UNEQUAL BENEFITS OF GLOBALIZATION, NEED TO IMPLEMENT DEVELOPMENT FINANCING COMMITMENTS FOCUS OF SECOND COMMITTEE DEBATE

Fifty-eighth General Assembly

Second Committee

32^nd & 33^rd Meeting (AM & PM)

UNEQUAL BENEFITS OF GLOBALIZATION, NEED TO IMPLEMENT DEVELOPMENT

FINANCING COMMITMENTS FOCUS OF SECOND COMMITTEE DEBATE

Member States stressed the unequal benefits of globalization and the urgent need to implement commitments made at the 2002 Monterrey International Conference on Financing for Development, as the Second Committee (Economic and Financial) focused on those topics in two meetings today.

Pakistan’s representative noted that globalization had yielded benefits for only a small part of mankind –- the part that could do without them –- at the expense of the larger expanse of humanity that could not.  It had boosted economic growth, expanded global trade, increased investment flows and connected regions and peoples.  But it had also increased the digital divide, widened income inequalities and concentrated economic power in the hands of a few.

Similarly, Morocco’s delegate, speaking on behalf of the “Group of 77” developing countries and China, highlighted the failure of trade liberalization to yield universal social and economic benefits, the unresolved debt burden, inadequate official development assistance (ODA), and the lack of international attention for commodity problems.  He also underscored the need to repair damage from recurrent financial crises in emerging economies, ease trading tensions and narrow income and technology gaps.

He added that fears about the effectiveness of global economic institutions had been growing, and the recent failure at the Cancun World Trade Organization (WTO) talks had done little to relieve them.  The international community must address asymmetries in international finance, trade, technology and investment patterns that were having a negative effect on development.

Other speakers noted that, while global trade and investment may have risen, the share of least developed countries (LDCs) in world exports had remained under 0.04 per cent.  In addition, trading sectors of particular interest to developing countries, such as textiles and agriculture, were being liberalized at a slower pace than those benefiting developed countries, such as information technology and telecommunications.

Anwarul Chowdhury, Under-Secretary-General and High Representative for the Least Developed Countries, Landlocked Developing Countries and Small Island Developing States, said globalization had left LDCs particularly vulnerable to external events, bearing the main brunt of the global economic downturn, despite wide-ranging efforts they had made to reform their domestic policies.  Their best efforts to improve investment climates in their countries and attract larger flows of foreign direct investment were insufficient without support from their development partners.

Introducing his summary of the recent High-level Dialogue on Financing for Development, General Assembly President Julian Hunte (Saint Lucia) said participants had stressed the need for increased efforts to implement the Conference’s outcome, the Monterrey Consensus.  They called on States to submit progress reports on commitments to mobilize resources, increase ODA and private capital, create fair trading rules, reduce external debt and improve economic governance.

Speaking on behalf of the Rio Group, Peru’s representative urged the international community to draw developing countries into global decision-making, increase transparency in the international monetary and financial systems, and move resources towards development and democratic governance.  The international community must also combat asymmetric trade relations, implement strong social policies, and reform the international financial architecture into an authentic multilateral system.

Other speakers echoed the appeal for a fair and predictable multilateral trading system, calling on developed countries to open up their markets to exports from developing countries, eliminate customs tariffs and reduce agricultural subsidies.  States must also redouble their efforts to eliminate external debt and increase ODA, which had increased in real terms by a mere 5 per cent in 2002, compared to 2001, reaching no more than $57 billion.  That figure was far below the needs of developing countries, in general, and least developing countries, in particular.

Also speaking were the representatives of Italy (on behalf of the European Union), Malaysia, Russian Federation, Bahrain, San Marino, India, China, Saint Kitts and Nevis (on behalf of the Caribbean Community (CARICOM)), Suriname, Armenia, Iran, Thailand, Azerbaijan, Indonesia, United States, Norway and Mexico.

A representative of the Financing for Development Office of the Department of Economic and Social Affairs also spoke, as did a representative of the United Nations Industrial Development Organization (UNIDO).

The Committee will meet again at 10 a.m. on Wednesday, 12 November, to conclude its discussion of follow-up to the International Conference on Financing for Development.

