Addis Ababa Action Agenda on financing for development adopted amidst wide disappointment

Addis Ababa Action Agenda on financing for development adopted amidst wide disappointment

TWN Info Service on Finance and Development (Jul15/08)
20 July 2015, Third World Network

by Ranja Sengupta, New Delhi | While the outcome document of the Third Conference on Financing for Development got the official nod on 16 July, the Addis Ababa Action Agenda elicited severe dismay among developing countries and civil society organisations for its failure to offer much in terms of concrete instruments for implementation of development objectives.

While the developed countries and the United Nations secretariat hailed the document, several Member States, including the 134-member strong Group of 77 and China, expressed concerns and reservations during the closing plenary. Venezuela said “this is not a situation where we have cheering and applause. With this document the developed countries are shirking their responsibilities”.

The outcome document had already been endorsed by the Main Committee, tasked with overseeing the actual negotiations and chaired by the Ethiopian Finance Minister, late Wednesday evening (15 July). The Main Committee had met three times during the course of the four-day conference, only to adjourn the first two times after quick process-related discussions and deciding to open up the discussions related only to paragraph 29 on a UN based global tax body. Bilateral negotiations between the G-77 and China (represented by South Africa), Ethiopia, Brazil and India, and the like-minded group of non G-77 countries represented by the European Union, Russia and Japan, came to a close in the form of a compromised text that gave very little additional concession to the G-77’s key demand on an intergovernmental tax body.

(The Addis conference was the culmination of intense negotiations that took place at the UN headquarters in New York over the past few months.)

Soon after, the Main Committee met at 8 pm on 15 July, simply to announce the sealing of the deal and to declare the endorsement of the outcome document by the Main Committee. All that remained was to adopt the document at the closing plenary the next day. Further discussions were not encouraged. According to sources, the Ethiopian government played a crucial role in ensuring that the Addis talks did not fail at any cost.

The four days of the Conference were marked by an intense battle of will and power between the North and the South, where the USA, EU, and Japan allegedly exerted severe pressure on developing countries including several African countries to yield to their demand of sealing the document as it was. In the process, actual negotiations were bypassed and hazy bilateral and plurilateral discussions held sway.  Several negotiators of developing countries expressed the feeling of having come for negotiations but being shut out of actual negotiations with key concerns remaining unaddressed.

(For more detailed information on the events leading to the Main Committee decision please see TWN Info dated 17 July: Outcome document adopted without intergovernmental tax body or new financial commitments.  http://twn.my/title2/finance/2015/fi150706.htm)

According to experts, a Technology Transfer Mechanism (TFM), a Global Infrastructure Forum and a dedicated Forum for review and monitoring of the financing for development (FfD) process as well as the Means of Implementation and Global Partnership for Development, are the key positives in an otherwise weak and ineffective document.

AN INTERGOVERNMENTAL TAX BODY OR NOT

In preceding negotiations in New York, a 7July version of the draft outcome document had seen critical differences between the developed and the developing countries. However pressures to adopt the document was increased by the EU, USA, Canada and Japan, which threatened to open up the whole document if any part was opened up to negotiations by developing countries in Addis.

But in spite of acquiescence by the G-77 and China on many of the thorny issues contained in the July draft outcome document, remaining differences were mainly on a developing country demand for a tax body under the UN that sees better representation from developing countries.

The demand from developing countries was the upgrading of the current UN Tax Committee of Experts that is dominated and controlled by the OECD, to a full intergovernmental tax body under the ECOSOC. Given that the issue of domestic tax resources has been pushed under the FfD as the main resource for development finance, the developing countries very legitimately wanted to ensure better tax cooperation to stop tax losses due to illicit financial flows and other ways used by transnational corporations to dodge taxes. Losses in tax revenues from illicit financial flows are much higher for the South, on South to North financial flows than the reverse. In this context, the G-77 and China had argued that developing countries need more representation and voice on global tax matters and had proposed the upgrading of the current Expert Committee to a full intergovernmental body.

