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Info Service on UN Sustainable Development (Dec13/01) SDGs -- Enabling international environment for development prioritized by South New York, 2 December (Bhumika Muchhala) – Developing countries reinforced the urgent need for an enabling international environment in systemic macroeconomic, debt, financial system and trade policies, while also raising attention to the persisting lack of access to affordable energy in many developing countries. The fifth session of the United Nations General Assembly Open Working Group (OWG) on Sustainable Development Goals (SDGs) took place on 25-27 November in New York. The thematic focus was on a broad but significant range of issues: “sustained inclusive economic growth, macroeconomic policy questions (including international trade, international financial system and external debt sustainability), infrastructure development and energy. The OWG is one of the key outcomes of the UN Conference on Sustainable Development (Rio+20), held in Rio de Janeiro in June 2012, tasked with preparing a set of SDGs. The meetings are based on interactive exchanges among the 30 groupings of Member States, supported by expert panelists and background papers prepared by the UN Technical Support Team. A total of eight meetings of the OWG have been scheduled from 2013 through to February 2014. Rio+20 did not elaborate specific goals but stated that the SDGs should be limited in number, aspirational and easy to communicate. The goals should address in a balanced way all three dimensions of sustainable development and be coherent with and integrated into the UN development agenda beyond 2015. (The OWG was established on 22 January 2013 by UN General Assembly resolution 67/555 - A/67/L. 48/rev. 1 - of the General Assembly. The Member States have decided to use an innovative, constituency-based system of representation that is new to limited membership bodies of the General Assembly. This means that most of the seats in the OWG are shared by several countries, thereby increasing the level of participation.) Below is a compilation of the key messages delivered by the statements delivered by Ambassador of Fiji to the UN, Peter Thomson, on behalf of the Group of 77 and China, representing the overall group of developing countries in the UN General Assembly. The statement of the group of China, Indonesia and Kazakhstan was delivered by Endah Murniningtyas, Indonesia’s Deputy Minister for Natural Resources and Environment. Thestatement of the group of India, Pakistan and Sri Lanka was delivered by the Permanent Representative of Pakistan to the UN, Ambassador Masood Khan. Both country groups aligned themselves with the statement of the G77 and China at the outset of their remarks. Poverty eradication The G77 and China’s opening remarks underscored the importance of the link between inclusive and sustained growth and poverty eradication, reinforcing that poverty eradication is “today’s greatest global challenge and an indispensible requirement for sustainable development.” The importance of the economic pillar of sustainable development, which is premised on the three pillars of economic, social and environmental sustainability, was asserted. “Despite its critical role in eradicating poverty and in attaining sustainable development, the economic pillar has been neglected. For example, the MDGs had focused mainly on the social pillar, while the Rio+20 process had focused mainly on the environment pillar.” China, Indonesia and Kazakhstan reinforced the importance of the commitments in the Rio+20 outcome document as well as existing internationally agreed development goals. The comprehensive and timely implementation of these goals is necessary for “global efforts to accelerate the realization of sustainable development and to address future development challenges.” Continuing global economic uncertainty was also highlighted. “We are living today in a time of continuing transition and uncertainty for the global economy. The recent report of the IMF highlighted that despite the gradual improvement in advanced economies, the global financial conditions continues to sustain at a much slower pace, especially in developing countries. These situations retain the potentialof sudden downspiralling effect that couldonce again derail the feeble recovery of the world economy.” India, Pakistan and Sri Lanka stressed that economic growth must be a pre-requisite for poverty reductionin the SDGs. “We recognize that economic growth alone is not sufficientfor reducing poverty, enhancing economic inclusivity, and sharing prosperity. Atthe same time, without economic growth we cannot hope to achieve meaningful reduction in poverty or enhance equitable economic gains.” The troika also asserted that the post-2015 Development agenda should not impose pre-designed strategies or frameworks. “Policy space of the developing countries to pursue inclusive growth must be fully preserved. Countries must shape their own targets and strategies under the relevant inspirational goals.” Macroeconomic policies and global partnership The G77 and China emphasized that “macroeconomic policies, including those related to international trade, finance and debt management, are critical to support an enabling environment for growth and sustainable development.” “The challenge for the SDG process and the post-2015 development agenda is to incorporate macroeconomic issues that were not prominent in the MDGs, to ensure the kind of inclusive growth that generates decent jobs and gives opportunities for all segments of society, especially those socially excluded individuals and groups, and distributes those gains more equitably across society and between countries.” The Group stressed that “there is legitimate concern that framing systemic issues in macroeconomic policies, trade, debt and other macro-issues into goals may be a risky over-simplification in the overall SDG framework. However, in whatever formulation the SDGs may take shape, it is important that macroeconomic policy issues be recognised as a crucial part of an enabling environment to achieve sustainable development goals, alongside methodological and qualitative factors.” The G77 and China reiterated that it is important the SDGs reflect the different national