Background

The Second Committee (Economic and Financial) met this morning to continue its discussion of globalization and interdependence.  (For background information see Press Release GA/EF/3064.)  It was also expected to take up its item on follow-up to the International Conference on Financing for Development.

Before the Committee was a report of the Secretary-General on implementation of and follow-up to commitments and agreements made at the International Conference on Financing for Development (document A/58/216), which highlights progress in implementing commitments laid down in the 2002 Monterrey Consensus, focusing mainly on domestic and international financial resources, trade, aid and debt relief.

The report notes that most countries have begun to mobilize domestic financial resources for development, while insufficient political will or special interests have slowed down reforms in some.  In several countries, natural disasters, serious disease, social unrest, and armed conflict, especially in sub-Saharan Africa, have hampered efforts to focus on long-term concerns.  Also, the international community has offered less support than expected, and attention has focused on short-term policies or on coping with the uncertain global economic outlook.

Internationally, private capital flows -– inflows and outflows of foreign direct investment (FDI), portfolio investment and international commercial bank lending -– dropped significantly from 1997 to 2001, with only a small increase in 2002, the report says.  Foreign direct investment, the only positive net source of private foreign finance to developing countries for several years, declined sharply from $145 billion in 2001 to $110 billion in 2002.  In transition economies, FDI and foreign portfolio investment have remained positive and relatively stable, while banking and other private flows have been volatile.

Developing countries have benefited over the past decade from increased world trade, the report states, with their share of world exports exceeding 30 per cent in 2001.  However, many countries have remained marginalized, with exports concentrated in products of low domestic value-added and technology content.  Several are also hindered by importing-country export barriers, volatile external trade earnings and external trade-related shocks.

Regarding aid, the report notes progress on three major fronts –- focusing aid to enhance its effectiveness, increased aid efficiency through greater harmonization and coherence, and overall aid volume.  As for external debt, it observes difficulties in reaching sustainable debt, especially in a world economy subject to economic shocks.  In addition, several countries are faring poorly in the Heavily Indebted Poor Countries (HIPC) Debt Initiative and debt for some is worsening due to low commodity prices and export receipts.

The report recommends that developing countries implement reforms to guard against volatility in financial and commodity markets, as well as episodes of slow growth or recession.  They should also strengthen supervision and regulation of their banking systems and integrate investment frameworks with national policies to ensure economic growth, tackle market and institutional weaknesses and enhance local capabilities.

In the area of trade, market access for developing country exports should be increased, agricultural subsidies reduced and export subsidies eliminated, the report states.  The international community should also fully and promptly implement Monterrey commitments to increase aid flows and assist heavily indebted poor countries to achieve sustainable debt, using additional contributions by donors and creditors.

Noting that surveillance is the chief global mechanism for reviewing the macroeconomic polices of all International Monetary Fund (IMF) member countries, the report also recommends further tailoring of surveillance priorities to make them compatible with individual country needs and capacities.  International financial institutions should also develop loan facilities and credit lines to better address the range of balance-of-payment financing needs faced by countries in different economic circumstances.

Also before the Committee was a summary by the President of the Economic and Social Council of the special high-level meeting of the Council with the Bretton Woods institutions and the World Trade Organization (New York, 14 April 2003), which calls on Member States to step up monitoring of national and international implementation of the Monterrey Consensus, as well as efforts to ensure the timely completion of the Doha development round.  The summary (document A/58/77-E/2003/62) also underscores the need for enhanced debt sustainability on the part of low-income countries, new mechanisms for orderly debt workouts involving multi-stakeholder participation and a greater say for developing countries in the decision of international financial institutions.

In the report’s first addendum, a summary of the hearings and dialogue of the Economic and Social Council with members of civil society (New York, 20 March 2003) (document A/58/77/Add.1-E/2003/62/Add.1), the Council President makes note of its public hearings and dialogues with representatives of non-governmental organizations on the financing for development process held in preparation for the special high-level meeting.  The hearings featured panel discussions on external debt, international trade, global governance reform, the Millennium Development Goals, official development assistance (ODA) and policy coherence.

