25 April 2006
Secretary-General Calls for Elimination of Trade-Distorting Subsidies for Agriculture at High-Level ECOSOC Meeting
Participants in Day-Long Meeting Include Representatives of IMF, World Bank, World Trade Organization, UNCTAD
NEW YORK, 24 April (UN Headquarters) -- United Nations Secretary-General Kofi Annan, fearing that the difficulties encountered in the trade talks at Doha had led some to contemplate settling for something less than a true development round, today urged global economic experts meeting in New York to maintain ambition, sustain the drive and demonstrate the political courage to conclude the talks by the end of 2006.
Addressing the Special High-Level Meeting at Headquarters of the Economic and Social Council (ECOSOC) with the Bretton Woods institutions, the World Trade Organization and the United Nations Conference on Trade and Development (UNCTAD), Mr. Annan urged developed countries to adopt bold liberalization measures that would lead to a successful conclusion of the Doha Round. He said it was also time for trade-distorting subsidies for agriculture to be eliminated, and rapidly, especially with sensitive products, such as cotton. The "Aid for Trade Initiative" should also be promptly and fully funded, and implemented, he urged.
Opening the meeting, the President of the Economic and Social Council, Ali Hachani (Tunisia), said that the new functions assigned by world leaders to the Council had placed it at the centre of the effort to monitor and advance implementation of the global development agenda. The large number of high-level participants at today's meeting attested to the critical importance of development cooperation for human welfare worldwide. Taking and implementing difficult decisions and the required reforms could be facilitated by increasing economic and financial resources, as a result of the growing world economy. Today's deliberations were important to identify how to seize that opportunity, for which new initiatives were welcome.
Saying that Aid for Trade was no substitute for an ambitious trade round, but a valuable component, Deputy Director-General of the World Trade Organization, Valentine Sendanyoye Rugwabiza, said the aim was to help developing countries build the necessary tools to benefit from more open world markets. That was new territory for the World Trade Organization, which, for decades, had viewed its role rather narrowly. The World Trade Organization's core business would remain setting up fair trade rules, but Aid for Trade presented major institutions with significant opportunities and challenges to translate the challenges of greater cooperation into concrete actions and meaningful results. She urged participants at today's event, therefore, to press ahead in helping millions worldwide escape poverty.
Reporting on the recent meeting of the International Monetary Fund (IMF) and the Financial Committee, the Fund's Deputy Managing Director, Augustin Carstens, said the Committee had welcomed the continued strong expansion of the global economy, which was becoming geographically more broadly based and expected to remain strong in the next couple of years. Downside risks arose from continued high and volatile oil prices, however, along with the potential for an abrupt shift in global financial market conditions, a rise in protectionism, and a possible avian flu pandemic. Action for orderly medium-term resolution of global imbalances was a shared responsibility, and given economic interlinkage, all countries and regions had a role to play by increasing the flexibility of their economies and adapting to changing global demand patterns, he said.
Additional speakers in the morning's opening session were: Alberto Carrasquillo Barrera, Chairman of the Development Committee, and Ransford Smith, President of the Trade and Development Board.
Following the opening remarks, four round table discussions were held under the overall theme, "Coordination and cooperation in the context of the implementation of the Monterrey Consensus and the 2005 World Summit Outcome". The following four subjects were considered: implementation of national development strategies; fulfilling the development dimension of the Doha work programme and the next steps, including in the Aid for Trade area; external debt; and supporting development efforts of middle-income developing countries. The chairpersons of the round tables reported on the results of those discussions.
This afternoon, the following co-chairs presented highlights of the round table discussions: Maria Luiza Viotti, Director-General, Humanitarian and Social Themes, Ministry of External Relations, Brazil; Eckhard Deutscher, Executive Director, World Bank (Germany); Willy Kiekens, Senior Executive Director, International Monetary Fund (IMF); and Leire Pajín, Vice Minister, Secretary of State for International Cooperation, Spain.
Reporting, as a panel member, on the meeting, held in New York a few weeks ago, of the Secretary-General's High-Level Panel on System-Wide Coherence in Development, Humanitarian Assistance and the Environment, Ruth Jacoby, Director-General for Development Cooperation of Sweden, said that never before had there been such a unity of purpose. But, the effort needed to be scaled up, in order to reach the goals the international community had set for itself. It was evident to all that the United Nations had a unique role to play. Its network was second to none around the world, coordinating countries as they worked towards development, but also performing in peacekeeping, peacebuilding activities and humanitarian assistance, a role no one else could play.
Many had questions on what the scope of the panel's recommendations would be with regard to the agencies represented, she said. The answer, for now, would have to be that the panel was looking into the relationships. In the end, the issue was to position the United Nations to achieve results on the ground and help countries achieve their development vision. It was evident that a major responsibility for system-wide coherence rested with the Member States themselves. There was also a need to define a vision of the role of the United Nations system in development, and how it should be equipped to respond to that role. In the end, as the panel issued its recommendations in September to the Secretary-General, she hoped it would contribute to greater coherence, but most of all, to greater impact.
