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Published by the Third World Network KDN: PP6946/07/2013(032707) ISSN: 0128-4134 Issue No 544/545 1 – 31 May 2013 SDG working group discusses conceptualization, poverty eradication

The UN Open Working Group established to formulate a set of Sustainable Development Goals (SDGs) for the international community convened its second session on 17-19 April. This session saw member states voice their views on the conceptual aspects of the SDGs and underline the centrality of poverty eradication in the planning and implementation of the goals. l Formulation of SDGs promises to be challenging – p2 l South emphasizes equity and means of implementation – p4 l Poverty eradication must be central to the SDGs – p8

Also in this issue:

Systemic reforms, global International investment economic partnership crucial, disputes on the rise p26 says South p18 Momentum builds in US, beyond Developing resilience to external to end corporate tax evasion shocks p23 p30

No 544/545 Third World Economics 1 – 31 May 2013 1 CURRENT REPORTS Sustainable Development Goals THIRD WORLD Economics Formulation of SDGs promises Trends & Analysis to be challenging 131 Jalan Macalister 10400 Penang, Malaysia Tel: (60-4) 2266728/2266159 Discussions at a UN working group in April revealed major areas of Fax: (60-4) 2264505 interest, differences and concerns among member states as they seek to Email: [email protected] draw up a set of Sustainable Development Goals for the international Website: www.twn.my community. Contents by Ranja Sengupta CURRENT REPORTS 2 Formulation of SDGs promises to be NEW YORK: The second session of the sion on 17 April, Co-Chair Kamau said challenging Open Working Group on Sustainable that the objective of the meeting was to 4 South emphasizes equity and means of implementation Development Goals (SDGs) heard a take stock of the lessons learnt from the 8 Poverty eradication must be central to wide range of perspectives by UN mem- past experiences of the Millennium the SDGs ber states on conceptual aspects of the Development Goals (MDGs), to discuss 12 GC Chair recommends Azevedo of SDGs and poverty eradication. an overview of the current conceptual Brazil as next WTO D-G The session was held on 17-19 proposals for SDGs and tackling the 13 WTO, dubious prize for a Latin April at the UN headquarters in New problems that emerge from the explora- American? York. The Open Working Group (OWG) tion of these conceptual issues. He said 14 Lamy panel on future of trade issues report was established under the UN General the framework could benefit from dis- 18 Systemic reforms, global economic Assembly as one of the major decisions cussions on stronger global partner- partnership crucial, says South of the UN Conference on Sustainable ships and means of implementation 19 South reiterates need for debt workout, Development (also known as Rio+20) (MOI). human rights approach of June 2012. Many developing countries 20 G24 calls for action by advanced economies The Rio+20 outcome document stressed, up to the end of the session, 22 The BRICS option mandated the OWG’s establishment the centrality of international coopera- 23 Developing resilience to external shocks with a membership of 30 countries. Due tion and MOI, and Kamau assured them 24 The free-market fundamentalists are to overwhelming interest from member that these would be part of the future now in Europe states, it was finally agreed that some discussions. 26 International investment disputes on the seats would be represented by two or Many developing countries have rise three countries, usually with these called for MOI to be part of every issues 28 Dealing with the transnational countries coming from the same region. cluster. This insistence is due to the fact corporations There are thus 70 members in total, with that most developed countries have re- 29 Serious threat to Asian economic model some countries taking turns being in the treated from their commitments to pro- 30 Momentum builds in US, beyond to end corporate tax evasion official 30 seats, and statements can be vide MOI to developing countries, as THIRD WORLD ECONOMICS made in the name of each “troika” or revealed in the difficult negotiations on is published fortnightly by the Third World Network, each individual member. MOI during the UN Conference on Sus- a grouping of organisations and individuals involved During the 17-19 April session, a tainable Development. in Third World and development issues. seven-page summary of the discussion (The latest draft of the Programme Publisher: S.M. Mohamed Idris; Editors: Chakravarthi Raghavan; Editorial Assistants: Lean Ka-Min, T. of the two focus areas of the agenda was of Work of the OWG has MOI and glo- Rajamoorthy; Contributing Editors: Roberto Bissio, presented by the OWG Co-Chairs, Am- bal partnership for achieving sustain- Charles Abugre; Staff: Linda Ooi (Administration), Susila Vangar (Design), Evelyne Hong & Lim Jee Yuan bassadors Macharia Kamau of Kenya able development as standalone issues, (Advisors). and Csaba Korosi of Hungary. and three days have been allocated for l Annual subscription rates: Third World countries The Programme of Work for 2013- this at the sixth session of the OWG on US$75 (airmail) or US$55 (surface mail); India Rs900 (airmail) or Rs500 (surface mail); Malaysia RM110; 14 that will shape the SDGs has still to 9-13 December.) Others US$95 (airmail) or US$75 (surface mail). be agreed upon. There was, however, According to a developing-country l Subscribers in India: Payments and enquiries can be agreement on the clusters of issues for delegate, some of the other issues that sent to: The Other India Bookstore, Above Mapusa Clinic, Mapusa 403 507, Goa, India. the next two sessions of the OWG. will continue to generate differences, The third session on 22-24 May will even controversy, are energy; conflict, l Subscribers in Malaysia: Please pay by credit card/ crossed cheque/postal order. address food security and nutrition, peace and security; and oceans. The l Orders from Australia, Brunei, Indonesia, Philip- sustainable agriculture, drought, deser- framing of the issues related to the cli- pines, Singapore, Thailand, UK, USA: Please pay by tification, land degradation and water mate change session will also be key. credit card/cheque/bank draft/international money order in own currency, US$ or euro. If paying in own and sanitation. It is expected that the The first topic of the 17-19 April currency or euro, please calculate equivalent of US$ rate. Programme of Work for 2013-14 will be session, conceptual aspects of the SDGs, If paying in US$, please ensure that the agent bank is located in the USA. adopted then, making this a key meet- dealt with issues including guiding l Rest of the world: Please pay by credit card/cheque/ ing, as the Programme of Work will principles and framework, possible bank draft/international money order in US$ or euro. If unquestionably influence the formula- themes and priorities for goal-setting, paying in euro, please calculate equivalent of US$ rate. If paying in US$, please ensure that the agent bank is tion of the SDGs. The fourth session of global partnership, means of imple- located in the USA. the OWG on 17-19 June will address mentation, and convergence between Visit our web site at http://www.twn.my health and population dynamics, em- the SDGs and the post-2015 develop- Printed by Jutaprint, No. 2, Solok Sungei Pinang 3, Sungai ployment and decent work for all, so- ment agenda. The second topic was on Pinang, 11600 Penang, Malaysia. cial protection, youth and education. poverty eradication as part of the © Third World Network At the opening of the second ses- overarching framework (with sustain-

2 Third World Economics 1 – 31 May 2013 No 544/545 CURRENT REPORTS Sustainable Development Goals able development). and should contribute to implementa- can reinforce national actions while tion of outcomes of all major summits respecting countries’ different priorities “Transformation agenda” in the economic, social and environ- and circumstances and also empower mental fields.” civil society. The Co-Chairs’ summary of the However, such “broad agreement” On a very important note, the sum- three-day meeting was presented at the does not amount to a clear conclusion mary pointed out that “there will be last session on the afternoon of 19 April or consensus: this part of the summary need to allow flexibility to countries to and this is their perspective of the pro- reflects the position of developing coun- adapt global goals and especially re- ceedings. tries that many developed countries do lated targets to their needs”. In this re- In their summary, the Co-Chairs not fully support, preferring to have spect, the summary referred to expressed their “sense that early anxi- simple goals and even retreating from Colombia’s suggestion of “a global ety is giving way to growing intellec- especially their commitments to provide dashboard of targets and indicators” tual curiosity” and reflected that the the means of implementation (finance under each goal from which countries OWG agrees that “our task is to gradu- and technology). could select those most appropriate and ally craft the backbone of the transfor- The summary also noted, “It was relevant. The idea suggested that “this mation agenda”. also broadly recognized that defining would also allow flexibility for coun- The summary states that MDGs are SDGs is not the occasion for negotiat- tries to take on more ambitious targets one important touchstone for the ing or renegotiating existing agree- over time, should they make better than OWG’s work, inevitably a point of de- ments, treaties that are under the re- expected progress”. parture, and that while there is much to sponsibility of other international fora learn from – and build upon – in the and processes.” Scope MDGs, it can be agreed that they will On the characteristics of SDGs, the not be enough. summary stated that defining the SDGs On the issue of scope of the SDGs, On the conceptual aspects of SDGs, is a way to prioritize – to identify the the summary said, “The MDGs did not the Co-Chairs’ summary states that “we critical problems to address, critical recognize the many dimensions of pov- must conclude any unfinished business goals needed to be set, and critical ac- erty, which go beyond monetary in- of the MDGs, and set a goal of complete tions needed to be taken. It recognized come. In building on the MDGs, many eradication of poverty in a clear that “development is a complex process of you have said that the gap the SDGs timeframe”. It posited that “we are un- of structural change, a complex way are meant to address is one of integra- likely to reach that goal in a sustain- how to combine growth with progress” tion of the three dimensions of sustain- able way if we do not address the eco- and “there are no magic bullets” to able development, and implementation nomic, social and environmental factors achieve this, especially sustainable de- of integrated solutions. SDGs could that make for durable poverty eradica- velopment “which no country has yet serve three functions: norm or priority tion. So, integration of the three dimen- successfully achieved”. setting; coordinating global action; and sions is a critical means to sustainable It pointed towards the “need to be measuring actions and outcomes at the poverty eradication and people-centred faithful to the complexity in the narra- national level.” development.” tive and in our broad post-2015 agenda, Three possible types of goals are The summary highlighted the need while aiming for simplicity in the goals highlighted in the summary: (i) human- to call for “strong cooperative global we set ourselves”. Reflecting the views development-related goals with little en- action” as human activities in one part of member states (mostly developed vironmental impact associated with of the world can have consequences for countries), the summary stated, “Many their attainment (e.g., education); (ii) people living in other parts. The report noted how important it is to retain this human-development-related goals pointed towards the need to embed the positive feature [simplicity] of the with important environmental dimen- SDGs in a broader narrative, “a narra- MDGs. Not to do so could jeopardize sions (e.g., water, food, energy); and (iii) tive of the transformative change needed the chances of success. As one of you goals related to common management to realize our vision of sustainable pov- said, ideally the SDGs should be of global resources. Further, “women erty eradication and universal human ‘tweetable’.” and disadvantaged groups, indigenous development, respecting human dig- While the summary noted that all peoples and ethnic minorities must be nity and protecting our planet, mother agreed on the universality of the SDGs, addressed through ambitious and mea- Earth, living in harmony with nature there were different understandings of surable targets and indicators in all rel- for the wellbeing and happiness of how this should be reflected in the evant goals”. present and future generations”. goals. On “Realizing and measuring On the principles of SDGs, the sum- “Many share the view that the SDGs: means of implementation and mary stated, “Many of you reiterated SDGs must speak not only to develop- global partnerships”, the summary that the [1992] Rio principles should ing countries but also to developed stated, “We cannot set goals for our- guide the formulation of the SDGs, in- countries, and not just in terms of con- selves without considering carefully cluding the principle of common but ventional development cooperation, how we are to achieve them. We will differentiated responsibilities.” It important as that is. Shared responsi- continue to discuss means of imple- added, “At Rio+20 it was agreed that bilities are broader if we are to achieve mentation and a renewed and strength- the SDGs would be based on Agenda sustainable poverty eradication and ened partnership for sustainable devel- 21 and the Johannesburg Plan of Imple- development. Many of you mentioned opment in the course of our work. We mentation, and fully respect all Rio prin- in particular the need for all to achieve expect to dedicate time specifically for ciples.” sustainable patterns of consumption that discussion. We will also keep close “There was broad agreement,” the and production, with developed coun- track of progress of discussions in the summary said, “that the SDGs should tries taking a leading role.” financing expert working group.” build upon commitments already made It also pointed out that global goals The summary said, “Many of you

No 544/545 Third World Economics 1 – 31 May 2013 3 CURRENT REPORTS Sustainable Development Goals say that means of implementation and stressed as a critical driver”. for discussion, inputs could be given partnerships should usefully be consid- The summary however did not by member states on the thematic areas ered in relation to each goal we set, mention issues such as trade, finance, that were suggested. while some cautioned that just as goals intellectual property rights and technol- There were several responses to this and their achievement will be interre- ogy transfer which had been raised re- proposed programme. The developing- lated so will be the means of achieving peatedly by several developing coun- country Group of 77 and China sug- them.” The summary also acknowl- tries as being key structural factors be- gested having the MOI and indicators edged that the needs of countries in hind poverty and inequality. discussion for each of the thematic ar- special situations will need to be con- Some of the other questions that eas. sidered. It added that new thinking on came up and are due for more discus- Switzerland suggested adding top- international cooperation beyond the sion were: whether to have standalone, ics such as human rights, governance traditional donor-recipient relationship cross-cutting or both sets of goals; how and population dynamics, and sug- is needed. to recognize and enunciate the multi- gested moving topics such as MOI and On measures of progress, the need dimensional nature of poverty; and how global partnership (currently sched- to look beyond GDP was highlighted to address inequality in the goals. The uled under session 6) to the end. in the important act of measuring risk to those with incomes just above Argentina said that the programme though “not all that is valuable can be the poverty line (of falling back into of work “should not prejudge the struc- measured”. poverty) as a result of various shocks, ture of the SDGs” and agreed with the The summary also highlighted the and the “poverty of opportunity” were G77 that MOI should be touched upon importance of quality measures that some of the issues raised in the report. with every issue. came up several times during the dis- On convergence, the summary The United States said it could sug- cussion, for example, completion of stated, “It was widely agreed that at the gest another programme of work but schooling and literacy rates in the area end of the day, when we come to 2015, would cooperate with the programme suggested by the Co-Chairs. of education, or access to quality nutri- we would like to have a single, coher- India said if areas such as human tional food in the area of food security. ent development agenda with poverty rights were to be added, the discussion The need to be able to collect reliable eradication and SDGs at the core.” could be together with the right to de- and timely data and address capacity Among the various efforts in this velopment. Further, India wanted glo- constraints in meeting data require- regard, the “need to track and commu- bal economic governance to be added ments by building institutional capaci- nicate with the other processes under- to session 6, and financial stability to ties as early as possible was seen as way to define the post-2015 develop- be added to the macroeconomic issues important. ment agenda”, get technical support under session 5. Another issue that came up was the from UN technical support team, and The second session of the OWG need to tap the best scientific knowl- to reach out to the scientific community ended on a note of some optimism and edge, in both natural and social sci- to provide technical inputs on setting dynamism but also pointed towards the ences, to inform the work, including in appropriate goals, targets and indica- major areas of interest, differences and the setting of sensible targets and the tors, were pointed out by the Co-Chairs. concerns among the member states. It choice of indicators, but also in the Programme of work gave an inkling of what some of the monitoring and evaluation of progress. national priorities will be for countries In terms of timeframe, the need to as a group and individually, in the cur- have a longer 30-year period of refer- The concluding session ended rent global context. It showed that there ence was highlighted by some mem- with a discussion on the further is still a long way to go before the SDGs bers, while some harped on the need to programme of work to be focused on can take shape. (SUNS7572)ÿÿÿÿÿÿÿÿÿÿÿÿÿp ensure that countries and governments the thematic areas which had been pro- are held accountable within shorter in- posed by the Co-Chairs. The Co-Chairs This article was written with inputs from Chee cremental periods. There is also a need said that while the dates were not up Yoke Ling. to recognize that a rapidly changing world will present unexpected chal- lenges and new developments, both South emphasizes equity and means of positive and negative, and that an ever- increasing global population must also implementation be kept in mind. On poverty eradication, the report The first half of the OWG session was devoted to addressing the underlined that “it is central to the conceptual aspects of the SDGs, reports Ranja Sengupta. OWG, it is at the core of the SDGs and it must be mainstreamed in all our work”. The summary also identified criti- NEW DELHI: Substantive work on for- menting the Millennium Development cal drivers of poverty eradication such mulating the Sustainable Development Goals (MDGs) with their 2015 deadline, as “inclusive and robust economic Goals (SDGs) at the United Nations heard numerous statements from mem- growth, decent jobs and productive live- began with discussions on conceptu- ber states, considered the relationship lihoods; equitable access to basic goods alizing the goals and the SDG process, between the SDGs and the post-2015 and services, such as water, food, en- and on poverty eradication. development process, and agreed on the ergy, health and education, social pro- The second session of the UN Gen- thematic issues for the next two OWG tection; and sustainable management eral Assembly Open Working Group sessions in May and June. of natural resources. Empowerment of (OWG) was held in New York on 17-19 The UN Technical Support Team women and gender equality as well as April. The session conducted some co-chaired by the UN Department of the access of poor people to justice were stocktaking of the experience in imple- Economic and Social Affairs and the

