Neven Mimica backs 'strong and comprehensive' Addis agenda

For Neven Mimica, “one paragraph on tax coordination” was the only major sticking point that created a few tense days of heated negotiation in Addis Ababa, Ethiopia. Indeed, disagreement over the creation of an intergovernmental tax body that would enforce tax evasion and avoidance standards had threatened to derail negotiations and result in the third International Conference on Financing for Development ending with no final outcome document in place. But for the European commissioner for international cooperation and development, even this was not “a major point of difference.” Mimica stressed that participants and partners in the negotiations came to Addis not to debate the creation of an intergovernmental tax body but to discuss ways to “make the U.N. tax committee more effective.” In an exclusive interview with Devex on the sidelines of last month’s #FFD3 conference, Mimica gave the inside track on the ups and downs of the negotiations, as well as the road ahead and the role the EU in this context. Here are some highlights from that conversation: In a week of ups and downs, and ebbs and flows, what was your key conference moment in Addis? We came to Addis with a firm determination to reach an agreement on the very important means of implementation of the financing for development agenda. This was eventually possible and has been done in a spirit of real cooperation and partnership among all participants in this negotiating process. Of course, there were moments here in Addis when some of the issues that had already been agreed upon in earlier drafts in New York were brought back to the negotiating table. However, in my view, these discussions never reached a level where the overall outcome and impact of the action agenda may have been jeopardized. So I feel we have managed to agree on a very strong and coherent document that will determine not only the future financing for development agenda, but also the post-2015 sustainable development goals agenda. ... For me, the true value of the Addis agenda is in its comprehensiveness. We must not single out any given element, any paragraph, any piece of language in order to measure its success or failure. The document must be seen in its entirety, as a comprehensive and integrated package of aid, investments, domestic resources and good policies. We cannot even say what is more important among these four elements. Maybe [official development assistance] is the least prominent among the financing instruments mentioned, but that it is because the agenda aims at strengthening private investments and domestic contributions, which can go way beyond the financial volume provided through ODA. In any case, it is not only about financing mechanisms but about the synergy of financing means and good policies that are expected to emerge from this agenda. We came here to Addis — all of us — with an almost agreed agenda. There were no brackets in the draft outcome document at all, so no single issue was so controversial that it required in-depth review or negotiations. Therefore, for me, Addis was a confirmation of the international community’s readiness to take the development agenda forward to a new — a very new — level. You didn’t feel like you've been put in a difficult situation at certain points in terms of negotiations, whether from EU member states or the Group of 77 developing countries? Are there any obstacles that you’ve had to overcome in Addis? Actually, the major — if not only — issue that was subject to last-minute negotiations was a paragraph on tax coordination, and even this was discussed before in New York. We came here with — in my view — quite clear and strong language on strengthening the U.N. technical tax committee and making it more effective in its deliberations and discussions on a better tax coordination at global level. We all recognize that to “collect more and spend better” is an important part of the financing for development agenda and that we have to enhance global discussions on how to work together to get fairer and more transparent taxation systems. What we actually discussed was whether to add some additional language on an already agreed text. But this was not, for me, a major point of difference between the G-77 and other participants and partners in the negotiations. We just wanted to find the appropriate language along the lines of strengthening the rolling contribution of a U.N. technical tax committee. ... I am aware that some expected this conference to at least show the way toward upgrading the tax committee into an intergovernmental body, or even up to the level of international taxation organization. But this has never been tabled as part of the discussion for this Addis agenda. What was on the table — and what we discussed — was how to make the U.N. tax committee more effective. ... In my view it is better to improve the process of international cooperation on tax matters, rather than deciding on something that — by definition — cannot work right now. It is a more effective way of contributing to what is a long-term and complex process. As you mention, many civil society organizations we’ve spoken to in Addis — not all, but many —have been disappointed with the outcome of negotiations on the issue of taxation. What steps will the EU Commission take, together with the U.N. family, to ensure that issues such as illicit financial flows and tax revenues are really got to grips with in the forthcoming period? Is there any heightened sense of urgency now than there was before Addis? As I also mentioned, I would avoid trying to single out certain parts of the agenda in order to take it as a measure of success or failure. The taxation matter is not a weak point of this agenda. In fact, it is a very strong point — from my point of view, the agenda is much weaker on ODA commitments by all developed and emerging donors. ... Despite the EU recommitment? Yes, actually we are the only ones with a commitment or recommitment to 0.7 percent [of gross national income] and there was almost nothing else in terms of commitment. However, the recognition of the new role and the new, more strategic approach to ODA is there, and this is very important: ODA, taxation or domestic resources and the partnership with the private sector should not be singled out, but seen as part of a comprehensive framework — this is the strength of the agenda. We recognize that the Addis action agenda has really brought taxation and domestic resource mobilization — including better international coordination — to the forefront of global development discussions. And the European Union is definitely resolved to contributing to and promoting fair and transparent taxation both at home in the EU and in development cooperation efforts with our partner countries. The commission has adopted a new approach to fairer, more coordinated and transparent taxation, and the fight against tax avoidance or tax-based erosion. We really are focusing now on strengthening national, income-based taxation systems in the countries where the income has been generated. Our own internal EU taxation and tax coordination policy, promoting fairer and transparent taxation, can serve as a proof of our credibility within the framework of the international taxation coordination that goes on in the [Organization for Economic Cooperation and Development], the G-20, the [International Monetary Fund] and the World Bank. We can only be credible in the promotion of domestic resource mobilization in developing partner countries if we lead by example within our own borders. So the European Union will be more and more engaged and will be a prominent leader for fairer and transparent taxation in the global development arena. But of course on that point, there are many critics are arguing that recent aid cuts in EU member states, such as Finland and Belgium, are actually undermining the EU's reputation as a prominent development aid provider. What’s the key message at home in the European Union and to the external critics? The European Union’s member states and the European Commission were the only ones who committed here in Addis to reaching 0.7 percent of GNI for ODA, within the time frame of the post-2015 agenda. So there is a strong collective commitment, but it also has to be implemented at the level of member states in the period of this post-2015 agenda. There are different levels of capacities at the level of individual member states in meeting these goals, but I would at least be more optimistic with regard to the overall capacity and political determination of the so-called old member states to collectively reach this goal. Yes, there are ups and downs in this process if you look at it from the individual member states level, but our overall ODA contribution continues to grow in absolute terms and in relative terms to GNI: We are now at 0.42 percent, which is double the amount as compared with 10 years ago in absolute terms. ... In spite of all the financial budgetary problems, there is an increase and we are — collectively — on a clear and positive path toward reaching our goals and we will try to agree with the member states to also make it part of their individual trajectories. 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