The second addendum, a summary of the hearings and dialogue of the Economic and Social Council with business interlocutors (New York, 21 March 2003) (document A/58/77/Add.2-E/2003/62/Add.2), notes the Council’s morning session with the business community to identify and eliminate obstacles to private investment; improve information, analysis and communication of country opportunities; develop risk and investment transaction services; improve developing-country access to long-term infrastructure development financing; and create public-private sector partnerships to implement the Monterrey Consensus.  In the afternoon, business interlocutors gave progress reports on initiatives and projects launched at the Monterrey Conference, as well as relevant new ventures.

Also before the Committee was a report of the Economic and Social Council (document A/58/3, Part 1 and II).  Part I details the Council’s 2003 organizational and substantive sessions, which includes consideration of United Nations operational activities for international development cooperation, implementation of and follow-up to major United Nations conferences and summits, and preparations for an international meeting to review the Programme of Action for the Sustainable Development of Small Island Developing States.

Part I also recounts the high-level segment of the Council’s substantive session in June on promoting an integrated approach to rural development in developing countries for poverty eradication and sustainable development.  Part II recounts various segments of the July substantive session.

Introduction of Report

JULIAN HUNTE, President of the fifty-eighth session of the General Assembly, introduced the Summary by the President of the General Assembly of the High-level Dialogue on Financing for Development (document A/C.1/58/L.58/555).  More than 190 governments, 35 intergovernmental organizations and 50 civil society stakeholders held a frank and open dialogue on implementation of the Monterrey process thus far.  For the first time ever, the presidents of the World Bank and the IMF had addressed the Assembly’s plenary session.

Participants welcomed the progress made, but said much more must be done, particularly concerning international trade and financial transfers, he said.  Many participants called for Member States to submit progress reports on the implementation of the Monterrey commitments and the Millennium Development Goals as they related to mobilizing resources, ODA, private capital for development, creating fair trading rules, easing the external debt burden of developing countries, improving economic governance and staying engaged on the matter.

Statements

HASSAN ABOUTAHIR (Morocco), speaking on behalf of the "Group of 77" developing countries and China, noted that the benefits of globalization were unevenly distributed between developed and developing countries, pointing to the continued need for an international economic environment that was supportive of development.  Trade liberalization had failed to yield universal social and economic benefits, the debt burden remained unresolved, ODA fell short of internationally set objectives, and commodity problems lacked the international attention they deserved.  The international economic environment was less conducive to development than ever.

He said that the absence of a global coordinated approach had not helped repair the damage from recurrent financial crises in emerging economies, tensions in the trading system and widening income and technology gaps.  Fears about the effectiveness of global economic institutions had been growing and the recent failure at the Cancun WTO talks had done little to relieve anxiety about the international trading and financial systems.  The international community must address asymmetries in international finance, trade, technology and investment patterns that were having a negative effect on development prospects for developing countries.

ANTONIO BERNARDINI (Italy), speaking on behalf of the European Union, said the growing intensity of worldwide interconnection had created unprecedented prospects for development.  Unsatisfactory levels of foreign direct investment, gradual recovery after the 2001 slowdown, and risks of oscillations in trade liberalizations were all cyclical difficulties that might have an impact on globalization, but did not seem able to reverse its process.  If globalization could not be made to work for the poor and to prevent environmental degradation, all would suffer the consequences.

He said that during hard times, the need for better management of globalization became particularly urgent.  The European Union supported the Secretary-General’s comments on the idea of a more efficient “network of global, regional and national institutions”.  As a global actor with the ability to improve the lives of people far beyond the borders of Europe, the European Union recognized its unique potential to play a leading role in ensuring that globalization also worked for the poor and without detriment to the environment.

As many of the issues raised in the Secretary-General’s report had been addressed under other agenda items, he said, it would be a mistake to ignore or underestimate the social, cultural and environmental implications of globalization and emphasize only its economic aspects.  Migration was an important aspect of globalization and its impact on the economic situation in the countries of origin and destination was substantial and multifaceted.

