FINANCING FOR DEVELOPMENT
Summary of Proposals

This summary contains the principal proposals made in ICSW’s paper, Financing for Development: Proposals for Action (2002). That paper has been prepared for submission to the United Nations Preparatory Committee for the International Conference on Financing for Development ("the FfD Conference"). It provides further detail of the recommendations made below and the reasons for them.

ACHIEVING THE INTERNATIONAL DEVELOPMENT GOALS

A Campaign for the IDGs

P1. ICSW proposes that the FfD Conference should call on the United Nations to initiate a Campaign to achieve the International Development Goals and should commit its participants to full involvement in that Campaign.

An Anti-Poverty Pact.

P2. The Conference should agree that development and implementation of an International Anti-Poverty Pact will be the centrepiece of the Campaign for the International Development Goals. It should agree in principle that the Pact will consist of

• the nine specific, time-bound International Development Goals, to be achieved by 2015 (see para 19 of the Millennium Declaration);
  
  
• a similar number of specific, time-bound commitments for resource mobilisation to be achieved by 2005 (with further commitments to be agreed subsequently for achievement by 2010 and 2015).

P3. The Conference should request the UN Secretary General to prepare a report in time for consideration by the 2002 meeting of the Economic and Social Council (ECOSOC) proposing

(a) a framework for an International Anti-Poverty Pact; and

(b) a process and timetable for developing a detailed draft Pact for finalisation as a resolution of the General Assembly.

STRENGTHENING INTERNATIONAL INSTITUTIONS

 Economic and Social Council

P4. The Conference should request ECOSOC to strengthen at its 2002 meeting both the composition and role of its Bureau. It also should request ECOSOC to adopt processes which increase its capacity to focus on timely and in-depth policy discussion and give greater opportunities for effective contributions to those discussions by non-governmental experts.

P5. The Conference should request ECOSOC to develop a practice of establishing Special Working Groups involving Ministers or other representatives with high political authority, and of making greater use of independent experts, especially in areas of major economic policy.

P6. In particular, the Conference should request ECOSOC to establish at its 2002 annual meeting a Special Working Group on Economic Cooperation. The Working Group could consist of up to 25 members, of whom approximately one-third are the G8 countries, another one-third are countries with very large populations, and the other one-third are members elected triennially by the remaining countries on a regional basis.

Regional cooperation in a global framework

P7. The Conference should strongly support the concept of "constructive regionalism" by which regional inter-governmental groupings are encouraged to be positive in their engagement with other parts of their world rather than unduly defensive or exclusive, and also to operate also as building blocks for an appropriate framework of representation and cooperation in global institutions.

P8. The Conference should call on the UN and other global institutions to strengthen substantially their cooperation with regional groupings. In particular, the Conference should

• request ECOSOC to begin convening by 2003 an Annual Regional Consultation of its own regional commissions and appropriate non-UN regional groupings;
  
  
• request the World Bank, IMF, WTO and G20 to provide greater opportunities for appropriate regional groupings, especially of developing countries, to operate as such within their deliberative and negotiating processes.  

STRENGTHENING INTERNATIONAL STANDARDS

P9. The Conference should emphasise the importance of improving resource mobilisation for development by strengthening international standards in relation to financial speculation, tax avoidance and evasion, corporate governance and responsibility, and competition and trade.

P10. The Conference should identify key elements of the processes, principles and priorities that should apply to the development of these standards. In doing so, it should seek to ensure that appropriate recognition is given to the interests and circumstances of developing countries, and to the relevance of social and environmental considerations. It should also seek to ensure that the standards are developed by appropriate global or regional institutions under the overall auspices of the UN system.

Financial speculation

P11. The Conference should propose modest expansion by the end of 2002 in the composition of the Group of 20, the Financial Stability Forum and other key bodies in international financial regulation in order to include representation of developing countries’ experiences and interests. It should endorse the regular meetings that are being convened by ECOSOC with these groups and other key inter-governmental institutions as having an over-arching role of coordination in financial market regulation.

P12. The Conference should call for readier recognition by the International Monetary Fund and other relevant institutions of the need for capital controls in vulnerable circumstances, especially for developing countries. It also should call for the developed countries, in particular, to adopt standards requiring stricter prudential regulation of speculative investment funds and tighter limits on public bailouts of fund failures.

