TWN Info Service on WTO and Trade Issues (Jul16/17)
21 July 2016
Third World Network

UNCTAD-14: UNCTAD's integrated approach must be strengthened, say CSOs
Published in SUNS #8287 dated 21 July 2016

Nairobi, 20 Jul (Kanaga Raja) -- It is absolutely critical to continue and strengthen the integrated approach of the UN Conference on Trade and Development (UNCTAD) to the evolution and management of globalization and to the interdependence of trade, finance, investment and technology as they affect the growth and development prospects of developing countries.

This was among the key demand and recommendations of over 400 civil society organisations (CSOs) that participated in the Civil Society Forum of the UNCTAD-14 conference that took place here from 15-17 July, just as the main conference got underway on Sunday (17 July).

In a Civil Society Declaration to UNCTAD-14, the CSOs said that with its focus on the interdependence of trade, finance, investment, macroeconomics and technology as they affect the growth and development prospects of developing countries, UNCTAD is uniquely positioned to contribute to the global achievement of the ambitious commitments made by all countries in 2015 in the Agenda 2030 for Sustainable Development, as well as the financing for development process (which the Third International Conference on Financing for Development in Addis Ababa continued in 2015), the Paris Agreement under the United Nations Framework Convention on Climate Change and the Tenth Ministerial Meeting of the World Trade Organization.

"However, to live up to its name and promises, UNCTAD's role must remain development-centred, oriented by South priorities and not subordinated to the liberalization goals of other institutions," they said.

The CSOs noted that the ramifications of the 2008 global financial and economic crisis, the worst in the post-war period, still haunt the world.

"Economic performance remains sluggish in all regions, further reducing opportunities for addressing the material needs of the vast and growing majorities of the poor and vulnerable. The phenomenal levels of inequality among and within nations, linked to the very types of economic activity that led to the crisis, have grown even sharper in its aftermath and through the inequitable measures adopted by many Governments in response to the crisis."

Added to these are the escalating climate-related and humanitarian crises, and natural disasters arising from global systems of production and patterns of consumption, which threaten the very survival of humanity.

In far too many developing countries, neoliberal policies have served to reinforce the structures that their economies inherited from colonialism: dependence on the export of (a narrow basket of hardly processed) primary commodities; little or no domestic manufacturing industrial capacity; stagnation of the rural economy; wanton extraction of natural resources; and reliance on fossil fuel and other harmful energy systems.

They remain vulnerable to external shocks while, internally, unremitting rural collapse continues to drive levels of urbanization unrelated to the expansion of economic opportunity and/or investment in social and economic infrastructure, said the CSO Declaration.

For the majority of people, especially for women and marginalized groups and communities, this has meant joblessness, precarious and degraded livelihoods, diminished opportunities for self-fulfilment, lack of access to essential services such as health and education, unsafe environments and damaged local ecosystems.

At the same time, fabulous wealth continues to concentrate in the hands of narrow circles of national elites and global corporate forces that together dominate political processes and exercise control over economic resources.

"The specific developmental challenges that UNCTAD sought to address are still with us, and in some cases (such as the African region) have become more acute," said the CSOs.

These are the challenges posed by the structural imbalances of the global order characterized at one pole by a concentration of highly industrialized economies, and at the other pole by a mass of primary commodity export-dependent economies feeding the needs of the industrial economies.

This system produces immense prosperity for some, while generating poverty, constraining the well-being of vast majorities in the developing world, and intensifying environmental and climate crises.

"UNCTAD provides a critical institutional framework and a unique forum for taking up the challenges of equitable development, thanks to its make-up and orientation, its rich history of policy interventions on behalf of developing countries and the abiding relevance of the issues for which it was founded," said the CSOs.

The organization's foundational vision is as critical today as it was 50 years ago, when it was established as a platform for thought and action on broad issues of trade and development explicitly formulated around the challenges and perspectives of the vulnerable and marginalized majority of nations within the international system, and the people in them.

"Its foundational principles continue to drive the work of UNCTAD. Its values, understandings, perspectives and accumulated outcomes of 50 years form the critical point of departure upon which to build the work of UNCTAD for the coming period - to enable the organization to support developing countries in meeting the challenges of today."

Yet the high-quality contributions that UNCTAD has made have gone beyond the developing world. Arguably, all countries can benefit from expanded support to the organization that was able to spot the last global financial crisis - which took its toll on the poor and vulnerable everywhere - before it happened, and that pushed issues such as inequality and sovereign debt restructuring onto the international development agenda.

"Indeed, who would not benefit from developing countries being on a better footing to face their development challenges and make their contribution to the global pledge of achieving the Sustainable Development Goals by 2030? Policy analysis, consensus-building and technical cooperation activities of UNCTAD are crucial to fulfilling this task."