ANISA ZEB TAHIRKHELI (Pakistan) said globalization had enhanced economic growth and expanded international trade, as well as global investment flows.  Driven by information and communication technologies, it had also connected regions and peoples.  However, it had also marginalized some of the less developed societies, increasing the digital divide, as well as income inequalities, and concentrating economic power through mega-mergers.  Increased trade and investment flows had bypassed the majority of developing countries and the share of the least developed countries in world exports had remained under 0.04 per cent.  Areas of trade that were of particular interest to developing countries, such as textiles, agriculture and the movement of people were being liberalized at a slower pace than sectors benefiting developed countries, such as information technology and telecommunications.

She emphasized that if globalization was to work for all, the economic, financial and social challenges confronting humanity would have to be addressed coherently, and developing countries properly integrated into the global economic system.  Developed countries must open up their markets to cross-border flows of goods, technology, capital, information and people.  Resolving the unsustainable debt burden, filling capacity and resource gaps, and enhancing the participation of developing countries in global decision-making were essential for development.  Globalization had produced benefits for only a small part of mankind –- the part that could do without them –- at the expense of the large expanse of humanity that needed them.

RADZI ABDUL RAHMAN (Malaysia) said his country continued to be deeply concerned with the negative impact of unfettered globalization on the economies of developing countries.  The Asian financial crisis was a stark example of the need for checks and balances and the proper management of trade liberalization to ensure that globalization was a win-win situation, its benefits reaching everyone, particularly in developing countries.  That had not been the case thus far.

During a conference in February, he said, heads of State and government of the Non-Aligned Movement had pointed to the continued marginalization of developing countries from globalization’s benefits and the persistent economic gaps between developed and developing countries.  Developed countries still faced barriers to markets, capital and technology and grappled with the structural transformations needed to integrate effectively into the world economy.  Developing countries clearly needed greater assistance to build economic, technological, trade, industrial and institutional capacities.

ANDREI KONDAKOV (Russian Federation) said regional integration was instrumental in making global trade mechanisms effective.  The Russian Federation, Belarus, Kazakhstan and Ukraine -- whose economies accounted for 90 per cent of gross domestic product and trade in the Commonwealth of Independent States (CIS) -- had recently formed the Common Economic Space, intended to further integrate CIS territory.  The private sector was also instrumental in making globalization contribute to the development agenda.

In that regard, he said, the United Nations was the most appropriate forum for forming partnerships with the private sector to ensure that joint efforts were transparent, well balanced and in line with the Organization’s objectives.  Poverty-eradication, improved living standards and greater social security could only be achieved through national and international integration of economic, financial, trade and social policies.

MARCO BALAREZO (Peru), speaking on behalf of the Rio Group, said that many developing countries continued to be marginalized from the benefits of globalization and interdependence.  Even when some countries had made progress in adapting to changes, differences in technologies and incomes had increased between developed and developing countries.  Promoting development in the globalization context meant amending inequalities in financial and commercial regimes that were negatively affecting developing countries.  The international community should offer opportunities to all countries, particularly the poorest ones, so they could benefit equally from globalization.

In correcting inequalities, he said, the international community must draw developing countries into global decision-making, increase transparency in the international monetary and financial systems, adopt effective measures to move resources towards development and democratic governance and improve coherence between international economic and development policies.  It must also combat asymmetric trade relations, implement strong social policies, and reform the international financial architecture into an authentic multilateral system.

ASAF AL-SAIE (Bahrain) said many developing countries had capitalized on globalization’s benefits through the use of information and communication technologies.  However, many people in those same countries were cut off from many of the benefits that resulted from freer investment and financial flows.  Good political and economic governance, as well as democratic and transparent strategies were needed.  The international community must support domestic sustainable development efforts by reducing tariffs and customs duties.

Bahrain had created a national development strategy to address socio-economic ills that involved government, private sector and civil society stakeholders, she said.  Moreover, women had been given constitutional rights and many were now running for political office.  Civil society institutions had been improved, and last year, a civil court had been created by constitutional decree.  Bahrain had transformed into a centre for regional investment and trade.

DANIELE DAMASO BODINI (San Marino) said that local communities and governments must make the necessary adjustments demanded by globalization, focusing on their particular strengths and assets to become economically sound.  San Marino, which had limited land and resources, had focused first on agriculture, then on craftsmanship and only lately on tourism and services, which made up 60 per cent of its gross domestic product.  Only when each country took responsibility for its own destiny could international organizations provide credible and sustainable assistance.