4 Third World Economics 1 – 31 May 2013 No 544/545 CURRENT REPORTS Sustainable Development Goals

UN Development Programme provided ber states and groupings/troikas spoke. (MOI). two issues briefs on conceptual issues Below are the highlights of some of the He also emphasized that it is criti- and poverty eradication. Two expert statements with regard to the concep- cal to get the content of the SDGs right panels on conceptual issues and pov- tual discussion, made on 17 April and at the beginning. For example, the sus- erty eradication also provided inputs the morning of 18 April. tainable development agenda has to for interactive discussion with and Observers and the representatives place the global economic and finan- among member states. of major groups also spoke. The state- cial crisis at its heart in order to be rel- (Such issues briefs and expert pan- ments displayed a range of positions: evant, and include the social and envi- els will feature in the following ses- on universality versus national priori- ronmental crises as well. It must ad- sions of the OWG at the “input stage”. ties, on global partnership for develop- dress the structural factors and root Following this will be the “output ment and means of implementation, on causes that give rise to these crises. He stage” where member states will engage structural factors that cause poverty added that there must be a significant in negotiations on the final outcome of and inequality across countries, and on section on strengthening the global part- the OWG.) the possible merging of the two pro- nership for development that is to be In the afternoon of 17 April a panel cesses. conceived and designed in a system- discussion was organized where Claire atically adequate manner. Melamed, Head of the Growth and Eq- Global partnership Further, he said that each SDG uity Unit of the Overseas Development should be linked with the strengthened Institute, and Sakiko Fukuda-Parr, Pro- Ambassador Peter Thomson of Fiji global partnership for development. fessor of International Affairs, New spoke as Chair of the developing-coun- These means of implementation must School, United States, presented their try Group of 77 and China (G77), reiter- be supported by actions from devel- views on conceptual issues. ating the Group’s view that the identi- oped countries at the international level, The panel on poverty eradication fication of principles and the categori- such as time-bound financing targets, took place on 18 April afternoon with zation of cross-sectoral issues should associated trade and economic policies, presentations by Jomo Kwame be arrived at after the OWG’s mapping technology transfer and other resources Sundaram, Assistant Director-General, exercise, which would allow all states to assist and enable developing coun- UN Food and Agriculture Organization to contribute and identify their respec- tries’ efforts. (FAO), and Professor Sabina Alkire, tive priority areas of sustainable devel- Thomson also highlighted the three Director of the Oxford University Pov- opment. He stressed that the issues pillars of sustainable development (i.e., erty and Human Development Initia- briefs are intended for information only economic, social and environmental), tive. and should not have any legal status and what these could contain in a The panel discussions were inter- in the final report of the OWG. meaningful SDG framework. active and member states responded On the guiding principles, he said Benin [on behalf of the least devel- with questions and comments. that they “must be based on those enu- oped countries (LDCs)] said that the Wu Hongbo, UN Under-Secretary- merated in Agenda 21 and SDGs should primarily be based on General for Economic and Social Af- Johannesburg Plan of Implementation Agenda 21 of the Rio+20 outcome docu- fairs, presented the issues brief on con- (JPOI), be consistent with international ment. The SDGs should fully absorb ceptual issues prepared by the UN Tech- law, and should fully respect all Rio lessons learnt from the MDGs. nical Support Team. He highlighted Principles and the sovereignty of states It emphasized that the LDCs are that most proposals are in terms of a over their natural resources, including lagging behind in capacity and other limited, measurable and concrete set of the need for all states to cooperate in a areas of the MDGs and therefore the goals. In terms of putting eradication of spirit of global partnership to conserve, SDGs will remain incomplete unless poverty as central to the context of protect and restore the health and in- attention is paid to the LDCs. The imple- SDGs, he said poverty and tegrity of the Earth’s ecosystem and that mentation mechanism is crucial, it sustainability are two sides of the same states have Common But Differentiated stressed. Differential and preferential coin. Responsibilities (CBDR).” treatment of LDCs is a must. The LDC Based on the report, he suggested a Thomson said further that the category that has existed for a long time set of universal goals for both devel- SDGs should contribute to the could be used and there is no need to oped and developing countries with fulfilment of the right of development reinvent the wheel, it highlighted. two options: a common set of goals with for developing countries. Moreover, in On the environmental aspect, differentiated targets or timelines at fulfilling their SDGs, developing coun- Benin argued that the LDCs are not national levels; or a common set of goals tries should be supported by an en- causes of environmental degradation with multiple targets and indicators so abling international environment, but face the results of it, so instead of a that each country could plan its own which includes a supportive and just “one size fits all” approach, they must development agenda. international system where the rules are have differential treatment. On MOI, it He said “we have to take into con- fair and pro-development, as well as a said that LDCs do not have sufficient sideration what we can measure, things genuine global partnership to enable domestic resources as their tax, invest- for which member states can get accu- developing countries to achieve the ment and finances are low, and there- rate, timely and disaggregated data”. He SDGs. This should be done through the fore LDCs must be provided differen- also added that the MDGs and the SDGs provision of new and additional fi- tial and preferential treatment. It also are not in conflict. The SDGs have the nancing resources, technology transfer said that LDCs want a strong voice in potential to accelerate and complement in concessional terms, capacity-build- the OWG. the work done by the MDGs. ing, pro-development trade policies and Nicaragua (also on behalf of Bra- Following this, more than 20 mem- effective means of implementation zil) talked about the historical respon-

No 544/545 Third World Economics 1 – 31 May 2013 5 CURRENT REPORTS Sustainable Development Goals sibilities of the developed countries to- a single set of global common goals for plicity of crises adversely impacts so- wards the developing ones, stressing global coherence as no country stands cial protection measures such as social the importance of CBDR and ensuring alone today. But the framework must security. So the structural causes must the means of implementation. A suc- also provide for differences at country be addressed and there must be con- cessful implementation of the SDGs re- level. Colombia suggested that there be crete measures to deal with such crises. quires the addressing of issues such as a “dashboard” with common targets It also agreed with several other devel- trade, finance and technology. and indicators where countries sign on oping countries that every SDG must International cooperation is very to whichever they want voluntarily. be accompanied by MOI. Transfer of important for developing countries in They can also add more if they want. technology, capacity-building and fi- order to be able to implement the SDGs, Colombia added that if there is a nancing for developing countries must so the SDGs have to have a section on fear that this will mean a race to the be the obligations of developed coun- global support, it emphasized. Nicara- bottom, they believe that “it will lead to tries, it said, adding that “we can’t be gua added that no developed country a race to the top”. The dashboard sys- prisoner to financial colonialism”. It has yet achieved sustainable develop- tem can also provide specific targets also made several proposals on the ment, so it is important to change pro- and indicators for those at the very bot- SDGs. duction and consumption patterns. tom and the marginalized. Pakistan (also on behalf of India On MOI, the need for technology On MOI, Colombia said it sub- and Sri Lanka) asked for a coherent, and capacity is important. New fund- scribed to the view that MOI should be measurable set of SDGs that would in- ing as well as use of funds have to be built into each goal. There are many corporate all the three dimensions of evaluated, accompanied by indicators cross-cutting issues, and there can be sustainable development. It highlighted on use and goals, it said. The SDGs must target sharing across different goals. that under the MDG framework, MDG8 specify the source of financing and use. (on global partnership) was under-re- Indonesia (also on behalf of China Structural flexibility alized as it did not have indicators or and Kazakhstan) highlighted the im- goals. Each goal under the SDGs must portance of multilateralism as a corner- Egypt articulated very clearly that have a set of indicators and attached stone to achieve the SDGs and said that there must be structural flexibility at the MOI. there was a historical responsibility to- national level in the SDG framework The troika noted the work done by wards the MDGs. It reiterated that the and a recognition of inequalities in any the UN technical team and the empha- work of the OWG was based on the assessment of outcomes. The frame- sis on the review of financing. It wanted (1992) Rio principles including CBDR, work must focus on means (processes) a separate agenda to be set on this is- in addition to that of the Monterrey and not only on outcomes. sue. The dearth of good-quality data Consensus (on financing for develop- It made a very strong case that for and to set this as a standalone goal was ment) and Agenda 21. developing countries, access to markets also highlighted by Pakistan. The goals must be universal but and technology is far more important Bangladesh said that the MDGs take into account the different national than foreign aid and they need a more were clear and measurable, there was priorities. The troika urged that the “enabling environment”. The principle no framework in it. The SDGs must be framework must not deviate from the of universality could be followed, but anchored on the three pillars of sustain- main topic of development. The SDGs common but differentiated responsibili- able development. The goals should be must aim to end poverty but sustain- ties must also be recognized. As far as ambitious but flexible in recognizing able development and global partner- MOI is concerned, Egypt highlighted differences in national priorities. ship should be basic principles. the role of trade, investment and intel- It highlighted that economic In terms of structure, the troika ar- lectual property rights for developing growth must be given high priority but gued that balance between the three countries. only one that is equitable and environ- pillars of sustainable development is Bolivia (also on behalf of Argentina ment-friendly. It further highlighted the necessary and the necessary structure and Ecuador) highlighted the univer- importance of multidimensional pov- for this to be achieved must be explored, sal nature of the SDGs. On the principle erty, and the need to address climate including finance, technical transfer of universality, the developed countries change in the SDGs, including both and capacity development. Global MOI should show greater commitment to mitigation and adaptation. Displace- including finance must also be gar- sustainable consumption and produc- ment caused by climate change must nered. The systemic and structural is- tion patterns and the developing coun- also be addressed. sues like global trade and finance are tries should be supported in their ef- Bangladesh stressed that MDG8 cross-sectoral issues and must be ad- forts to reach the development goals. should be very clearly stated and re- dressed. Bolivia also asserted that the SDGs lated to each goal separately as well as Indonesia also highlighted that should go beyond the reductionist view collectively. Financing, technology poverty eradication is a key element of of just economic growth. It stressed the transfer etc have to be given due atten- the SDGs which the SDGs should reaf- importance of common but differenti- tion, and while aid is important, it is firm and not deviate from. Finally, GDP ated responsibilities, and that national trade that has to be linked to the SDGs. per capita and therefore increases in plans and perspectives must be given It also called for democratic governance production capacity and job creation due importance. Poverty is multidimen- at the international level, both within are very important for developing coun- sional and the rights of workers, the institutions and outside. tries, which must be kept in mind for women, children, old people and the Saudi Arabia said that the Rio prin- the SDGs. disabled must be recognized in this re- ciples, Agenda 21 and CBDR must un- Colombia (also on behalf of Guate- gard. derpin the conceptual framework of the mala) suggested that there needs to be Bolivia highlighted that the multi- SDGs, and the different political and

6 Third World Economics 1 – 31 May 2013 No 544/545 CURRENT REPORTS Sustainable Development Goals economic contexts of countries must be responsibilities and the need to ac- be catered to national structures and acknowledged. The goals must be prag- knowledge different national circum- capacities. matic, implementable and affordable. It stances and capabilities. It suggested Costa Rica mentioned that the said that MOI was critical for success that measurable commitments must be SDGs must not divert from the MDGs, of the goals. On convergence, it said that made by developed countries for each and wanted a more equitable distribu- how the two frameworks interact with SDG. The SDGs must not dilute the in- tion of wealth, equitable development one another must be figured out. ternational commitments made by de- and poverty alleviation in MDGs. It Uruguay highlighted areas that it veloped countries. highlighted that affordable energy would like to see covered under the Cuba also asked for a “frank and sources must be tapped to help reach SDGs such as gender and income in- open debate on global governance” in- goals. equalities, food security, degradation of cluding governance of international in- The European Union presented its the earth, healthcare especially in non- stitutions. preliminary ideas and called for one communicable diseases, and education Zambia (also on behalf of Zimba- overarching framework and a simple (including secondary education and bwe and South Africa) asserted that the set of goals. It argued that the link be- information technology). SDGs must be much broader than the tween poverty and sustainable devel- It stressed the importance of access MDGs and have a multidimensional, opment has to be recognized. It high- to markets for developing countries and multi-sectoral approach. They must rec- lighted the importance of implement- the role of agricultural subsidies given ognize the principle of CBDR and en- ing the three dimensions of sustainable by developed countries in this regard. sure equity and equality in partner- development in a balanced manner. The statement underlined the need to ships. On specifics, the EU suggested that adapt current consumption and pro- On MOI, Zambia agreed with sev- further work on the SDGs could include duction patterns and the need for the eral other developing countries and the some of the following issues: basic liv- developed countries to take the lead in G77 that each SDG must be accompa- ing standards including water, sanita- this matter. Uruguay also said that fi- nied by MOI. It also emphasized that tion etc; drivers for sustainable growth nance must accompany each of the ob- goals must not only be quantitative but such as sustainable consumption; natu- jectives. ensure quality as well. ral resources such as forests and Ethiopia said “we cannot limit our- Nigeria (also on behalf of Ghana) oceans; equity and justice such as gen- selves thinking what can be done, what said that while the technical support der equality, human rights, governance ought to be done should also be a team report is very good, it should not at all levels; peace and security. All these guide”. It further pointed out the impor- have any role in determining the final areas should not be seen as standalone tance of MOI and the “right to develop- outcome of the process. but as cross-cutting. ment” in this process. It highlighted that In a separate statement speaking While saying that supporting “glo- unsustainable production and con- for itself, Nigeria emphasized uphold- bal partnership” will be an important sumption patterns need to be elimi- ing the principle of CBDR and the need element of the new framework, the EU nated. to foster the “enablers of development” also pointed towards the need to estab- On convergence, Ethiopia favoured such as peace and security, rule of law lish responsibilities for all partners that SDGs complement rather than sub- and accountability. (mutual accountability) and focus on stitute MDGs. It also suggested that actions at both global and national lev- major bottlenecks are never given due Added value els. attention. It is important to have open, It said that while external support transparent, non-discriminatory multi- Peru (also on behalf of Mexico) ar- remains important for countries most lateral rules of trade and investment, gued that the SDGs should be built on in need, “means of implementation” is and technologies must be given “para- what has already been agreed on inter- about putting all resources to good and mount importance”, said Ethiopia. nationally and should be based on the efficient use, whether from public or South Africa drew attention to how success of the MDGs. It also argued that private, domestic or international foreign direct investment (FDI) is fall- there must be clarity as to the critical sources. The EU also said that new ing in Africa both in absolute terms and added value of the SDGs and as to what thinking on international cooperation in shares. On global partnership, it is sought to be achieved with it. is needed that moves away from the tra- asked for the focus to be shifted from It welcomed the dashboard idea ditional donor-recipient paradigm. donor-recipient to fair rules of trade and floated by Colombia that suggests vol- On the principles related to the SDG flexible intellectual property rights so untary commitments and a tailoring to process, the EU said that it remains that local manufacturing products could national priorities. Peru asked the OWG committed to the MDGs and does not be developed, and to also meet health to consider a follow-up and implemen- want to “take away” from it, and that and nutrition needs in order to meet the tation mechanism and keep in consid- duplication between the MDGs and the MDGs. While the principle of univer- eration the global economic context. SDGs should be avoided. The EU said sality can be adopted, the SDGs must Bhutan mentioned that while the that the agenda can be ambitious but acknowledge different points in devel- MDGs talk about minimum material flexible. opment trajectories and therefore allow needs, an indicator of well-being, on the Italy (also on behalf of Spain and local adaptation, South Africa said. It lines of Bhutan’s indicator of happiness, Turkey) highlighted that the SDGs can also suggested that the SDGs be stag- could be introduced. build on the case of policymaking ex- gered into short-, medium- and long- Paraguay said that the SDGs perience on development cooperation. term interventions. should be built on the MDGs but It talked about the important role of the Cuba agreed with many others in strengthened where the MDGs have not MDGs and raised a question as to the arguing for common but differentiated done well, and that the SDGs need to additional value of the SDGs. It high-

No 544/545 Third World Economics 1 – 31 May 2013 7 CURRENT REPORTS Sustainable Development Goals lighted certain keywords such as em- sional poverty eradication as being cen- a single international agenda for devel- ployment, labour, women, equality and tral. It argued that it is important that opment. Russia pointed out that in this physical security, among others. It em- “goals in themselves are outcome-ori- framework it is not appropriate to have phasized that the SDGs need to promote ented” and that “we want to be ambi- general ideas or political views ex- technology, the use of natural resources tious but also realistic”. Noting that an pressed. The new goals must be con- and the utilization of knowledge. extensive list of priorities which in- cise, few in number, aspirational in Switzerland favoured an over- cludes big and contentious issues such scope and global in scope, it said, add- arching framework for the SDGs that as climate change and trade (among ing that the MDGs should be merged includes the post-2015 development others) is being mentioned, Australia into the SDGs, which are a continua- agenda, which will also have a bal- argued that the value-added of those tion of the MDGs. anced consideration of all the three di- issues in this forum must be decided New Zealand laid the case for an mensions of sustainable development. on. On MOI, it said there is a need to overarching development agenda with It favoured an incorporation of sustain- have a comprehensive view. a single set of goals. But the gap of in- able development into all policy areas. South Korea also proposed that clusive economic growth must be ad- Goals should be universally applicable there should be common goals but with dressed. but allow for country-specific differ- different targets and indicators by coun- Bulgaria and Romania, in separate ences. Switzerland underlined the role tries. It said that MOI should be consis- interventions, both argued for a single of domestic resource mobilization and tent with commitments countries have coordinated agenda. Both countries knowledge. made in other fora. highlighted the importance of issues Russia said the OWG is important such as freedom, peace and security, Balanced approach as preparatory work for the UN Gen- gender equality and good governance. eral Assembly in 2014-15. It supported (SUNS7573)ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿp The United States (also on behalf of Canada and Israel) argued that pov- erty eradication needs to be at the core Poverty eradication must be central to of the agenda and greater attention must the SDGs be paid to inequality and exclusion. It stressed on a “balanced” approach in The talks during the second half of the OWG meeting underscored the dealing with the issues, but made it need to prioritize poverty eradication in the SDG framework. clear that it was not using balance in the sense that all goals have to get equal by Ranja Sengupta attention on a necessary basis. In terms of principles, the US said NEW DELHI: Poverty eradication is the Massachusetts Institute of Technol- that the nature of the goals needs to be critically linked to sustainable develop- ogy and currently member of the UN universal but relevant to national goals ment and must be central to the plan- Secretary-General’s High Level Panel and priorities. It also argued that the ning and implementation of the Sus- on the post-2015 development agenda, MDGs remain unfinished business and tainable Development Goals (SDGs). delivered the keynote address, where must have a home, a follow-up. The US This was one clear message from he spoke about how the Millennium said that whatever goals there are in the second session of the United Na- Development Goals (MDGs) “changed the SDGs/MDGs, they do not represent tions General Assembly Open Working the landscape” and how they had man- the entirety of the agenda, and there are Group (OWG) on the SDGs that ended aged to “get into the vocabulary”. He other processes where these can also on 19 April. The overarching impor- advised that countries should be free to be addressed. tance of poverty eradication was prob- decide on processes. “Choose out- Norway (also on behalf of Iceland ably the only issue on which there was comes, do not dictate process,” he sug- and Denmark) argued for a single set of no dissenting voice in the three-day gested. meeting. Banerjee argued that the one theme global goals, universal, realistic and Poverty eradication was the second that had come out of every consultation measurable. Under each set of goals, focus area on the agenda, after an ex- was that there is a need to “take the idea there could be targets for all countries tensive exchange of views and official of partnership more seriously”, beyond which could recognize national priori- statements on the conceptualization of national governments and donors. Sev- ties. On MOI, Norway posed a question the SDGs and SDG process. The dis- eral countries asked him to elaborate as to how to address its major weak- cussion on the afternoon of 18 April and on the importance of a global partner- nesses such as trade, financing, domes- member states’ interventions on 19 ship, and Bangladesh asked whether a tic resource mobilization, public-pri- April morning provided an insight into global partnership could be both “vir- vate partnership (PPP), redistribution the various aspects of poverty that were tuous” and “vicious”. and technology transfer. It said MOI of concern to different member states. Banerjee felt, however, that while it cannot be independent of goals and tar- The discussion on poverty eradi- is of tremendous importance, it is a very gets, and also suggested that all three cation began with an interactive session complex area and the SDGs/MDGs, dimensions of sustainable development where a number of experts spoke on the being a baseline framework, cannot be be integrated into each goal. issue. used to solve “every problem in the Australia said that it could see Abhijit Banerjee, Ford Foundation world”. He emphasized that global commonality emerging on multidimen- International Professor of Economics at partnership is very much about global