realities, capacities and development priorities of all members of the United Nations, and that they do not place additional restrictions or burdens on the national priorities and development plans of developing countries. In this regard, in fulfilling their SDGs, developing countries should be supported by an enabling international environment, which includes a supportive and just international system where the rules are fair and pro-development, as well as a genuine global partnership to enable developing countries to achieve the SDGs. This should be done through the provision of new and additional financing resources, technology transfer with concessionary and preferential terms, capacity building, pro-development trade policies, and effective means of implementation for developing countries. (Within the technology working group, which is one of the components of the means of implementation in the SDG process, along with the Intergovernmental Committee of Experts on financing for sustainable development, the G77 and China have proposed a technology facilitation mechanism that would enable necessary technology transfers for developing countries to be able to pursue environmental sustainability). China, Indonesia and Kazakhstan reinforced that “macroeconomic policies, including those related to international trade, finance and debt management, are critical to support a global enabling environment for growth and sustainable development.” “The continuing instability of the international financialsituation, has further call for transformation and systemic reforms in the international monetary and financial system. All countries should implement responsible macroeconomic policies as well as strengthen communication and coordination. Macro-prudential policies coordination must be increased, and financial cooperation through, inter alia, bilateral swap arrangement should be promoted.” The group stressed that structural policies must underpin macroeconomic and financial stability in order to enable sustained economic growth, the generation of productive and decent employment, the reduction of poverty and inequalities, the enhancing of welfare protection, the promotion of technology innovation,and the enabling of sustainable consumption and production patterns. “In this regard, discussion on a possibleSDG goal related to eradicatingpoverty is clearly more ambitious than MDG 1. However, the $1.25-a-day poverty line cannot realistically be seen as fulfilling the right to ‘a standard of living adequate for health and well-being.’ Neither is it enough merely to ensure that everyone receives $1.25 per day, irrespective of the source. We must go beyond thatfor the SDGs goal related to enhancing macroeconomic conditions, to encompass the challenge of inequity, in all three dimensions of sustainable development.” (MDG 1 is “To eradicate extreme poverty and hunger”.) India, Pakistan and Sri Lanka said the post-2015 Development Agenda should draw significant lessons from the indifferent implementation of MDG 8 on Global Partnership, and must equally emphasize policy actions at the international level. “In our view, international actions are critically important for allowing a vast majority of developing countries to realize much-needed economic growth. A revamped and broadened global partnership for development would be critical in order to create a development-friendly global economic environment.” “Our MDGs' experience substantiates that emphasis on social outcomes without economic growth only stunts growth patterns and does not lead to the desired outcomes in poverty eradication. Evidence and experience gathered from some developing economies, including India and China, clearly demonstrate that higher growth, when accompanied with inclusive policies, has a positive impact on poverty reduction. The economic dimension must therefore be captured in the form of dedicated and equal number of goals as part of the SDGs. We must place equal emphasis on policies and actions leading to acceleration of economic growth at the national, regional and international levels.” Sovereign debt and debt workout mechanism The G77 and China reiterated the importance of “debt relief, including debt cancellation and debt structuring, noting that no path can be construed or fostered when a country is faced with unsustainable debt overhang. Sovereign debt management has been an important issue for developing countries, particularly in view of the persistent economic and financial crisis, exacerbated by the activities of vulture funds. The speculative and profit-seeking nature of the vulture funds hamper the debt-structuring efforts of developing countries, and pose a serious risk to all future debt-restructuring processes for both developed and developing countries.” The Group stressed that the inability of States with heavy debt burdens to access affordable credit during the current crisis has revealed problems with the existing debt framework. “The Group believes this universal problem of unsustainable debt should be addressed by establishing an independent and fair public debt workout mechanism, with ex-ante rules for fair burden-sharing in order to promote responsible lending and prevent build up of unsustainable debt. We stress that times are ripe for the creation of a structured mechanism for resolving sovereign debt crises, for we cannot have sovereign insolvency still operating in a legal vacuum in the 21st century. We further hold the view that the United Nations is well-placed to coordinate such a mechanism.” China, Indonesia and Kazakhstan reinforced that “unsustainable debt adversely affects developing countriesand has became a stumbling block toward the common efforts to eradicate poverty and achieving sustainable development.” The troika reiterated “that the SDGs need to take into account the importance of ensuring a durable solution to the current debt crisis.” “We are also of the view that the international community, must come together to promote options for an effective, equitable, durable, independent and development-friendly debt restructuring and international debt resolution mechanism. The developed countries as major creditors should fulfill debt relief commitments, increase net capital investment, and expand the scale of aid. In the meantime, the developed