However, she noted, developed countries must assist developing countries in making a successful transition to development, which should be staged over several years.  Along with international organizations, they should also encourage developing countries to focus on specific niches in business and trade where they had an obvious competitive advantage.  That process should be partially financed by developed countries and monitored by international organizations.

P.R. DASMUNSI (India) said that while increased trade and liberalization had been the cornerstone of globalization, that process had produced unequal returns.  While, some developing countries had, in fact, achieved high growth rates, many traded less than they did 20 years ago.  The challenge today was to make globalization universally beneficial.  Many countries experiencing low growth rates were instituting policy reforms, but without external assistance, such reforms were not sustainable.  Export-oriented growth was not sustainable in the long-term without aggressive, well-planned and well-financed programmes for poverty eradication and infrastructure development, particularly in energy and transport.  India’s goal of 7 per cent average annual growth by 2007 was predicated on its ability to capitalize on globalizations’ positive aspects.

He said the international community must demonstrate the political will to make good on commitments set forth at Doha, Monterrey and Johannesburg, regarding fiscal discipline, expenditure and finance management, non-inflationary price control mechanisms and comprehensive programmes for disaster management, reproductive health care, literacy and housing.  Global interdependence would remain a utopian ideal, unless resources, technology and the fruits of scientific research were shared equitably.

IRENE FREUDENSCHUSS-REICHL, Industrial Development Organization (UNIDO) noted that globalization had helped some regions to integrate into global markets, including countries in South-East Asia, and that it had assisted in combating poverty in some areas.  However, it had also neglected a wide section of the world’s population.  Even in countries where globalization had brought increased wealth, that had often been accompanied by adverse conditions.  The effects of globalization were spread unevenly and several countries were unprepared for technological advances or the economic volatility of a globalized world. 

Despite the increased level of trade and investment that globalization had brought, she said, the least developed countries had been further marginalized with respect to the FDI, receiving only 0.44 per cent of the world total.  For globalization to reach the poor, efforts must be made to address structural constraints, prioritize development in international institutions, change reform programmes in developing countries, and advance the multilateral trade agenda.  Developed countries and international organizations should launch initiatives to meet those needs.

ZHANG YISHAN (China) said that while globalization had increased the links and interdependence among countries, its benefits were unevenly distributed, widening the gap between the North and the South and between the rich and the poor.  The challenge was not globalization itself, but rather how to secure common development and achieve worldwide justice and equality.  There was, therefore, an urgent need for the international community to come up with a well-coordinated and functioning globalization management strategy, which should include reform of the global economic system, and the establishment of open, equitable, rule-based, predictable and non-discriminatory multilateral trading.

He said that as agricultural subsidies in developed countries amounted to more than five times the level of their ODA, the international community should take resolute actions to open markets to goods from developing countries.  It was also imperative to promote throughout the world the progress of science and technology and narrow the digital divide.  The international community should provide assistance to developing countries in the field of science, technology and information, coordinate actions at the global, regional and national levels and create “digital opportunities”, so as to enable developing countries to catch up with the new round of technological progress and ensure that information technology did indeed contribute to development.

CARLISLE RICHARDSON (Saint Kitts and Nevis), speaking on behalf of the Caribbean Community (CARICOM), noted that countries with small, vulnerable developing economies were more exposed to the negative effects of globalization than other countries.  The CARICOM economies had been taking major steps to reduce globalization’s adverse effects by building resilient mechanisms to strengthen their economic competitiveness, pursuing prudent macroeconomic policies and working towards regional integration. 

In addressing the imbalances of globalization, he said, the international community must build an equitable system covering the four main aspects of globalization –- trade, capital movement, movement of people and the spread of knowledge and technology -- to ensure that it became a positive force for all.  In addition, trade, migrant remittances and tourism, three important contributors to economic growth in the Caribbean, had been seriously hampered by global security concerns in the aftermath of 11 September.  The CARICOM would like to work in partnership with Member States in arriving at viable solutions to those issues. 