8 Third World Economics 1 – 31 May 2013 No 544/545 CURRENT REPORTS Sustainable Development Goals distribution of power and its control. low are highlights of some of their in- tional community to live up to its re- He said that rather than asking for puts. Most member states agreed on the sponsibility in conjunction with na- better institutions now, which may lead importance of poverty eradication, its tional governments, saying, “A re- to a failure of the process, “if we get the multidimensional nature and the need newed and strengthened global part- MDGs right, it may lead to better insti- to go beyond economic growth. Several nership for development ... which tutions”. statements contained specific priorities builds on the strengths of the current Olav Kjorven, United Nations As- of nations and regions. global partnership for development, sistant Secretary-General and Director The statement of the Group of 77 while going beyond and addressing of the Bureau for Development Policy and China (G77) was presented by weakness of its present framework, of the UN Development Programme Luke Daunivalu, Deputy Permanent would be a positive step in the right (UNDP), presented the UN Technical Representative of Fiji to the UN. He direction.” Support Team’s issues brief on poverty highlighted “the need to intensify ef- Benin (speaking on behalf of the eradication. He highlighted the need to forts and accelerate actions on MDGs” least developed countries) highlighted address structural causes that create and that there still remained “signifi- that “poverty and hunger are multidi- and sustain poverty. He also suggested cant variations across regions and mensional problems that pose serious that both poverty and inequality need within countries”. The Group under- constraints to LDCs’ efforts to make to be targeted. scored the importance of taking into progress in human and social develop- A panel of two experts then pro- account multiple dimensions of poverty ment”. The populations in LDCs lack vided further inputs. Jomo Kwame vis-a-vis the opportunities and capa- the resources to participate in social, Sundaram, Assistant Director-General bilities of government and people economic and political life and benefit of the UN Food and Agriculture Orga- “while devising international coopera- from economic growth. Various esti- nization (FAO), reminded the audience tion efforts and national policies”. It mates show that the achievements of of the linkage between poverty and hun- called for a holistic and integrated ap- the LDCs have lagged behind and the ger. Sabina Alkire from the Oxford Pov- proach to sustainable development. “absolute number of poor people has erty and Human Development Initia- The Group emphasized that eco- increased in many LDCs even in times tive (OPHI) elaborated on the use of nomic growth is necessary but not suf- of sustained economic growth”. The various indicators (such as access to ficient in itself and must be “sustain- LDC grouping argued that sustained, food, health, education, water, energy) able, inclusive, equitable and create inclusive and equitable economic in a multidimensional index of poverty decent work and livelihood opportuni- growth, enabling environment and uni- (MPI) which has been designed by ties for all, especially the poor and vul- versal access to social services are key UNDP and also individually by several nerable members of society”. requirements for eradicating poverty countries. The G77 argued that policies and and hunger. The interdependence between development efforts targeted at poverty It set out four specific principles. hunger and poverty and the sustenance eradication must respond to challenges First, the share of poverty is statistically of hunger in spite of some efforts at pov- and opportunities at both national and more important (than absolute number). erty eradication provoked a rich discus- international levels. Accordingly, “a Second, given low income, domestic sion from the floor. Jomo pointed out supportive, fair and enabling economic savings, investment and a low tax base, that “there is a credibility problem” and financial architecture as well as a many LDCs do not really have the ca- since UN calculations show a halving genuine global partnership for sustain- pacity to deal with the challenges by of poverty but not of hunger. The latter, able development are crucial to comple- themselves. Third, trends clearly show he argued, will in fact go up tremen- ment the efforts of national govern- the multiple vulnerabilities of LDCs in dously if there is a realistic hunger line. ments”. raising living standards. Fourth, the In response to Alkire’s presentation In particular, it emphasized that initial endowments and characteristics on poverty measures, Pakistan sug- global trade and investment rules must of countries are crucial. So “LDCs are gested that the one-dollar-a-day poverty be designed and implemented so that at the highest of the ladder in terms of line should be done away with as “it constraints faced by developing coun- challenges and at the bottom of it in needs to be continuously updated in tries can be met, and efforts to reform terms of capacity”. order to be relevant”. Bolivia empha- the international financial institutions The grouping also reiterated its call sized the need to include income, as- must be strengthened to ensure partici- for adopting differential and preferen- sets and living standards in the MPI. pation and voice of developing coun- tial treatment for LDCs. Alkire suggested using national head- tries. Developing countries also need line indicators with a multidimensional ownership of their agenda in order to Holistic approach poverty underpinning. effectively eradicate poverty, and there- fore must have adequate policy space. Nauru, representing the Pacific Multiple dimensions of poverty Developing-country governments must troika, said that the SDGs need to look formulate their own development strat- at poverty in a holistic manner and high- On the morning of 19 April, the egies to assist the poor through poli- lighted the centrality of human well- OWG Co-Chair Ambassador Macharia cies, the Group added. being and security. The Pacific troika Kamau of Kenya invited member states In conclusion, the Group expressed underlined the importance of climate to deliver their short interventions, in its belief in “consolidated efforts by all change as a cross-cutting issue which groups and in national capacities. Be- stakeholders”. It asked the interna- is very important for island countries.

No 544/545 Third World Economics 1 – 31 May 2013 9 CURRENT REPORTS Sustainable Development Goals

Nauru highlighted the Dili Consen- lier proposal of a “dashboard” where poverty reduction, international com- sus which resolved to ensure that the each country would decide how they mitment has lagged far behind. ODA voices of the world’s most fragile and translate the goals and targets into ac- on average turned out to be only 0.1% conflict-affected countries are influen- tions. Under every goal, specific targets of gross national product (GNP) tial in reshaping the global development must be included for marginalized sec- whereas the commitment was for 0.7%. agenda which will succeed the MDGs tions. While remaining under the dif- Cuba also talked about the inherent in- after 2015. The troika asked that means ferent goals, specific targets from all equality involved in a system where of implementation be included under goals can also be pulled out and stacked “millions go to banks and nothing to each set of goals. Without MOI, the under an MDG on poverty, Colombia the poor”. SDGs will not achieve what is set out suggested. Bangladesh pointed to structural under the agenda, they warned. Indonesia (with China and constraints that persist nationally as Ghana [speaking on behalf of the Kazakhstan) said the agenda should well as internationally. It raised con- Economic Community of West African include global partnership for develop- cerns about “the international financial States (ECOWAS)] aligned itself with ment. It must also include issues such architecture which is standing in the the statement of the G77 and China. It as trade, finance, technology transfer, way”. reiterated the same fact as the LDCs, that as well as MOI. It re-emphasized the India said that economic growth is “poverty continued to be pervasive in link between hunger and poverty. of crucial importance and that though West Africa, even in countries that per- Pakistan (with India and Sri Lanka) poverty eradication is a multidimen- formed relatively well with respect to underscored the need for economic sional effort, “the priority must be in- economic growth”. It focused attention growth and institutional support for come generation and employment for on the unsustainability and volatility poverty reduction. The troika cited the the poor”. It stressed the importance of of growth in West Africa and the capi- example of high health costs which agriculture and of access to energy in tal-intensive nature of such economic push people into poverty. The state- poverty reduction. expansion with limited links to job-cre- ment also highlighted the need to re- Agreeing on the principle of uni- ating sectors such as agriculture and move barriers to markets, especially versality, India proposed, “When we manufacturing. It also underlined the agricultural markets; debt financing; talk of poverty issues as an SDG which need for improving access to education and ensuring MOI and meeting the applies primarily to developing coun- and other social conditions. committed targets for official develop- tries, we need to balance it out through Ghana highlighted the “comple- ment assistance (ODA). another SDG which would apply to mentary roles of both national and in- developed countries ... i.e., changing ternational authorities” and called for Universal access to basic services the unsustainable patterns of consump- “a just, fair and transparent interna- tion and production.” tional trade and financial system” that Ecuador (with Argentina and Bo- The European Union, at the begin- “will significantly enhance the capac- livia) highlighted the need for ensur- ning of its intervention, asked that the ity of governments to develop and put ing universal access to basic services discussion in the OWG be synchronized in place the requisite measures ...” such as water, education, health, sani- with discussions at September’s UN Brazil (with Nicaragua) reminded tation and energy. It underlined the General Assembly special event on the the OWG that the Rio+20 conference need to include indigenous groups. In MDGs. “Two of the most pressing chal- committed to freeing the world from terms of a global partnership, Ecuador lenges facing the world are eradicating poverty and hunger. “Ensuring ad- asked for access to financing and trans- poverty and ensuring that prosperity equate income is crucial but will never fer of technology. It also reiterated that and well-being are sustainable at the be enough,” it cautioned, underscoring inclusive fair trade is very important for same time,” it said. the need for basic access to food and poverty reduction. The EU stressed the role of emerg- nutrition, health, education, social pro- Several national statements were ing economies and said “the global tection and natural resources (among also made by member states. landscape has dramatically changed others). Zimbabwe agreed with the UNDP over the last decade”. It said that differ- Brazil also drew attention to the Task Team Report about the importance ences between developing countries fact that while ending poverty requires of poverty as a super goal but expressed have increased. Emerging countries’ focus on 1 billion people in absolute fears whether it will be of enough value growth has become an essential part of poverty, sustainable development re- to risk the complexity of measuring the global growth. Several countries have quires effort by all countries and also MPI, which had been much discussed become donors in their own right and allows for more diverse financial strat- after Sabina Alkire’s presentation the key partners in the provision of global egies. day before. public goods. This is very important in Colombia (with Guatemala) argued Russia highlighted the importance the consideration of poverty eradica- that ending poverty is not an end in it- of infrastructure such as transport and tion, the EU added. self but a continuum so there is a need communications in poverty eradication Asking for an “ambitious to ensure that “those that are left be- and also of providing social support to overarching post-2015 framework that hind are not left behind”. It said that the vulnerable. Global trade and finan- uses the MDGs as a springboard to- even developed countries have not cial systems need to be fair, it said. wards making poverty a thing of the achieved sustainable development. Cuba said that while many coun- past, while ensuring that we remain Colombia highlighted again its ear- tries have achieved some progress in within planetary boundaries”, the EU

10 Third World Economics 1 – 31 May 2013 No 544/545 CURRENT REPORTS Sustainable Development Goals also warned that “the achievement of The Rio Declaration on Environment and the MDGs continues to face consider- Development: An Assessment able challenges, especially in conflict- affected and fragile regions, as well as By Chee Yoke Ling in least developed countries (LDCs), and small island developing states In 1992 the historic UN Conference on (SIDS). Many countries remain highly Environment and Development (UNCED, vulnerable to shocks and crises”. popularly known as the Earth Summit) held in Rio de Janeiro, Brazil witnessed unprecedented Ireland (with Norway and Den- political will and commitment among mark) reiterated the importance of mul- governments to make a paradigm shift to tidimensional poverty as a reference sustainable development. Acknowledging the point and advocated choosing out- twin crises of poverty and the environment comes for their ease of use. They agreed UNCED concluded that the prevailing economic model was unsustainable. The Rio Declaration with Benin and India about the impor- on Environment and Development that emerged tance of agricultural production. The from intense discussion, debate and troika highlighted that goals at global negotiations was thus the framework of and national levels are mutually rein- principles adopted by Heads of States and ISBN: 978-967-5412-48-6 72 pp forcing and these arenas are already Governments for that paradigm shift. Almost 20 years later, as governments, civil society organisations and well integrated. international institutions prepare for the UN Conference on Sustainable Canada (with the United States Development in June 2012 to be held again in Rio, there is growing questioning by and Israel) echoed many others in high- the North, and even rejection by some governments of the North, of some of the lighting the importance of poverty re- most fundamental of the Rio principles. The spirit of Rio 1992 was generally one of duction as a core starting point and cen- multilateralism, cooperation and solidarity based on the fundamental principle of common but differentiated responsibilities even though the North had shown tral to the work of the OWG. They un- reluctance in crucial issues such as reforms in global economic systems and derlined poverty’s multidimensional taking the lead in changing consumption and production patterns. Today, that spirit nature and its link with hunger, as is ebbing as competition and inequities dominate international relations. The pointed out by experts in the previous objectives of Rio+20 is “to secure renewed political commitment for sustainable development”. We hope that this booklet that provides a summary of the negotiation session. They also emphasized the need history of the Rio Declaration can contribute to that objective. to learn from successes such as Brazil’s Zero Hunger project. Price Postage Malaysia RM7.00 RM1.00 The United Kingdom (with Neth- Third World countries US$4.00 US$2.00 (air); US$1.00 (sea) erlands and Australia) agreed on the Other foreign countries US$6.00 US$2.00 (air); US$1.00 (sea) challenge posed by poverty eradication and advocated a single post-2015 de- Orders from Malaysia – please pay by credit card/crossed cheque or postal order. velopment agenda. It highlighted that Orders from Australia, Brunei, Indonesia, Philippines, Singapore, Thailand, UK, this will require a “complex set of ac- USA – please pay by credit card/cheque/bank draft/international money order in tions” from the public and private sec- own currency, US$ or Euro.If paying in own currency or Euro, please calculate tors, in an echo of what was said by equivalent of US$ rate. If paying in US$, please ensure that the agent bank is located in the USA. many other developed countries. 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Tel: 60-4-2266728/2266159; raised the issue of the next generation Fax: 60-4-2264505; Email: [email protected]; Website: www.twn.my and said that the “SDGs therefore I would like to order ...... copy/copies of Reaffirming the Environment- should be directed to prevent next gen- Development Nexus of UNCED 1992. erations from facing similar unequal I enclose the amount of ...... by cheque/bank draft/IMO. circumstances caused by inadequate income, coverage of basic needs and Please charge the amount of US$/Euro/RM ...... to my credit card: access to services”. The troika men- American Express Visa Mastercard tioned that “several dimensions of well- being strongly depend on public insti- A/c No.: Expiry date: tutions performing essential tasks and providing public goods and services”. Signature: The OWG will meet again on 22-24 Name: May for its third session, with informal consultations expected at the UN head- Address: quarters in New York prior to that. (SUNS7574)ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿp

No 544/545 Third World Economics 1 – 31 May 2013 11 CURRENT REPORTS WTO GC Chair recommends Azevedo Azevedo said that “we come to this moment where the WTO is in a very of Brazil as next WTO D-G critical stage”, adding that the negoti- ating pillar of the WTO is “completely stuck”. Brazil’s ambassador to the WTO Roberto Azevedo will become the next He added that there is a clear pa- head of the trade body after coming through a selection process helmed ralysis in the system because the nego- by the WTO General Council Chair. tiations are avoiding the disciplines from being updated and closing the gap by Kanaga Raja between the rules of the organization and the real world where businesses GENEVA: The Chair of the WTO Gen- ence between the two remaining candi- operate. eral Council has said that Ambassador dates, Azevedo and Herminio Blanco “We have a trade agenda that we Roberto Carvalho de Azevedo of Brazil of Mexico. The Chair reported that all have to broaden and tackle,” he said, is the candidate most likely to attract 159 members expressed their prefer- adding that there are a large number of the consensus of WTO members. ences. trade-related areas and issues that need Reporting on 8 May at an informal Ambassador Bashir said that the to be evaluated and discussed at the meeting of the General Council at the results that flowed from the consulta- WTO. “We’re not doing that, and that’s level of heads of delegation (HOD) on tions in this round were clear and un- extremely worrisome, and we need to the outcome of the final round of con- ambiguous. Members recognized that change this situation as quickly as we sultations on the selection of the next both candidates were highly qualified can.” WTO Director-General, both the Chair individuals equipped to lead the orga- In his view, the way to do it is to and the two facilitators in the process nization and, thus, both were held in ensure that the negotiations move, “and recommended that members appoint very high respect. move as soon as we can”. Azevedo at a General Council meeting As in the previous rounds, the The multilateral trading system to be held on 14 May. The term would Chair said that no negative preference was created to be a forum for negotia- be for a period of four years starting was expressed by any member. tions and discussions. “We cannot al- from 1 September 2013. He said that “our assessment of the low the system not to function in these (The General Council has since for- preferences provided to us during this two areas,” said Azevedo. mally approved by consensus, on 14 third round of consultations is that the Access to medicines May, the recommendation to appoint candidate from Brazil, Mr. Roberto Azevedo as the next Director-General.) Carvalho de Azevedo, is the candidate The outcome of the final round of most likely of the two to attract consen- Meanwhile, in a press release is- consultations had earlier been privately sus”, on the following basis: Azevedo sued on 8 May, the international conveyed on the evening of 7 May to carried the largest support by members medical humanitarian organization the delegations of the two countries in the final round and had consistently Medecins Sans Frontieres (MSF) urged whose candidates figured in this round. done so in each round; and he enjoyed that access to medicines must become a The process to select the replace- support from members from all levels priority. ment for Pascal Lamy when his second of development and from all geographic “One of the new Director-General’s four-year term ends on 31 August, be- regions and had done so throughout first jobs should be ensuring that afford- gan nearly six months ago, with an un- the process. able access to medicines for all WTO precedented nine candidates vying for The General Council Chair said Member States is a key priority,” said the post. that he intended to convene a special Rohit Malpani, Director of Policy and The process was conducted by a meeting of the General Council on 14 Analysis for MSF’s Access Campaign. “troika” led by the General Council May, and that at that meeting, he, sup- It noted that Azevedo’s appoint- Chair, Ambassador Shahid Bashir of ported by the facilitators, shall submit ment comes as least-developed-country Pakistan, who was assisted by the the name of Azevedo as the candidate (LDC) member states have requested to Chair of the Dispute Settlement Body, most likely to attract consensus and rec- remain exempt from implementing the Ambassador Jonathan Fried of Canada, ommend his appointment by the Gen- WTO’s TRIPS Agreement on intellectual and the Chair of the Trade Policy Re- eral Council as the next Director-Gen- property rights until they are no longer view Body, Ambassador Joakim Reiter eral of the WTO for a period of four years classified as an LDC. of Sweden, serving as facilitators. starting 1 September 2013. According to the MSF press release, According to trade officials, Mexico the LDC request, submitted in Novem- Clear and unambiguous said its government expressed sincere ber 2012, would allow these countries thanks to all the governments that had to avoid monopoly protection for medi- In his report on the third and final supported Blanco’s candidacy at all cines, diagnostics and medical devices, round of consultations at the 8 May in- stages of the process. Extending its which is essential in enabling access to formal HOD meeting, Ambassador government’s congratulations to low-cost versions of these products. Bashir said that both he and the facili- Azevedo, Mexico said it was prepared LDCs also wish for an extension tators had conducted the consultations to join the consensus behind Azevedo. not to include a clause that would pre- from 1 to 7 May, when each WTO mem- In a media briefing at the Brazilian vent them from being allowed to roll ber was asked to indicate their prefer- mission here on 8 May afternoon, back any existing intellectual property