In closing, Mr. Hachani, President of the Economic and Social Council, said that ideas were not in short supply, and strong action was needed on some of them. He suggested that the Economic and Social Council could explore how the result of today's dialogue could lead to greater impact. He would initiate consultations on ways to follow up the key recommendations. Highlighting the salient issues, he said the current outlook remained satisfactory, but there were significant risks, particularly due to persistent global financial imbalances and the possibility of continued volatile energy prices. A major concern had emerged, namely that the negotiating parties in the Doha talks had made only modest gains in some areas, while areas of concern to developing countries had registered no significant advances. The need for renewed efforts to enhance the international financial architecture was also underlined. He would circulate a final summary to all participants, as soon as possible.
Participants in the discussion also included Wahu Kaara, Coordinator, Kenya Debt Relief Network; Parag Saxena, Chief Executive Office and Managing Partner, INVESCO Private Capital; and Kim Hak-Su, Executive Secretary of the Economic and Social Commission for Asia and the Pacific. The representatives of Austria, on behalf of the European Union, and the Republic of Korea also spoke.
The Economic and Social Council (ECOSOC) met this morning to convene a special high-level meeting with the Bretton Woods institutions, the World Trade Organization and the United Nations Conference on Trade and Development (UNCTAD). Statements were expected by the United Nations Secretary-General; ministers and senior representatives of Member States; and representatives from development, finance and trade institutions, as well as from civil society and the private sector.
ALI HACHANI (Tunisia), President of the Economic and Social Council, recalled that leaders, at the 2005 World Summit, had assigned several new functions to the Council, such as annual ministerial reviews of progress towards agreed development goals, the convening of a global Development Cooperation Forum, and a strengthening of ECOSOC as a forum for global policy dialogue. Each of those new tasks placed ECOSOC at the centre of the effort to monitor and advance implementation of the global development agenda. The Council could only successfully undertake those functions with the full engagement of all stakeholders, especially the key institutions involved in the implementation process. Everyone must seize the unique opportunity that engagement provided, to advance the global partnerships for development required to ensure timely and full realization of the shared vision.
He said that the large number of high-level participants in today's meeting attested to the critical importance of development cooperation for human welfare in all regions of the world. He was encouraged by the joint deliberations for the preparation of the meeting, and the evolving partnership with the key international development, finance and trade institutions, as well as other main institutional stakeholders of the Monterrey Consensus. Under the overall theme, "Coordination and cooperation in the context of the implementation of the Monterrey Consensus and the 2005 World Summit Outcome", four vital subjects would be considered: implementation of and support for national development strategies; fulfilling the development dimension of the Doha work programme and next steps, including in the "Aid for Trade" area; external debt; and supporting development efforts of middle-income developing countries. The last was especially innovative and of particular interest to a growing number of developing States.
The recent International Monetary Fund (IMF) and World Bank Ministerial meetings in Washington had confirmed the likelihood of continuing satisfactory growth for the world economy as a whole, at least in the short term, he said. That should not lead to complacency. Indeed, current circumstances provided the opportunity to advance more rapidly in the required national and international actions to achieve the internationally agreed development goals. The Monterrey Consensus recognized that national efforts should be complemented by supportive global programmes and actions aimed at maximizing the development opportunities of developing countries. Taking difficult decisions and implementing them, as well as undertaking required reforms, could be facilitated by increasing economic and financial resources, as a result of the growing world economy. Today's deliberations were important to identify how to seize that opportunity, for which new initiatives were welcome.
KOFI ANNAN, Secretary-General of the United Nations, said that, during last September's World Summit, world leaders had pledged to adopt, by no later than the end of this year, comprehensive national development strategies for achieving the millennium targets. Those strategies would help place the Millennium Development Goals at the centre of national policymaking and should build on existing national policies and development plans, including Poverty Reduction Strategy Papers. The strategies, he stressed, must be based on actual investment needs and include details on how to mobilize and allocate domestic and external resources for maximum effect. He urged the Bretton Woods institutions to team with the United Nations and other partners to help Governments improve strategy-formulating capacity.
He said he was encouraged by the progress made during the last few years to mobilize development resources. Not long ago, official development assistance (ODA) as a share of gross national income was declining. But, since 2001, ODA had almost doubled, and, as a share of gross national income, had reached a level not seen since 1992. In addition, debt servicing by the Heavily Indebted Poor Countries (HIPC) had declined, and further progress was expected, now that the Multilateral Debt Relief Initiative, proposed by the "Group of Eight" (G-8), was being implemented by the IMF and the World Bank. He noted important strides in innovative financing, with Member States implementing various proposals, including a levy on air tickets and a mechanism to frontload funds for immunizing children.
Still, more needed to be done, he continued, stressing that a large part of the ODA increase had concentrated on debt and emergency relief, while flexible funding for financing millennium strategies had not increased sufficiently. The Secretary-General urged developed countries to adopt bold liberalization measures to successfully conclude the Doha Round, including genuine market access for developing countries' goods and services, and duty-free and quota-free access for least developed countries' goods. It was also time for trade-distorting agricultural subsidies to be eliminated, and to do so rapidly for sensitive products, such as cotton. Also, the Aid for Trade initiative should be promptly and fully funded and implemented. He warned Doha participants against settling for something less than a true development round, calling on them to sustain the drive and political courage to conclude the talks by year's end.
