Info Service on WTO and Trade Issues (Jul14/14)
SDG negotiations reveal the hard fight for means of implementation
New York, 24 July (Bhumika Muchhala*) – The last two days of the final session of the UN Open Working Group on the Sustainable Development Goals in July witnessed a fiery debate on the means of implementation, which constitute the foundation of the goals and the ultimate test for the credibility of the goals in developing countries.
The ethos of the means of implementation (MOI) in the sustainable development goals (SDGs) framework encompasses not only financial resources and technology transfer for the implementation of sustainable development, but also the structural reform of international financial and trade architectures. Developing countries in the UN have persistently argued in various UN conferences, negotiations and debates that without structural reforms, development on all three economic, social and environmental dimensions will remain impeded over the long-term.
[The OWG is mandated by the Rio+20 Outcome Document “The Future We Want” to come up with a set of Sustainable Development Goals. These are expected to feed into the General Assembly negotiations on the Post-2015 Development Agenda. The OWG is co-chaired by Ambassadors Macharia Kamau of Kenya and Csaba Korosi of Hungary.]
A particular development that had taken hold of the OWG discussions since the beginning of this year was the resistance by developed countries to incorporating MOI targets both within individual goals and as a stand-alone goal (Goal 17) that encompasses structural themes such as trade, finance and technology. Developed countries wanted to pull the goal-specific MOI out and integrate them into Goal 17 through a process of condensation and dilution. Developing countries fought back by saying that this would necessitate a renegotiation of the document at large, which is not an option. At one point during the discussions, the impasse seemed serious enough to topple the entire process.
Backtracking a month earlier to the 12th OWG session in June, the signal transmitted from most developed countries’ finance ministry officials was negative on the goal specific MOI. Indeed, the tense climate in the discussions revealed skepticism and suspicion on both sides of the fence, with most developing countries expecting the developed countries to not commit to goal specific MOI and with diluted commitments on the combined Goal 17, given the history of unfulfilled aid and UN treaty financing commitments from most developed countries.
The universality problem
The notion that the SDGs are a universal framework, as opposed to the Millennium Development Goals (MDGs) which only applied to developing countries, without any corresponding actions or commitments required by developed countries, has defined the very understanding of the SDGs. However, in the final hours of negotiations, the chronic resistance by developed countries to agree on meaningful and substantive language for MOI targets led the Group of 77 and China to state that universality has become “an international agenda for national implementation.”
[The MDG 8 on global partnership that required action by developed countries is generally accepted as weak and lacking concrete targets.]
The G77 further stated that “On the one hand developing countries don’t get the structural, financial and technological support that they need to carry out the SDGs; on the other hand, they don’t receive adequate policy space to carry out their development plans. A “universal” agenda is now dangerously implying that there is no such thing as developed country or developing country, that there are no differentiations. This MOI will thus be reduced to hollow policy statements, and that is not acceptable.”
While rhetorical language on policy space is in the document, the operational language of commitments is nuanced with the clause, “with respect to nationally defined policies and priorities.” This was routinely blocked by developed countries. It was only after this intense session in July that some basic demands by the G77 for the MOI was ceded to.
Furthermore, the last few days of SDG negotiations witnessed almost total rejection of all instances where developing countries nuanced commitments, particularly in Goal 12 on sustainable consumption and production, with the clause of “developed countries taking the lead.” This put into threat the very definition of universality which developing countries had unanimously clarified from the outset of the SDG discussions in March 2013. This understanding of universality is that while SDGs are universal to all countries in nature and relevance, the degree of national responsibility in the implementation of the goals should be differentiated in accordance with the varying capacities, realities and developmental levels of countries.
While the developed countries refused to “take the lead” on target commitments, on MOI where they already have existing commitments, they actually demanded equal treatment and suggested that forthcoming MOI should also be available to them for use.
The Rio+20 Outcome Document, ‘The Future We Want,” states in paragraph 247 that SDGs are supposed to be "global in nature and universally applicable to all countries while taking into account the different national realities, capacities and levels of development and respecting national policies and priorities.”
Brazil and Nicaragua in particular had earlier emphasized that the transformational potential of SDGs is rooted in this very mandate of universality with differentiation; and that a cursory interpretation of this mandate could jeopardize the balance, coherence and impact of SDGs. India too had earlier underscored that the principle of common but differentiated responsibilities (CBDR) captures the duality of universality and differentiation. It is the definition of differentiation embodied in the principle of CBDR that should be the basis of crafting targets under the universally relevant goals, India had argued last year.