Paradoxically, however, the advanced industrial countries seek the exact opposite agenda for the future of UNCTAD. As is clear from the positions they have taken in the negotiations towards UNCTAD XIV, these countries continue with their project to curtail the ability of UNCTAD to provide independent and critical policy perspectives.

"If they succeed, UNCTAD will be undermined in its role of providing the much-needed corrective and balance to the chorus of positions that usually emanate from dominant players such as the International Monetary Fund, Organization for Economic Cooperation and Development, World Bank, World Trade Organization, and the like," the CSOs warned.

"Instead, UNCTAD might end up as a pale reflection of these dominant frameworks and policies, with its task reduced essentially to supporting poorer countries in Africa and other parts of the world to implement and live within this dominant paradigm as best as they can. The foundational mission and role of UNCTAD could be silenced at the very time when it is most needed in global affairs."

The CSOs went on to make a number of general recommendations.

"It is absolutely critical to continue and strengthen the integrated approach of UNCTAD to the evolution and management of globalization and to the interdependence of trade, finance, investment and technology as they affect the growth and development prospects of developing countries. The same applies to the linkages between international trade and financial and macroeconomic issues, with particular emphasis on issues related to crisis management," they said.

Quite pertinent to this focus will be to strengthen its research on the financialization of commodity markets, and the consequences of financialization for commodity prices, commodity export revenues, taxes on commodity extraction and processing, and the use of such revenues and taxes for economic diversification for developing country members of UNCTAD.

"The United Nations would be failing its responsibility to the many countries that need this service if it does not take a more robust role in this regard."

Common but differentiated responsibilities and special and differential treatment are long-standing multilaterally-negotiated principles that recognize that developed and developing countries cannot be treated in the same manner because of their differing development and economic circumstances. Thus they have different levels of responsibility with respect to environmental degradation, climate change and sustainable development.

Failing to take this into account would undermine the aspiration to promote universal advances in development and trade.

"The UNCTAD XIV outcome document must give full support to the UNCTAD mandate on curbing tax evasion and avoidance, including in commodities markets and through investment policies. More broadly, the issue of changing international tax rules and closing loopholes that facilitate and enable international tax evasion and avoidance cannot just be dealt with by the Organization for Economic Cooperation and Development, which excludes the vast majority of developing countries."

According to the Political Declaration, it must be at the centre of a multilateral intergovernmental process under the auspices of the United Nations.

"As part of its contribution to curbing tax-dodging internationally, UNCTAD must play a vital role in the development of a normative definition of illicit financial flows, in developing guidelines and building global consensus towards public country-by-country reporting and in providing policy support and capacity-building to enhance the involvement and cooperation of developing countries in addressing base erosion and profit shifting to safeguard their taxing rights."

The mandate of UNCTAD to work on debt workout mechanisms and responsible lending and borrowing has been uniquely useful and its members should strengthen it, including by supporting further work on these issues at the level of the General Assembly of the United Nations.

"UNCTAD should follow up on and further enrich its conceptual work and support the implementation of responsible lending and borrowing practices in member States and monitor progress. UNCTAD should develop an alternative and development-oriented methodology on debt sustainability analysis and support national vulture funds legislation in line with the Addis Ababa Action Agenda."

The UNCTAD Road Map and Guide to Sovereign Debt Workouts should be made known to member States, in particular those in debt distress, and UNCTAD technical assistance should enable member States to conduct debt workout in line with the application of the principles and steps explained in the Road Map.

On the question of trade negotiations, the CSO Declaration pointed out that while a multilateral system of trade rules is preferable to a fragmented system, the rules must be fair and balanced, taking into account the various levels of development across the United Nations membership, rather than focussed on trade liberalization or simply increasing trade flows. As an institution with a long history of helping developing countries to use trade for their development, UNCTAD must play an active role in assisting developing countries to advocate for a fair multilateral trading system, and special and differential treatment for all developing countries, addressing the imbalances in the current trade regime, particularly in agriculture and cotton.

"It is not new approaches that are needed but the fulfilment of the development mandate of the Doha Development Agenda. Yet we are concerned that UNCTAD may be transformed into solely an implementation mechanism for trade agreements concluded elsewhere. The further UNCTAD moves towards seeing developing countries mainly as engines to increase trade - thus deviating from its mission to support the use of trade for development - the more it risks redundancy and irrelevance."

Trade and investment agreements do not support development without the right policy environment, which necessitates policy space, an effective and developmental state able to sustain its own resource base responsible for safeguarding people's human rights, gender equality and a more coherent, inclusive and representative global architecture for sustainable development.