12 Third World Economics 1 – 31 May 2013 No 544/545 CURRENT REPORTS WTO

(IP) rules. demics such as TB and HIV under con- Kyerematen of Ghana, Anabel However, said MSF, developed trol,” said Jennifer Cohn, Medical Di- Gonzalez of Costa Rica, Amina countries, including the United States rector for MSF’s Access Campaign. Mohamed of Kenya and Ahmad and countries from the European “It is critical to ensure access to Hindawi of Jordan were deemed un- Union, are resisting calls for an exten- newer medicines for these countries, likely to command a consensus. sion or to allow LDCs to roll back exist- and asking them to apply stringent IP In the second stage, Mari Pangestu ing IP rules. rules to the same level as developed of Indonesia, Tim Groser of New “Least-developed countries al- countries would be catastrophic,” she Zealand and Taeho Bark of South Ko- ready face an uphill battle to keep epi- warned. (SUNS7582)ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿp rea were held to have insufficient sup- port. But the two remaining candidates WTO, dubious prize for a Latin for heading up the WTO, Blanco and American? Azevedo, are backed by two blocs, the industrialized and the developing Writing before the conclusion of the selection process, Gustavo countries, respectively, with opposing trade interests. Capdevila outlined the considerable challenges awaiting the new WTO Blanco was educated at the Univer- Director-General. sity of Chicago, associated with the neoliberal economic ideas that predomi- GENEVA: The complicated challenge eral and plurilateral trade agreements, nated in a large part of the globe in the of invigorating the debilitated World encouraged mostly by industrialized last few decades of the 20th century. He Trade Organization (WTO) and the nations. Behind these failures in achiev- was part of the nucleus of this school of multilateral trade system that it governs ing a balanced opening of international thought which governed the Institu- will fall, for the next four years and for trade flows is the reluctance of coun- tional Revolutionary Party (PRI), and the first time ever, to a Latin American. tries of the North to attend to the devel- therefore Mexico, from 1985 to 2000. The 159 member states of the WTO opment needs of the countries of the But his most significant feature is will choose between Roberto Carvalho South, a constant feature since the cre- his participation as chief negotiator, de Azevedo of Brazil and Herminio ation of the WTO in 1995. between 1990 and 1993, of the North Blanco of Mexico, the two candidates The extent of the discord is clear at American Free Trade Agreement for the post of Director-General of the the present WTO negotiations aimed at (NAFTA), which came into effect 1 Janu- organization who have weathered the achieving a modest agreement to keep ary 1994. complex selection process that began 1 up appearances at its next Ministerial Although he has no practical ex- December. Conference, to be held in Bali, Indone- perience of WTO affairs, it is taken for The current Director-General, Pas- sia, on 3-6 December. granted that Blanco’s candidacy has cal Lamy of France, will conclude his Industrialized countries are push- the support of his NAFTA partners, the two consecutive terms of office that be- ing for trade facilitation, such as in- United States and Canada, and will gan in 2005, on 31 August, and his suc- creased speed and efficiency of border benefit from the influence they can ex- cessor will take up the post on 1 Sep- controls for trade goods. Developing ert on the rest of the world. tember. nations fear that such an agreement will For his part, Azevedo has demon- Lamy will be leaving unfinished only increase their imports without ben- strated his negotiating skills at the the Doha Round of talks which he was efiting their exports. WTO, where he heads the Group of 20 instrumental in promoting in 2001, as Longstanding demands, such as developing nations, a coalition propos- EU Commissioner for Trade. differential treatment for developing ing the reversal of protectionist policies Gloom is cast on the climate of talks countries, a special trade regime for the in agriculture applied by industrialized at the WTO by global economic news. least developed countries (LDCs) and countries. He won resounding victories The crisis has repercussions on the arrangements to mitigate the effects of for his country in two disputes before trade policies of the vast majority of the the food crisis, have again fallen foul of the WTO, one against US cotton subsi- members of the trade system. stumbling blocks in the discussions on dies, and one against the EU for similar The WTO secretariat, which early the draft Bali agreement. protectionism for sugar growers. in the life of the institution was pleased But above all, Azevedo’s candi- with double-digit annual growth in And then there were two... dacy rests on Brazil’s foreign policy over world trade, now has to recognize the the past decade, as an emerging nation trade contraction. In 2012, trade growth The difficulties tripping up the together with Russia, India, China and of 2% represented a sharp fall compared trade negotiations have apparently not South Africa in the BRICS bloc, and its with 2011, when it grew by 5.2%. For been reflected so far in the process of openness to offering a helping hand to this year, growth of 3.3% is forecast, designating the new WTO Director- other developing countries on every lower than the average of 5.3% over the General. continent. last two decades. Seven other candidates from differ- Whoever is appointed will find a After eight years of leadership by ent countries were eliminated in earlier paralyzed WTO riven with dissensions Lamy, the multilateral system appears stages of the selection process. In the that obstruct the reaching of under- debilitated by the proliferation of bilat- first phase, Alan John Kwadwo standings. (IPS)ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿp

No 544/545 Third World Economics 1 – 31 May 2013 13 CURRENT REPORTS WTO

Lamy panel on future of trade issues oped countries as a possible deliverable at the Bali Ministerial Conference this report December), the Lamy panel was of the view that effective international action A report by a panel formed by the WTO head to look into “the future of on trade facilitation would generate trade” has come under fire from development advocates for what they “win-win” outcomes for the interna- say are wrong-headed proposals for trade and WTO reform. tional community. “We strongly encourage members to complete the trade facilitation nego- by Kanaga Raja tiations by the Ninth Ministerial Con- ference in Bali in December 2013.” GENEVA: A panel of so-called stake- tiation must give way to effectiveness Amongst other recommendations, holders of the World Trade Organiza- of policy. It also came as a surprise that the report calls for a stronger WTO sec- tion (WTO) on “Defining the Future of the head of the United Nations Devel- retariat and for it to be permitted to table Trade”, constituted by Director-General opment Programme (UNDP), who is a proposals in order to speed up the de- Pascal Lamy in April 2012, finally on member of the panel, seemed to be en- liberative process and facilitate consen- 24 April presented its report, which was dorsing a view that is different from that sus by providing technical information immediately rejected by civil society of the UN on issues of LDC (least devel- and fresh ideas. It claimed that this groups both on its contents and on the oped country) graduation or differen- would in no way compromise the ex- process. tial treatment. clusive right of member states to decide. A report in The Times of India also “We need a dynamic approach to The Lamy panel was composed of cited Indian officials as pointing to the flexibility, tailor-made for specific needs 12 members: Talal Abu-Ghazaleh, report being that of a panel of Lamy con- and supported by appropriate capac- Chairman and Founder of Talal Abu- sultants and not a WTO panel, and in- ity-building programmes,” the panel Ghazaleh Overseas Corporation, Jor- dicating that India would oppose and further said, adding that this approach dan; Sharan Burrow, Secretary-General reject the report. should be based on four guiding prin- of the International Trade Union Con- The panel report came with a dis- ciples. federation (ITUC); Helen Clark, UNDP claimer which said: “There remain ele- These principles are: flexibilities Administrator; Thomas J Donohue, ments regarding the relationship be- should be based on needs and capaci- President and CEO of the US Chamber tween trade opening and social and ties; they should target specific chal- of Commerce; Frederico Fleury Curado, industrial policies, investment and the lenges, and not focus only on catego- President and CEO, Embraer SA; Vic- scope of convergence, in respect of ries of countries; flexibilities should be tor K Fung, Chairman of Fung Global which different views were expressed.” time-specific to advance progressively Institute and Honorary Chairman of the towards convergence; and dynamic Recommendations International Chamber of Commerce; monitoring is needed of the manner in Pradeep Singh Mehta, Secretary-Gen- which flexibilities are helping countries eral of CUTS International; Fetus Among the main recommenda- converge. Gontebanye Mogae, former President of tions of the report are “a new approach The report also resurrects the Botswana; Josette Sheeran, Vice Chair- to managing reciprocity and flexibility “Singapore issues” of competition man of World Economic Forum; Jurgen which fully respects the different reali- policy and investment, which the EU R Thumann, President of BUSINESS ties and needs of members at different (whose trade commissioner then was EUROPE; George Yeo, former Foreign levels of development”, but one that Lamy) gave up at the WTO’s Cancun Minister of Singapore and Vice Chair- embraces a “more granulated and dy- Ministerial Conference in 2003. man of Kerry Group Limited; and namic process” leading progressively On competition policy, it believes Fujimori Yoshiaki, President and CEO to convergence. that members should engage in the of JS Group Corporation. The panel report claimed that in quest for a more trade-supportive inter- Only five of the 12 panellists at- saying that it is time to embrace a new national competition policy framework, tended the launch of the report at the perspective on managing reciprocity building on the work of other interna- WTO on 24 April: Abu-Ghazaleh, Bur- and flexibility, the panel does not ques- tional organizations such as the UN row, Mehta, Mogae and Thumann. tion differentiation and considers it an Conference on Trade and Development essential feature of a fair and effective (UNCTAD), the Organization for Eco- “Food for thought” trading system. nomic Cooperation and Development “We are aware that the least-devel- (OECD) and the International Compe- In his opening remarks at the oped countries and other low-income tition Network. launch, Lamy said that the panellists developing countries, as well as devel- As in the area of competition policy, had looked at three basic elements: how oping countries facing particular diffi- it sees the absence of multilateral rules trade works for welfare and under culties, cannot be expected to aspire to on investment as a gap in cooperation. which conditions; what are the trans- the same degree of trade opening as “Current bilateral arrangements are formational factors shaping interna- more developed countries while these not, in our view, a satisfactory substi- tional trade in the medium to long term; challenges persist. But in recognizing tute for a comprehensive international and recommendations to address these the legitimacy of differentiation, we con- investment agreement.” challenges. sider that policy effectiveness is cru- On trade facilitation (which is be- This report offers “food for thought” cial.” ing aggressively pushed by Lamy and to the members and to many other stake- This seemed to imply that differen- the US, the EU and some other devel- holders of the multilateral trading sys-

14 Third World Economics 1 – 31 May 2013 No 544/545 CURRENT REPORTS WTO tem as they think medium- to long-term non-tariff measures; and finally, con- reform.” on trade policies and as a consequence vergence of trade and other domestic The second was to reaffirm the case of that, for the prospects for the WTO, policies, such as education, innovation for development through industrializa- he added. and social safety nets. tion and structural transformation, the Lamy said this was a different ex- third was to argue the case for public ercise from members organizing them- Context-dependent policy interventions and a floor of glo- selves for the next week, next month or bal rights and standards for labour and six months or sometimes a year ahead, Speaking at the presentation, environment, and the fourth was to and “an exercise that looks at medium, Mogae said: “We [the panellists] said consider and qualify where “we believe long-term ... and not about short-term” trade can support more jobs, [and] trade necessary” the 21st century issues. nor about a “quick fix” to conclude the can be made to work for greater equal- “The report does carry a disclaimer Doha Round of trade talks. ity ... We want inclusive development, ... Not everybody has total agreement, “What it says about the Doha and ... acknowledge that even as we say but this has been ... a model for discus- Round ... is that there is a political im- trade is good, that it is contextual. It sion where you need to settle some very perative as well as an economic ratio- ‘can’ but not necessarily.” big questions and the debate will go on. nale to conclude it...” However, many On the permissive language, Mogae This is the start of the debate, not the of the issues addressed in the report are said that on the whole, “we believe that end of the debate,” she said. of direct relevance to unlocking the trade is good and that it should be pro- Stressing the ITUC’s support for Doha Round, said Lamy. moted. We, however, acknowledge that multilateralism, Burrow said: “We are Pointing to the “most salient certain conditions have to be met and I disturbed about governments who points” of the report, he said Chapter 1 think that is at the root of what you have can’t sort agreement within a global looked at how trade can work for been negotiating all along. And we urge framework, who then look to their own growth, for development, for jobs and that there has to be mutual accommo- political interests elsewhere” because for sustainable development. “The dation, that no principle, no practice, of the proliferation of confusion, of dis- panel felt it was important to start with no rule is absolutely correct in itself and crimination – the potential for all of that placing trade in a broader context, in a that therefore it has to be accommoda- is there. broader set of domestic or international tive of other legitimate considerations.” “So while I understand and ... put policies that need to be in place for trade Abu-Ghazaleh said that he is con- it in this context that ... convergence is a to work ‘as a means to growth welfare cerned about “what next”, adding that noble ambition, we also say ‘not at any and not as an end in itself’.” he thinks that this report deserves a cost’ ... the WTO constituency must rec- The second part looked into the fac- critical look by the decision-makers, ognize that because of their inability to tors shaping trade for the future: “the meaning, the ministers. He proposed a negotiate settlements in terms of trade continuous technological progress ... at ministerial to look at this report. “I think justice, other parties will go elsewhere, the heart of globalization, the rise of the future of trade deserves a ministe- and to some extent for the world of investment on par with the growth of rial.” labour which you have failed to recog- trade, and the expansion of value He further said that a ministerial is nize with any real strength in here as a chains.” also needed on the reform of the WTO. fundamental set of rights to underpin a Lamy also pointed to the rise of “I don’t think a report like this can be trading floor, then in fact there are bet- “emerging countries” in trade, with implemented without reforming the ter deals to be had elsewhere.” South-South trade having increased WTO.” Burrow further said: “For us, de- from 10% of world trade 20 years ago to He was of the view that the WTO velopment is absolutely critical. You one-third of world trade, “a manifesta- should have a place for the trader, not can’t have a just world if the policy tion of this centre of gravity of trade just the annual public forum. He space is not there to allow people to moving very rapidly Southwards”. wanted the report to be sent directly to converge at their own pace. But it needs He further highlighted the increase ministers for their comments. more than just recognition, and I think in preferential trade agreements and In a strong dissenting view on the we could have done a better job on this. bilateral investment treaties, and non- report, in her remarks, Burrow of the It actually needs to acknowledge the tariff measures as “the” main obstacle ITUC said that in agreeing to join the support that is required in terms of tech- to trade in the future. panel, she had articulated four ambi- nology sharing which we have to get to Against this background, Lamy tions to her constituency. in terms of investment, in terms of in- said, Chapter 3 of the report has a set of “One is to make sure that the domi- frastructure support and so on to make suggestions that members of the panel nant context of inequality and unem- this a reality or you won’t see global “freely offer” to the WTO members. The ployment was recognized and that the rebalancing or inclusive growth.” essence of the suggestions is “conver- trade regime was located in the context The report makes the case for trade gence”. of what we believe is a failed model of having contributed to specialization, Lamy spoke about convergence of globalization. We are not opposed to but “we need to do much more work the trade regimes of the WTO members, globalization. We want reform of the because that’s not the reality in coun- reflective of their progressive economic system generally both within and be- tries where low-value-added produc- and social development; convergence yond the WTO but nevertheless you tion is still the reality of their daily cir- between the non-multilateral regimes can’t look at what is probably the ad- cumstances and indeed is probably pre- and the multilateral trading system; vent of stagnation – certainly recession venting the transformation in some between trade and other public policies, in many countries, but stagnation in ways necessary”. about greater coherence specifically in others – and not say that we need some On the critical issue of subsidies

No 544/545 Third World Economics 1 – 31 May 2013 15 CURRENT REPORTS WTO raised in several points, she said that and we’ve said we remain which is the current demand of devel- on agriculture, “while ... we recognize unconvinced.” oped countries for the proposed Bali absolutely the ambitions for an end to She was also critical that there is package, and doesn’t, on the other trade-distorting subsidies, there is a re- no empirical data source to actually hand, include an emphasis on issues ality here that is linked to the global predict the impact of trade agreements like the LDC policy demands or the supply chains that is not acknowl- on jobs. problem of the emergence of the food edged”. In his remarks at the launch, Mehta crisis and the need for more policy “You have to actually end the oli- of CUTS pointed to two caveats: “... any space for developing countries to feed gopsonies; you have to put some con- such report which comes out from a their poor, which is obviously the em- trol and that goes to some of the posi- bunch of heterogeneous interests is not phasis of the G33 proposal [on public tive elements of competition policy on bound to be a unanimous report. What stockholding for food security] towards buying power when there are a very few we have tried to do is to agree on a con- Bali.” global conglomerates who control the sensus on a very large number of is- And these issues, along with the purchasing, the contract base for farm- sues, as well as understanding the fact fundamental one of taking up again the ers, and simply saying, in our view, that that any sentence can be interpreted in implementation issues, “would obvi- ‘you can decouple the costs of produc- two different ways” as the reader per- ously be the first steps of the future of tion with support programmes’ ... is not ceives it. changes needed to be made for the glo- something that most countries would Thumann of BUSINESSEUROPE, bal trading system to address histori- necessarily accept.” which represents 35 federations and cal inequities in the WTO between de- Competition policy, she said, over 20 million companies, said “one veloped and developing countries”, “needs more thought from us”. There may think I am sitting here a little bit in James added. are positive and negative arguments a defensive position trying to defend the “I am a little bit aghast that the re- but the policy must deal with the pres- old economies from old Europe and try- port even goes so far as to endorse long- sures of buying power on producers as ing only to protect. No, the reverse is term developed-country proposals that well as the issues for consumers. correct.” were explicitly rejected by developing “Otherwise, it’s simply again re- “I am totally convinced in open countries in Cancun, and of course, I’m sorting to the notion that everything is markets,” he said, adding that he was talking about the Singapore issues of at the cheapest production cost and the aware of the sensitivity that this brings competition policy and investment.” maximum profit.” with it. “When we look a little bit back, She said she failed to see the legiti- On investment, she remains then history will tell us quickly that macy of this report from the point of view unconvinced. “I do wish that we had open markets have brought prosperity that it does not reflect the membership more debate on this in the context of the to the societies and also, at the end, of the WTO. She therefore believed, with report. It will come but I think we have jobs.” all due respect to the panellists and to be very careful about simply assum- their hard work throughout the year, ing the consolidation of plurilateral or Critical voices that it does not have a role in the future bilateral trade agreements around in- negotiations. She noted that this point vestment because the responsibilities Two civil society representatives was already made by several member issue is frankly not there in most of from the Our World Is Not for Sale states at the last WTO General Council them. And you can’t just have rights of (OWINFS) global network of non-gov- meeting. investors. You have to have a look at ernmental organizations and social James also pointed out that she responsibilities.” movements, spoke during the question- failed to see any way that this report On convergence, she said that “no- and-answer session. reflects a future pathway of using trade body would argue more strongly than Deborah James said that in spite of for development, which doesn’t even labour that you have to have global co- the fact of WTO membership, least de- appear to be the goal of the report. herence if you’re going to have a glo- veloped countries (LDCs) were not rep- She concluded that it is more a re- balized environment. But you can’t resented on the panel, and there was flection of the secretariat’s continued have convergence at any cost and ... we only one member each from Africa and emphasis on helping developed coun- have to get the elements of convergence Latin America. Developed countries tries achieve their negotiating goals of that are about trade and social justice and the business sector were well rep- simply expanding trade liberalization and the framework of convergence right resented, but there was only one worker for the benefit of their corporations, to allow everybody to have a stake and representative. rather than addressing the serious is- therefore trust in a more visionary trade It seemed to her that this report was sues confronting the multilateral trad- system”. actually drafted in large part by the ing system today to change the system During the question-and-answer WTO secretariat, and according to sev- for countries to be able to use trade for session, Burrow said on investment eral of the panellists many of their com- development and job creation. that she is “absolutely appalled [over] ments were not well reflected. Another member of the OWINFS governments signing off on investor- “It is no surprise to me that even network, Sanya Reid Smith of the Third state dispute settlement clauses which though you have stated several times World Network said that the report actually are not about equal treatment”. that this report is not about the imme- says that trade is a means, not an end, “Am I convinced that we should diate negotiations but about the future, so presumably for developing countries, consolidate those plurilateral or bilat- the report then does emphasize and development is the end goal. It is inter- eral deals in the WTO? No, no I am not, endorse issues like trade facilitation, esting then that the report explicitly

