Debate, discord mark UN Conference on Trade and Development

By Naki B. Mendoza 27 July 2016

The Kenyatta International Convention Center in Nairobi, where the 14th session of the United Nations Conference on Trade and Development was held. Photo by: Joseph Kiptarus / UNCTAD / CC BY-SA 

The United Nations Conference on Trade and Development renewed its mandate at its annual summit last week, aiming to more closely align international trade policies and standards with the new global development agenda. But reaching consensus was not easy.

Negotiations were marked by intense discussions and a debate persists about whether UNCTAD is giving enough of a voice to the global south on issues of trade and development.

Many civil society groups contend that UNCTAD, with its development-centric mission, can go further still to embed the interests of developing countries on matters of trade and finance into international principles and agreements.

Prioritizing that development focus would go a long way to ensuring that aid indeed goes hand-in-hand with trade. But instead, groups argue, the UNCTAD has largely left it up to richer, industrialized countries to set those global standards.

Drifting focus?

The issue of an inclusive development agenda was the primary focus of civil society organizations leading up to the 14th UNCTAD summit in Nairobi, Kenya, where more than 5,000 delegates from 149 U.N. member states convened for the quadrennial UNCTAD meeting to debate high-level issues of trade and development.

UNCTAD’s role in promoting global development stands out among other large international organizations. While institutions such as the World Bank, International Monetary Fund and World Trade Organization work to advance economic development, growth and stability, UNCTAD is primarily rooted in people-centered development with a specific purpose to improve livelihoods and well-being in the “global south.” The agency promotes ways that governments can use trade to improve the lives of the poor and its mission has expanded over time to support finance, investment and technology.

However, civil society organizations have grown increasingly concerned that UNCTAD’s development mandate has taken a back seat to advancing the commercial interests of industrialized countries, promoted through predominantly Western-led institutions.

Ahead of the summit a group of 331 civil society organizations sent a letter to UNCTAD member governments, urging the agency to recenter its focus on development and not tie its agenda too closely to the missions of other institutions. The more that UNCTAD moves toward seeing developing countries mainly as engines for global trade agreements, the more the U.N. body risks redundancy and irrelevancy, the groups argued.

Civil society organizations placed high hopes that the Nairobi summit would reverse that trend. The five-day meeting was the first UNCTAD summit since the Sustainable Development Goals were approved and offered the agency a fresh chance to integrate its work on finance and trade with the global goals.

“If we look at the challenge of fulfilling the SDGs, we need a drastic change of business,” said Tove Maria Ryding of Eurodad, a Brussels-based network of civil society organizations that focuses on aid effectiveness.

Sticking points

As is customary, UNCTAD member states approved an agreement at the conclusion of the meeting that affirms the group’s mandate and establishes its work plan for the next four years. Drafting that accord was largely procedural, said Ryding, whose group followed the negotiations closely. UNCTAD negotiators reached consensus on routine matters of identifying the role of trade in development and agreeing to more closely collaborate to advance the SDGs.

But a fierce debate emerged on whether UNCTAD should expand its mandate by endorsing specific principles on tax policy and debt management. Civil society groups advocated for standards and recommendations that put industrialized and developing countries on equal footing to address those issues.

Those sticking points ultimately pushed negotiations into the 11th hour. UNCTAD officials described two days of round-the-clock talks in which negotiators resorted to caffeine pills, candies and soft drinks to keep themselves alert.

On taxes, for example, UNCTAD already helps developing countries build capacity to manage their revenue collection systems and monitor tax flows in accordance with bilateral investment treaties. But civil society groups pushed for UNCTAD to give developing countries the right to participate on equal footing with developed countries in crafting global tax standards. Such wording, however, was left out of the final agreement.

On debt, a major point of contention was whether to shift UNCTAD’s mandate simply from “debt management” to “debt crisis and prevention.”

The agency has principles in place to guide responsible borrowing and lending between countries. But civil society urged for a new UNCTAD mandate to endorse specific practices to implement those principles. Types of practices would include restrictions against “vulture funds” that sue governments to recover debt or sustainable payback practices for highly indebted countries. Neither made it into the final agreement.

