Round Up #10. 3rd Preparatory Committee for upcoming International Conference on Financing for Development (FFD4)

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Cuba supports AOSIS proposal for an international convention on debt under UNGA, not IMF 

“We fully support the proposal made by AOSIS to initiate an intergovernmental process at the United Nations level, under the auspices of the General Assembly, the most democratic and inclusive body of this organization, during the 80th Session, [to] establish an international convention that includes a multilateral sovereign debt mechanism. The fact that those that have traditionally benefited from the broken system that we have are opposing the reform just emphasizes how urgent it is…

“We have serious concerns, evidence-based concerns, about the incapacity of the IMF to successfully review the debt architecture… That is why we are asking for a reform of the IFA, particularly because of the IMF.”

• Also calls for deleting references which place a review of the sovereign debt architecture under the purview of the IMF, as stated in the Pact of the Future.

Ghana “Since the last Preparatory Committee meeting in December, the international development landscape has shifted into a more adverse position and dramatically so. In such an evolving context, we cannot afford an outcome that is disconnected from today’s global economic realities… The current text does not go far enough and is a regression of the Addis Ababa Action Agenda (AAAA) commitments.  The proposals in the zero draft do not match the scale or urgency of the crisis and we accordingly reaffirm our call for the establishment of a multilateral sovereign debt workout mechanism that prioritizes development in debt treatment and a comprehensive overhaul of the credit rating system to ensure fairness and transparency.  The debt and debt sustainability section is a non-negotiable priority… Climate resilience must be integrated into debt management strategies to address the twin crises of debt distress and climate vulnerability, which disproportionately burden developing nations. For Ghana and most developing countries, a weak debt section in this outcome document would render it ineffective and inadequate in addressing financing needs.”

Australia: enhance debt sustainability measures through the IMF, World Bank and G20

“We need to work through existing institutions with expertise and comparative advantage to deliver effective outcomes and avoid costly duplication.” 

• On paragraph 48a: “we question the value of a new UN led working group, as this falls outside the UN’s mandate and duplicates work already carried out by the World Bank and the IMF through the Global Sovereign Debt Roundtable and G20.”
• Opposes para 50e: “as the Pact for the Future is clear that the review [of the sovereign debt architecture] will be undertaken by the IMF in collaboration with the UN. The initiation of a new intergovernmental process at the United Nations runs counter to this.”
• Views the G20 Global Sovereign Debt Roundtable as a sufficient forum for creditors, debtors and credit rating agencies to engage on issues related to credit ratings and advocates for state contingent clauses on a voluntary basis, rather than standardizing the practice.

Jamaica addresses the linkages between the high interest rate environment and increasing debt levels

“In the absence of low fixed rates on multilateral loans, developing countries would greatly benefit if MDBs add interest rate caps to loan contracts.”

• Advocates for MDBs and IFIs to adopt practices of the Inter-American Development Bank’s Flexible Financing Facility, which provide interest rate caps, interest rate conversions and lending in local currencies.

Pakistan (2:26:26-2:30:20) “We believe all the different proposals culminate in 50e, [to establish] an intergovernmental process at the UN where we will all be equal to take forward these different parts of a new sovereign debt architecture…  The UN does have the mandate to initiate such a process. If it cannot, I do not know why we have a debt section in the FFD outcome document. We are extremely disappointed by proposals to bring 50e back to Pact for the Future language when delegations know how controversial it was. We request the deletion of the reference to the IMF debt review.”

China advocates for binding ODA commitments from developed countries to be monitored by the UN, not the OECD

“Para 38 a and b should explicitly state that developed countries, rather than all Member States, be requested to meet their ODA commitments and create binding timetables and roadmaps. In terms of 38c, the UN should be the body that monitors the assessment of ODA commitments, and it is not appropriate to ‘invite the OECD DAC to develop indicators to measure this commitment.’”

• Stresses ODA is not the same as humanitarian assistance, climate finance or finance for biodiversity.

Brazil (1:24:28-1:28:30)  “The Right to Development has not been fulfilled, and the SDG Summit just showed us just how far we are from achieving the 2030 Agenda. The reform of the international financial systems requires realigning IMF quotas, reviewing World Bank shareholding and strengthening the global financial safety net… The slow pace of reforming the governance of IFIs has caused significant frustration among developing countries, prompting calls for a stronger role for the United Nations in shaping the international financial architecture.”

Bangladesh pushes for stronger language on climate finance, so that the FFD 4 outcome document “can outlive 2030”

• Reaffirms that climate finance should be provisioned based on the principle of common but differentiated responsibilities (CbDR).
• Addresses the text’s gaps on climate finance, including language on balancing funding for adaptation and mitigation; providing adequate financing for Loss and Damage; and avoiding double counting of climate finance and ODA.