“Partnerships” section paves pathway for private sector
Perhaps the most crucial failure of the SDG text is the complete absence of the global partnership for development in its original invocation as that of international cooperation on a broad range of key development issues, principally between governments of developed and developing countries, with the developed countries taking the lead in providing resources and the means of implementation. The global partnership for development is supposed to be an enhanced and strengthened version of Goal 8 in the Millennium Development Goals.
While some developing countries urged that it is imperative to re-capture the term with its original meaning and not allow the term to be isolated only as partnerships with the private sector and civil society, developing countries did not call for this with as much urgency or collective action as they did for many other structural issues.
In previous OWG discussions, Brazil and the Community of Latin American and Caribbean States (CELAC) were the only countries to explicitly caution against excessive reliance on private sector financing for sustainable development. They argued that a comprehensive assessment of existing and future partnerships should be carried out through a governance model that ensures ex-ante transparency and accountability, and that such assessments should take into account the impact, accountability and compliance of existing partnerships, and their institutional arrangements, with the principles and governance mechanisms of the UN.
They had pointed out that while the UN should be open to catalyze all existing support for sustainable development, this should not facilitate an evasion of government responsibility, or as a means of compensating for unmet commitments in official development assistance (ODA), from both developed and developing countries. Brazil had expressed in strong words that outsourcing development cooperation to the private sector raises serious issues about the UN as an intergovernmental organization, in large part because they have expanded outside the purview of intergovernmental oversight, without regular and effective participation by Member States.
Since it became clear, during the course of 2013, that private sector partnerships will distort the original global partnership for development, a critical mass of global civil society groups, along with progressive academics, have argued that public-private partnerships need to be accompanied by a governance framework, led by the UN, within which private sector partnerships should be held accountable and transparent. Such a governance framework should incorporate accountability, ex-ante assessment and criterion, transparent reporting, independent evaluation, and monitoring mechanisms. Furthermore, partnerships should demonstrate sustainable development results in developing countries, and this should formulate a key criterion that must be met before a private sector actor is able to engage in a “partnership.”
The role of the UN thwarted
The role of the UN in discussions ranging from financing for development, UN General Assembly Second Committee economic and macro-policy issues, sustainable development and several other issues has been routinely weakened by most developed countries. Unfortunately, the diminution of the primacy of the UN is not always effectively or robustly challenged by developing countries either. Three key examples illustrate this case.
First, when discussion of structural macroeconomic, trade and finance issues arise (e.g. fiscal and monetary policies, trade policies, financial regulation and so on), developed countries immediately claim that these issues are the domain of international financial institutions, namely the International Monetary Fund, the World Bank and the World Trade Organization, as well as other institutions such as the Financial Stability Forum and the Bank for International Settlements. The line of argument is that the UN does not have the technical expertise or the legitimacy to adequately address such issues, which have their home elsewhere. Thus, systemic issues are kept out of reach for the one global arena (the UN) which has an equitable governance structure.
Second, under the mandate of the Rio+20 outcome document, the UN in New York has been holding discussions on a global technology facilitation mechanism for the objective of sustainable development, that would strengthen North-South, South-South and triangular regional and international cooperation on and access to science, technology and innovation. Developing countries consistently pressed for this mechanism to be housed under the United Nations; however, developed countries tried to evade this.
Third, the High-Level Political Forum (HLPF) of the UN, which is supposed to replace and expand on the Commission for Sustainable Development as the implementation, review, monitoring and accountability body for sustainable development, was originally mentioned under the thematic heading, “Data, monitoring and accountability.” It was included in the following manner: “… ensure regular monitoring and reporting on global partnerships for development and means of implementation through the High-Level Political Forum.” It was eventually removed from the final text, thus negating any inclusion of the HLPF within the text of the SDGs.
Overall, there is a consistent attempt to diminish the leadership role of the UN. Even a body such as the HLPF, which is expressly mandated to constitute a governance framework for the SDGs, has been erased from the very text of the SDGs. It is not far-fetched to say that there is a crisis of governance in the formulation of the SDGs.
Structural reforms at center of the battlefield
Finance and trade are the key thematic areas of the MOI goal where the G77 and China negotiated for reforms on policy and systemic levels.
A key example is that of the pushback by developed countries on reaffirming developing countries’ full use of TRIPS (trade-related aspects of intellectual property rights agreement of the World Trade Organization) flexibilities in target 17.7 on promoting the development, transfer and diffusion of environmentally sound technologies to developing countries in MOI Goal 17.
Developing countries had made a strong effort at including language on TRIPS flexibilities for both technology transfer under Goal 17 applying generally to the whole framework, particularly in clean technologies, and in access to medicines and vaccines.
Developed countries fought hard to remove all references to TRIPS, stating that such technical issues have their place in the domain of the WTO, and that the UN does not have the mandate or the technical training to address the legality of such issues.
