides the basis for the UN to substantively follow-up
through three specific ways. The first mechanism of follow-up is the
establishment of the ad-hoc open-ended working group of the General
Assembly. The second is through the strengthening of the collaboration
and coordination between the UN and the Bretton Woods Institutions,
and the third is through the possible establishment of an ad-hoc panel
of experts on the world economic and financial crisis and its impact
EU affirmed that the outcome document contains many references to the
integration and linkages between the UN system of specialized agencies
and programmes and other institutions such as the Bretton Woods Institutions
and the World Trade Organisation and other trade fora.
current crisis requires concerted international action," the EU
said, adding that it was satisfied that what was achieved was the beginning
of international action which prioritises a path of sustainable growth
Japan welcomed the adoption of the
outcome document by consensus, saying that it is a "milestone in
the history of the UN." The document reflects the interests of
all Member States as well as the complexity of these interests. Japan welcomed the follow-up process
to this conference in the UN, adding that the ad-hoc and open-ended
working group needs to make maximum use of existing mechanisms and institutions
while also taking advantage of the strengths of the UN, especially its
regard to the reform of the Bretton Woods Institutions and the issuance
of SDRs for meeting the financing shortfalls in developing countries,
said that these matters should be carried out in accordance with the
respective mandates and governance structures of the IMF and World Bank.
agreed with the US on the role
of the UN, and that it "cannot support the formal role of the UN"
in issues dealing with the financial and economic system. On the follow-up
said that the ad-hoc working group proposed in the document should focus
on follow-up. It was not useful for the forum to address issues that
fell outside the UN's mandate and expertise, such as global reserve
system, reform efforts of the Bretton Woods institutions, and frameworks
for sovereign debt restructuring.
echoed the US, saying that
SDRs cannot be used for development purposes. SDRs can only serve the
purpose of international liquidity provision through quota-based allocations
to reserves, such as that agreed to in the G20 communique on the $250
billion allocation of SDRs through the IMF.
regard to migrant workers and labour migration in paragraph 27, Canada
clarified that legislation on migrants cannot be applied to all countries
universally, and must follow the individual national legislation provisions
on labour migration and the treatment of migrant workers.
Cuba expressed its discontent on the
outcome document as being "far below what is required". The
outcome document did not contain new and additional resources that are
urgently needed by developing countries which are facing the critical
economic impacts of this crisis, it said. It does not sufficiently call
for the 0.7% contribution of GDP from developed countries that is needed
for official development assistance (ODA).
Cuba said that the developing countries
continue to be subjected to "humiliating alms from the rich countries
which are conditioned on their policies." Furthermore, the outcome
document, in Cuba's
view, did not pay heed to the need for a radical transformation of the
international financial architecture, nor does it reflect a substantive
discussion of the root causes of the financial crisis.
Cuba also stated that it rejects the
phrase "human security" in the outcome document, which has
a "clear interventionist connotation" that links to "attacks
on sovereign international territory." The financial crisis instigates
a debt crisis in developing countries, said Cuba, where most developing countries
are vulnerable to precipitous declines in foreign exchange reserves.
stated that although the outcome document has many deficiencies, it
agreed to the mention of reviewing the way in which the UN and the Bretton
Woods Institutions coordinate their programmes and to exploring approaches
to the restructuring of sovereign debt as mentioned in paragraph 34
of the outcome document.
regard to ODA in paragraph 28 of the outcome document, Venezuela
expressed grave concern for the way in which aid effectiveness is stated.
With regard to paragraph 30 on increasing and making more effective
South-South cooperation initiatives, it was stated that the countries
of the South are already cooperating together in various ways, such
as through Latin American ALBA initiative, the Petro Caribe oil alliance,
and other vehicles that are based on "solidarity and complementarity."
Nicaragua emphasized that the IFIs
need to work for the development of people, not capital. The follow-up
process of the conference needs to ensure that the working group's recommendations
are implemented by the conclusion of the 64th session of the General
Bolivia said that with the outcome
document, the G-192 had demonstrated that the UN was the appropriate
place to discuss a global response. It hoped that the document would
provide a foundation to overcome the crisis. To that end, it was important
that the open-ended working group follow up on paragraph 15, which touched
on the shortage of foreign reserves and their negative impact on balance
of payments. Indeed, it was an unjust paradox that so much capital was
flowing out of the poorest countries to the richest.
was also clear that trade would be part of the discussion. On paragraphs
24 and 25, Bolivia
believed that the financial crisis had demonstrated that free trade
and free markets were unable to self-regulate. Regarding paragraph 10,
it said that it was essential to mitigate the impact of the crisis with
special emphasis on the least developed countries, particularly those
that were landlocked. Moreover, the weakest part of the document was
its lack of criticism of the Breton Woods institutions.
speaking for the members of the Caribbean Community (CARICOM), attached
great importance to the convening of this UN conference, and that the
conference had given small island states such as those in the Caribbean
a chance to speak. It also said that the follow-up process must ensure
that access to concessionary financing and grant funding is extended
to small developing countries and that the GDP unit for measuring economic
growth must not be the only indicator for development. Developed countries
have a moral and political obligation to developing countries following
the financial and economic crisis, it said.
Iran welcomed the document's adoption.
It sends the positive signal that the UN with its legitimacy is the
right place to address the crisis in a holistic manner. This is the
first step in the right direction. However, it falls short in concrete
measures in the reform of the international financial institutions and
architecture and the role of the UN. It was also concerned about the
reference to "human security" as UN documents should not be
open to vague concepts that had not been agreed on.
General Assembly President Miguel d'Escoto Brockmann said the world
has had the opportunity to hear the views of the G192. All members have
had the chance to express their views. The UN General Assembly, the
G192, has now been established as a central forum for world economic
and financial issues. This in itself is a major achievement.
Brockmann said the General Assembly had been asked to follow up on the
conference through a working group. The issues to follow up on include
global stimulus measures, SDRs, reserve currency, restructuring of the
financial system and architecture including the reform of the IFIs,
the role of the UN, external debt, trade, investment, tax, development
assistance, South-South cooperation, new forms of financing, and regulation.
At the same time, the crisis should not delay our response to climate
change and the environment.
said "we are happy but not completely satisfied", and there
are many other crises such as water, food, energy, and humanitarian
affairs. "We must all join forces. There is much to be done. We
will not be content as long as issues are unresolved. My role is to
invite you to look beyond today's concerns and hold up hope for humanity."
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