ALBERTO CARRASQUILLA BARRERA, Minister of Finance for Colombia and Chairman of the Development Committee, said today's meeting was the first since what had aptly been labelled the year of development. Last year, 2005, had been a milestone year for development, with several important landmarks, including the G-8 Summit in Gleneagles, the Paris Forum on Aid Harmonization, the World Trade Organization Ministerial Meeting in Hong Kong, and most centrally, the World Summit last September. The commitments made in 2005 had given new impetus to the development agenda and to accelerating progress to meet the Millennium Development Goals. The challenge was to translate those commitments into a concrete programme of action. That was the theme of the discussions at this year's spring meeting of the Development Committee, and the themes chosen for today's high-level dialogue would shed further light.
He said that, in many ways, the environment for scaling up ambition on the development agenda had never been better. Developing country growth was at historically high levels. It was striking that all developing regions had grown more rapidly than high-income countries over the last several years. Encouragingly, that was true for sub-Saharan Africa as well, which was growing at its fastest pace in the last 30 years, and surpassing growth of other developing regions, excluding India and China. In Africa, as in other developing regions, there was little doubt that a concerted shift towards better policies played a major role in the improved outcomes, even in the face of adverse external shocks.
Yet, poverty reduction remained uneven, he reported. East Asia had already reached the target, and South Asia would soon reach that milestone as well, however, Latin America was slightly off the target trajectory and very few African countries would reach the poverty Millennium Goal, despite the acceleration in per capita growth. Progress on the human development goals was less favourable. Although there were signs of better progress towards the human development Millennium Goals, with current trends, many developing countries would fail to meet those Goals.
He said that, at the Development Committee meeting, ministers agreed that it was feasible, and indeed, imperative, to do better. That would require concerted efforts by developed countries, developing countries and international agencies on a broad agenda focused on trade, aid and governance based on the principles of mutual accountability. Governance had emerged as an essential element of the mutual accountability framework that supported efforts to reach the Millennium Development Goals, and progress in that area could be both rapid and substantial. Ministers had agreed on the need for efforts to improve governance in all countries, to help build effective States with strong national systems, and to work together on implementing global initiatives to improve governance, increase transparency and build demand for good governance at the country level in a way that strengthened ownership.
Building on work over the last decade, the ministers had called on the World Bank to lay out a broad strategy for helping member countries strengthen governance and deepen the fight against corruption, he said. There were also major new commitments to expand aid flows and deepen debt relief to the poorest countries in 2005. Ministers had welcomed the rising trend in the volume of ODA, not only from the Organisation for Economic Cooperation and Development (OECD) Development Assistance Committee (DAC) members, but also from non-DAC countries, and they called on all donors to fully implement the commitment they had made for substantial increases in aid volumes. Ministers also called for rapid progress in implementing the framework agreed in the Paris Declaration for enhancing aid effectiveness through improved modalities, and a stronger focus on results, as aid was often fragmented, unpredictable, and poorly aligned with country strategies.
He said that ministers had also welcomed the progress made concerning the Multilateral Debt Relief Initiative, the International Development Association (IDA) and the African Development Fund. They also welcomed, in particular, the cancellation by the International Monetary Fund of the debt of the first 19 countries, and, in the Bank, the approval of the required resolution by the IDA Governors leading to final agreement on that Initiative. Implementation of the Doha Development Agenda was a critical complement to other efforts to increase growth and reduce global poverty. Ministers urged all World Trade Organization members to step up their efforts to reach a successful conclusion to the Doha Round by the end of this year. They welcomed a significant increase in donor commitments for Aid for Trade and the creation of a World Trade Organization task force to make recommendations on how to operationalize Aid for Trade, recognizing that that was a complement, and not a substitute, for a successful Doha Round.
In addition, middle-income countries were key to the achievement of the global poverty reduction goals and essential in the provision of global public goods, he said. Most of those countries, however, faced constraints in mobilizing the funds needed to invest in infrastructure, health, education and reform of policies and institutions essential to improve the investment climate. He was pleased, therefore, that ministers had agreed to take up that topic at their next meeting. Another issue with important implications for development and financing, though not on today's agenda, was that of securing affordable and cost-effective energy supplies to underpin economic growth and poverty reduction, while preserving the environment. Two thirds of the increase in world primary energy demand over the next 25 years would come from developing countries where 1.6 billion people, mostly in Africa and South Asia, still had no access to electricity. Meeting the energy demand in developing and transition countries during that period would require investments of some $300 billion per year. It was important that those investments be directed towards more efficient and lower carbon energy sources.
RANSFORD SMITH (Jamaica), President of the UNCTAD Trade and Development Board, said effective national development strategies must be the central pillar of developing countries' economic policy efforts. Such strategies depended increasingly on the structural and cyclical conditions in the global economy. Over the past two or three years, economic performance had improved in several low- and middle-income developing countries. Still, a significant number of those countries continued to seriously lag behind in achieving national development objectives and the millennium targets. They needed support in designing and implementing national strategies, particularly international financial and technical support to strengthen infrastructure and productive sectors, as well as their health and education systems. Country ownership was important for success. International support must leave scope for alternative policy choices. UNCTAD could offer important policy advice and alternative policy options with a coherent, goal-oriented framework.