In addition, they suggested that if TRIPS had to be mentioned, it had to be in reference not only to the flexibilities but the implementation of TRIPs overall. The language they suggested on 19 July was: “17.9 promote development, transfer, dissemination and diffusion of environmentally sound technologies on favourable terms, including on concessional and preferential terms, as mutually agreed, and support TRIPS provisions including developing countries’ use of TRIPS flexibilities” (emphasis added).
The implementation of TRIPS as a whole has been a highly contentious issue in developing countries. In fact, TRIPS implementation waiver for LDCs has been challenged repeatedly by developed countries. The language to “support TRIPs provisions” was contested by the G77 and China and was dropped later but they also lost the entire target related to technology in the process. The removal of reference to TRIPs flexibilities under Goal 17 meant the option for the general use of such flexibilities for access to technology got eliminated in the document.
In the final document, while the reference to TRIPS flexibilities for technology under Goal 17 was denied, the reference was agreed to in target 3(b) under Goal 3 on health, which in accordance with the WTO Doha Declaration, “affirms the right of developing countries to use to the full the provisions in the TRIPS agreement regarding flexibilities to protect public health and, in particular, provide access to medicines for all.” This is an important “holding” win for developing countries though it refers to specific uses of TRIPS flexibilities and was in effect a reiteration of existing rights.
Developing countries’ rally call for the inclusion of TRIPS was centered on the analysis that intellectual property (IP) can often be a major disincentive to transfer of technology catching up, as IP holders use IP protection as a tool to protect monopoly. A strong IP protection also prevents technology catching up efforts traditionally done through reverse engineering. After 20 years of the conclusion of the TRIPS Agreement, the TRIPS Council records show that there is no meaningful technology transfer from developed countries to least developed countries (LDCs).
Despite attempts by developing countries to integrate language on removing “tariff and non-tariff barriers” in the third target on trade (17.3) in Goal 17, this did not make it into the final SDG text. However, language on “timely implementation of duty-free, quota-free market access for all least developed countries” and “ensuring that preferential rules of origin applicable to imports from LDCs are transparent and simple” did manage to appear on the final text.
In the second target on trade (17.2), despite the repeated call by developing countries to highlight “improve market access of developing countries,” the final language highlights developed countries’ preference of the words “increase significantly the exports of developing countries.” (Emphasis added.)
The first trade target (17.1) was initially confined to “promoting a rules-based, open, non-discriminatory and equitable multilateral trading system under the WTO.” The inclusion of the “Doha Development Agenda (DDA)” as well as its “agricultural mandate” was contested. Eventually the Doha language made it into the final document; the agricultural mandate did not.
[The “agricultural mandate” would for example include special and differential treatment for developing countries and LDCs in agriculture-related commitments and the elimination of export taxes by developing countries. The Hong Kong WTO Ministerial had also discussed exempting subsidies give by developing countries for public food stockholding for ensuring domestic food security.]
when DDA made it into the target, it is not all good. The final target
(17.10 in the final document) now says: “promote a universal, rules-based,
open, non-discriminatory and equitable multilateral trading system
under the WTO including through the conclusion of negotiations
within its Doha Development Agenda” which means it still refers to
the WTO as a whole and not just to the DDA (emphasis added).
As is well-known, the history of the WTO is not at all development
friendly and any round which comes after the Doha Round may not have
strong elements of development in them.
On a positive note, however, MOI targets 2(b) and 10(a) under Goal 2 on food security and sustainable agriculture include language on “correcting and preventing trade restrictions and distortions in world agricultural markets, including the parallel elimination of all forms of agricultural export subsidies and all export measures with equivalent effect in accordance with the mandate of the Doha Development Round” and to “implement the principle of special and differential treatment for developing countries, in particular least developed countries, in accordance with WTO agreements” was agreed to in the final text.
Tough positions on both sides preceded this consensus language, which on agricultural export subsidies in particular, has significant bearing on a fundamental call by developing countries for the elimination of vast sums of subsidies provided by the United States and the European Union in particular to their agricultural producers, which has the effect of distorting agricultural prices and rendering developing country producers uncompetitive. However, references to the Hong Kong Ministerial Declaration that developing countries had tried to include earlier was dropped. The Hong Kong WTO Ministerial had countries agreeing to eliminate export subsidies by 2013, a promise that remains unfulfilled.
The initial language on debt in target 17.4 in the thematic section on finance was confined to a paltry phrase of “ensuring long-term debt sustainability.” The G77 added to that the following: “… through coordinated policies aimed at fostering debt financing, debt relief and debt restructuring, including the establishment of a transparent and independent mechanism to prevent and address debt crises and its impacts, while taking into account the role of credit rating agencies and the predatory effects of vulture funds.” The G77 also inserted language to “cancel external debt of Highly Indebted Poor Countries (HIPC) to reduce debt distress.”
