Trade negotiators close to a deal as battle of wording continues

The United Nations Conference on Trade and Development’s (UNCTAD) Nairobi meeting closed its fourth day closer to a deal on a final declaration even as intense lobbying continued on the wording of the text.

The differences are centred on developing countries’ quest for a deal with better trading terms that will boost their economies while their developed counterparts remained focused on stability of the international trading system.

“We are seeking an outcome that will amount to meaningful action that moves the developing nations and I think no one, including the EU, is against that,” Kenya’s Foreign Affairs principal secretary Monica Juma said, adding that differences remained on how the text is structured and nuanced.

Delegates said negotiations were particularly intense on how to frame segments of the final declaration on debt management, tax, gender and technology transfer.

Kenya’s Foreign Affairs and International Trade secretary Amina Mohamed said the talks had entered a hard bargaining phase that stretched well past midnight on Tuesday and would be concluded before Friday.

The EU said it supported the use of trade as the main instrument through which least developed countries (LDCs) that are lagging behind will be lifted from poverty.

Some 48 LDCs control only one per cent share of the global trade, making improvement of trading terms critical to their
advancement.

Differences however remain on how any new trade deal will sit within the many existing frameworks, including the WTO and UNCTAD.  

The European Union (EU) has also taken issue with the segments of the text on Overseas Development Assistance (ODA) and the developing world’s quest to strengthen UNCTAD’s mandate.

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.

READ: Nairobi trade negotiators fight over debt management text

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.

Besides, the developing nations want implementation of the Principles on Sovereign Debt Restructuring Processes hinged on a UN law related to debt contracts.

That should result in a single legally-binding process to negotiate all sovereign debt similar to how corporations use insolvency law to resolve their debt issues.

The European Union has however led efforts to block the text outlining principles of debt restructuring insisting that it prefers debt management.

The two camps have also disagreed on how to treat tax policies with developing countries demanding equal say in how taxes are set, dealing with tax avoidance, misinvoicing and illicit financial flows.

UNCTAD released a report revealing that commodity dependent developing countries are losing as much as 67 per cent of their exports worth billions of dollars to trade misinvoicing.

Mr Lange said the EU supported measures to get companies to pay their fair share of taxes to developing nations as this was crucial to their development.

“Tax is crucial for development and tax avoidance that takes money out of these countries is unacceptable. We have to respect how we create a new system and build capacity that enables everybody to collect the tax due to them,” he said.

Some countries are also uncomfortable with gender clauses which they say are stretching the mandate of UNCTAD given the limited resources.
On ODA, the Group of 77 is asking the developed world to pay ‘commitment debt’.

“We reiterate the importance of achieving particular targets for official development assistance of 0.7 per cent of gross national income to developing countries and 0.15 per cent to 0.2 per cent of gross national income to least developed countries as well as further enhancement of resources for the least developed countries,” the draft Group of 77 Ministerial Declaration text reads.

UNCTAD released a report indicating that if the developed world kept promises made in Mexico in 2002 to put 0.7 per cent of their gross national income into oversees aid, the developing South would have been $2 trillion better off.

Ms Mohamed said the negotiators had dealt with about 100 paragraphs of the 200 plus paragraph document and stood to have an agreeable ministerial declaration on time.

“We are not there yet but the document is 60 per cent done, we are hopeful to complete the 40 per cent soon,” CS Amina said.

Kenya will also deliver a political declaration prepared by the country’s diplomats called Azimio - Kiswahili for resolution.

Ms Mohamed said the draft was almost ready and would be shared among the ministers tomorrow (today) before being presented on Friday for adoption along the technical Nairobi consensus.