The critical 30 April deadline for setting up full market-access modalities in agriculture and non-agricultural market access and services was seriously in jeopardy, he continued. It was evident that the Doha Round required renewed commitments at all levels to be successfully concluded. The Aid for Trade Initiative must be relevant, targeted and adequate, and must be used in addition to current resources. Aid for Trade should also reflect recipients' priorities and be demand-driven. Developing countries would need trade-related assistance to cover adjustment costs, compliance costs related to implementing new World Trade Organization agreements, and for building necessary trade-related infrastructure and supply-side capacity to benefit from the post-Doha multilateral trading system.
The G-8 decision to provide adequate resources for financing of multilateral debt for Heavily Indebted Poor Countries (HIPC) and recent steps of the World Bank and the IMF to implement the initiative were important contributions to support the world's poorest countries' efforts to achieve the millennium targets, he said. However, extending debt relief to other heavily indebted countries remained unfinished. It was essential to add debt relief to new ODA commitments, and to ensure that financing for development and trade-related aid would build developing countries' supply capacity and their participation in international trade.
Reporting on the thirteenth meeting of the International Monetary Fund (IMF) and the Financial Committee, held on 22 April in Washington, D.C., was AUGUSTIN CARSTENS, IMF's Deputy Managing Director. The Committee welcomed the continued strong expansion of the global economy, despite the higher oil prices. That expansion was becoming geographically more broadly cased, and global growth was expected to remain strong in the next couple of years. It noted, however, that downside risks arose from continued high and volatile oil prices, the potential for an abrupt shift in global financial market conditions, a rise in protectionism, and a possible avian flu pandemic. The major risks posed by underlying vulnerabilities, including widening global imbalances, had yet to be comprehensively addressed.
On behalf of the Financial Committee, he reiterated that action for orderly medium-term resolution of global imbalances was a shared responsibility, and, as such, would bring greater benefit to members of the international community than individual actions. The agreed policy strategy to address imbalances remained valid. Key elements included raising national saving in the United States, with measures to reduce the budget deficit and spur private saving; implementing structural reforms to sustain growth potential and boost domestic demand in the euro area and several other countries; further structural reforms, including fiscal consolidation, in Japan; allowing greater exchange rate flexibility in a number of surplus countries in emerging Asia; and promoting efficient absorption of higher oil revenues in oil-exporting countries with strong macroeconomic policies.
Given economic interlinkage, all countries and regions would have a role to play by increasing the flexibility of their economies and adapting to changing global demand patterns, he said. The Committee had, therefore, asked IMF to work on modalities, in consultation with country authorities, aimed at encouraging actions needed to reduce the imbalances, and had called for a report at its next meeting. The new multilateral consultations could play a role in promoting multilateral action. He also welcomed the actions already taken to address capacity constraints in oil production, and he called for further measures to improve the supply-demand balance in oil markets over the medium term, with oil producers, oil consumers, and oil companies all playing their part.
He also emphasized the importance of further upstream and downstream investment policies to promote energy efficiency, conservation and alternative energy sources; reducing subsidies on oil products; and further efforts to improve the quality and transparency of oil-market data. Steps to strengthen medium-term fiscal positions were also crucial to growth and stability, and to improving resilience against future shocks. Greater advantage should be taken of the economic expansion to reduce fiscal deficits and to move forward with reforms to ensure the sustainability of pension and health systems. He called on members to ensure the robustness of essential economic and financial infrastructure, as part of a broad strategy to address the risk of an avian flu pandemic and, in that context, supported the IMF's outreach initiative to promote business continuity-planning among financial institutions.
The Committee also emphasized the importance of an ambitious and successful outcome to the Doha Round by the end of 2006, for global growth and poverty reduction, he said. He called on all members to resist protectionisms in both trade and foreign direct investment. With time running increasingly short, all members must urgently contribute to reaching agreement on the key elements of a comprehensive package supporting a strengthened multilateral trading system. For poor countries especially, he urged Aid for Trade assistance firmly grounded in national development strategies and full use of existing and enhanced mechanisms for trade-related technical assistance. The improving growth prospects in poor countries, including in sub-Saharan Africa, were encouraging. Developing countries should continue to pursue sound macroeconomic policies and growth-critical reforms, and the international community should follow through expeditiously on its commitment to provide additional resources.
He said that the IMF's effectiveness and credibility as a cooperative institution must be safeguarded and its governance further enhanced, emphasizing the importance of fair voice and representation for all members. He underscored the role an ad hoc increase in quotas would play in improving the distribution of quotas to reflect important changes in the weight and role of countries in the world economy. The Committee agreed on the need for fundamental reforms, and it called on the Managing Director to come forward with concrete proposals. It also reiterated the importance of making IMF surveillance more effective through a new framework consisting of the following four elements: a new focus of surveillance on multilateral issues; a restatement of commitments regarding surveillance of monetary, financial, fiscal and exchange-rate policies; and a new proposal for multilateral surveillance, through which the Managing Director, the Executive Board and the staff were accountable for the quality of surveillance.
As emerging market members pursued sound policies and integrated effectively into world trade and capital markets, they made a welcome contribution to global economic stability and avoidance of financial crisis, he said. The Committee welcomed the Fund's efforts to respond to the new challenges and needs of emerging market members. Financial and capital markets should be increasingly at the centre of the Fund's work in those countries. The Committee supported further examination of the Managing Director's proposal on a possible new instrument to provide high-access contingent financing for countries that had strong macroeconomic policies, sustainable debt, and transparent reporting, but remained vulnerable to shocks. It encouraged IMF to explore the role it could play in supporting regional arrangements for pooling reserves. A review was also needed of the operational aspects of the Fund's policy on lending into arrears.
