Sixty-second General Assembly

Second Committee

27^th Meeting (AM)

speakers in Second Committee underscore importance of favourable investment

climate, market access as ways to reduce global economic imbalances

Building favourable investment climates and ensuring market access were among the ways to level global economic imbalances created by the uneven distribution of foreign investment flows, limited market access and stifling competition in the world economy, several speakers told the Second Committee (Economic and Financial) this morning.

As the Committee began its general debate on the follow-up to and implementation of the outcome of the International Conference on Financing for Development, Libya’s representative pointed out the uneven distribution of foreign investment flows, which, despite efforts by developing countries, prevented most of them from increasing productivity.  Investment also continued to flow from developing to developed countries, leaving the former vulnerable to external threats, competition and price fluctuations.

He emphasized that international cooperation and priority funding would enable developing countries to cope with difficulties in the areas of reforming financial structures, productive investment, education, training and research.  Since development was driven by trade, it was to be hoped that the Doha negotiations would lead to positive results.  It was also important to overhaul the international financial architecture in order to address global economic imbalances and increase the participation of developing countries in the decision-making of international funding institutions.

Nepal’s representative agreed, emphasizing also the importance of a redefined development partnership that should, among other things, support national efforts to attract foreign investment in developing countries, create a favourable investment climate and reduce the costs of doing business.  Of equal importance was ensuring beneficial market access for the least developed countries and landlocked developing countries, as well as enhancing the efficacy of official development assistance.

External financing played a key role at the present halfway point to the Millennium Development Goals target date, he said.  That role included promoting country ownership and leadership in policy formulation and programme implementation, so as to ensure aid effectiveness and the success of development strategies with a focus on preventing the poorest segment of the international community from being further marginalized in the current wave of globalization and competitiveness.  Nepal’s efforts to create an investment-friendly environment required scaled-up international support and cooperation in order to succeed.

Pakistan’s representative, speaking on behalf of the Group of 77 developing countries and China, said a negotiated outcome to the review of the International Conference on Financing for Development would infuse new life and vigour into the Monterrey process and ensure the outcome was fully owned and shared by everyone.  Last month’s High-level Dialogue on Financing for Development had catalyzed the preparations for a serious and meaningful review of the implementation of the Monterrey Consensus, and the Second Committee’s efforts would delineate a clear road map for future actions, based on lessons learned as well as current and emerging realities.

Peru’s representative highlighted the emerging reality that national resources remained the most important source of financing for sustainable development, based on the principle established in Monterrey that every country was responsible for its own development.  Peru reiterated calls for heightened public and private international resources, and for the application of an operationally effective strategy to increase official development assistance to fund sustainable development, environmental conservation as well as investment in education, science and technology.

That kind of strategy would require new instruments to foster debt for nature swaps, debt for education, debt for science and debt for innovation exchanges and transform them into viable instruments for development, particularly in middle-income countries.  It would also require the provision of equal access to innovative financing and foreign investment for sustainable development and technology transfer.

Also making statements this morning were the representatives of Bangladesh, Qatar, India and the Republic of Korea.

Earlier in the meeting, Oscar de Rojas, Director of the Financing for Development Office in the Department of Economic and Social Affairs, introduced the Secretary-General’s reports on the follow-up to and implementation of the outcome of the International Conference on Financing for Development, and on the high-level dialogue for the implementation of the outcome of the International Conference on Financing for Development.

At the outset of the meeting, the representatives of Pakistan and Portugal introduced, on behalf of the Group of 77 and China and the European Union, respectively, draft resolutions titled, “Training and Research:  United Nations Institute for Training and Research (UNITAR)” and “Towards global partnerships.”

The Committee will meet again at 3 p.m. on Friday 16 November to take action on draft resolutions under its consideration.

Background

The Second Committee (Economic and Financial) met this morning to consider its agenda item on the follow-up to and implementation of the outcome of the International Conference on Financing for Development, including the high-level dialogue for the implementation of the outcome of the International Conference on Financing for Development.  It was also expected to hear the introduction of draft resolutions on global partnerships (document A/C.2/62/L.22) and the United Nations Institute for Training and Research (document A/C.2/62/L.34).

As it took up implementation of the outcome of the International Conference on Financing for Development, the Committee had before it a letter dated 8 October 2007 from the Permanent Representative of Pakistan to the United Nations addressed to the Secretary-General (document A/62/488), which transmits the Ministerial Declaration adopted by the Ministers for Foreign Affairs of the Group of 77 and China at their thirty-first annual meeting, held at United Nations Headquarters on 27 September 2007.  The Declaration reviews international economic developments and activities undertaken in the context of the United Nations development agenda.