TERRY SHAMEEN (Suriname) underscored the importance of the United Nations Global Compact, which aimed to achieve a partnership for development between developed and developing countries on the basis of shared responsibilities, mutual commitment, economic growth, poverty reduction and sustainable development promotion.  In economic development and world trade, the views of developing countries were often ignored as a select group of developed countries controlled decision-making.  An equitable and fair trading system was needed to address the development agenda’s many challenges.

Poverty and inequality were the root causes of war and conflict, refugee movements, human rights violations, international crime, illegal drug trafficking, the HIV/AIDS pandemic and environmental degradation, he said.  Developing countries were struggling to achieve the Millennium Development Goals by 2015.  Greater national and international efforts were needed in that regard, and Suriname was doing its part in collaboration with the United Nations Development Programme (UNDP), United Nations Children's Fund (UNICEF) and the World Health Organization (WHO).

ARMEN MARTIROSYAN (Armenia) said globalization could be effective in combating poverty but did not always work as an effective tool for development.  Development was a shared responsibility and developed nations must increase development assistance, open up their markets and tackle subsidies, while developing countries had committed themselves to strengthening their capacities and improving their institutions.

In resolving the development dilemma, he said, it was first necessary to oppose developed-country protectionism, which blocked the integration of developing countries into the global economy.  It was also necessary to build up institutions and promote the spread of knowledge, which had become one of the insistent needs of post-industrial society.

NASROLLAH KAZEMI KAMYAB (Iran) noted the overall decline in both trade and capital flows in the last two years.  World trade had declined to well below the levels of the 1990s.  Global capital flows had also fallen dramatically and several countries had posted negative inward flows.  FDI, a major source of external financing for developing countries, fell 50 per cent in 2001 and another 25 per cent in 2002, while portfolio flows and commercial bank loan flows turned negative.  Those developments occurred at the same time as interest rates in developed countries hit historic lows, FDI remained highly concentrated in a small number of countries, and many developing countries were shut out of the financial and trading systems.  The advent of information and communication technologies had fostered economic growth, sustainable development and poverty eradication in some nations.  However, for many low-income countries, information and communication technology (ICT) access remained out of reach. 

International partnerships among governments, international organizations and institutions, regional groups, civil society and the private sector were the only viable means to extend globalization’s benefits to marginalized developing countries, he continued.  Moreover, the institutional capacities of international organizations and bodies must be strengthened to promote good global governance.  He also called for international forums for technological innovations and for setting priorities on ICT research and development. 

KITIRAT PANUPONG (Thailand) said his country’s development strategy looked for the best balance between domestic and foreign sources of growth.  The government had adopted a people-centred development approach, a dual-track policy to attract FDI and increase exports on the one hand, and to strengthen the grass-roots economy and the productive sector on the other.  The attempt had been successful and Thailand had achieved its best economic performance since the aftermath of the Asian financial crisis.

He stressed that capacity-building was a key emphasis in the Thai Government’s call for the innovative interaction of information technology with domestic resources and traditional knowledge as a new avenue to promote development and provide new sources of income.  Modern technology stimulated domestic production at all levels, including the grass roots.  However, the current speed of global technological and economic transformation required urgent global action to turn the current digital divide into digital opportunities for all.

Ms. SAHAKOV (Azerbaijan) said when forming trade policies and programmes, countries should fully take into account national strategies for development, poverty reduction and good governance.  Comprehensive efforts were needed on the supply side so that the poor could reach global markets.  Globalization and trade liberalization were not just about technology flows and cheaper imports, but also about socio-economic development and poverty eradication.  The advent of information and communication technologies and the sharing of knowledge, expertise and production methods constituted added value for developing countries. 

Human development also required environmental sustainability, she continued, calling on States to implement the Helsinki and Basel Conventions to curb transboundary pollution.  She also called for the development of transport infrastructure to move hydrocarbon resources, which could lead to a diverse regional supply chain.  The international community must take further steps to address the concerns and needs of developing countries in market access, implementation of the Millennium Development Goals, stamping out transnational organized crime and combating terrorism.

DARMANSJAH DJUMALA (Indonesia) said acts of good faith and assurances to implement commitments made at recent major United Nations conferences and summits were critical to improving globalization’s impact on the world.  Developing countries needed an additional $50 billion annually for development to meet the Millennium Development Goals by 2015.  He urged developed nations to increase ODA to the internationally agreed level of 0.7 per cent of gross domestic product, write off developed countries’ unsustainable debt, provide transnational corporations with incentives to invest in the developing world, and remove trade barriers.