However the rich nations had decided that OECD “leadership and expertise” was good enough for the developing world, and though the latter had to primarily depend on their own taxes to fund their development, they had to essentially make do with what their rich partners were deciding on their behalf on global tax matters.

Faced with the stiff opposition from the developed countries, some compromise texts surfaced on the last but one day of the negotiations. Some G-77 members had apparently suggested a compromise in terms of insertion of some language on regionally proportionate representation in the current tax body of experts with a 2016 deadline to decide on structural changes.

The final text on paragraph 29 saw very little change, that excluded mention of an intergovernmental body or a timeline of 2016 to decide on new structures, and made cursory reference to a regional representation and selection of experts by the Secretary-General in consultation with Member States. The G-77 and china, in their closing statement, reiterated the “need to fully upgrade the Tax Committee into an intergovernmental body”.

The other thorny issues on the 7July text were related to the mention of common but differentiated responsibilities (CBDR) as an underlying principle, the differentiation between climate and development finance, and the follow-up and review mechanisms for the FfD and the Post-2015 Development Agenda. However the G-77 and China had decided to cut their losses on these issues and persist with their demand only on the tax body.

CONCERNS AND RESERVATIONS EXPRESSED AT CLOSING PLENARY

During the closing plenary on 16 July, Member States put forward their reservations on the adopted text. Below are some highlights.

The G-77 and China, in their statement, acknowledged the importance of the FfD process for development as well as the gains made on the Technology Facilitation Mechanism, Global Infrastructure Forum, and the Review Forum under the ECOSOC. However the G-77 and China went on to stress that “a number of issues of principle that are important to, and fully endorsed by, the Group … have not been adequately addressed in the current text”. These include the explicit reaffirmation of the key principle of CBDR in the context of the Global Partnership for Development. The Group put on record that “an unequivocal affirmation of this principle in the Outcome Document of the Post-2015 Development Agenda is a non-negotiable for the Group”.

The statement also highlighted the “need to maintain the integrity of the FfD3 and the Post-2015 Agenda process as separate negotiation tracks, while acknowledging the need for stronger synergies between them”. The Group also underscored the “need for development partners to meet current commitments and to upscale ODA, with binding timetables, including the reaffirmation that ODA is still the main source of development finance”.

The G-77 and China also drew attention to the need to make explicit references to countries and people living under foreign occupation, and to explicitly address the issue of lifting and terminating coercive measures, including unilateral economic sanctions. It also spoke against references to fossil fuel subsidies and carbon pricing that could prejudge outcomes of the ongoing negotiations under the UN Framework Convention on Climate Change and also, the need to explicitly address that climate financing is new and additional and cannot be counted as ODA, nor mixed with traditional development finance.

The Group described FfD as a process and promised that it will continue to engage constructively on these issues. “Rest assured, the Group is not abandoning its principled positions”, stressed the G-77 and China.

Benin, speaking on behalf of the Least Developed Countries, supported the G-77 and China statement and said that while they felt that general concerns of the LDCS are addressed, this document will allow us to change things if applied in good faith.

Maldives, speaking on behalf of the Alliance of Small Island States aligned their statement to that of the G-77. The Group said that “SIDS, through the G77, have engaged actively throughout the negotiation process and welcome the recognition of the special case of SIDS in development, and the specific provisions for its implementation that this recognition entails. Though there is much language that can be strengthened throughout this document, to cater to the needs of the world’s most vulnerable, let us now look to the remaining processes this year, so that no country is left behind and our successes are fructified on the tree of our endeavors”.

Venezuela, in a strong statement said, “our acceptance is in no way an acknowledgement of the contents of this document. This is not a situation where we have cheering and applause. With this document the developed countries are shirking their responsibilities”. Venezuela also said that CBDR is not a mere buzzword but reflects the various models of development where predatory development has exploited resources of the people.