Also before the Committee was a letter dated 18 October 2007 from the Permanent Representative of Pakistan to the United Nations addressed to the Secretary-General (document A/62/507-S/2007/636), which transmits the Final Communiqué of the Annual Coordination Meeting of Ministers for Foreign Affairs of the Organization of the Islamic Conference (OIC), held at United Nations Headquarters on 2 October 2007.  The meeting emphasized the central role of the United Nations in strengthening global coordination and cooperation to deal with global challenges and threats, and reaffirmed the determination of the OIC member States to work actively with the Organization in that regard and in accordance with the United Nations Charter.

The Committee also had before it the summary by the President of the Economic and Social Council of the special high-level meeting of the Council with the Bretton Woods institutions, the World Trade Organization and the United Nations Conference on Trade and Development (New York, 16 April 2007) (documents A/62/76-E/2007/55 and A/62/76/Corr.1-E/2007/55/Corr. 1), which includes summaries of discussions on governance at all levels, developing country participation in international economic decision-making, realizing the Doha Development Agenda, as well as aid effectiveness and innovative financing for development as a critical factor in international cooperation outcomes.

In addition, the Committee had before it the report of the Secretary-General on Follow-up to and implementation of the Monterrey Consensus of the International Conference on Financing for Development (document A/62/190), which contains the input of regional commissions on the regional and interregional aspects of the follow-up to the Conference.

The report reflects progress in relevant areas, including the mobilization of domestic and international resources, official development assistance, technical cooperation, foreign direct investment (FDI) and private financial flows for development.  It also analyzes the regional dimension of issues relevant to improving the coherence of the international monetary, financial and trading systems in support of development, and underlines the critical importance of staying engaged with all major stakeholders, including at the regional level, through continued discussions of issues relevant to the follow-up process. 

Also before the Committee was the report of the Secretary-General on Follow-up to and implementation of the Monterrey Consensus of the International Conference on Financing for Development (document A/62/217), which provides an analytical assessment of the implementation of agreements reached at the 2002 Conference.

According to the report, the evolution of the world economy has improved, but development and growth have been unfairly distributed and there seems to be a growing trend towards a higher concentration of income and wealth.  Prepared with major institutional stakeholders, the report covers the six core areas of the Monterrey Consensus, reviews key intergovernmental and multi-stakeholder activities, and contains policy recommendations calling for action by Member States and other stakeholders in the financing for development follow-up process.

Also before the Committee was a letter dated 4 April 2007 from the Permanent Representative of Spain to the United Nations addressed to the Secretary-General (document A/62/71—E/2007/46), which contains a summary of the proceedings of the Intergovernmental Conference on Middle-Income Countries held in Madrid on 1 and 2 March 2007.  The summary offered 10 conclusions, among them that middle-income countries can possibly go beyond the Millennium Development Goals because their level of progress necessitates working with a more complex and ambitious development agenda.  Among other conclusions:  that the diversity of middle-income countries requires a more precise characterization to provide clearer guidance to donors; that despite this diversity, areas such as democratic governance and international financial markets call for greater cooperation among middle-income countries; and that the Madrid Conference was only the beginning of a process which must be continued, especially regarding the identification of tools for combating poverty in middle-income countries.

Introduction of Draft Resolutions

ASAD KHAN ( Pakistan) introduced on behalf of the Group of 77 and China the draft resolution entitled, “Training and Research:  United Nations Institute for Training and Research” (document A/C.2/62/L.34), saying the group supported the Institute’s goal of being a centre of knowledge.  It also agreed on the need for more predictable and adequate funding for United Nations Institute for Training and Research (UNITAR), as reflected in the draft resolution before the Committee.

VANESSA GOMES ( Portugal) introduced, on behalf of the European Union, the draft resolution titled, “Towards global partnerships” (document A/C.2/62/L.34).

The Committee then began considering follow-up to and implementation of the outcome of the International Conference on Financing for Development.

Introduction of Reports

OSCAR DE ROJAS, Director, Financing for Development Office, Department of Economic and Social Affairs, introduced the reports of the Secretary-General on the follow-up to and implementation of the International Conference on Financing for Development (document A/62/217), and of the Secretary-General on the follow-up to and implementation of the Monterrey Consensus of the International Conference on Financing for Development (document A/62/190).

He said the first report had been presented for the seventh year in a row, in consultation with the Bretton Woods institutions and the United Nations Conference on Trade and Development (UNCTAD).  The second noted that the biggest complaint about the 2007 High-level Dialogue on Financing for Development’s round tables was that delegates did not have sufficient time to discuss issues. 