Likewise, UNCTAD must receive a strengthened mandate to ensure that the trading system enhances the integration of developing countries, especially the least developed countries, first on a regional level; the structural transformation of African economies and gender equality and women's rights in relation to the structural and global issues in trade and finance; the promotion of sustainable development, centred on the promotion of a higher self-sufficiency in basic food staples; and the assurance of decent work, and peasant, indigenous and workers' rights.

"These goals necessitate that UNCTAD undertake a review of proposed and existing trade agreements with a view to promoting sustainable industrialization and equitable transitions to a low-carbon economy, reversing the reductions of labour's share of income, supporting the implementation of agreements regarding the least developed countries and strengthening the negotiating capacity of developing countries in trade negotiations."

According to the CSO declaration, given the long history of UNCTAD in encouraging developing countries to sign international investment agreements, and the negative impacts that developing countries have experienced, particularly due to investor–State dispute settlement mechanisms, the mandate of UNCTAD should be intensely invested in helping developing countries craft investment policies that will contribute to development, rather than just "balance the interests" of investors and development; as well as to unwind and reform these agreements with a view to ensuring a positive impact on national or regional development strategies. "UNCTAD members should strengthen its mandate to support not the attraction of investment as a goal in itself but rather its contribution to development. The establishment of an intergovernmental group of experts on trade and investment rules and policy reform would be helpful in this regard."

UNCTAD should be involved in monitoring the role of the private sector, particularly foreign investors and their impacts (both positive and negative) on mobilization of domestic resources, fiscal and debt sustainability, development, human rights, the Sustainable Development Goals and climate goals.

"In particular, we strongly caution about support and promotion of public-private partnerships or addressing them as ends in themselves - despite the unfortunate adoption of an indicator under Goal 17 that merely refers to the number of them," said the CSOs.

"There is a lack of proof that public-private partnerships are actually delivering positive economic, social and environmental outcomes. Traditional public procurement that meets administrative efficiency and public accountability criteria and supports local private sectors should remain the preferred route for involving the private sector in infrastructure financing."

Technology transfer is essential to the enabling of sustainable development in developing countries, and UNCTAD should continue to take a lead role in supporting these efforts by developing countries rather than in enforcing intellectual property rules that benefit protectionist patent- and copyright-holders in developed countries.

The important role of UNCTAD in financing for development should be affirmed and expanded, including through the creation of an intergovernmental group of experts on financing development, as well as monitoring the implementation of commitments on official development assistance.

"Official development assistance is a long-standing but essentially unfulfilled commitment by the developed countries; it is central to North–South cooperation, and it must be differentiated from, and not substituted by, South-South cooperation and other sources of international public finance."

UNCTAD should ensure that in all of the above areas, the analyses, policy formulations and implementation processes include the sharp reflection and articulation of gender dimensions and impacts on women and future generations and ways to address these, and the empowerment and effective participation of women, said the CSOs.

On structural transformation in Africa, the CSO Declaration said that at UNCTAD XIV - taking place on African soil - African and other developing countries must ensure, and developed countries must support, the adoption of a work mandate that: (a) Provides UNCTAD with the necessary space and means to articulate the policy requirements of Africa's structural economic transformation and work in support of their realization; (b) Reflects the elements of the changing global trade and development agenda as it affects the positions and fortunes of African countries in meeting the challenges of this landscape; ( c) Addresses the specific constraints that African countries face in meeting their development challenges.

UNCTAD must support African countries to:

(a) Address the negative effects of the imbalances of the international trade regime, including World Trade Organization agreements, economic partnership agreements and bilateral and international investment agreements, and protecting the space for policy initiatives and South-South economic cooperation against further encroachment;

(b) Push and adopt financial, fiscal and other relevant policies that stop the transfer of capital, illicit financial flows and other leakages of economic resources from Africa and enable African countries to retain the investible resources generated in their economies for domestic investment and economic development;

(c)  Decisively address continuing debt burdens and the looming debt crisis and adopt policies that will prevent the re-accumulation of unsustainable and illegitimate debts;

(d) Adopt policies to access technology (through adoption, diffusion and technology transfer) to support the development of productive capacities and domestic enterprise and to meet the needs of sustainable development;

(e) Adopt gender-sensitive and responsive trade and development policies that promote equitable and rights-based development. The ongoing work of UNCTAD in this regard must continue and be enhanced.

"Above all, it is important that African countries reimagine UNCTAD beyond the expectations of technical assistance and capacity-building, and reclaim the role of UNCTAD to shape global policy frameworks that uphold developmental imperatives in line with their vision as expressed in Agenda 2063 of the African Union."

The CSOs said that to further allow implementation of the calls made in this declaration, "there is a need to scale up the international financial and human resource support of member Governments towards UNCTAD and its overall mandate. As the organization becomes more dependent on project-based funding from developed countries, priorities shift in the direction of donor States rather than the agreed-upon mandate, a tendency that robust, renewed general support funding from member States could curb." +