The Committee also stressed the Fund's critical role in low-income countries, he said, adding that IMF should play its part, within its areas of core competence, in monitoring progress towards implementation of the Millennium Development Goals. The Committee welcomed the establishment of new instruments to strengthen the Fund's support for low-income countries, including the Policy Support Instrument and the Exogenous Shocks Facility, and underlined the importance of further contributions to enable the Fund to provide timely concessional shock financing. It also welcomed debt relief provided by IMF and other institutions under the Heavily Indebted Poor Countries (HIPC) Debt Initiative and the Multilateral Debt Relief Initiative. It underscored the importance of ensuring debt sustainability in countries receiving debt relief, by refining the joint IMF/World Bank debt sustainability framework, and in helping countries to implement sound medium-term debt strategies and strong public expenditure management and tax systems. The next meeting of the Financial Committee would be held on 17 September, in Singapore.
VALENTINE SENDANYOYE RUGWABIZA, Deputy Director-General of the World Trade Organization, said all hopes were pinned on the chance for a global trade deal in the foreseeable future. The cost of failure for developing countries would be the following: they would lose a once in a generation opportunity to open world markets for exports and form a balance in trade relations; the smallest and poorest economies would lose leverage and be further marginalized in global trade; and the increasing pressure of bilateralism and regionalism would continue. Both developed and developing countries would suffer from a weakened system. The World Trade Organization and its expanded rules were pivotal to international economic relations, but if the Doha negotiations stumbled after an investment of so much energy and hope, the future of multilateral trade was grim.
She said there was little time remaining, and a lot of work. Agreement was pending on the numbers for slashing trade distorting subsidies and market access. Developing countries had now become increasingly important players, and a big push was possible to arrive as close as possible to drafting a negotiated text, in such areas as anti-dumping and subsidies. Measures were also needed to cut red tape at the bottom, as was good progress towards consolidation. Above all, the development objective must remain at the heart of the upcoming round of talks, as that would be the benchmark of success. By the end of the year, the substantial result must be to deliver progress on each and every part of the talks, of which a critical part was Aid for Trade. Many developing countries had been unable to benefit, so far, from an opening market, however, because they lacked the necessary trade capacity and infrastructure.
Aid for Trade was no substitute for a successful and ambitious trade round, but a necessary and valuable component, she said. What was needed was technical assistance, capacity-building, and strengthened customs authorities, tax systems and product testing to lower the cost of doing business, along with the building of roads and communications networks to link exports to the global markets. Adjustments were also needed to help with any transition costs associated with tariff reductions. The complexity of the details should not detract from the basic objective of Aid for Trade, namely helping developing countries build the necessary tools to benefit from more open world markets. That was about better harnessing trade as an engine for growth and development. And, that was new territory for the World Trade Organization, which, for decades, had viewed its role rather narrowly.
She said that the World Trade Organization's core business would remain in trade negotiating rules and setting up fair trade rules. The solution, therefore, could come only from working with others, such as the World Bank, IMF, United Nations agencies and regional Development Banks at the national level. It was in national capitals that policy must begin. Aid for Trade presented all major institutions with major opportunities and challenges in translating greater cooperation into concrete actions and meaningful results, and in translating last year's collective commitment to the Paris principle of aid effectiveness into reality.
A missing piece of the development puzzle -- an essential third pillar -- was trade opening. She, therefore, urged participants at today's event, in the strongest possible terms, to press ahead, in order for millions of people worldwide to escape poverty and lead decent lives.
Panel on System-Wide Coherence
Reporting, as a panel member, on the meeting, held in New York a few weeks ago, of the Secretary-General's High-Level Panel on System-Wide Coherence in Development, Humanitarian Assistance and the Environment, RUTH JACOBY, Director-General for Development Cooperation of Sweden, said that the Monterrey Consensus, the Millennium Declaration, the Millennium Development Goals, the Johannesburg Action Plan and the 2005 World Summit showed that there was now consensus on where the world needed to go. That made coherence both possible and necessary. Never before had there been such a unity of purpose. But, coherence had a way of becoming more difficult, as it was clear that the efforts needed to be scaled up, in order to reach the goals the international community had set for itself.
She said that the meeting of the High-Level Panel had demonstrated that it was not just about reforming international institutions, but also about coherence by Governments in ensuring that they say the same thing, whether speaking in Washington, New York or Geneva. In addition to consensus on the goals, there was a consensus on the need to support nationally owned and tailored strategies. The United Nations system should be strengthened, in view of the ambitious agenda and substantial official development assistance (ODA) increases. Although some of those increases had been the result of debt relief, the trend was definitely positive for the first time in many years. It was in that environment it was evident to all that the United Nations had a unique role to play. It had had the convening power, the neutrality and the legitimacy to formulate the Millennium Development Goals. It had been crucial in analysis and advocacy.