Global challenges such as bridging the digital divide, ending transnational organized crime and corruption, and protecting the environment and the rights of migrants required immediate and comprehensive action, he continued.  In that regard, he underscored the importance of the World Summit on the Information Society to promote technology transfer and access in developing countries, the adoption of the Convention against Corruption, the convening of a global conference on international migration, and the full implementation of the outcomes of the World Summit on Sustainable Development.

The Committee then turned to its agenda item on follow-up to the International Conference on Financing for Development.

Introductory Statements

ANWARUL CHOWDHURY, Under-Secretary-General and High Representative for the Least Developed Countries, Landlocked Developing Countries and Small Island Developing States, said the recent High-Level Dialogue on Financing for Development had concluded that the projected rate of implementation did not augur well for achieving commitments laid down at the 2002 International Conference on Financing for Development.  With globalization expanding, least developed countries had remained particularly vulnerable to external events, bearing the main brunt of the global economic downturn, despite wide-ranging efforts they had made to reform their domestic policies.

The High-Level Dialogue on Financing for Development had noted that stringent rules of origin, complex documentary procedures and other practices had reduced the extent to which least developed countries (LDCs) could use preferential schemes; current ODA levels were still well below those needed to achieve the Millennium Goals; the majority of developing countries, particularly LDCs, did not share the benefits of FDI flows; and that the delay in providing adequate debt relief for heavily indebted poor countries was further handicapping LDCs.

Even the best efforts of LDCs to improve investment climates in their countries and attract larger flows of FDI were insufficient without support from their development partners, he added.  In the present international economic climate, which made it doubly difficult for those countries to attract FDI, their reliance on ODA gained greater importance in their development efforts.

OSCAR DE ROJAS, Acting Head of the Financing for Development Office of the Department of Economic and Social Affairs, said his office served as the focal point in the United Nations Secretariat for overall follow-up to implementation of the Monterrey Conference; provided Secretariat support to the intergovernmental process; facilitated stakeholder participation; closely followed issues and policies related to international economic, financial and development cooperation; and reviewed actions at all levels.  Despite its modest level of staffing, the office had fulfilled its responsibilities.  However, it had not been easy.

He called on Member States to support consolidation of the office in both political and budgetary terms, and to increase funding to the Secretary-General’s Financing for Development extrabudgetary trust fund, which enabled the office to sponsor seminars and study groups, as well as to support participation of delegates and civil society representatives in relevant events.  He also called on delegations to inform his office of their areas of priority.  Concerning the United Nations Secretariat’s participation in the International Tax Dialogue, he said that, to take part in the initiative, it would cost the United Nations $20,000 to fund infrastructure support.  The Secretariat’s proposal to participate as a non-paying “observer” had been rejected.  He called for guidance on that matter.

ABDELLAH BENMELLOUK (Morocco), speaking on behalf of the Group of 77 and China, said the international community must satisfy the legitimate demands of developing countries for a fair and predictable multilateral trading system.  Developed countries must open their markets to exports from developing countries, by eliminating customs tariffs and reducing agricultural subsidies.  States must also redouble their efforts to increase ODA, which was a vital financial source in implementing economic and social policies.  The flow of ODA had increased in real terms by a mere 5 per cent in 2002, compared to 2001, reaching no more than $57 billion.  That figure was far below the needs of developing countries in general, and LDCs in particular.

A genuine economic take-off could not occur without cancelling or relieving external debt, he continued.  Reducing the debt burden would allow countries to optimize their financial resources in attaining growth and sustainable development.  The Heavily Indebted Poor Countries (HIPC) Debt Initiative must be more flexible in helping concerned countries with the difficulties they faced.  The international community must assist with those difficulties, and reduce the effect the unstable world economy had on foreign debt.