countries should implement responsible macroeconomic policy, properly handle their own sovereign debt and fiscal risks.” Financial regulation and financialisation The G77 and China said that the “2008 financial and economic crisis has illustrated that international finance has created an economy of its own, which has become increasingly disconnected from the real economy of production, direct investment, job creation and wage growth. Key aspects of financialisation include volatile capital flows, excessive commodity and food price fluctuations, rapid shifts in exchange rates and boom-bust cycles of financial crisis and economic recession.” To address these harmful trends, “international efforts to re-regulate the financial sector should include the Credit Rating Agencies (CRAs). Governments should limit their regulatory reliance on CRAs and reform legal regimes to hold them liable for negligent behaviour in order to suppress conflicts of interest and ensure integrity and accountability.” “The post-2015 development agenda must address financialisation by reviving a focus on heterodox and innovative policies, tailored to local conditions, that allow for a shift of resources from the financial economy to the real economy. Financial regulation in this regard, should be directed to support policy paradigms that aim at improving quality of life and reducing unsustainable drains on natural resources, as well as creating decent jobs and guaranteeing human rights for all.” China, Indonesia and Kazakhstan asserted that “a strong and stable financial system is crucial to the realization of sustained and balanced economic growth.” “Therefore, we should push forward the reform of international financial system towards the following directions: First, improve the governance system, effectively increasing the representation of developing countriesin the international financial institutions. Second, improve the regulatory system, strengthen the supervision of the developed economies’ macroeconomic policies, cross-border capital flows and commodity derivatives. Third, improve the monetary system, establish sound reserve currency issuing regulatory regime, and maintain relative stability of exchange rates of the major reserve currencies. Fourth, strengthen the international financial institutions’ function of development and poverty eradication to narrow the north-south gap.” India, Pakistan and Sri Lanka said that “reform and better regulation of the international financial system, removal of restrictions to transfer of technologies, and reform of the global economic governance, including the Bretton Woods Institutions, to give more voice to the developing countries are important objectives to ensure rapid, sustained and inclusive growth.” The troika noted that it would be useful to explore this area through a study by Technical Support Team of the UN, “with a view to crafting necessary indicators and targets under the SDGs.” In concrete terms, the group added that areas such as labor migration, investment, and ways and means for enhancing development finance should also be included. Trade The G77 and China stated that for international trade to have a positive impact on development, it needs to be conducted in a fair manner with a strong emphasis on the development dimension of trade, assisted by an enabling environment at both the national and international levels. With regard to the World Trade Organization (WTO) the Group asserted that “in order to ensure effective functioning of the multilateral trading system, one that benefits all countries, particularly developing countries, the WTO must undertake serious institutional reforms. These reforms should focus on addressing the WTO’s structural bias, unfair rules, as well as the substantial power asymmetries in negotiations between developed and developing countries.” The G77 and China underscored the necessity of the timely conclusion for the Doha Round of multilateral trade negations, which must fully respect its development mandate and take into account the needs and priorities of developing countries. “We call for a balanced and pro-development outcome at the upcoming WTO Ministerial Conference in Bali in December, in accordance with the Doha Development mandate.” China, Indonesia and Kazakhstan stressed that theinternational community should take a firm position against all forms of protectionism and promote the integration of the global market by improving the global value chain. “Developing countries can derive significant benefit from an open, fair, rule-based, predictable, and non‐discriminatory trading and financial system (which is derived from the MDG 8).” The troika further emphasized that the synergy between trade liberalization and economic growth can be strengthened if complementary policies are in place, such as “supports in the means of implementation,investment in public goods, such as education, transport and information and communication technology (ICT) infrastructure, which could enhance the ability of individuals and firms to take advantage of trade opportunities and to diversify towards higher value‐added exports over time.” India, Pakistan and Sri Lanka said that the “SDGs must be inspirational and should seek to encourage removal of developed world's bias in the international trading regime, and investment rules.” “Continuous reform of the international trading regime to provide a level playing field to developing countries, dismantling of the agricultural subsidies in the developed countries, and enhancing non-agricultural market access is needed for achieving the Sustainable Development Goals.” Inclusive growth and industrialisation The G77 and China stated that for “developing countries to attain the macroeconomic goals and to succeed in achieving inclusive sustained economic growth, developing countries need to have adequate policy space in the course of their industrialisation and development efforts.” “Industry today accounts for around 31 per cent of global GDP and is a creator of jobs and an engine for growth and prosperity. As a key contributor in this growth, which must be decoupled from increased raw material use and negative environmental impacts, industry must play its part by becoming significantly cleaner and vastly more efficient.” The key role of