The United Nations network was second to none around the world, coordinating countries as they worked towards development, and also performing in peacekeeping, peacebuilding activities and humanitarian assistance, a role no one else could play, she said. Many had questions on what the scope of the panel's recommendations would be regarding the agencies represented here. The answer, for now, would have to be that the panel was looking into the relationships. In the end, the issue was to position the United Nations to achieve results on the ground and help countries achieve their development vision. It was evident that a major responsibility for system-wide coherence rested with the Member States themselves. There was also a need to define a vision of the role of the United Nations system in development, and how it should be equipped to respond to that role. In the end, as the panel issued its recommendations in September to the Secretary-General, she hoped it would contribute to greater coherence, but most of all, to greater impact.
Highlights of Round Tables
Reporting on Round Table A, MARIA LUIZA VIOTTI, Director-General, Humanitarian and Social Themes, Ministry of External Relations, Brazil, said the key message of Jeffrey Sachs, Director, United Nations Millennium Project, who had been one of the lead discussants, had been that IMF should be more proactive in helping secure international development financing. Instead of taking ODA levels as given, the Fund should work together with the finance ministries of donor countries to fill the gaps between current ODA levels and the needs of the countries concerned. Mr. Sachs had also stressed that the IMF and the World Bank should ensure that country programmes were consistent with achieving the Millennium Development Goals.
She said that Lee Kyu-hung, Vice Foreign Minister of the Republic of Korea, had focused on development of human resources, particularly with respect to education and job training, as the best strategy to achieve the Goals. Many countries today offered examples of their own national strategies, stressing the role of human resources development in pursuit of the Millennium Goals. The first half of the discussions had been dedicated to reviewing national strategies and employment promotion, and the second part in support of ODA, innovative financing sources and domestic efforts to achieve the Millennium Development Goals. Many had felt that coherence with development partners was crucial in implementing their development strategies. Country-owned national strategies had been repeatedly emphasized, as well as the idea that they should reflect the conditions of the country concerned. Also stressed had been the point that a sound macroeconomic policy framework was central to attracting external financing. It had been suggested that focus should also be placed on identifying major roadblocks to development and to scaling up aid.
Some had argued for several different strategies, and the importance of countries building on existing ones, rather than trying to develop new ones, she said. Elements of development strategies should be incorporated into one simple document, and the Millennium Development Goals, themselves, should be incorporated into the Poverty Reduction Strategy Papers. Some civil society representatives had stressed that development policies should put people first. Fiscal space should be enhanced and not constrained. The ECOSOC had a role to play in engaging more effectively with the international finance and trade institutions in promoting coherence and national development strategies. A shift from "arc budget funding to through budget funding", for which public finance management was needed, had also been suggested. Donors should align aid with developing countries' priorities. Concern had been expressed that the political commitments to increase ODA levels had yet to materialize. Many felt that more should be done to increase the volume and improve the quality of ODA.
Reviewing the discussion in Round Table B, ECKHARD DEUTSCHER, Executive Director, World Bank (Germany), said participants had focused on Aid for Trade and the steps required for fulfilling the Doha work programme. All participants agreed that Aid for Trade was a welcome initiative and that the focus should be on supply capacity-building, such as on physical and economic infrastructures. It was also felt that compensation should be provided to developing countries for adjustment costs. Aid for Trade should complement, and not substitute, for trade. That had been stated repeatedly, as well as the point that country ownership and countries' individual development processes must be respected. Concern had been expressed, however, that Aid for Trade was diverting attention from the Doha negotiations. Aid for trade should provide stable, predictable and non-conditional financing for capacity-building and trade. Cooperation across all stakeholders, as well as coherence, was crucial to success.
The view had also been expressed, he said, that trade should be integrated into planning at the national level and aligned with national priorities. An integrated framework should be an integral part of development policies, but there, improvements were needed. Attention should not be diverted from the core development agenda of the trade talks. The need was to support trade liberalization and to ensure the development outcome of the negotiations. There was likely to be an increased amount of ODA available in the future to support Aid for Trade, and that financing aspect was very important, but that should not divert improved market access. The task force on Aid for Trade should take a wider view to include adjustment costs and compensation. Removal of subsidies could provide much greater benefits than Aid for Trade. The creation of a global fund in that context was not deemed necessary, but it was important that measures provided the appropriate incentive for the private sector to expand trade.
On reform of the United Nations in the context of development and the ECOSOC, he said that many had stressed the need to examine the relationship with the Bretton Woods institutions, the World Trade Organization, UNCTAD and other stakeholders. The need for coherence, transparency, monitoring, accountability and evaluation had also been emphasized. It was felt that ECOSOC should ensure that trade supported development. Structural problems should also be addressed, in addition to market access and issues of finance and subsidies. In terms of next steps, agriculture was one of the most important aspects of the current Doha Round, but the views had been controversial in this morning's discussion, especially involving issues of distortions to free trade, South-South cooperation, quotas and duty-free access, and so forth. In his view, this might be the last chance for the international community to reach some conclusions, and it should seize that opportunity.
Reporting on Round Table C, WILLY KIEKENS, Senior Executive Director, International Monetary Fund, said the discussion on debt relief had been constructive and had focused on several themes, including the causes of unsustainable debt, the financial and equity aspects of debt relief, as recognized by the international community, and the problems middle-income countries faced with maintaining debt sustainability.