16 Third World Economics 1 – 31 May 2013 No 544/545 CURRENT REPORTS WTO says in a number of places that there Reaffirming the Environment-Development Nexus should be “convergence of trade re- of UNCED 1992 gimes, but it does not talk about con- vergence of levels of development”. By Martin Khor “Usually in development, we talk about developing countries reaching the developed countries’ levels of de- The 1992 United Nations Conference on Environment and Development (UNCED) ended with mixed feelings velopment, i.e., a convergence of devel- of euphoria, deep disappointment, concern about the opment levels. But the report seems to future, and stirrings of hope. say ‘let’s converge our trade regimes Many of the Agenda 21 actions were not new but it regardless of your levels of develop- was significant to collate together a comprehensive range of environment and development issues, put ment’,” she said. action programmes to them, and attach cost estimates Smith added that the report says for their implementation. Government leaders morally there should be a fixed time-specific end committed themselves to implement the agreed to special and differential treatment measures. In addition a finely balanced set of environmental obligations and development rights was rather than based on the actual level of achieved in the Rio Declaration on Environment and development of the country, not even Development. Environment & Development Series No. 13 some objective standard like the UN Implementation was estimated at US$600 billion for ISBN: 978-967-5412-63-9 40pp LDC indicators. the South alone, of which the external aid component “And we’ve seen because of the fi- was US$l25 billion. The South regained a high-profile place on the international agenda for development assistance and technology transfer. However, as the Earth Summit ended, nancial crisis or HIV/AIDS that many there were doubts that the promises would be fulfilled. Today it is undeniable that the North countries actually go backwards in de- has failed to deliver on the means of implementation: finance and technology. velopment indicators over time, for ex- Nevertheless UNCED saw the first global discourse on the environment-development ample, their life expectancy falls as the nexus in the context of North-South relations. In the current debate on “a green economy in the context of sustainable development and years go by. So despite this, the propos- poverty eradication”, one of the two themes of the 2012 UN Conference on Sustainable als in the report say that they should Development (Rio+20), there are concerns that lack of clarity and common understanding of nevertheless converge their trade re- the term “green economy” risks the substitution of the framework of sustainable development gimes and their levels of liberalization, adopted at UNCED and a marginalisation of the social and economic dimensions. This booklet provides an account of the evolution of the UNCED approach to this nexus, and recalls the presumably of goods, services, invest- necessity of the integration of the three dimensions of sustainable development. ment, government procurement, and the Singapore issues.” Price Postage Malaysia RM7.00 RM1.00 This is despite the commitment in Third World countries US$4.00 US$2.00 (air); US$1.00 (sea) the WTO rules to special and differen- Other foreign countries US$6.00 US$2.00 (air); US$1.00 (sea) tial treatment, Smith said. She recog- nized the comments of some panellists Orders from Malaysia – please pay by credit card/crossed cheque or postal order. who said that they personally don’t Orders from Australia, Brunei, Indonesia, Philippines, Singapore, Thailand, UK, believe in convergence at any cost, but USA – please pay by credit card/cheque/bank draft/international money order in the report itself appears to recommend own currency, US$ or Euro.If paying in own currency or Euro, please calculate that WTO members violate or amend equivalent of US$ rate. If paying in US$, please ensure that the agent bank is current WTO rules on special and dif- located in the USA. ferential treatment. Rest of the world – please pay by credit card/cheque/bank draft/international “I was also shocked to see that the money order in US$ or Euro. If paying in Euro, please calculate equivalent of US$ proposal by one developed-country rate. If paying in US$, please ensure that the agent bank is located in the USA. WTO member to multilateralize free All payments should be made in favour of: THIRD WORLD NETWORK BHD., trade agreements appears to be taken 131 Jalan Macalister, 10400 Penang, Malaysia. Tel: 60-4-2266728/2266159; up as a recommendation by the panel Fax: 60-4-2264505; Email: [email protected]; Website: www.twn.my despite the lack of support for this by WTO members generally.” I would like to order ...... copy/copies of Reaffirming the Environment- Development Nexus of UNCED 1992. As for the future of this report, she said she understands that this panel I enclose the amount of ...... by cheque/bank draft/IMO. was established by the WTO Director- Please charge the amount of US$/Euro/RM ...... to my credit card: General on his own responsibility, and that WTO members did not choose the American Express Visa Mastercard panel members nor set the criteria for choosing. They also did not set the A/c No.: Expiry date: terms of reference, and neither did they Signature: draft the report, review the report be- fore it was published or agree to the text Name: of the report. Address:

(continued on page 25)

No 544/545 Third World Economics 1 – 31 May 2013 17 CURRENT REPORTS Economic policy Systemic reforms, global encompass liquidity creation, includ- ing improvements in the Special Draw- ing Rights for developing countries, economic partnership crucial, setting up a framework for resolving debt distress, mobilizing the private says South sector to invest in productive sectors, as well as ensuring the transfer of ap- During a recent UN meeting of multilateral economic bodies, develop- propriate technology at concessional ing countries underlined the need for a global development framework terms to developing countries. Also that encompasses deep-rooted financial and trade reform. important is the transparency and proper regulation of the financial sec- tor, in order to ensure that capital mar- by Bhumika Muchhala kets can be mobilized to achieve sus- tainable growth and play a construc- NEW YORK: Developing countries transformative, people-centred and tive role in the global development have called for an intergovernmental planet-friendly development agenda. agenda. partnership to formulate a new devel- In this regard, it is important that opment framework, emphasizing the the UN builds on the strengths of the Trade vital tool for equitable need for deep-set systemic financial re- current global partnership for develop- development form and fulfilment of the development ment and moves beyond its present mandate of the Doha Round of trade framework. The Monterrey Conference Bainimarama said that the G77 negotiations. marked the beginning of a new ap- and China has stressed on numerous This was contained in the state- proach to dealing with issues relating occasions that trade is a vital tool to ment of the Group of 77 and China, rep- to development finance and should provide long-term sustainable growth. resented by the Prime Minster of Fiji, JV therefore be a basis for the renewed and However, in order to fully harness the Bainimarama, at the annual high-level strengthened global partnership for potential of trade, it is important to up- meeting of the United Nations Eco- development beyond 2015. hold a universal, rules-based, open, nomic and Social Council (ECOSOC) non-discriminatory and equitable mul- Financial reforms with the Bretton Woods institutions tilateral trading system that contributes [viz., the World Bank Group and the to growth, sustainable development International Monetary Fund (IMF)], the The Fijian Prime Minister stated and employment creation, particularly World Trade Organization (WTO) and that five years after the eruption of the for developing countries. the United Nations Conference on global financial crisis, the world The timely conclusion of the Doha Trade and Development (UNCTAD). economy is still struggling to recover. Round of multilateral trade negotia- The meeting was held on 22 April at The current institutional arrangements tions, which must fully respect its de- the UN headquarters in New York. have proved to be inadequate in ad- velopment mandate and take into ac- dressing a range of pressing develop- count the needs and priorities of devel- Development beyond 2015 ment issues, including reducing in- oping countries, was also stressed. The equalities across and within countries. successful outcome of the Doha Round The G77 and China said that the He said that it is clear that the in- will help to ensure growth in global challenges of the globalized world are ternational financial and monetary sys- trade and create new market access becoming more complex and the global tems in the context of global public au- opportunities for developing countries. development agenda more cross-cut- thority need urgent deep-set systemic Developed countries were called ting in nature. At the same time, multi- reform to make them more effective, upon to provide effective trade-related stakeholders including UN agencies, transparent and legitimate. A viable technical assistance and capacity- academia, the scientific community and model of international financial archi- building tailored to the specific needs civil society are increasingly playing a tecture, one that reflects the realities of and constraints of developing coun- more active role in the development the 21st century and gives developing tries. Developed countries should also process in the search for a sustainable, countries an increased voice in global provide adequate support for the En- people-centred and environment-sensi- economic governance, is of critical im- hanced Integrated Framework in order tive post-2015 development agenda. portance. to address the supply side and trade- Nevertheless, it is crucial that national The current attempts to reform the related infrastructure and productive governments play a central role in fram- IMF, for instance, address certain as- capacity constraints of least developed ing the future global development pects of these challenges, such as the countries (LDCs). agenda. In this regard, the formulation needed changes in the distribution of Moreover, the international finan- of a new development framework must voting rights that reflect new realities. cial and trading systems should adopt be held through an intergovernmental However, he said, the redistribution of and implement appropriate policy process to allow the full participation voting rights alone will not resolve the measures to facilitate foreign direct in- of all states. fundamental problems of financial in- vestment to developing countries, in- The Prime Minister of Fiji stressed stability and unavailability of liquidity cluding investment guarantee schemes that a renewed and strengthened glo- for developing countries in need to gen- targeting productive sectors. bal partnership for the post-2015 devel- erate the necessary sustainable growth Within the framework of such a re- opment agenda is imperative if the in- and development. newed and strengthened global part- ternational community is to achieve a Financial reform must therefore nership, the G77 and China firmly be-

18 Third World Economics 1 – 31 May 2013 No 544/545 CURRENT REPORTS Economic policy lieves that official development assis- the post-2015 development agenda on ing nature. These vulture funds pose a tance remains essential as a catalyst for the right path, effective means of imple- risk for all future debt restructuring pro- sustainable development. mentation, including adequate, predict- cesses, both for developing and devel- The Fijian Prime Minister con- able and stable financing for develop- oped countries. cluded by saying that in order to put ment, are necessary. (SUNS7576)ÿÿÿÿÿÿÿp The Group believes that vulture funds must not be allowed to paralyze the debt restructuring efforts of devel- South reiterates need for debt workout, oping countries, and that these funds human rights approach should not supersede a state’s right to protect its people under international law. Debt restructuring processes and The importance of debt restructuring processes was highlighted at a debt sustainability face serious risks recent UN meeting on external debt sustainability and development. when countries facing debt obligations and repayment processes are placed in by Bhumika Muchhala such vulnerable situations by vulture funds. NEW YORK: Developing countries the Millennium Development Goals. have reiterated the need for sovereign The Fijian Prime Minister stressed A human rights approach to debt debt workout mechanisms and a hu- that the continuing financial and eco- man rights approach to debt as well as nomic crisis is negatively affecting the The Fijian Prime Minister said that called for remedial action on credit rat- growth prospects of many developing when the market-based, ad hoc contrac- ing agencies. countries, reversing the development tual approach to debt workouts is in- This was contained in the state- trends of the recent past and leading to sufficient to deal with debt crises, ment of the Group of 77 and China, rep- increased poverty. Because of the lim- thereby leading to cascades of litigation resented by the Prime Minster of Fiji, JV ited scope of their economies, many and causing ripple effects throughout Bainimarama, made at the United Na- developing countries are unable to en- the debt market, the preferred option tions Economic and Social Council act the appropriate fiscal measures to should be a human rights approach. A (ECOSOC) special event on external mitigate the impacts of the crisis on de- fair, human-centred and development- debt sustainability and development on velopment. oriented mechanism enshrining the 23 April. Clearly, the crisis highlights legal principle of “odious debt” should The meeting was a follow-up to the longstanding systemic fragilities and assist to ensure that a government UN General Assembly special event in inequalities. The promise of a recovery strives to fulfil its sovereign duty to October 2012 on sovereign debt resolu- is being threatened by new adverse cir- respect its people’s right to develop- tion mechanisms. cumstances, including turbulence in ment. The 23 April special event was to the global financial markets and wide- The UN Guiding Principles on For- consider lessons learned from debt cri- spread fiscal strains. eign Debt and Human Rights, which ses and the ongoing work on sovereign Furthermore, said the Fijian Prime were adopted by the UN Human Rights debt restructuring and debt resolution Minister, the crisis has revealed the Council in June 2012, underscore the mechanisms, with the participation of vulnerability of developing countries to importance of states, international fi- all relevant stakeholders. exogenous shocks. It is now evident nancial institutions and private com- that these exogenous shocks are affect- panies honouring the obligation to re- Reiterating the need for debt ing their capacity to continue servicing spect human rights. restructuring and resolution their debt obligations, regardless of their According to these principles, all mechanisms good practices in the past. efforts must be directed towards achiev- The international community must ing a negotiated settlement between the The G77 and China, represented by realize that no path to growth can be creditor and debtor, and loan agents Bainimarama, said that the report of the construed or fostered with an unsus- have a responsibility to impose restric- UN Secretary-General to the 67th ses- tainable debt overhang, he stressed. As tions on the sale and assignment of sion of the General Assembly highlights such, any debt restructuring exercise debts to third parties without prior con- that the total external debt of develop- should have as its core element a deter- sent of the borrower state. ing countries reached $4.5 trillion be- mination of real repayment capacity. If The G77 and China called on coun- tween 2010-11. the real repayment capacity of any tries to adopt legislation consistent with The importance of the ongoing de- country is not properly addressed, the these guiding principles to prevent vul- bate within the UN and other relevant original restructuring may require more ture funds from pursuing excessive forums on the need for new sovereign time for further restructuring. Such an claims against heavily indebted coun- debt restructuring and debt resolution outcome would further affect growth tries before their national courts. mechanisms was underscored. These and good-faith creditors. The Prime Minister of Fiji ex- debates should take into account the The G77 and China also expressed pressed support for the establishment multiple dimensions of debt deep concern about vulture fund litiga- of an independent international system sustainability and its role in the tions. Recent examples of vulture funds’ of debt arbitration, in which countries achievement of the internationally actions in international courts have re- facing risks of debt distress can have agreed development goals, including vealed their speculative and profit-seek- recourse to a debt standstill. Such a sys-

No 544/545 Third World Economics 1 – 31 May 2013 19 CURRENT REPORTS Economic policy tem would facilitate debt workouts It is evident that credit rating agen- confidence and strengthen growth. with burden-sharing procedures. cies have inherent conflict-of-interest The G24 called on advanced econo- problems. They lack transparency and mies to take into account the negative Credit rating dysfunctions once objective criteria and a very small num- spillover effects of their “prolonged again ignored ber of firms control a large majority of unconventional monetary policies” on the market. In order to set this right, it is inflation, capital flow volatility and Bainimarama further stated that important that not only should coun- commodity price volatility, among the G77 and China regrets to see that tries adapt their legislation, but the stan- other areas, in emerging markets and once again the mandate agreed upon dard-setting bodies themselves should developing countries. by member states, which called for the also reduce reliance on credit ratings (Meanwhile, the IMF in its World organization of a General Assembly and start pursuing objective criteria to Economic Outlook report has empha- thematic debate on the role of credit rat- assess credit, solvency and liquidity sized global risks emanating from ing agencies, has been ignored, while risks. emerging market economies, while di- non-mandated debates have been orga- The G77 and China also expressed luting the impact of volatile capital nized. serious concern over the substantial flows, originating in advanced econo- The G77 and China has repeatedly increase in the financial stability risks mies, on macroeconomic instability.) highlighted dysfunctions in the rating of many developed economies, in par- Macroeconomic policies and struc- methodology used by the major credit ticular, their high structural fragilities tural reforms should focus on encour- rating agencies. Since credit rating in financing sovereign debt created as aging productivity-led growth, safe- agencies usually do not adequately re- a result of transferring private risk to guarding financial stability and man- flect the solvency of the debtor, the the public sector. In this regard, it said, aging volatile capital flows, including Group believes that it is necessary to urgent and coherent solutions to reduce through precautionary measures, the continue the discussions on the role of sovereign risk in developed economies G24 stated. Many developing countries credit rating agencies, with a view to are necessary in order to prevent conta- have signed onto the IMF’s recently cre- proposing concrete policies aimed at gion and mitigate its impact on the in- ated Precautionary Liquidity Line (a fi- reducing dependency on them and en- ternational financial system. nancing instrument where country re- hancing their supervision. (SUNS7576)ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿp cipients do not actually draw on the money, which provides signals of con- fidence to creditors and markets). G24 calls for action by advanced Job creation was emphasized by economies the G24 communique as a “foundation for sustainable and inclusive growth”. Meeting on the eve of the IMF-World Bank spring meetings in April, Preceding the spring meetings, the ministers from the developing-country G24 grouping put forward their IMF had released a new report on Jobs views on issues relating to, among other subjects, macroeconomic and Growth, which concludes that in a world with over 200 million people out policy, IMF governance and development financing. of work and subdued global output, “macroeconomic stability not only sup- by Bhumika Muchhala ports job creation, but also encourages investment and growth and helps tackle WASHINGTON: At the spring meet- eight Latin American countries. The inequality”. ings of the World Bank and Interna- Chair of the G24 this year is Mexico’s tional Monetary Fund (IMF) on 19-21 Secretary of Finance and Public Credit, Governance reform in deep inertia April, the G24 developing countries is- Luis Videgaray Caso; the First Vice- sued a communique that addressed is- Chair is Egypt’s Minister of Planning The G24 stated its regret over the sues including the stagnation of IMF and International Cooperation, Ashraf missed October 2012 deadline for entry governance reform, the negative El-Araby; and the Second Vice-Chair is into force of the IMF’s 2010 quota and spillovers of advanced economies’ un- Lebanon’s Director-General of Finance, governance reform, and highlighted the conventional monetary policies on Alain Bifani. lack of agreement for a new quota for- emerging markets and developing mula by the review deadline of January countries, the lack of coherence in glo- Advanced economies should 2013. It reiterated the importance of bal economic policy-making between address macro-policies and meeting the commitments to give cred- the IMF and World Bank, as well as the spillovers ibility to the ongoing efforts to enhance need to boost productivity and job cre- the legitimacy and effectiveness of the ation. The G24’s communique opens IMF, and emphasized the importance The communique was negotiated with an expression of concern about the of not postponing the discussion in or- by central bank officials and finance adverse effects of protracted difficulties der to reach agreement on a comprehen- ministers of the Intergovernmental and uncertainties in the Euro area and sively reformed quota formula in time Group of Twenty-Four on International the United States on the pace and fra- for it to serve as a basis for the 15th Gen- Monetary Affairs and Development gility of global economic recovery. More eral Review of Quotas, to be completed (G24), which is composed of nine Afri- action is needed by advanced econo- by the January 2014 deadline. can countries, five Asian countries and mies to reduce uncertainties, restore Similar to previous years, the G24