ANTONIO BERNARDINI (Italy), speaking on behalf of the European Union, said the United Nations engagement with the Bretton Woods institutions, the intensive dialogue concerning implementation of the Monterrey Consensus, and the participation of the WTO in the financing for development process were strong signs of a continuing fruitful partnership.  The participation of civil society and the business sector in the recent High-level Dialogue was a step in the right direction and must be strengthened in the future. 

The unresolved question of debt needed continued attention in relevant forums, he continued.  The European Union widely supported the HIPC Debt Initiative and intended to provide 100 per cent bilateral pre-COD (Cut-off Date) debt relief for all claims of HIPC countries.  He urged all creditors and donors to follow suit.  The European Union was poised to discuss with the Bretton Woods institutions and other donors the prospects of changing the method used to calculate the topping requirement at the completion point for HIPC countries with unsustainable debts resulting from severe exogenous shocks.  The Union was open to discussing other steps to fill the financing gap, while sharing the burden evenly. 

MARCO BALAREZO (Peru), speaking for the Rio Group, said his Group had made progress on national commitments agreed on in Monterrey.  They were strengthening governance and participation, laying down sound macroeconomic policies, developing and strengthening their domestic financial systems, and attempting to enhance their infrastructures, social services and social protection.  Latin America had done its part, but lacked the appropriate external environment or adequate resources to finance its development.

Stressing the need to resolve the external debt problem, he acknowledged the importance of continued proposals of the United Nations for a lasting solution within the framework of the financing for development process.  Considering the importance of stable international economic conditions for sustained development and economic growth, it was also essential that surveillance of the macroeconomic policies of all IMF member countries be as effective as possible, and compatible with individual country needs and capacities.  Surveillance should pay special attention to the policies of States that had a greater influence on the international economy.

SICHAN SIV (United States) said the Financing for Development Secretariat should be strengthened to better coordinate the United Nations’ Monterrey Consensus follow-up efforts.  In that regard, he proposed organizing workshops and multi-stakeholder consultations with government, private sector, academic and civil society experts to look at hold-ups in resource mobilization for international development and poverty alleviation.  He also proposed the creation of a public-private sector process to stimulate private investment and financing by mitigating risk at the margin, as well as holding side events during the General Assembly plenary session to showcase success stories in implementing the Monterrey Consensus. 

The United Nations should fully support, not replicate, initiatives of other multilateral organizations to foster and facilitate dialogue on specific issues such as debt and tax matters, including the International Tax Dialogue of the Organisation for Economic Cooperation and Development (OECD).  The United States’ commitment to the Monterrey Consensus was steadfast.  Its Millennium Challenge Account gave developing countries an incentive to improve policies and practices, and would help them bolster legal systems and finance investments in health, education and agriculture.  The Account would increase the United States’ core development assistance by 50 per cent in the next three years.

JOHAN LOVALD (Norway), stressing that trade was at the centre of financing for development, said improved access for goods and services from developing countries to markets in the North was a vital part of the Doha Agenda.  Developing countries would also benefit from increased South-South trade.  In addition, developed and developing countries had a common interest in a strong, rules-based,multilateral trading system.  Undermining and fragmenting the system by shifting towards bilateral and regional trade agreements would benefit no one.

The most important challenge of the Doha Agenda was to lay down rules that were relevant to all members, regardless of their level of development, he continued.  The overall aim must be to allow developing countries to benefit fully from a common set of trade rules that protected against discrimination and “the law of the jungle”.  Formal market access was insufficient, however, and must be supplemented with technical assistance and capacity-building.

CARLOS VALERA (Mexico) called for an appraisal of implementation thus far of the Monterrey Consensus.  Among developing countries’ main concerns during the High-level Dialogue was the need for substantive progress in international trade negotiations and implementation of the Doha Agenda.  In that regard, he called on all Member States to strengthen trade liberalization, and on members of the WTO to live up to their Doha commitments and initiate a constructive, open dialogue during the forthcoming trade round in Geneva. 

Follow-up of the High-level Dialogue on Financing for Development must focus on monitoring and promoting alliances to implement agreements made at the Monterrey Conference, he continued.  He also supported the proposal to have States regularly report on their progress in implementing the Monterrey Consensus, as well as the creation, during this session, of a work programme involving all relevant actors, to measure and revise progress, identify problems and priorities, and effectively implement commitments made.

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