Uruguay urges FFD4 outcome to advance “Beyond GDP” process and cautions against “double counting” ODA and climate finance

“The language should be refined to align with the latest advancements in this [beyond GDP] process as adopted in the Pact for the Future Action 53.”

• Calls for language to ensure that new and additional climate finance is needed and should not be double counted with ODA.

Palau/AOSIS: “SIDS are tired of being the poster children for international financial architecture reform”

“SIDS are tired of being the poster children for the reform of the international financial architecture, [of] which we are not allowed to access its concessional finance. We cannot continue this going forward…

“If international trade is the engine for development, the provision of international public finance to developing countries is the fuel…

“In the context of [para] 38j, we would need to see that the international community decides to use complementary measures, as opposed to ‘consider to use’ [measures] that go beyond GDP.”

• Calls for “additional finance to baseline development finance to address the incremental and full costs [of tackling] environmental challenges such as ocean conservation, biodiversity loss and climate change.”

Environment, Climate & FFD: Spotlight on CBAMs and Critical Minerals  During the second and third FFD PrepComs, multiple delegations brought attention to the negative impacts of Carbon Border Adjustment Mechanism (CBAMs) on developing countries. The role of critical minerals in driving the green transition has also featured prominently. South Africa (1:56:20-2:00:20):  “On paragraph 46k, we’d like to see an acknowledgement of the very grave harm that trade protectionism disguised as environmental measures would do to developing countries, causing massive de-industrialization and unemployment…  Regarding [paragraph] 43l on unilateral, coercive economic trade measures, we see this as a cross-cutting issue… Critical minerals provide one of the best emerging opportunities we have to avoid mistakes of the past, reset unjust extractive patterns and enable developing countries to climb the development ladder.”

Zimbabwe and China call for explicit language opposing unilateral coercive measures (UCM)

• Zimbabwe stresses that UCMs provide unnecessary barriers to development and result in increased hardship on its constituents.
• China emphasizes that UCMs violate WTO rules.
• Under the subheading “Trade Measures which Restrict or Distort Trade” of the zero draft, China proposes adding: ‘‘oppose UCMs, including arbitrary increase of bound or applied tariffs, abusive use of national security exceptions” and “oppose trade protectionism under the pretext of environmental protection”.

Russia and US against language on environment, climate and gender

Russia: “[T]he 2030 Agenda recognizes the contribution of gender equality, but it doesn’t define it as a necessary condition for the Sustainable Development Goals… we also believe that the conference on Financing for Development should not turn into a platform to discuss the climate agenda and issues of biodiversity.”

• Opposes “excessive climate alarmism” throughout the text.

US “reserve[s] on gender references throughout the document and additionally request[s] to soften the verb ‘will’ to ‘intend to’, as this is not a legally binding document.”

• “[O]n paragraph 39, we cannot accept the section on financing for climate, biodiversity and ecosystems as drafted and would require significant changes to be able to agree to it. The United States reserves on other references to climate change, biodiversity and green financing throughout the document.”

Canada: gender equality in the context of gender financing and budgeting, AI safety and closing the digital divide

“The term ‘gender responsive’ signals an approach that considers gender norms and inequalities with measures then taken to actively address them…

“Without a gender responsive approach, AI risks perpetuating and amplifying existing inequalities leading to unfair treatment and reinforcing systemic barriers for women and girls.”

• Advocates for streamlining the term ‘gender responsive’ throughout the text.
• Suggests “the addition of language on closing the gender digital divide in [para] 60b, to bring the full text in line with the Pact for the Future.”
• Emphasizes that “closing the gender digital divide requires removing systemic barriers that limit women’s and girls full participation, leadership and innovation in these fields. A more comprehensive approach includes improving education, employment and research opportunities, while also addressing the risks of gender based violence, discrimination and bias that technology can amplify.”
• Proposes “suggestions for textual edits to [para] 29f, which seek to expand gender responsive budgeting to include tracking… because it emphasizes not only the gender responsive allocation of resources, but also the monitoring and evaluation of how those resources are spent and their impact.”

Iceland stresses role of gender disaggregated data in measuring development and climate impacts on women and girls

“The often highly gendered impact of the many development challenges faced by developing countries… [is] rationale for why gender disaggregated data is important and can be strengthened further [in the text].” 

Algeria, Guatemala & South Africa advocate stronger language to combat illicit financial flows

Algeria notes that “concerning illicit financial flows (IFF) in paragraph 31, the current text inadequately addresses the responsibilities of developed countries as [the] destination countries for IFFs…” 

• “[S]tronger language requiring developed countries to proactively share information with developing countries, provide technical and financial assistance for anti-IFF measures, and expand asset recovery processes with preferential treatment for developing countries [is needed].”