Some of the main factors behind unsustainable debt were inappropriate terms of debt, as well as insufficient economic growth and inappropriate investments, he said. The participants agreed that highly concessional loans were not the cause, and the avoidance of unsustainable debt was the responsibility of both lenders and borrowers.
The round table recognized that the adequate economic growth was one way to avoid unsustainable debt, as were good governance, a positive regulatory environment, a business environment that stimulated investment, and adequate aid flows in the future. Another factor was progress on global trade negotiations to provide countries with opportunities to sustain growth in a fair manner.
The group had recognized that appropriate debt management should be carried out by the poor countries, as the lending countries adhered to good lending practices. The international community should also move towards more accurate analysis of the risk of debt distress and policies that could minimize the risk of countries facing debt distress in the future.
The round table participants agreed that debt relief should be regarded as additional aid to countries and not serve as a substitute for aid. All donors should live up to their responsibility and provide debt relief, in addition to their aid flows, he added.
With respect to the middle-income countries, round table participants had agreed on the need for more innovative techniques for debt restructuring, such as debt-to-equity swaps, he said. The private sector had called for more transparency on debt management, so that private creditors could make informed decisions in extending credit and assuming risk.
Participants agreed that development required much more than debt relief, such as good policy management, responsible debt management by countries, and appropriate macroeconomic policies that promoted growth. The success of the Doha Trade Round was a complement to debt relief, he added.
Reporting on the discussion of Round Table D, LEIRE PAJÍN, Vice Minister, Secretary of State for International Cooperation of Spain, said the group agreed, first of all, on the importance of placing the debt of middle-income countries on the agenda of today's meetings. The group recognized the need for a dialogue on the future of middle-income countries and that some developing countries with middle incomes had similar problems to the least developed nations, such as poverty, excessive debt, social inequities and vulnerability to external shocks, which could lead to macroeconomic instability.
Participants also recognized the differences among the middle-income countries, in areas such as size, regional and geographic location, and the level of development. Their problems should be evaluated on an individual basis, and suitable assistance developed by the international community, she said.
She also said there was a need for special financial assistance to obtain visible results and accelerate the growth of those countries. Financing mechanisms were necessary to create social programmes that could address the needs of the poor people in middle-income developing countries. Some policies that might help included measures to improve the macroeconomic situation, the development of South-South cooperation, common systems in science and technology, and the improved transfer of technology.
Other helpful measures would be efforts to improve the level of private capital, the development of public and private alliances, greater participation by the private sector and good governance, she said.
Another beneficial measure would be strengthening the participation of middle-income countries in international institutions and their participation on the governing boards. She added that an upcoming conference in Spain on middle-income countries was a move in the right direction.
Civil Society Participation
WAHU KAARA, Coordinator, Kenya Debt Relief Network, said that financing for development had been identified as an important mechanism with which to work in tandem with national development strategies to achieve the goal of shared and equitable development. The international consensus in Monterrey recognized that the financing for development process was an important opportunity for comprehensively dealing with issues relating to trade, international finance, debt, development aid, investment and capital flows, in the process of delivering sustained and equitable growth. In delivering the Monterrey Consensus and making financing for development a reality, the Economic and Social Council (ECOSOC) had been identified as a main anchor, coordinating the activities of the IMF, the World Bank, the World Trade Organization and other stakeholders.
Despite the call at Monterrey and its clearly articulated goals and mechanisms, she said that, more than four years later, implementation of the commitments made there remained a hope, rather than a reality. An increasing and deepening global inequality persisted, with more people living in abject poverty and more classified as working poor. Access to jobs was essential, but much of the developing world had experienced high, and even rising, unemployment. It should be recalled that national Governments had adopted the Copenhagen Declaration and Programme of Action on Social Development in 1995, and by doing so, had committed themselves to eradicating poverty, pursuing full employment, fighting social exclusion and promoting gender equality. Ten years later, it appeared that Governments lacked the political will to implement it, however.
If Governments remained hamstrung by a lack of political will, it was all too easy to forget the faces behind the facts, figures and economic theory, or the devastating impact of failed or unimplemented policies on human lives, she said. The faces of those people must now be on everyone's mind, as those discussions continued. A lack of political will had led to a stalled development agenda. National Governments must be afforded the necessary policy space critical to implementing their national development strategies. The political will harnessed in Monterrey in 2002 had shamelessly been lacking in delivering on the commitments. Yet, the key to sustainable development lay in the political will and policy space needed to implement national development strategies.
Business Sector Participation
PARAG SAXENA, Chief Executive Office and Managing Partner, INVESCO Private Capital, said he had developed a boundless optimism in watching entrepreneurs around the world solve problems, small and large. He had seen that done, primarily through venture capital-fostered companies, which required no handouts, no tax breaks and, yet, was a substantial creator of jobs. One third of the jobs created in the United States in the last 10 years had been created by venture capitalists. The funds went to people with grand ideas, but no money, such as Apple Computer, Google and Starbucks. The key idea was to foster the creation of those firms and then leave the entrepreneurs alone to do their magic.
He said that the one other important part was a debt market. He urged all those in middle-income or even low-income countries to find access to debt markets, without which it would not be possible to finance schools, hospitals or bridges. Debt markets found the balance and the most efficient way of providing subsidies or tax relief, rather than cash. Every country was different, but every country had people who worked in those markets, even within five miles of the United Nations building. Go out and find them, he urged.