20 Third World Economics 1 – 31 May 2013 No 544/545 CURRENT REPORTS Economic policy reiterated that any quota realignment also reiterated that enhancing the quota of financing. to reflect the growing weight of dynamic shares of the poor must be done directly The IMF’s renewed focus on small emerging market developing countries through the quota formula, so as to en- and vulnerable states, in particular the should not come at the expense of other sure a technical assurance of increased small island states, was supported in developing countries, in particular the voting power. the G24’s communique, which called low-income countries. Also echoed was Finally, touching on a long-held for the “expeditious completion of con- the group’s longstanding belief that the debate on the over-representation and sultations with country authorities and fundamental goal of quota reform must domination of European member states other development partners to inform be to enhance the voice and representa- on the IMF’s 24-seat executive board, new and revised guidelines for IMF tion of all developing countries, includ- the G24 communique once again called engagement with some of its smaller ing the poor and small low- and on “advanced European countries to members”. middle-income countries, and to better fulfill their commitment towards the reflect changes in relative weights in the consolidation of chairs”. G24 welcomes BRICS development global economy. (In order to avoid having to expand bank, supports post-2015 agenda Regarding the components and the board to 25 seats, developing-coun- valuation of the quota formula, which try member states of the Fund have been On the UN’s post-2015 develop- includes criteria such as economic calling for one European chair to be ment agenda, the G24’s communique growth and degree of trade openness, given up to the creation of a third sub- endorsed the UN’s leadership and sup- particularly the extent to which coun- Saharan African director. In diametric ported the World Bank’s role in the tries have liberalized their trade with opposition to European over-represen- post-2015 processes based on its man- European members, the G24 communi- tation, 44 sub-Saharan African coun- date and comparative strengths. The que argued that there remain serious tries are represented by only two direc- G24 called for an “ambitious set of flaws with the current formula and sev- tors on the Fund’s board.) goals, with a clear plan and solid com- eral steps are required. For example, due The G24 also repeated its mitment to mobilize the necessary re- to the significant changes in the global longstanding warning that a third chair sources, and to strengthen partnerships economic landscape, the G24 con- for sub-Saharan African countries and enable conditions for development, tended that the role of gross domestic should not come at the expense of other including financial system strengthen- product (GDP) in purchasing power developing countries, meaning that no ing, recognition of countries’ special parity (PPP) terms must be increased in other developing country should have needs, and improved aid delivery”. the quota formula. At the same time, the to give up a chair for the induction of a The communique supported the size bias must be reduced, including third sub-Saharan African director and World Bank’s vision on accelerating the through higher compression. seat on the board. end of extreme poverty and achieving The G24 communique recognized shared prosperity, as proposed by that the shortcomings of the variability More money on better terms for World Bank President Jim Yong Kim, measure must be addressed in order to low-income countries and agreed on the “need to focus on adequately reflect the need for IMF re- inclusive and equitable growth in or- sources if it is to be maintained in the The G24 expressed strong reserva- der to lay the basis for enduring pov- formula. The Group asked that any tions about halving access norms and erty reduction and job creation”. compensation with respect to variabil- limits to the IMF’s concessional facili- According to sources, in the G24 ity must take into account its primary ties when the 14th General Review of discussions, the question of how the goal of enhancing the quota shares of Quotas takes effect. It urged that no low- World Bank’s grant facility to low-in- vulnerable countries, including the income country eligible for the Poverty come countries, the International Devel- poor. Reduction and Growth Trust (PRGT), opment Association (IDA), would in- However, according to sources, the concessional financing facility of teract with the post-2015 development during the discussion of G24 finance the IMF, become worse off. framework was raised. However, there officials, many middle-income coun- To ensure this, the Fund should was no mention of systemic issues and tries sought to remove the variability raise additional resources, including reforms in the international financial measure altogether, which would also through bilateral contributions and and trade architecture, according to remove the factor of trade openness continued non-reimbursement to the sources. while strengthening the weight of the General Resources Account (GRA) of The World Bank’s approach to PPP criteria. Other low-income coun- administrative expenses of the PRGT. sustainability was also welcomed by tries criticized the proposed measures Furthermore, donors should take the the G24. However, the Bank’s empha- of “variability” due to the inferences it necessary steps to meet the financial sis on “environmental, fiscal and so- had to representing “vulnerability”. commitments for poverty reduction and cial sustainability” was changed in the The communique urged that the growth in low-income countries. communique to “social, economic and serious conceptual and measurement The IMF’s new proposal on in- environmental sustainability”. This re- flaws in the openness measure be ad- creasing the flexibility for its official flected the G24’s concern that the dressed if it is to remain in the quota policy on “debt limits” was welcomed operationalization of a “fiscal formula. Meanwhile, the G24 agreed by the G24, which agreed that the ulti- sustainability” concept will result in that the criterion of foreign exchange mate goal must be to preserve debt new or reinforced obligations on the reserves should be maintained in the sustainability, including through in- part of developing countries. Further- quota formula at the current weight. It centives for appropriate concessionality more, fiscal policy is seen as belonging

No 544/545 Third World Economics 1 – 31 May 2013 21 CURRENT REPORTS Economic policy to the IMF’s domain, not the World to establish a new development bank mit, the Brazilian Minister of Develop- Bank’s. that will prioritize infrastructure fi- ment, Industry and Foreign Trade The G24 communique concludes nancing. Fernando Pimentel said: “The objective with mention of a priority agenda While the modalities and structures of the BRICS development bank ... is not amongst many developing countries, of governance, membership and devel- to rival any other organization but ac- that of scaling up infrastructure financ- opment financing have not yet been tually to offer alternatives.” The World ing and investments across developing sketched out, sources said that one of Bank formally welcomed the BRICS countries. The communique states that the BRICS countries mentioned during announcement, saying it “stand[s] the mobilization of resources and in- the G24 meeting that a more concrete ready to work closely with the new bank vestment in infrastructure is crucial for report will be produced at the next to end poverty and build shared pros- realizing “our countries’ economic de- BRICS meeting in September in St. Pe- perity throughout the developing velopment, inclusion and human de- tersburg. And when Brazil hosts the world”. velopment goals”. The scale of infra- following BRICS summit in 2014, the These notes chime with the think- structure financing needs, and the de- operationalization of the bank will ing of the United Nations Development ficiencies in the existing development likely be announced. Programme (UNDP)’s mid-March Hu- financing architecture for those needs, Details such as the relationship man Development Report, which argues “necessitate the strengthening and re- between the BRICS development bank for “coherent pluralism” instead of “a orientation of all pillars of long-term fi- and the multilateral development false choice between globalism and re- nancing”. banks, the question of additionality gionalism”. It went on to argue: “New The communique calls on the with the financing carried out by na- institutions will be more effective if they World Bank in particular to play a key tional development banks, particularly work in concert with existing regional role in meeting infrastructure financing in China and Brazil, and the pertinent and global institutions, filling gaps in needs. However, given the magnitude question on the membership and gov- funding and investment.” of the financing gap, alternative, ernance structure of the development The CRA, on the other hand, looks complementary mechanisms will also bank are yet to be worked out. to be a more direct challenge to the IMF. be important. In this context, the G24 The full text of the G24 communi- Kavaljit Singh, of Indian NGO welcomed the agreement in March 2013 que is available at http://www.imf. Madhyam, agreed: “In a western-domi- among the BRICS nations of Brazil, org/external/np/cm/2013/ nated financial world, the idea of a Russia, India, China and South Africa 041813.htm. (SUNS7571)ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿp BRICS reserve fund looks very exciting and promising. In a post-crisis world full of financial risks and uncertainties, The BRICS option the reserve pool could potentially re- shape the global financial architecture Whether a new set of financial institutions initiated by the middle- of the 21st century.” income BRICS countries will offer a viable alternative to the IMF and Demanding a third approach World Bank remains to be seen. Civil society reactions to the BRICS At a leader-level summit in late March, Arrangement (CRA), to pool foreign announcement have overall been scep- Brazil, Russia, India, China and South exchange reserves among the BRICS tical and cautious. Alfredo Tjiurimo Africa (BRICS) announced their prelimi- countries, was announced to be $100 Hengari of the South African Institute nary agreement to set up multilateral billion and is not expected to have any of International Affairs was doubtful, institutions for both development fi- formal link to the IMF. writing in the newspaper Windhoek nance and emergency financial sup- The BRICS countries have not yet Observer that the BRICS group “is not port. Progress was faster than expected, decided whether either institution independent from existing global largely due to BRICS anger at the fail- would have a mandate to operate out- power structures. It seeks to reinforce ure of rich countries to sufficiently in- side their own five countries. These de- these power structures through a voice clude them in governance of the World tails are to be decided over the next year, that is not substantively an alternative, Bank and International Monetary Fund with leaders meeting again in Septem- but merely one of continuity.” (IMF), or adequately respond to their ber on the sidelines of the G20. A full Dorothy-Grace Guerrero of calls for greater lending. South African agreement is expected in 2014 and the Bangkok-based NGO Focus on the Glo- Finance Minister Pravin Gordhan told institutions to be operational by 2015. bal South said “social movements and journalists IMF and World Bank re- activist academics are increasingly forms “are inadequate in terms of re- Competition or cooperation? wary that the economic model [China] flecting current economic and other re- is advancing is the same unsustainable alities around the world”. For years civil society organiza- and unjust paradigm that facilitates The so-called BRICS Bank will fo- tions have been encouraging the cre- accumulation of wealth by a few while cus on infrastructure finance. However, ation of regional financial institutions resulting in the dispossession and details on the exact financial contribu- as rivals to the Bank and Fund, but pauperization of the already tions, location and governance struc- these new initiatives may not really be marginalized and powerless.” Bobby ture of the bank were discussed but not in competition with the Washington- Peek of South African NGO Ground- agreed. An agreed Contingent Reserve based lenders. In the run-up to the sum- work suggested that civil society groups

22 Third World Economics 1 – 31 May 2013 No 544/545 CURRENT REPORTS Economic policy

“build a strong criticism that demands ity criteria; 3) prior to disbursements, developed world. equality instead of new forms of exploi- an open process for discussion and This resulted in a significant shift tation”. decision-making with people poten- in the balance of the world economy, Carlos Tautz of Brazilian NGO tially affected by the projects; 4) the with developing countries accounting Instituto Mais Democracia said: “For deliberative decision-making space to for a growing share of trade and the first time in history, civil society or- include civil society organizations of growth, and led some pundits to argue ganizations have the opportunity to the countries impacted; and 5) a norm that we were about to witness a “de- monitor an international financial in- against any violation of human coupling”, which would see develop- stitution from its birth.” Tautz summa- rights.”ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿp ing countries continue to grow despite rized demands being made of the new the unsatisfactory performance of de- institutions: “1) a wide public informa- This article is reproduced from the Bretton Woods veloped countries. Update (No. 85, March/April 2013), which is However, prospects in the develop- tion policy, including norms of trans- published by the London-based Bretton Woods parency; 2) international accountabil- Project (www.brettonwoodsproject.org). ing world remain heavily influenced by the growth dynamism in the developed countries. To the extent that develop- Developing resilience to external ing countries continue to rely on exports to developed countries as their key shocks growth driver and have to cope with unfettered capital flows generating United Nations Conference on Trade and Development (UNCTAD) boom-and-bust cycles, their economies Secretary-General Supachai Panitchpakdi stresses the importance of will remain vulnerable to shocks to their reducing developing economies’ vulnerability to external shocks. external economic environment. Most forecasts predict that the cur- GENEVA: The global repercussions of resilience and are in a stronger posi- rent difficult external environment is the 2007-08 financial crisis are a stark tion today than in previous decades to likely to remain for the near future, with reminder of the economic interdepen- withstand shocks originating in inter- only a slow recovery towards a weak dence in our globalizing world. No national capital markets. growth path in advanced economies. country was spared from the Lower debt-to-GDP ratios and im- This suggests that developing and shockwaves that originated in the fi- proved debt management have been transition economies will need to reduce nancial systems of developed econo- contributing factors in this resilience. their export orientation to developed mies. But the most important factor in shield- economies if they want to continue to Transmitted through both trade ing these countries from the volatility grow and increase their resilience to and financial channels, they led to an of capital flows has likely been their external economic shocks. Instead, they economic slowdown in most countries, accumulation of foreign exchange re- will need to rely more on domestic, re- and even outright recessions in others. serves. gional and South-South trade. Thus These recent events call for a thor- However, reserve accumulation as they will need to adapt their develop- ough examination of the different kinds an insurance against the instability of ment strategy in order to strengthen re- of possible shocks to the external eco- capital markets is a costly policy mea- silience. nomic environment and the channels sure, and one that is always second best On the other hand, coordinated through which they spread. We also to multilateral measures to better regu- measures at the multilateral level to ex- need to better understand the factors late these markets. pand global demand would be prefer- that determine countries’ vulnerability Furthermore, not all countries have able. For example, increasing domestic to such shocks, and how we can been able to build up such a “war demand in advanced countries with a strengthen the resilience of different chest”. Indeed, some countries are now current account surplus would stimu- economies. left with little reserves to cope with fu- late global demand while helping to Perhaps the most obvious case of ture needs that may arise in interna- reduce global imbalances. This would an external shock is that of a financial tional financial markets, making them be more appropriate than the current crisis, such as the Asian financial cri- more vulnerable to external shocks. process of global rebalancing, which is sis which broke out in the early sum- being led by demand compression in mer of 1997, or the most recent global Trade shocks deficit countries, accentuating the risks financial crisis. of a global economic downturn. These shocks have demonstrated A second external shock that has These are only two examples of sig- that countries need to build resilience recently affected many developing nificant external shocks that develop- against the shortcomings of our inter- countries is the sharp slowdown in ing countries are vulnerable to. Identi- national monetary and financial sys- demand for their exports in the devel- fying external shocks and mitigating tem. The most pertinent shortcoming is oped markets after the recent financial their impact on trade and development the failure to avoid a disorderly expan- crisis. requires the availability of statistical sion of short-term capital movements, In the decade preceding the crisis, tools that capture the growing interde- which have been a major factor in cre- many developing countries were able pendence of national economies. ating economic instability. to benefit from a trade-led expansion, Among the many measures that are Partly as a result of the experiences allowing them to achieve growth rates available, the terms of trade is a key in- of the Asian financial crisis, many de- that were sometimes four or five per- dicator of the impact of external shocks, veloping countries have built up their centage points higher than those of the especially in countries with a high

No 544/545 Third World Economics 1 – 31 May 2013 23 CURRENT REPORTS Economic policy share of external trade relative to gross estimating the contribution of different The Bank of Cyprus has already domestic product. product groups to changes in the terms sold all its gold reserves. What will they The United Nations Conference on of trade. now extort, the sale of houses? This is Trade and Development (UNCTAD) All these issues require the atten- what is widely rumoured will be asked has been particularly active in this area, tion of policymakers, as a better under- for in Spain and Italy, where citizens pursuing the development of more dis- standing of the problems will help in would pay a one-off amount and bank aggregated terms-of-trade figures by finding solutions. (IPS)ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿp depositors would be taxed on their de- posits as a condition for any European money. The free-market fundamentalists are At the same time, Germany sits com- fortably on its trade surplus with South- now in Europe ern Europe, which has reached, accord- ing to the OECD, the magical amount A combination of fiscal austerity and financial speculation could spell of one trillion euros. And the bailouts economic peril, cautions Roberto Savio. to Greece, Portugal and Ireland were directed towards reimbursing bad Ger- man bank investments. ROME: For a long time it was a given have a high level of debt, deep struc- Yet, the situation of the banks and that while Europe was based on defend- tural medium-term challenges, and the volume of toxic titles they still pos- ing a more just society, with social val- short-term economic headwinds that sess are unclear. A number of figures ues and solidarity, the United States we need to confront.” circulate: what is agreed is that banks was based on the glory of individual- These short-term economic still need money to stabilize. The case ism and competition, and anything headwinds are the daily reality of all of Bankia in Spain is emblematic. The public was considered “socialist”. the countries of Southern Europe. Suf- government has poured in $72 billion, One of the main accusations of the fice it to point out that youth unemploy- more than what it cut in health and last electoral campaign in the US was ment has climbed to 22% across Europe education. Have the banks become that Barack Obama had an unspoken (Spain is close to 47%) to see that we wiser and less speculative now that design to transform the US into another are wasting a generation, which will they know they will be bailed out any- Europe, beginning with healthcare re- have no access to a future pension or a how? form. house. Like it or not, a study by the In- The latest news from Wall Street is Well, it’s time for an update – the ternational Labour Organization (ILO) revealing. The banks that created risky defenders of market fundamentalism foresees that the generation now enter- amalgams of mortgages and loans – the are now in Europe. ing the labour market will retire with a so-called derivatives, which created the At the last meeting of ministers of pension of only 640 euros per month. Is immense disaster that ignited the finance on 9 April, the freshly ap- that a sustainable society? present crisis (with the added contri- pointed US Treasury Secretary Jacob J The reaction of British Prime Min- bution of European bank speculation Lew tried to convince Europeans to ister David Cameron to his country’s over sovereign titles) – are creating ex- lessen their commitment to austerity as loss of Triple A status was to reaffirm actly the same instruments of risky the best medicine for economic prob- even more his commitment to austerity, speculation. Forgotten is the last crisis lems. The US Treasury, together with including reductions in education and five years ago. the US Federal Reserve, has launched a health spending. In the last quarter alone, banks have policy of economic stimulus, with con- He conveniently used the funeral issued $33.5 billion in bonds backed by crete success. celebrations for former British Prime commercial mortgages and proven di- Every month, the Federal Reserve Minister Margaret Thatcher, the fore- sastrous speculation is back, just like alone is putting $80 billion into the runner of the dismantling of the wel- collateralized debt obligations. bond market. Incidentally, Japan is do- fare state, to place himself as the heir of The reason is simple. Unless banks ing the same, on an even greater scale. the Iron Lady: TINA, There Is No Alter- are put back to the pre-Clinton era when Lew was met with a firm rejection: the native. deposit banks were rigidly separated best way to achieve growth in the long from investment banks, all the money term (contrary to any evidence) is to cut More bailouts that goes to the banks will go first to deficits and reassure the markets, even speculation, which has a higher return at the cost of higher unemployment and Meanwhile, we now have the data (and if anything goes wrong the state social misery in the short term. for Cyprus. It is widely accepted that it will bail them out again), and then to Europe’s most powerful minister, will lose at least 2% of its gross domes- deposits and loans, which have a much Germany’s Wolfgang Schauble, said: tic product (GDP) in the coming months smaller return. So, the traders special- “Nobody in Europe sees this contradic- and the social impact will be dramatic. izing in those derivatives are being tion between fiscal consolidation and Soon, it will be obliged to ask for an- hired back by the banks. growth. We must stop this debate, other bailout. But under the new for- Two experienced forensic experts which says that you have to choose be- mula imposed by Germany, which is to working for a Swiss university have tween austerity and growth.” make bank investors and depositors devised computer simulation and in- He was echoed by the president of pay for the bailout, they have already telligence tests to measure the egoism the European Union, Herman Van lost 60% of their money. It will be inter- of 28 professional financial traders, and Rompuy: “There is no room for com- esting to see how Germany will find a to check their willingness to cooperate placency. The European economies way for a new bailout. with others.

