UNCTAD mandate stalemate persists at Nairobi trade talks

The stalemate over the wording of the Nairobi UNCTAD conference’s final declaration remained unlocked hours to the close of the summit, sources close to the 70 ministers negotiating the deal said.

Several clauses that are set to define the Nairobi outcome remained unresolved as different factions fought to have their way in the final document, according to a draft of the final text expected to be released Friday.

The document will define how UNCTAD executes its mandate in the next five years through alignment of its programmes with emerging issues as raised by members.

The ministers are split in factions, including the JUSCAN (Japan US and Canada), and the European Union (EU) which are aligned to former Soviet Group D countries waiting to join the EU against the Group of 77 comprising of 134 developing countries backed by China.

The draft text seen by the Business Daily, shows that the JUSCAN group wants to limit the scope covered under tax policies to evasion and avoidance.

“The JUSCAN see the problem as crime and corruption but the G77 want the mandate to include illicit financial flows as well,” Tax Justice Network Kenya chief executive Alvin Musioma said. The G77 want UNCTAD to cover the wider mandate , citing the billions of dollars they are losing every year in illicit financial flows.

They feel they would gain more from the UN body if it helped clamp down on illicit financial flows which include proceeds of corruption, tax evasion and tax avoidance.

If they succeed, UNCTAD will have a stronger mandate to deal with issues such as the Panama papers scandal, miss-invoicing and transfer pricing.

The club of the rich, which is host to most of the companies  involved in the vices, does not see the matter as a priority and wants a narrower mandate on crime and corruption, which they feel directly affects developing countries.

“The JUSCAN countries look at the problem of illicit financial flows such as proceeds of corruption as pure crime while developing countries want UNCTAD to have a more comprehensive mandate that includes tax evasion and illicit financial flows to the tax havens,” said Mr Musioma.

Insiders at the negotiations also said that the club of rich countries is also lobbying to include in the text contested issues that the developing world has been fighting at the World Trade Organisation (WTO).

“Developing countries are fighting new International trade issues that are being introduced and amount to pulling in contested WTO issues at UNCTAD talks,” Mr Musioma said.

The list of contested issues includes liberalisation of trade in services that were left unresolved during last year’s 10th WTO conference in Nairobi.

Some of the regulations touch on procurement, investment rules and financial services liberalisation — that the developing world sees as mostly in favour of multinationals setting base in Africa.

READ: How poor nations lose billions to big firms through misinvoicing

The rich club also believes increased volumes of trade should be enough to lift the developing world out of poverty and wants UNCTAD to help them attract investment.

The Group of 77 and China on the other hand want a policy space where trade agreements respect sovereignty and national interests and are structured in ways that are not unfair to them.

“We do not see a controversy in our mandate as the organisation that leads the negotiation of new regulations for investment agreements,” UNCTAD Secretary- General Mukhisa Kituyi said.

Dr Kituyi said the G20 rich nations in had agreed on investment governance reforms and that Nairobi would only sign up more countries into the structure.

The developing countries want UNCTAD to be strengthened since its mandate includes development in trade and has historically fought the finance driven agenda of the rich nations.

The developed world is opposed to the arrangement on the grounds that UNCTAD risks duplicating the roles of the WTO and OECD.

“There is a huge debate over concerns that UNCTAD should not be duplicating the work of international finance agencies like OECD and the IMF and that we do not need an extra body,” Mr Musiomi said.

He, however, insisted that the IMF and OECD are not development institutions but are neo-liberal agencies with the goal of pushing countries into signing more treaties, liberalising and restructuring.

The developed world is opposed to the strengthening of UNCTAD’s mandate to a decision making organ of the UN and prefers it to remain a technical assistance institution.

“The question is how far UNCTAD shall work. Is UNCTAD an advisory body, a capacity building organisation or a law making organisation, that is the issue,” the chair of the European Parliament’s INTA-DEVE Bernd Lange told journalists, adding that the EU’s position is that there is the WTO and there are other bodies that advice on international trade.

The Group of 77, a group of 134 developing countries and China, want a stronger UNCTAD with the statistical capacity to measure South-South Co-operation, offer technical assistance and whose analysis translates to concrete policy advice and with a role in driving intergovernmental monitoring and implementation, especially in the developing world.