The final document stops at “debt restructuring,” and the key term to “cancel” HIPC debt is weakened to “address.” This is problematic because the word “cancel” denotes an action, whereas the word “address” does not have to entail any action whatsoever.
While it is positive that at the very least language on “debt restructuring” remains in the final text, the struggle to maintain the very language already included in the Rio+20 outcome document demonstrates how intergovernmental negotiations can barely manage to retain the language of previous processes and outcomes, let alone move the language forward to encompass broader and deeper issues.
Target 17.3 on “mobilizing additional financial resources for developing countries from multiple sources” was initially nuanced by developing countries through an emphasis on prioritizing public financial resources over private financial resources. When this did not seem possible due to the resistance of developed countries, the idea then was to delete it entirely. However, in the final document the full target appears, without the nuance called for by developing countries.
This opens the floodgates to private financing of sustainable development, which is in line with the modus operandi of the Expert Committee on financing sustainable development (another Rio+20 follow-up process). Many, though not all, developing countries are wary of the domination of private sector financing, which may not always prioritize development over profits, and often bypasses fundamental criterion such as transparency, accountability and demonstrable results in development on the ground.
On domestic resource mobilization in finance target 17.1, tax is only addressed vis-à-vis improving developing countries’ capacity for tax collection. There was no call made for addressing tax evasion, tax havens and international tax cooperation, and this is a key missed opportunity by both developed and developing countries to address one of the most structural reforms needed in the global financial system. Similarly, the opportunity to include specific progressive taxation policies toward the objective of mitigating inequality within countries was also missed in Goal 10 on inequality.
In target 17.2 on official development assistance (ODA), developing countries repeatedly called for increasing aid flows from the current 0.7% of Gross National Income to 1.0% “on an agreed timeline.” This was not heeded to in the final text.
Other finance-related targets called for by the G77 were also ignored. They include:
The call by all developing countries to establish a standing intergovernmental sovereign debt workout mechanism was also unsuccessful.
On a positive note, however, MOI target 2(c) under Goal 2 on food security addresses adopting “measures,” though not explicitly regulating food commodity markets and their derivatives “in order to help limit extreme food price volatility.”
A significant achievement of the SDG text is the reference to national policy space as vital to the implementation of poverty eradication and sustainable development policies (target 17.15); as well as to the multiple references in targets 17.13 and 17.14 to policy coherence and policy coordination specifically for global macroeconomic stability and for sustainable development. This was hard fought for.
Forum-shifting as classic negotiation tactic
The particular tactic of ‘forum-shifting’ has been widely employed in the SDGs negotiations. Developed countries have repeatedly argued that all content related to systemic and financing issues should take place through the Financing for Development Conference (to be held in Addis Ababa, Ethiopia in July 2015) and through the report of the International Committee of Experts on Financing for Sustainable Development (ICESDF, due in August of this year).
Developed countries provide the rationale that the SDGs must show respect for other UN intergovernmental processes and must not supercede them. The OWG could be, at best, a forum for re-affirming earlier commitments but not for making new commitments.
Thus, the MOI Goal 17 of the SDG text originally came with a footnote attached to its title, which read, “To be aligned with the outcomes of the report of the Intergovernmental Committee of Experts on Sustainable Development Financing and the third International Conference on Financing for Development in July 2015.”
The G77 group of developing countries were steadfast in their push for deleting this footnote, stating that governments cannot open the MOI Goal for discussion at a later point. Language that has not been agreed on cannot be part of the text, they stressed. Other processes such as the ICESDF and FFD have important bearing, but the actual language being negotiated for the SDG document cannot be decided by other processes; it can only be decided by the current negotiations taking place.
In conclusion, the adoption of the SDG document by the OWG in some sense is a step forward, despite the fact that the text fails to meaningfully address an enhanced global partnership for development as well as ambitious and substantive means of implementation both within the goals and through themes of trade, finance and technology. The myriad green lights given to private sector financing and partnerships for sustainable development, without any specific language on evaluations, accountability, transparency and overall governance, are deeply worrying.
However, the text encompasses a bold spectrum of the three pillars of sustainable development: economic, social and environmental. And there is a fair amount of progressive, development-oriented language, as well as some demonstration of political will to prioritize a more holistic framework for development through sustainability.
It was a complex negotiation process amidst sharp differences and disputes among Member States. Thus taking this political reality into consideration, the work going forward will be to ensure that the forthcoming General Assembly negotiations take place based on the document as it stands now, in a manner that is inclusive, transparent and accountable, and without any further dilution or deletion of the hard-won gains in the SDG text as it currently stands.
(* With inputs from Ranja Sengupta.)