P13. The Conference should agree on the need to reduce tax privileges for speculative transactions (for example, through coordinated adoption of currency transaction taxes that increase from a low rate in times of special volatility). It should request ECOSOC to make development of detailed options in this area a high priority for its Expert Group on International Cooperation in Tax Matters and the proposed annual International Taxation Forum (see below) with a view to full consideration by ECOSOC in 2003.

Tax avoidance and evasion

P14. The Conference should commit its participants to cooperate in strengthening international standards on matter such as tax bases, minimum tax rates and taxation of multinational enterprises and in reducing tax avoidance and evasion through devices such as transfer pricing, secret bank accounts and non-reporting of foreign income. It should also agree that participants will cooperate in reducing under-taxation of cross-border payments (such as interest, dividends and royalties), unearned assets, speculative capital gains, and electronic commerce.

P15. The Conference should request ECOSOC to begin convening by 2003 an annual International Tax Forum, involving key global and regional groupings such as the OECD, in order to promote cooperation in tax design, administration and enforcement. Such cooperation should include conducting research, exchanging information, identifying problems, proposing standards, monitoring implementation and facilitating action to promote compliance.

P16. The Conference should also request ECOSOC to strengthen the role, composition and resources of its existing Expert Group on International Cooperation in Tax Matters so that it can play a key role in coordinating preparation and conduct of International Tax Forum meetings.

Corporate governance and responsibility

P17. The Conference should request ECOSOC to establish an Independent Group of Experts to prepare by 2003 a draft International Code on Corporate Governance and Responsibility. The Panel should comprise experts from the ranks of government, business and civil society in both developed and developing countries. It should draw on existing codes and guidelines such as the OECD Code on Multinational Enterprises and the ILO Declaration of Principles Concerning Multinational Enterprises and Social Policy.

P18. The Conference should call for the Code, and other relevant international initiatives, to give special attention to corporate reporting requirements, independent financial and social audits, minority shareholders’ rights, anti-corruption measures, compliance with labour and environmental standards, and local re-investment. The Conference should also urge pension funds and other major institutional investors to insist upon good corporate governance and responsibility by corporations with which they are involved.

Competition and trade

P19. The Conference should request ECOSOC to convene an Independent Group of Experts to prepare by 2003 a detailed proposal for establishing a Multinational Enterprises Competition Authority with responsibility to investigate and report upon possible breaches of fair competition policy by multinational enterprises. After an initial period of advisory status, the Authority should establish adjudicatory processes analogous to those of the WTO.

P20. The Conference should emphasise the need for the WTO Development Round to give top priority to removing trade barriers in relation to agriculture and textiles that harm developing countries, preventing abuse of anti-dumping rules, providing tariff- and quota-free access for exports from least developed countries, and strengthening the availability of exemptions for developing countries from TRIPS and other trade agreements which impact harshly upon their people.

IMPROVING DIRECT ASSISTANCE

Official Development Assistance

P21. The Conference should unequivocally reaffirm the ODA target of 0.7% of GNP and call on each donor country to reduce its shortfall by at least one-half by 2005 with full achievement of the target by no later than 2008. This commitment should form part of the proposed Anti-Poverty Pact.

P22. The Conference should also agree that by 2005 most ODA should be on an untied grant basis, within the framework of the Anti-Poverty Pact, and most should be provided through pooled arrangements with other donors.

Debt relief

P23. The Conference should agree to an immediate moratorium on debt repayments by the poorest countries and a process for providing full debt cancellation for those countries by 2003. It should also agree to relax the conditions for access to relief under the HIPC initiative.

P24. The Conference should request ECOSOC to appoint an Independent Group of Experts to prepare a draft proposal for an international debt arbitration system to be operative by no later than 2003. A specific commitment to action in this area should form part of the Anti-Poverty Pact.

Financing ODA and debt relief

P25. As recommended earlier, the Conference should request ECOSOC to develop by 2003 detailed draft proposals for coordinated adoption of currency transaction taxes at the national level. It should also request ECOSOC to develop detailed draft proposals for coordinated adoption of national carbon taxes.

P26. Introduction of such taxes should be high priorities for possible inclusion in the first round of resource mobilisation commitments in the Anti-Poverty Pact, together with a programme for reducing tax avoidance and evasion as proposed earlier. These initiatives should be accompanied by commitments to devote a specified proportion of the revenue to additional assistance for developing countries, such as commitments in the Anti-Poverty Pact for specific improvements in ODA and debt relief.