Guatemala stresses the need to fully implement the UN Convention on Transnational Organized Crime to combat IFFs and ensure it is referenced in the FFD 4 Outcome.

• “Without a staunch commitment to that international framework, efforts to avoid illicit financial flows and to improve financial transparency will continue to fall short of need, which will limit developing countries’ ability to mobilize domestic resources effectively.”

South Africa: “With regard to the section on illicit financial flows, we appreciate the bold proposals from the co-facilitators. We were asking ourselves whether they were bold enough, but I think the lively reaction [from Member States] has answered that question.”

Madagascar emphasizes the need to leverage technology to combat IFFs 

“On illicit financial flows, we insist on the importance of international cooperation, the implementation of regulations and the use of technology to fight against IFFs. We should improve the recuperation of illicit financial flows and bolster countries’ capacities to do so, while fostering transparency and the return of assets.”

Brazil: clear linkages between STI and Financing for Development

“[T]he commodity trap is still very relevant, and we can address [it] through science and technology…

“[I]nternational technological diffusion is very unequal and puts developing countries in an unfavorable situation...

“[I]n reality, very little is done to achieve voluntary [technology] transfers – there’s very limited financing to instruments such as the UN’s technology facilitation mechanism… we have to evolve towards more effective transfer of technology on voluntary terms and agreed terms, but it has to happen.”

EU and Japan: technology transfer must be on voluntary and mutually agreed terms; the impact of intellectual property and TRIPS flexibilities on development

EU notes that Member States “have some work to do in terms of the right articulation about the role of intellectual property and about applying TRIPS and its flexibilities… Now I know we always insist on voluntary and mutually agreed terms. And why do we do that?”

• EU delegation has not “heard anyone who says the UN should condone that rogue governments coerce private companies into transferring their technology. I haven’t heard anyone say that this is what we should be encouraging.”
• “[I]t should not be problematic to say that technology transfer, which we fully support, should abide by some basic principles of non-coercion and having terms that we agree to.”

Japan: “Technology transfer involves intellectual property like patents and trade secrets, which are mostly owned by the private sector. To avoid forced transfers, as some others have said, it must be voluntary and based on mutually agreed terms… As for TRIPS flexibilities, there is no common international understanding of what they mean or how they contribute to innovation and sustainable development… the current text wrongly assumes that IP regimes are barriers to innovation and sustainable development. To prevent misinterpretation, the language needs to be adjusted.”

Indonesia calls for ensuring fair taxation in the digital era

“The value created by digitalized business that operates across multiple jurisdictions without a significant physical presence… [is a] missing element [that] potentially results in tax based erosion for many countries, particularly developing economies.”

• Addressing the digital gaps in the current international tax framework can increase domestic resource mobilization and reduce inequalities in tax collection.

Chile emphasizes the importance of tax progressiveness and strengthening international tax cooperation

“[The] way to build an inclusive and effective international tax architecture [is] to support domestic revenue mobilization and a fair distribution of taxing rights, in line with recent discussions on a United Nations Framework Convention on International Tax Cooperation.”

• Supports taxation of high net worth individuals and country by country reporting obligations on their wealth. 

India stresses that progressive tax policies be based on principle of tax sovereignty 

“In para 30e, we suggest deleting ‘extending reporting obligations to high net worth individuals’, considering that the discussion on taxation of high net worth individuals is still at a very nascent stage and will be taken up in the future at the UN Framework Convention on International Tax Cooperation… In para 30h, we would like to underscore that it is premature to include any references to global solidarity levies or specific innovative taxes.” 

Switzerland voices limits for parallel UN Tax Convention negotiations

“We would like to include a reference to the ongoing negotiations on the UN tax convention and to the need for a fully inclusive and effective international tax architecture, which is founded on consensus based decision [making]… 

“[O]n para 31 on illicit financial flows, we support the comments made by the EU… In sub para d, Switzerland co-organizes this process together with Ethiopia and UNODC, and would like to anchor this process on a global level…

“Furthermore, we suggest deleting sub para e; exploring the need for a multilateral mediation mechanism is in our view not necessary, since many platforms already exist…

“Lastly, and most importantly, we would like to introduce a new sub paragraph where we commit ourselves to ensure that confiscated assets are returned to the benefit of the populations of the countries of origin.”

Colombia (32:45- 35:45) “After paragraph 30i, underscoring the importance of ensuring that the voice of developing countries are adequately represented in global tax discussions [is needed]. The negotiations of the UN Tax Framework Convention represent a key milestone to address this need. In parallel, as the existing fiscal policy framework remains in place, Colombia calls on existing tax firms, such as those led by the OECD, to advance reforms that effectively reflect the interest of developing nations on equal footing and to constructively contribute to the development of the United Nations Framework Convention on International Tax Cooperation.”