KIM HAK-SU, Executive Secretary of the Economic and Social Commission for Asia and the Pacific (ESCAP) and current Coordinator for the Regional Commissions, said there was an ever-greater need in all regions to strengthen and promote regional infrastructure to sustain growing interregional trade, investment, South-South cooperation and development.
He said that ESCAP and other Commissions had carried out major studies on infrastructure needs. He noted that a recent ministerial session of ESCAP, hosted by Indonesia last month, had considered a major study on the subject, including financing needs for upgrading the region's infrastructure. The financing gap in the region for infrastructural development was estimated at $180 billion a year, and an understanding had been reached to begin a study to examine options of financing infrastructure.
He said that trade was critical for all nations, especially the developing countries, to meet the Millennium Development Goals and sustain their development efforts. He endorsed the views of the World Trade Organization's Deputy Director General, expressed at this morning's meeting, that Aid for Trade was a growing necessity, and solutions could only emerge through cooperation.
The Regional Commissions were working with the World Trade Organization and the United Nations Conference on Trade and Development (UNCTAD) to organize training and information-sharing events, so developing countries could take advantage of trade agreements. The Regional Commissions had also been active, in recent years, in helping the least developing countries, many of which were not yet members of the World Trade Organization, integrate into the global economy.
GERHARD PFANZELTER (Austria), speaking on behalf of the European Union, said the ECOSOC Special High-Level Meeting was an integral step in the follow-up to the implementation of the Monterrey Consensus. The meeting was a key forum that promoted the integrated and coordinated contribution of the United Nations, the Bretton Woods institutions, the World Trade Organization and other major international stakeholders, to the goals and objectives set out in the Monterrey meeting, as well as other United Nations conferences.
He said the European Union was well on track to meeting its 2002 commitment to increase aid volumes by 2006, and member States remained united in their commitments to increase aid. Some member States firmly believed that innovative financing mechanisms could help deliver the funds needed to achieve the Millennium Development Goals and supplement traditional sources of financing.
The European Union considered the ongoing round of multilateral trade negotiations, known as the Doha Development Agenda, as a significant opportunity for development potential that should not be missed, he continued. The Union welcomed the 2005 Summit conclusion, which had recognized vital role of trade in achieving the Millennium Development Goals and stressed the importance of ensuring the integration of developing countries into the world trading system. The Union also remained committed to finding solutions to unsustainable debt burdens, welcomed the deliberations of the Development Committee as timely and encouraged further development.
The Union remained concerned over the lack of progress in sub-Saharan Africa towards the Millennium Development Goals, and was examining options to push the development process forward. In that regard, he said the European Union welcomed the report of the Economic Commission for Africa (ECA) that underlined the vital role of the New Partnership for Africa's Development (NEPAD) as an African-owned strategic framework to address the continent's development challenges. The Union also welcomed the World Bank's Africa Action Plan and the launch of the Africa Catalytic Growth Fund.
CHO HYUN (Republic of Korea) said that today's meeting had touched upon all relevant and important development issues. Since his country had achieved its economic goals mostly through trade, he was inclined to subscribe to the discussion held in Round Table B. The idea of attaining economic growth through trade could not be overemphasized. The question was how developing countries could take advantage of international trade. A strong global trading system needed to be devised that could provide incentives for participation in global trade liberalization. Members of the General Agreement on Tariffs and Trade (GATT) had, a decade ago, introduced special and differential clauses as a result of worldwide negotiations, but, in 10 years, they had been found to be inadequate.
That was why hopes were high for the Doha development negotiations, although their result was as yet unknown, or even whether there would be agreement at all.
Against that backdrop, he said he had observed the widely spreading free trade agreements in recent years. Those developments were worrying, because most developing countries were not well equipped for such bilateral free trade agreements. Thus, he reiterated the importance of strengthening the global trade regime, as well as his strong support for a successful conclusion to the Doha talks.
In closing, Mr. HACHANI, ECOSOC President, thanked participants for the new approaches and ideas that had emerged to advance the development agenda. Ideas were not in short supply, and strong action on some of them was needed. He suggested that, in the near future, the Economic and Social Council should start exploring how the result of today's dialogue could lead to greater impact. He would initiate consultations on ways to follow up the key recommendations. Highlighting the salient issues, he said the current outlook remained satisfactory, but there were significant risks, particularly due to persistent global financial imbalances and the possibility of continued volatile energy prices. It had also been emphasized that substantial, coordinated effort was needed by the key players to achieve the smooth unwinding of global imbalances to avoid disruption.
He noted that the morning discussion had reflected a major concern, namely that the negotiating parties had made only modest gains in some areas, while areas of concern to developing countries had registered no significant advances. Individual speakers and representatives of institutions had reiterated the crucial role of Aid for Trade for many developing countries, but that initiative was viewed as a complement, and not a substitute, for trade. Others stressed the need to make development objectives explicit and identify priorities for action. Full ownership and policy space were considered central to implementation. Several had expressed the need for a bottom-up approach in designing strategies, and well designed strategies were seen as key to eradicating poverty. The need for renewed efforts to enhance the international financial architecture was also underlined. He would circulate a final summary to all participants, as soon as possible.
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