24 Third World Economics 1 – 31 May 2013 No 544/545 CURRENT REPORTS Economic policy

They discovered that the share trad- The Role of China in Regional South-South Trade in ers were both more reckless and more the Asia-Pacific: Prospects for Industrialization of the manipulative than psychopaths. Tho- Low-Income Countries mas Noll, a psychiatrist and a prison administrator, told Germany’s Der Spiegel that the “more egoistic” traders By Mehdi Shafaeddin “were more willing to take risks than a BASED on his proposed alternative theoretical group of psychopaths who took the framework for South-South trade as a vehicle for same test”. industrialization and development and refuting the What surprised the researchers was “decoupling” thesis – that is, that East Asian countries are decoupled from the business cycle the competitive attitude of the financial in developed countries – the author analyzes the traders, which had a destructive edge. merits and shortcomings of China’s regional trade Instead of being business-like and aim- with its partners. Moreover, considering the ing to reach the highest profit, ex- growing weight of China in the global production plained Noll, “it was most important network and international trade, he proposes to the traders to get more than their op- policies for the industrialization and development ponents, and they spent a lot of energy of the partner countries in the context of trying to damage their opponents”. strengthening China’s role as a growth “pole”. How many crises do we have to He suggests, inter alia, the need for industrial bear before regulations eliminate risks collaboration among the low-income countries of Trade & Development series no. 41 from the banks and they are confined to the region – which benefit less than others from ISBN: 978-967-5412-65-3 40 pp the dynamics of the Chinese economy as a “hub” the world of speculation? Or, in other – complemented by adjustment assistance by China and the newly industrializing words, before regulations isolate nor- economies (NIEs). He also proposes technological cooperation among China’s trading mal citizens from traders who are not ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿp partners which are currently involved in production sharing in a limited number of wired like us? (IPS) electrical and electronic products for export to third markets in developed countries. Such cooperation would be aimed at upgrading their industrial structure and reducing Roberto Savio is founder and president emeritus their vulnerability to changes in the economic strategy of China and to the business of the Inter Press Service (IPS) news agency and publisher of Other News. cycle in the developed countries. Price Postage Malaysia RM7.00 RM1.00 (continued from page 17) Third World countries US$4.00 US$2.00 (air); US$1.00 (sea) Other foreign countries US$6.00 US$2.00 (air); US$1.00 (sea)

So, as raised by WTO members ear- Orders from Malaysia – please pay by credit card/crossed cheque or postal order. lier, this report does not seem to be grounds for a basis for a ministerial con- Orders from Australia, Brunei, Indonesia, Philippines, Singapore, Thailand, UK, ference or any further work, she said. USA – please pay by credit card/cheque/bank draft/international money order in own currency, US$ or Euro.If paying in own currency or Euro, please calculate Following the comments by the two equivalent of US$ rate. If paying in US$, please ensure that the agent bank is civil society representatives during the located in the USA. question-and-answer session, Thumann of BUSINESSEUROPE re- Rest of the world – please pay by credit card/cheque/bank draft/international sponded: “I think you were able here to money order in US$ or Euro. If paying in Euro, please calculate equivalent of US$ get a pretty good impression and un- rate. If paying in US$, please ensure that the agent bank is located in the USA. derstanding how we were talking and All payments should be made in favour of: THIRD WORLD NETWORK BHD., discussing with each other. And these 131 Jalan Macalister, 10400 Penang, Malaysia. Tel: 60-4-2266728/2266159; two young ladies – blonde and black Fax: 60-4-2264505; Email: [email protected]; Website: www.twn.my hair, I see from here – I would like to ask you ‘be a little bit more tolerant in the I would like to order ...... copy/copies of The Role of China in Regional South/ future and show a little bit more respect.’ South Trade in the Asia-Pacific: Prospects for Industrialization of the Low- Income Countries. I do appreciate what you say and I do take you seriously. So that’s from my I enclose the amount of ...... by cheque/bank draft/IMO. point of view, but I’m of course a little bit in an advanced age so therefore I’m Please charge the amount of US$/Euro/RM ...... to my credit card: expressing myself in this way.” Several of the participants at the American Express Visa Mastercard launch later said privately that they A/c No.: Expiry date: were shocked at Thumann’s reference to the two NGO representatives as hav- Signature: ing “blonde and black hair”, and Lamy not intervening. They noted that for Name: much less, US President Barack Obama had to issue an apology for Address: complimenting a law officer in Califor- nia. (SUNS7574)ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿp

No 544/545 Third World Economics 1 – 31 May 2013 25 CURRENT REPORTS Investment International investment disputes based cases rose to 518 by the end of 2012, and since most arbitration forums on the rise do not maintain a public registry of claims, the total number of cases is likely Foreign investors are initiating more dispute cases against host-country to be higher, said UNCTAD. governments before international arbitration tribunals, finds a UN The majority of cases have been brought under the International Centre development body. for Settlement of Investment Disputes (ICSID) Convention and the ICSID Ad- by Kanaga Raja ditional Facility Rules (314 cases) and the UN Commission on International GENEVA: The year 2012 saw the high- merous bilateral and regional IIA ne- Trade Law (UNCITRAL) Rules (135). est number of known treaty-based in- gotiations. However, a multilateral dia- In total, said UNCTAD, over the vestor-state dispute settlement (ISDS) logue on ISDS could prove more effec- past years, at least 95 governments have cases ever filed in one year under inter- tive in bringing about a harmonized responded to one or more investment national investment agreements (IIAs), approach to reform,” he added. treaty arbitration: 61 developing coun- according to the United Nations Con- ISDS trends tries, 18 developed countries and 16 ference on Trade and Development countries with economies in transition. (UNCTAD). “Argentina continues to be the most In its report “Recent Developments According to the press release, frequent respondent (52 cases) followed in Investor-State Dispute Settlement ISDS proceedings are provided for by a by Venezuela (34), Ecuador (23) and (ISDS)” – available at www.unctad. majority of the 3,200 international in- Mexico (21),” it noted. org/diae – UNCTAD said that with 62 vestment agreements in existence today. Investor-state arbitrations have new cases initiated last year, foreign in- According to UNCTAD, in 42 of been initiated most frequently by claim- vestors are increasingly resorting to in- the 62 new cases initiated in 2012, re- ants from the United States (123 cases, vestor-state arbitration. spondents are developing or transition or 24% of all known disputes), the Neth- Among the main findings of the economies, and in 15 cases they are erlands (50 cases), the United Kingdom report are that in 68% of the new cases, developed countries. For five cases, the (30) and Germany (27). The three invest- respondents are developing or transi- respondent country is unknown. ment instruments most frequently used tion economies. While the number of In 2012, Venezuela, for the second as a basis for ISDS claims have been the cases initiated by developing-country consecutive year, responded to the larg- North American Free Trade Agreement investors has increased, the majority of est number of cases (9), followed by In- (NAFTA) (49 cases), the Energy Char- new cases (63%) still originate from dia (7), Pakistan (4), Algeria, Egypt and ter Treaty (29) and the Argentina- developed countries, it said. Hungary (3 each). In 2012, Belgium, United States BIT (17). According to UNCTAD, claimants Equatorial Guinea, Republic of Korea have challenged a broad range of gov- and Laos faced their first ISDS claims. In 2012, ISDS tribunals rendered at ernment measures, including those re- Of the 62 new cases, 39 were filed least 42 decisions in investor-state dis- lated to revocations of licences, by investors from developed countries. putes, 31 of which are in the public do- breaches of investment contracts, ir- Of these 39 cases, 29 were against de- main (at the time of writing). regularities in public tenders, changes veloping countries or economies in tran- Of the 31 public decisions, 12 ad- to domestic regulatory frameworks, sition; the remaining 10 cases were by dressed jurisdictional issues, with withdrawal of previously granted sub- investors from developed countries seven decisions upholding the sidies, direct expropriations of invest- against host developed countries. tribunal’s jurisdiction (at least in part) ments, tax measures and others. UNCTAD said that 2012 also wit- and five decisions rejecting jurisdiction. In 70% of the public decisions ad- nessed a surge in the number of cases Seventeen decisions on the merits dressing the merits of the dispute, in- filed by investors from developing were rendered in 2012, with 12 accept- vestors’ claims were accepted, at least countries (17, compared to nine in ing – at least in part – the claims of the in part. Nine public decisions rendered 2011). For six cases, the investor’s home investors, and five dismissing all of the in 2012 awarded damages to the claim- country remains unknown. claims. ant, including the highest award in the The year 2012 further saw at least “Compared to previous years, this history of ISDS ($1.77 billion) in Occi- eight new intra-EU investment dis- represents a higher percentage of rul- dental v. Ecuador, a case arising out of a putes, i.e., claims by EU investors ings against the State,” stressed unilateral termination by the state of an against EU member states, which UNCTAD. oil contract. brought the overall number of such Of the 12 decisions finding the “Recent developments have ampli- claims to 59. state’s liability, six found a violation of fied a number of cross-cutting chal- Of the eight new claims, two were the FET (fair and equitable treatment) lenges that are facing the ISDS mecha- brought pursuant to the Energy Char- provision, five of the expropriation pro- nism, which gives credence to calls for ter Treaty (to which all member states vision, two of the umbrella clause and reform of the investment arbitration sys- are party) and the other six pursuant to one of the prohibition of certain perfor- tem,” James Zhan, Director of provisions of intra-EU bilateral invest- mance requirements. UNCTAD’s Division on Investment ment treaties (BITs). Hungary was the At least nine decisions rendered in and Enterprise, said in a press release. most popular respondent, having to 2012 awarded compensation to the in- “The ISDS mechanism is already a cope with three new intra-EU claims. vestor, among them the highest award source of considered reflection in nu- The total number of known treaty- in the history of ISDS. Some decisions

26 Third World Economics 1 – 31 May 2013 No 544/545 CURRENT REPORTS Investment on liability have postponed the ques- by the differences in wording of a spe- phaseout of nuclear power plants. tion of damages to the next phase of the cific IIA applicable in a particular case; The UNCTAD report noted that arbitration. however, for the most part they repre- enforcing awards against sovereign The highest known award of dam- sent the differences in the views of in- states remains a difficult issue as some ages in the history of investment treaty dividual arbitrators.” governments continue not paying ear- arbitration featured in Occidental v. Ec- In the absence of a mechanism that lier arbitral awards rendered against uador II where the investor was would ensure uniformity of IIA inter- them. awarded $1.77 billion plus pre- and pretation, divergent findings can be Some investors prefer to settle with post-award compound interest by the expected to persist, UNCTAD cau- the respondent state, often for an majority of the tribunal. tioned. amount lower than that awarded but In EDF v. Argentina, the claimant UNCTAD also pointed to claims with a guarantee of prompt payment, was awarded $136.13 million plus arising out of crisis-related and finan- or with the monetary award being fully compound interest, while in Deutsche cial austerity measures: in 2012, a num- or partially replaced by other benefits. Bank v. Sri Lanka, the claimant was ber of cases emerged that have their ori- Other claimants seek to locate re- awarded $60.36 million plus interest. gin in the recent financial crisis and the spondent states’ assets abroad and In SGS v. Paraguay, the claimant was ongoing economic recession. start enforcement procedures in the rel- awarded $39.02 million plus interest, For example, a pair of Chinese in- evant third countries. and in RDC v. Guatemala, the claimant vestors brought an ISDS claim against Still others bring the non-payment was awarded $11.2 million plus com- Belgium relating to that government’s of awards to the attention of their home pound interest. treatment of Fortis, a Belgian-Dutch fi- governments, with a view to receiving Smaller awards were granted in nancial institution, in the midst of the their support. One such example from Marion and Reinhard Unglaube v. Costa financial crisis. The claimants report- 2012 is the United States excluding Ar- Rica ($3.1 million plus interest), Renta 4 edly allege damages of $2.3 billion. A gentina from the list of countries ben- v. Russia ($2 million plus compound Cypriot bank notified its intention to efiting from trade preferences, until Ar- interest), Antoine Goetz v. Burundi ($2 initiate arbitration proceedings against gentina pays on ICSID awards in favour million plus interest), and Swisslion v. Greece, arguing that the latter had dis- of US investors. Macedonia (350,000 euros plus com- criminated against the claimant’s Greek pound interest). subsidiary when implementing its bank Transparency bailout programme. Concerns Similarly, a number of claims have Highlighting the issue of transpar- been brought, or threatened, against ency of ISDS, UNCTAD said that a no- UNCTAD emphasized that devel- governments who have introduced aus- table development has been the opments in ISDS in 2012 have brought terity measures affecting renewable en- UNCITRAL Working Group’s comple- to light a number of cross-cutting issues ergy producers. tion of a legal standard on transparency and concerns. Reportedly, Italy, the Czech Repub- in IIA arbitrations. Among these is the issue of diver- lic and Spain have been put on notice Until now, ISDS proceedings un- gent findings in that different interpre- with respect to possible arbitrations re- der the UNCITRAL Arbitration Rules tations of the same or similar IIA provi- garding those countries’ withdrawal of have been characterized by a high level sions persist. subsidies for solar energy, introduced of confidentiality; frequently, the very According to UNCTAD, a vivid at a time of a more favourable economic existence of a dispute has been un- example for 2012 is the “umbrella” climate. known. clause, a clause which obliges the con- UNCTAD further underscored that In January 2013, the UNCITRAL tracting states to honour commitments in 2012, states have continued to face Working Group II agreed on a set of extended to individual investors (e.g., investor claims concerning measures of rules (still to be formally adopted by by means of investment contracts). general application introduced on en- UNCITRAL itself) that provide for a It found that tribunals adopted vironmental grounds. significantly increased level of trans- contradictory decisions on three key Thus, Canada was on notice with parency, including a public registry of issues: (i) whether an IIA claim under respect to two potential NAFTA claims: disputes, open oral hearings as well as the umbrella clause can proceed if the one arising out of the moratorium on publication of key documents (notices underlying investment contract sets out offshore wind farms introduced by the of arbitration, pleadings, transcripts, its own dispute resolution mechanism; government of Ontario province (pend- and all decisions and awards issued (ii) whether the relevant state conduct ing further research into such farms’ by the tribunal). must be an exercise of sovereign pow- environmental and health effects), These rules will apply to arbitra- ers (ius imperii); and (iii) whether the which allegedly destroyed the tions under future IIAs that refer to parties in IIA arbitration need to be the claimant’s contractual rights; the other UNCITRAL rules (unless the parties to parties to the investment contract con- regarding a ban by the government of these future treaties expressly opt out) cerned (for example, whether it is Quebec province on oil and gas activi- and thus exclude the multitude of ex- enough for the claimant in the IIA arbi- ties in certain areas. isting IIAs from their coverage, said tration to be a majority shareholder in A Swedish investor filed a case UNCTAD. the company that concluded an invest- against Germany under the Energy Also noteworthy is the decision of ment contract with the state). Charter Treaty demanding compensa- the Warsaw District Administrative “Sometimes, divergent outcomes tion for the damage allegedly incurred Court of 13 December 2012, where re- can be – at least partially – explained due to the government’s announced portedly, the court held that arbitral