Venezuela went on to put on record its specific reservations on the Addis Outcome Document, on paragraph 31 on fossil fuel subsidies that represent intervention in domestic policy and sovereignty matters; reference to low-carbon economies; on concept on modern energy for all in paragraph 49; to the deletion of references to new development banks such as the Banco de Sur, Banco de Alba etc in paragraph 14; on deletion of references to trade barriers on unilateral measures. It also reminded that Venezuela is not a party to the UN Convention on Law of the Sea.

Bolivia supported the G-77 and China statement and requested to put on record its reservation on innovative financing mechanisms in paragraphs 60-69. Bolivia added that it is reading the last sentence in paragraph 5, which reaffirms the Rio principles, ending as “particularly CBDR” (thus implying a specific reference to CBDR in the affirmation of Rio principles).

Nigeria, aligning itself to the statement of G-77 and China, said “the FfD was a concept meant to be different but not opposed to the spirits of Monterrey and Doha, but to supplement and deepen their impacts with provisions for addressing the questions around sustainable development … By adopting the Addis Ababa Accord we have agreed to give LDCs, LLDCs (land locked developing countries), SIDS and other countries in special or peculiar situations a new lease of life. We are acknowledging that their situations should no longer be hopeless and that vulnerability need not be their constant companion in life”.

In conclusion, Nigeria stressed that it is of the “view that the Addis Ababa Action Agenda may be a non-binding document, however, it has moral imperative of being faithfully implemented by all Member States and actors in the United Nations. It should not be a vain endeavour that resulted after months of careful negotiations”.

Malawi, expressed a strong reservation on paragraph 32 of the Outcome Document, which, it said, does not take into account the impact of tobacco control on tobacco-producing countries’ economies. “Countries whose economies substantially depend on tobacco production … must be supported and compensated for the loss of revenue within the framework of the UN and other international aid agencies as they diversify out of tobacco”.

Nicaragua, after supporting G-77 and China, clarified that CBDR is found in Article 7 of the Rio principles, and since those are in paragraph 5, “we have effectively incorporated CBDR as an integral part of this document”. The statement went on to talk about ODA and the unmet gap in ODA commitments made by developed countries. It also reminded the Conference of its reservation on review on energy policy; that the fund for climate change is additional and not part of ODA; that countries should maintain political space on measures and standards; and that countries should lift coercive measures that violate international law e.g. the embargo on Cuba. Nicaragua expressed solidarity with Palestine and wanted its points to be put on record.

Ecuador said very clearly that any monitoring and review of national energy policy will not be acceptable to it. It also expressed reservation on the first sentence of paragraph 103, and on paragraph 79 related to the meeting of the UN on financial crisis and development. Ecuador had additional reservations on several paragraphs in the document, which it wanted to be put on record.

Interestingly, the USA repeated in its statement the deleted paragraph 134 from the 25 June text that had been opposed vehemently by developing countries. The sentence said, “We affirm that the present Accord is not intended to create rights and obligations under international law.” The USA went on to add that it has “long standing concerns regarding the topic of the right to development. The right to development continues to lack any kind of an agreed international understanding”. It is important to note that developing countries have for long drawn attention to the need to address their right to development which includes the necessary policy space for development supported by a global framework that enables rather that impedes the ability of developing countries to achieve their development objective as a key right.

The USA, probably expressing their wariness of the Technology Facilitation Mechanism, spoke in favour of “strong protection and enforcement of intellectual property rights (IPRs), also as part of any international technology cooperation effort … through the facilitation of access to, and dissemination of, such technologies”. It said that references to technology transfer are to voluntary technology transfer on mutually agreed terms and conditions. The USA went onto to say that “the language in the document on technology transfer and on traditional knowledge does not, from the USA perspective, serve as a precedent for future negotiated documents, including any documents related to the SDGs (Sustainable Development Goals), or the UNFCCC, or any other negotiation in or outside of the UN system, including bilateral and multilateral agreements