technology was emphasized by the G77 and China, in that “developing countries require increased access to technology transfer on favourable terms, including through concessionary and preferential terms, in order to shift to a more sustainable development path. It is imperative that the international community takes urgent actions to bridge the technological divide so as to promote industralisation and inclusive growth across the developing world. These actions include reforming the international Intellectual Property regime with a view to facilitating technological catch-up for developing countries, as well as concerted efforts to establish the technology transfer mechanism, including the creation of a Technology Bank for the LDCs.” India, Pakistan and Sri Lanka stressed that the post-2015 development agenda “should be first and foremost about economic development and economic transformation in the developing countries. It must therefore help assist countries in enhancing productive capacity, generating employment, increasing per capita income, and augmenting resource endowments of the poor; while improving social and environmental outcomes.” “The SDGs must place a high emphasis on industrialization. As the Director General of UNIDO very rightly said, job creation in high productivity sectors and improvements in wages have a pull-effect on other sectors and services. In addition, industrialization is a potent agent transfer of technology, technological production and knowledge-based innovation. Industrialization cannot be pursued without addressing issues such as enhanced FDI, technology transfer, intellectual property rights, better market access for developing countries and investments in productive capacities and infrastructure.” Furthermore, India, Pakistan and Sri Lanka stressed that full and productive employment needs to be identified as a key policy objective, while the creation of the infrastructure must be identified as a stand-alone objective and promoted through relevant national and international policy instruments. Official Development Assistance (ODA) was specifically mentioned by the G77 and China. The Group reiterated the “necessity for developed countries to honour their ODA goals and targets of disbursing the equivalent of 0.7 per cent of their Gross National Income (GNI), out of which 0.15 to 0.20 per cent of their GNI should target the LDCs, with a clear timetable. We express grave concern at the decline in ODA in absolute amounts and in relative terms since 2011, at a time when we are elaborating on a transformative global development agenda beyond 2015.” Foreign direct investment (FDI), in terms of securing greater retention of FDI profits in developing countries, was specifically mentioned by India, Pakistan and Sri Lanka. “Income earned bymultinationals could help provide much needed support to economic growth inthe developing countries. UNCTAD has estimated that FDI in developing countries grew from $238 billionin 2005 to $555 billion in 2011. In 2011, about $214 billion were retained indeveloping countries (49 per cent of FDI earnings), while a slightly higher valuewas repatriated.” “A global partnership that promotes greater retention of FDI profits could generate significant resources for host countries. For instance, a 10 per cent increase in FDI income retention could generate about $22 billion of new investments in developing countries.” Special drawing rights (SDRs) were also specifically mentioned by India, Pakistan and Sri Lanka. They highlighted that “issuing new SDRs and allocating them to developing countries would not only reduce the developing world's immediate need to accumulate foreign-exchange reserves for self- insurance but also release considerable resources for development.” “Alternatively, SDR holdings of reserve-rich countries could be used as securities to leverage additional development finance in international capital markets for use in the developing world. As UN-DESA in 2012 pointed out, a global issuance of SDR 150 to 250 billion per year coupled with an increase in the developing countriesallocation share from 42% to 67% would generate about $160-$270 billion. Moreover, the estimated $100 billion of idle SDRs could be used to back the issuance of $1 trillion in bonds (for example Green Climate Fund).” Governance The G77 and China stressed that to address the gaps and failures in global financial governance, there is an urgent need for a global, universal and integrated response by the international community. “Reforms and initiatives are urged to uphold commitments already made towards narrowing the democratic deficit in global financial governance. In this regard, the Group calls upon all IMF members to expeditiously implement the agreed reforms to the voting system and the reform of the quota formula, and calls for further reforms to increase voice and representation of developing countries. We also hold the view that the process of selecting leaders of all global financial institutions must be transparent, merit-based and reflective of the composition of membership. The membership of financial standard-setting bodies should also be broadened to give developing countries greater voice and participation.” Energy The G77 and China acknowledged that energy is an important element to sustainable development, and that no country has developed without access to reliable and affordable energy. Concern was expressed that in this modern age, nearly one out of every five people still has no access to electricity and that nearly 3 billion people use biomass or animal waste to cook their meals or heat their homes. “We urge countries, particularly industrialised countries, to refrain from excessive and wasteful consumption of energy. We also urge effective measures, both at the national and international levels, to address national energy deficits through the development of new energy sources, especially renewable energies; and through the development of appropriate technologies relating to energy. Increased institutional and system capacities of developing countries, particularly LDCs and energy-poor countries, are crucial to enable their access to and benefits from financing, technology, knowledge and partnerships in the field of energy.”
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