However, there had been encouraging progress in the preparatory work for the upcoming Doha Conference.  In addition, the appeal made for new contributions to the Financing for Development Trust Fund was appreciated, as such funds were needed to pay for the travel of delegates to the meetings and multi-stakeholder consultations.

Statements

Mr. KHAN (Pakistan), speaking on behalf of the Group of 77 and China, said the draft resolution on the follow-up to and the implementation of the outcome of the International Conference on Financing for Development carried special importance this year in the lead-up to the review of the Monterrey Consensus.  Last month’s High-level Dialogue on Financing for Development had catalyzed preparations for a serious and meaningful review of Monterrey’s implementation, and the Second Committee’s efforts would delineate a clear road map for future actions, based on lessons learned as well as current and emerging realities.

Regarding the upcoming adoption of a procedural resolution on the follow-up, he reiterated that the Group preferred carrying out the review at the summit level, so as to bring much needed political visibility to financing for development, and favoured a combined format of general debate and round tables.  The Group underscored the importance of adopting an inclusive and transparent preparatory process, ensuring active participation by all Member States, and emphasized the relevance of regional inputs for the preparatory process.  The Group strongly favoured a negotiated outcome that facilitated the implementation of the commitments made at the 2002 Conferences, which would infuse new life and vigour into the Monterrey process, and ensure the outcome was fully owned and shared by everyone.

MUHAMMAD ALI SORCAR ( Bangladesh) said developed and developing countries, in a position to do so, should provide unconditional duty- and quota-free market access for all products from the least developed countries.  In addition, the Aid for Trade initiative should be made operational with sufficient funding and without further delay.  It should particularly help the least developed countries address supply-side constraints, and compensate for the erosion of preferences resulting from the most-favoured-nation tariff reduction scheme.

Recently, the Multilateral Debt Relief Initiative (MDRI) and the Heavily Indebted Poor Countries (HIPC) Debt Initiative had yielded some positive results, he said.  However, the overall external debt situation of the least developed countries remained a source of concern, and Bangladesh called for full cancellation of all outstanding bilateral and multilateral debt.  It was also regrettable that official development assistance from Development Assistance Committee countries had declined in 2006 to the 1999 level.  Developed countries must immediately fulfil their commitment to devote 0.2 per cent of their gross domestic product to aid for the least developed countries.

It was important to find new and innovative sources of financing to supplement existing ones, he said, calling also for reform of the governance regime of the Bretton Woods institutions.  Ongoing efforts to double basic votes would not significantly change the distribution of power in those institutions and the final outcome of the voting reallocation must result in a significant increase in the voting power of all least developed countries.  Those countries also supported an effective, open, transparent and inclusive preparatory process for the follow-up Conference on Financing for Development, in which their effective participation would be of critical importance.

AHMED MOHAMMAD ALI AL-ASMAKH ( Qatar) said recent global economic forecasts showed bright prospects for economic growth, but challenges remained, especially to anti-poverty efforts.  The position of developing countries in the world economy had not improved and their efforts to bolster economic development lacked support from the international community.  It was clear that the global market economy had shown great productive capacities, and that, if wisely and soundly managed, it could spur growth and jobs besides alleviating poverty.  But given current realities, the potential for economic growth was far from realization.

Globalization was recognized as an engine for unprecedented wealth among developed countries, but the majority of developing countries could not share those benefits, he said.  Those countries were almost voiceless in defining the features of the process.  Rising economic imbalances had forced an examination of the justice and sustainability of the global financial system and measures were needed to redefine globalization and make it easier for developing countries to join the world market.  Developed countries could not continue to stress their support for development while excluding the developing world from access to world markets.  Instead, developed countries must adopt measures to allow developing countries to participate in the global economy.

SACHIN PILOT ( India) said that despite the significant efforts of developing countries to establish good governance and mobilize domestic resources, support from the international community had lagged far behind.  Official development assistance flows were far below target, debt relief had not led to additional development funds, and private capital flows had not benefited all countries, all while trade distorting agricultural subsidies in developed countries and limited market access continued to have a negative impact on developing countries.  In addition, the restructuring of the international financial architecture had not been adequately addressed.

A comprehensive review of the implementation of the Monterrey Consensus must be undertaken at the Doha Review Conference, he said.  Reform of the Bretton Woods institutions and United Nations oversight of their policies was a way forward.  Regarding official development assistance, aid must assist national efforts and strategies in a predictable and stable manner.  Sustaining high employment levels was also an indispensable element of domestic resource mobilization, while international capital flows must be channelled to sectors with multiplier effects on job generation.  Policy space was needed for the development of counter-cyclical funds and instruments as well as the management of capital flows.  The mobilization of domestic resources also required the development of financial systems that could support the financing of productive domestic industry.