No 544/545 Third World Economics 1 – 31 May 2013 27 CURRENT REPORTS Investment awards rendered under investment “The continuing trend of investors is on the agenda in numerous bilateral treaties constitute public information challenging generally applicable pub- and regional IIA negotiations. eligible for release by the Polish gov- lic policies, contradictory decisions is- “While reform options abound, ernment. Although under appeal, the sued by tribunals, an increasing num- their systematic assessment including decision may eventually oblige the gov- ber of dissenting opinions, concerns with respect to their feasibility, expected ernment to release the unpublished about arbitrators’ potential conflicts of effectiveness and implementation award. interest, all illustrate the problems in- method (e.g. at the level of IIAs, arbitral “At a broader level, there is the pos- herent in the system.” rules, institutions) remains wanting. A sibility that freedom-of-information Accordingly, said UNCTAD, the multilateral policy dialogue on ISDS laws – in those countries where they public discourse about the usefulness, could help to develop a consensus exist – can help bring to light disputes legitimacy and deficiencies of the ISDS about the preferred course for reform and arbitral awards that have thus far mechanism is gaining momentum, es- and ways to put it into action,” it con- been unknown,” said UNCTAD. pecially given that the ISDS mechanism cluded. (SUNS7568)ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿp Third-party funding Dealing with the transnational As for third-party funding (TPF) of corporations claims, UNCTAD said that the practice of involving specialized firms to finance Threatened by billion-dollar lawsuits arising from investment treaties, IIA claims against states in exchange several governments have formed a new grouping to deal with for a share in a possible future award or settlement in favour of the claimant transnational companies. has been gaining prominence in the past year and attracted the attention of by Martin Khor commentators and scholars. The practice of litigation finance Leaders of several Latin American coun- gal actions, including sending informa- exists in a few countries (Australia, the tries have set up a new coalition to co- tion on legal disputes involving the United States, the United Kingdom and ordinate actions to face the growing states, coordinating joint legal actions some others) and, in some circum- number of international legal suits be- and disseminating information to the stances, can be viewed as giving access ing taken against governments by public. to justice to those claimants who do not transnational companies. They also agreed to establish a re- have the means to pay hefty legal fees A ministerial meeting of 12 coun- gional arbitration centre for settling in- and other litigation costs. tries held in Guayaquil, Ecuador, on 22 vestment disputes, based on fair and On the other hand, UNCTAD April decided on several joint actions balanced rules when settling disputes stressed, there are serious policy rea- to counter the threat posed by these law- between corporations and states. sons against TPF of IIA claims – for ex- suits, which have claimed millions or The proposed centre is to provide ample, it may increase the filing of ques- even billions of dollars from govern- an alternative to existing international tionable claims. ments. tribunals which are seen as biased in From a respondent state’s perspec- “No more should small countries favour of investors’ interests. The tri- tive, such frivolous claims, even if most face lawsuits from big companies by bunals, such as ICSID (based at the of them fail, can take significant re- themselves,” said Ecuador’s Foreign World Bank in Washington), have also sources and may cause reputational Minister Ricardo Patino at a media con- been accused of being mired in conflict- damage. There are other concerns ference after the meeting which he of-interest situations. Only a few arbi- which put the practice of TPF into di- chaired. “We have now decided to deal trators hear a majority of cases, with rect or indirect conflict with profes- with the challenges posed by these many of them also appearing as law- sional ethical rules in some countries. transnational companies in a coordi- yers for companies in other cases, and While there is no international regu- nated way.” some being board members of lation of TPF and public knowledge Seven of the countries, mostly rep- transnational companies. about financing of claims is limited, IIA- resented by their ministers of foreign The ministers also decided to cre- related TPF developments need to be affairs, trade or finance, adopted a dec- ate an “international observatory” to monitored closely with a view to better laration with an agreement to form a monitor and analyze investment cases, understanding trends and their policy conference of states affected by to reform the present arbitration system, implications, said UNCTAD. transnational interests. They are Ecua- and suggest alternative mechanisms According to the report, the 2012 dor, Bolivia, Cuba, Nicaragua, Domini- for fair mediation between states and peak in the number of new cases con- can Republic, St. Vincent and the transnational companies. firms that foreign investors continue to Grenadines, and Venezuela. The observatory would also pro- rely on IIA-based ISDS. Representatives of another five mote coordination between the judicial The increasing number of victories countries (Argentina, Guatemala, El systems of Latin American states, to for claimants (70% in 2012) and, on Salvador, Honduras and Mexico) also ensure the enforcement of domestic ju- some occasions, high amounts of dam- attended the meeting and will convey dicial decisions on disputes between ages awarded (e.g., the $1.77 billion in the results to their governments. states and transnational corporations. Occidental v. Ecuador) demonstrate the The ministers decided to set up an It should also give advice to govern- protective potential of the IIA/ISDS re- executive committee, led initially by ments on their negotiations with gime. Ecuador, to coordinate political and le- transnational corporations, especially

28 Third World Economics 1 – 31 May 2013 No 544/545 CURRENT REPORTS Investment/Free trade agreements in trade and investment contracts. the investors, not only affect the states’ eign investments, but the negative fiscal situation but also pose a serious consequences of such commitments Disillusionment challenge to their national jurisdiction have now become evident, said the note. and sovereignty, and compromise on- A second meeting of the newly The meeting had been prompted by going development plans in Latin formed grouping will be held in ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿp serious concerns arising from invest- America and other regions. Caracas in July. ment cases taken by transnational com- This problem originated in the panies against the governments under Martin Khor is Executive Director of the South 1990s when bilateral investment trea- Centre, an intergovernmental policy think-tank bilateral investment treaties and free ties were signed by developing coun- of developing countries, and former Director of trade agreements that enable these com- tries in the expectation of attracting for- the Third World Network. panies to sue for loss of future profits due, for example, to new government regulations or a cancellation or amend- Serious threat to Asian economic model ment of a contract. There have been more than 500 The successful East Asian model of “state-driven capitalism” is being known investor-to-state cases, over 60 threatened by proposals in the TPPA trade agreement to remove possible alone in 2012. Some countries in the advantages of state-owned enterprises. region, such as Argentina, Ecuador, Venezuela and Mexico, have each had by Martin Khor 20 to 30 cases taken against them. The proliferation of cases in recent Many articles and books have been trial firms are also subsidized in vari- years has also affected developing published on the contrast and compe- ous ways, including through the recent countries in other regions, such as tition between the present Western and multi-billion-dollar bailouts in the South Africa, India, Indonesia and Viet- the Asian-style economic models. wake of the recent financial crises. nam, as well as many developed coun- Western countries are said to have This has not stopped these coun- tries. the free-market model based on compe- tries from attacking the Asian model, Disillusionment with the agree- tition among private firms, with the however. The latest attempt to curb this ments and the arbitration system has government taking a hands-off model is through the negotiations on a prompted a variety of actions by gov- approach. East Asian countries are Trans-Pacific Partnership Agreement ernments such as suspension of nego- branded as practising “state capital- (TPPA), a trade and investment treaty tiations for new treaties, attempts to re- ism” in which the government plays a involving the United States, Canada, negotiate or withdraw from existing major role in helping the local private Malaysia, Singapore, Vietnam, Brunei, treaties, and withdrawal from the juris- sector and the state also fully or par- Peru, Chile, Australia and New diction of the ICSID tribunal. tially owns many enterprises. Zealand. The Vice President of Ecuador, The Western countries are increas- State-owned enterprises targeted Jorge Glas Espinel, briefed the meeting ingly attacking the Asian model, claim- about two arbitration disputes taken ing that state-owned companies or against his government by oil compa- state-aided commercial firms have an The TPPA contains an important nies under bilateral investment treaties unfair advantage vis-à-vis the foreign section on state-owned enterprises (BITs), and on the tribunal judgments firms competing with them. (SOEs), championed by the US and which in his view were unfair and even In the East Asian region, countries Australia. The TPPA drafts are secret, outrageous. where the state plays a substantial role so the text of the SOE section is not In one of the cases, Ecuador was include China, Malaysia, Vietnam and known. However, it can be anticipated asked to pay $2.3 billion compensation Singapore. Of course, in Japan and that the section will contain disciplines (including interest) to the American oil Korea their domestic firms grew to be- to curb and shape the behaviour of three company Oxy, even though the arbitra- come world-beaters with the systematic types of SOEs. tors recognized that the company had backing of their governments. Recently concluded bilateral free broken the terms of its contract with the For these countries, the so-called trade agreements (FTAs) with the US government. state capitalism (or in the case of so- contain a competition chapter that Other ministers and officials also cialist countries, market-oriented so- deals with two types of SOEs. For ex- presented the experiences of their coun- cialism) has worked well through in- ample, the US-Peru FTA has disciplines tries in cases taken against them by for- dustrial development and relatively on designated monopolies and state eign investors, and proposed actions high and sustained economic growth. enterprises, and it is likely that the US that could be taken to avoid future cases Some Western countries have been will propose something similar in the or reduce their effects. trying to curb or even eventually elimi- TPPA. A background note explaining the nate the Asian model of state-owned or That FTA says that government reason for the meeting said that arbi- state-aided capitalism. monopolies shall act solely in accor- tration proceedings and claims by Eu- Of course this is largely hypocriti- dance with commercial considerations, ropean and US multinational compa- cal because the American, European including with regard to price, quality, nies against a growing number of states and Japanese agricultural sectors are availability and transportation, when of the South have dramatically in- highly subsidized and protected; many buying or selling the monopoly good creased. of their farms could not survive with- or service. These costly litigations, the major- out massive state aid and high import They shall provide non-discrimina- ity of which were decided in favour of tariffs. Many of their banks and indus- tory treatment to investments, goods

No 544/545 Third World Economics 1 – 31 May 2013 29 CURRENT REPORTS Free trade agreements/Tax avoidance and services of the other signatory characterized by important roles of vent or hinder the socially useful func- country. And they shall not use their state-owned enterprises or government- tions of SOEs. monopoly position to engage in linked companies. The proponents of the SOE section anticompetitive practices through their The countries would have to move argue that foreign companies are not dealings with their parents, subsidiar- away from their successful develop- able to compete fairly with SOEs. They ies or other enterprises with common ment model and economic structure. want the TPPA to remove or reduce the ownership in a non-monopolized mar- Moreover, SOEs have many func- “advantages” of the SOEs. ket that adversely affect the investments tions including providing social ser- But that could threaten the survival of other countries. vices to the public, ensuring that poor of the system that has helped propel the State enterprises shall similarly and vulnerable groups are given spe- East Asian model, a creative and dy- provide non-discriminatory treatment cial consideration. namically changing mixture of state in the sale of goods or services to in- This often means that SOEs cannot and market. vestments of other countries. operate on solely commercial grounds The TPPA negotiations are still go- More importantly, the US and Aus- and that several of them depend on gov- ing on, and the text of the SOE section tralia are proposing a third type of SOE ernment subsidies and assistance. is not yet final, so there is scope for dif- to be subject to disciplines. According There are also cross-subsidies in that ferent views to be expressed. to press reports, Australia has also in- the profitable aspect of an SOE may fi- Much is at stake, and it is impor- troduced the principle of “competitive nance non-profitable (but socially im- tant for more information to be made neutrality” to discipline the SOEs. portant) activities. There is a danger available on the negotiations, includ- How this principle will apply can that the TPPA section on SOEs will pre- ing on the SOE provisions.ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿp be anticipated from the Australian government’s competitive neutrality guidelines. This is based on the con- Momentum builds in US, beyond to cept of a “government-owned busi- ness”. The state-owned business enter- end corporate tax evasion prise which competes with private com- panies may obtain advantages, imped- Measures to combat tax dodging by corporations are in the works in the ing the ability of the private sector to US and elsewhere. compete on equal terms. According to the Australian guide- by Carey L Biron lines, these advantages include exemp- tions from taxes; cheaper debt financ- WASHINGTON: The US government’s “Often these things get inserted at ing (because of the low-risk classifica- main watchdog on 15 April reported the last minute behind closed doors, tion or government guarantees); ab- that US corporations are paying taxes and the public can’t scrutinize whether sence of need to make a commercial rate on less than half of their declared in- they are in the public interest. Some of of return; and exemption from regula- come, largely due to dozens of tax breaks the largest companies are regularly ex- tory constraints or costs. that have come under increased scru- ploiting these loopholes to make it look To offset these advantages, the tiny in recent months. as though income they make here is Australian guidelines cover how gov- The Government Accountability getting made in another country.” ernment businesses should pay taxes Office (GAO) is reporting that US com- The results are an estimated $150- in full; pay back to the central govern- panies received tax breaks worth billion loss to the US Treasury per year ment the difference in their loan costs around $181 billion in 2011, slightly – a massive amount at a time of debt vis-à-vis private sector loan costs; pay licence fees equivalent to the central more than what they paid in taxes. That anxiety and austerity measures now government; and ensure that they ob- figure would make up the largest such threatening to bite heavily into public tain a commercial rate of return. sum since a major rewrite of the US tax programmes. Indeed, an important It is likely therefore that the draft of code took place in the mid-1980s. component of the current debt debate the TPPA will have disciplines along A significant part of these breaks here involves overhauling and simpli- the lines above on a third category of are due to a legal exemption under fying the US tax code, including clos- SOEs, government-linked business en- which US companies are not required ing loopholes. tities involved in commercial activities to pay taxes on income earned overseas Similar discussions are increas- that compete with the private sector. until it is brought back into the coun- ingly taking place in capitals around The proposed disciplines could be try. Yet corporations have increasingly the world, and leading to real new regu- along the line that “advantages” en- been accused of misusing this exemp- lation and legislation. joyed by government-linked businesses tion, misreporting overseas income or Also on 15 April, the deadline by such as those mentioned in the Austra- lodging it in countries with low or loose which US citizens were required to file lian guidelines be disallowed. tax regulations. their individual taxes, US Representa- “It’s extremely important that cor- tive Lloyd Doggett unveiled a package Adverse effects porate tax expenditures receive the of legislative proposals, backed by 45 same level of scrutiny as any spending co-sponsors, aimed at closing a series The implications for Malaysia, Viet- item,” Dan Smith, a budget researcher of loopholes in the US tax code and de- nam and Singapore would be serious at US PIRG, an advocacy group, told terring the use of overseas tax havens. because their national economies are Inter Press Service (IPS). “Over a three-year period, 30 [top]

30 Third World Economics 1 – 31 May 2013 No 544/545 CURRENT REPORTS Tax avoidance companies devoted more of their mon- “This issue is definitely heating up the development community. ies to lobbying this Congress than they – with Congress currently trying to fig- In the week of 8 April, five mem- did in paying taxes to the Treasury,” ure out how to fund public priorities bers of the European Union – France, Doggett, one of two members of Con- while bringing down the deficit, it’s just Germany, Italy, Spain and the United gress to request the new GAO report, impossible to ignore offshore tax haven Kingdom – agreed to the world’s first said in a Congressional hearing. “Some abuse anymore,” he notes. multilateral system of tax information have a negative tax rate. Many of our “And importantly, politicians on exchange, based on similar bilateral US largest corporations are paying effec- both sides of the aisle are starting to see requirements passed three years ago. tive rates that are single digits.” that it’s not in the public interest when (The United States itself doesn’t tax for- Doggett’s new bill, the Stop Tax corporations can exploit these loop- eign-owned income in US banks, and Haven Abuse Act, would also require holes. This costs a lot of money, and hence is one of the world’s largest tax all US-registered multinational corpo- owners of small businesses end up pick- havens.) rations to provide annual income re- ing up the tab in cuts to public Over the 13-14 April weekend, five porting on a country-by-country basis. programmes and higher deficits.” more countries – Belgium, the Czech Proponents say doing so would quickly Public support for regulatory Republic, the Netherlands, Poland and highlight any glaring discrepancies changes appears to be quite strong. Romania – signed on to the pilot between a company’s reporting and its According to recent polls, around 80% project, which is open to all EU mem- work on the ground. of the US public and 85% of small-busi- bers. Such a requirement would also ness owners support strengthened tax “There’s a flurry of action going on make it easier for developing countries regulations that would make it far right now, both domestically and inter- to ensure that they were receiving harder for corporations to exploit off- nationally, but this EU announcement proper taxes from foreign corporations shore tax havens. is huge,” Clark Gascoigne, communi- working within their territory. cations director for Global Financial A similar piece of legislation, intro- EU initiative Integrity, a Washington watchdog duced in February, is currently before group, told IPS. the Senate. While versions of both pro- The new momentum to end tax ha- “It pokes a massive hole in inter- posals have been introduced previ- ven loopholes here in the United States national bank secrecy and ensures that ously, US PIRG’s Smith says the bills joins a similar movement internation- tax officials will have a lot of the infor- are today in a far stronger position. ally, including at the highest levels of mation they need to crack down on tax Subscribe to the Third World’s own Economics Magazine!

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No 544/545 Third World Economics 1 – 31 May 2013 31 CURRENT REPORTS Tax avoidance haven-related evasion. They’re now The International Financial Architecture and promoting this as the new global stan- Free Trade Agreements dard on tax information sharing – a major development that will do much to curtail evasion, particularly once it’s Developing countries’ efforts to meet the expanded to developing countries and Millennium Development Goals (MDGs), a emerging economies.” set of development and anti-poverty targets Indeed, the ramifications of this adopted by the international community, are discussion for developing countries are confronted with a host of challenges, not enormous. In March, a high-level least those posed by an unfavourable United Nations panel negotiating the international economic setting. next phase of the Millennium Develop- This book puts together two Third ment Goals (MDGs), the deadline for World Network papers which look at how which is 2015, produced a communi- the global financial and trade systems may que stating that one of their highest pri- impede realization of the MDGs. The first orities would be tackling the abuse of paper considers how key elements in the offshore tax havens and illicit financial international financial architecture – IMF loan flows. conditionalities, the debt burden and capital According to a recent report by Glo- account liberalization – can hinder the implementation of national MDG strategies. bal Financial Integrity, such abuse ISBN: 978-967-5412-45-5 48pp could be resulting in losses for devel- The second paper examines the potential oping countries as high as a trillion adverse impacts of trade liberalization and dollars a year. other provisions in international trade treaties the financial and trade Gascoigne notes this is 10 times the on developing-country prospects for constraints on progress achieving the MDGs. towards attaining the amount that developing countries re- The analysis in these papers MDGs in the developing ceive in foreign aid each year. “This has underlines the urgent need to address world. a devastating impact on global devel- opment, and it’s fantastic that this is finally being recognized,” he says. Price Postage “There is a severe lack of transpar- Malaysia RM9.00 RM1.00 Third World countries US$6.00 US$2.00 (air); US$1.00 (sea) ency right now in how multinational Other foreign countries US$8.00 US$2.00 (air); US$1.00 (sea) companies are structured, and this fa- cilitates extremely high levels of illicit Orders from Malaysia – please pay by credit card/crossed cheque or postal order. flows out of developing countries. Be- Orders from Australia, Brunei, Indonesia, Philippines, Singapore, Thailand, UK, yond setting a precedent that these USA – please pay by credit card/cheque/bank draft/international money order in abuses are not acceptable in the United own currency, US$ or Euro.If paying in own currency or Euro, please calculate States, the legislative proposals in Con- equivalent of US$ rate. If paying in US$, please ensure that the agent bank is gress would force corporations to prop- located in the USA. erly record their profits in developing Rest of the world – please pay by credit card/cheque/bank draft/international countries, where they’re producing and money order in US$ or Euro. If paying in Euro, please calculate equivalent of US$ ÿÿÿÿÿÿÿÿÿÿÿÿÿÿp selling their products.” (IPS) rate. If paying in US$, please ensure that the agent bank is located in the USA.

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32 Third World Economics 1 – 31 May 2013 No 544/545