By not adopting a broader mandate, members of civil society believe that UNCTAD is limiting opportunities for developing countries to contribute to a global agenda in favor of industrial country interests. An UNCTAD mandate to build global consensus on tax standards, for example, would be a more inclusive approach than the current arrangement in which Organization for Economic Cooperation and Development countries establish much of the world’s tax practices and norms.  

“UNCTAD was set up as a body to help developing countries benefit from trade, stabilize their economies and escape unsustainable debt burdens,” Ryding told Devex. “However, as soon as the negotiations started, we saw a strong resistance from rich countries to strengthen UNCTAD, and this behavior is the reason why the outcome is much less ambitious that we had hoped.”

The issues of tax policy and debt management carried particular weight at the meetings. A new UNCTAD report warned of unsustainable debt burdens in many African countries and urged governments to add new revenue sources to finance development, such as remittances, public-private partnerships and a clampdown on illicit financial flows.

More broadly, a common theme of the meeting was the tenuous footing of the global economy and developing countries. The opening paragraph of the final agreement, for example, cites subdued growth, income inequality, financial fragility, volatile financial flows and a decreasing share in world trade among developing countries since the last UNCTAD summit.

Silver linings

Despite the qualms expressed by some civil society groups, the UNCTAD summit also produced positive achievements.

The meeting established an intergovernmental group to focus on financing for development, particularly around funding for the SDGs and Paris climate agreement.

The final agreement underscored the principle of common but differential responsibilities of developing countries in global trade — a key affirmation that as developing countries grow their economies they are held to different standards from industrialized ones on issues such as tariffs, the environment and intellectual property.

Ninety countries also signed a U.N. initiative to end fishing subsidies that total $35 billion globally and have contributed to sharp declines in fish stocks and degraded marine life.

Conference delegates also considered the structure and organization of the summit itself to be a success. “The event was very multifaceted,” said Matthew Wilson, chief of cabinet of the International Trade Center. “From investment topics to a commodities forum, women’s economic empowerment, small and medium-sized enterprise development, all of the key issues were covered,” he added. “There were quite a few [issues addressed] that will be helpful for the international community moving forward and be direct contributors to achieving the SDGs.”

While civil society was frustrated that some of their key demands were not met, Wilson suggests that those frustrations are perhaps misplaced.

“In many respects, the demands of civil society may be a bit more ambitious than the 150-plus members of UNCTAD can agree to,” he noted. “Civil society wanted a bit more and deeper language on taxation, debt and investment treaties — some [of the language] was not reflected in the way that they liked, but all of the key issues were mentioned.”

And while the official language of international agreements goes far to codify priorities, real progress comes from executing work programs, trade officials said.

“Some of the major hurdles to trade don’t have to do with legal text, but on implementing regulations,” said Ziad Hamoui, executive director of Tarzan Enterprise, a Ghana-based transport and logistics company, and the former president of a private sector-led advocacy group for regional economic integration in Africa.

Among the biggest barriers to trade, Hamoui said, are misaligned practices for processing and logistics between countries. Standardizing trade procedures at the border and along value chains would provide a major boost to commerce in developing countries, he noted. Eliminating this type of red tape and implementing a trade facilitation agreement is one of the WTO’s top priorities that the UNCTAD mandate supports.

While several issues still remain unresolved the high-level discussions that UNCTAD raise about them at its summit last week were important in their own right. Perhaps the most pivotal question going forward is how far UNCTAD in collaboration with other international bodies will go towards building an equitable, inclusive agenda for global development.

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About the author

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Naki B. Mendozamfbmendoza

Naki is a reporter for Devex Impact based in Washington, D.C., where he covers the intersection of business and international development. Prior to Devex he was a Latin America reporter for Energy Intelligence covering corporate investments and political risks in the region’s energy sector. His previous assignments abroad have posted him throughout Europe, South America and Australia.


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