BAEJIN LIM ( Republic of Korea) said that, in the global partnership for development, developing countries had to take primary responsibility for their own development while developed countries provided them with assistance.  Last month’s High-level Dialogue on Financing for Development had provided a valuable exchange of views among diverse stakeholders, and all participants had agreed on the necessity to institutionalize and consolidate dialogue mechanisms between developed and developing countries.  Despite the strenuous efforts of the global community, progress towards reaching official development assistance targets had been rather slow. 

FDI flows were at a seriously low level in low-income countries and those with less stable governance, he said.  Long-term debt sustainability was another significant issue, particularly for the least developed countries.  A demand based approach to development assistance was needed, and donors should take heed of the needs of developing countries.  The Republic of Korea reiterated the importance of consolidating dialogue mechanisms between developed and developing countries, and welcomed continued efforts by the General Assembly to make concrete preparations for the upcoming Doha Review Conference.

GONZALO GUILLEN ( Peru) said national resources remained the most important source of financing for sustainable development, based on the principle established in Monterrey that every country was primarily responsible for its own development.  At the same time, public and private international resources continued to be crucial.  It was important to apply an operationally effective strategy to increase official development assistance in order to fund sustainable development, environmental conservation and investment in education, science and technology.  That would require designing new instruments to foster debt for nature swaps, debt for education, debt for science and debt for innovation exchanges and transform them into viable instruments for development, particularly in middle-income countries.  It would also require supporting communities and national and local governments by providing equal access to innovative financing as well as foreign investment for sustainable development and technology transfer.

He emphasized the importance of strengthening partnerships between developed and developing countries, and of reaching consensus on revitalizing the North-South dialogue in line with the principles of the Monterrey Consensus.  That would require, in turn, strengthening of domestic financial systems, mobilizing international resources, including FDI and private direct investment, for infrastructure as well as South-South financial cooperation.  There was an urgent need to conclude the Doha Round of trade negotiations in order to promote development and create an open, non-discriminatory and equitable trading system.  Peru also stressed the importance of lowering conditions for official development assistance and transaction costs, and of integrating middle-income countries into the international cooperation agenda.

TIRTHA RAJ WAGLE ( Nepal) said a broad, inclusive and effective preparatory process was needed for the implementation of the Monterrey Consensus, which provided a sound framework of international policy discourse to promote a development partnership.  That partnership should be bolstered by focusing on the progress made and constraints encountered, as well as by enhancing ways to achieve better development results coupled with effective monitoring and follow-up actions.  The partnership should also be effectively mobilized to support national efforts to attract foreign investment in developing countries, create a favourable investment climate, reduce the costs of doing business and ensure beneficial market access for the least developed countries and landlocked developing countries.  It should also enhance the efficacy of official development assistance, implement effective debt relief measures, ensure inclusive participation and coordination in the international financial system and develop a technological base in poor countries.

Halfway to the Millennium Development Goals target date, actions should be boosted by a high and sustained level of external financing, he said.  Aid effectiveness and the success of development strategies could be ensured by promoting country ownership and leadership in policy formulation and programme implementation.  The Doha negotiations must embrace the development dimensions of trade and focus on preventing the poorest segment of the international community from being further marginalized in the wave of globalization and competitiveness.  Regarding climate change, urgent and collective actions were needed at the regional and national levels to mitigate risk.  Nepal’s critical focus on a political transformation process and economic restructuring reflected its commitment to creating conditions for a sound and investment-friendly business environment.

ABDALLA SHABBAN ( Libya) said the 2002 International Conference on Financing for Development had been an important landmark, and five years later it was important to consider what had made impossible any real progress in achieving the six priority areas outlined in the Monterrey Consensus.  Developing countries needed continued support to reform their financial structures and ensure productive investment, education, training and research.  Despite the efforts of developing countries, foreign investment was unevenly distributed, and most of them had not benefited enough from it to increase productivity.   Libya was concerned that investment flows continued to go from developing to developed countries, making the former vulnerable to external dangers and competition.

International cooperation and priority funding were necessary to enable developing countries to cope with those difficulties, and trade was an important source of development for them, he said, expressing the hope that the Doha negotiations would lead to positive results.  Developing countries were vulnerable to price fluctuations on international markets, and they must be able to exploit fully their human resources while benefiting from advanced technology, which would enable them to have a share in international markets.  Debt relief did not provide additional resources for development, and donors should honour their official development assistance commitments to developing countries while considering ways to increase aid.  There was also a real need to restructure the international financial architecture in order to increase developing countries’ participation in decision-making.

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For information media • not an official record