GENEVA PRESS KITBelow you will find the contents of the entire official press kit for the special session of the General Assembly taking place in Geneva from 26 to 30 June. The nine releases are presented here together in one easily printable format. All releases appear in the same format on the Media Section of the official website, www.un.org/socialsummit .The materials below are published by the United Nations Department of Public Information. For further information, please contact: Mr. Dan Shepard, Development and Human Rights Section, Department of Public Information, Room S-1040, United Nations, New York, NY, 10017, U.S.A. Tel.: (212) 963-2191; fax: (212) 963-1186 E-mail: vasic@un.org .
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GENEVA PRESS KIT - RELEASE 9 - DPI/2119Footing the Bill for Social Development
These are heady days for global entrepreneurs who have cashed in on countless opportunities created by the forces of trade liberalization and a simultaneous revolution in technology and information. Falling tariffs and other trade integration measures have propelled many people to fortunes, and stock market rises have bestowed riches on the many who have been able to participate. But most people in the world are not able to participate and for large swaths of the globe that remain untouched by the whirlwinds of investment flows and cash transfers, people remain poor, without much hope that they will be able improve their liveseven through persistence and hard work. The demonstrations that overwhelmed the World Trade Organization (WTO) talks in Seattle in December and recent protests at the World Bank and International Monetary Fund meeting in Washington, D.C., have shown that resource issues often lie at the heart of international political and economic discussions. Resource issues will be central to the United Nations General Assembly (GA) special session to follow-up on the results of the World Summit for Social Development, to be held in Geneva from 26 to 30 June. A meeting with long-term, rather than immediate implications, the session is not likely to produce instant debt relief, trade breakthroughs, or pledges of large new grants of assistance. Nevertheless, the results of the session can have far-reaching implications for the operations of the World Bank and the International Monetary Fund and on how national governments approach social development issues. A General Assembly meeting on financing for development in 2001 will zero in on resource issues. Money, Money, Everywhere The world is awash with resources, yet they are mostly private resources and tend to be concentrated in the hands of a few. Private resources have, by far, played the major role in spearheading global economic growth during the last decade, and countries that have made themselves attractive to private capital have enjoyed better than average growth. In a quest for profits, however, private capital does not venture where there is little to gain, and therefore does little to deliver global public goods, such as universal education, health care and disease prevention, or a clean environment. These needs are generally left to the seriously underfunded public sector. There are, then, basically two resource issues. One concerns the promotion of the private sector, and the other with financing national and international institutions to provide the services that serve as the foundation of free, fair, and safe societies. As a result, many of the proposals before the special session relate to the interdependence between economic and social policy, and the balance between the state and the market. Although there is abounding rhetoric about "leveling the playing field" and creating an equal opportunity for everyone to participate in the global economy, the facts show otherwise. Inequality is growing, terms of trade are still stacked against developing countries, and poor people and poor governments have little opportunity to elbow in on the global economic party. Resources, at the individual and government level, are clearly needed to promote social programmes and to invest in health and education. The United Nations Childrens Fund (UNICEF) estimates that it would take about $80 billion a yearless than a third of one per cent of global income, to ensure than all children can achieve a minimum standard of living. This includes access to adequate food, safe water and sanitation, primary health care and basic education. There is, by and large, little agreement on who should foot the bill. The issue is a flashpoint for conflicting views between developing countrieswho contend that developed countries have a historical and moral duty to help advance development in their countriesand developed countries. Developed countries, while not denying an obligation to help their less wealthy counterparts, have gone through a period of disillusionment with the results of foreign assistance programmes. They have insisted that developing countries should rely more on private investment flows, which are far more abundant, for generating the necessary resources, while also insisting, as a condition for foreign assistance, on better governance, greater accountability and more safeguards to ensure that assistance programmes benefit their intended targets. But it is not just free hand-outs that are at issue. Resource issues include hotly contested trade questions. These include the continuation of high tariffs in developed countries against exports from developing countries and issues of technological assistance to help emerging economies leap-frog over the mistakes of the already industrialized world. Social Summit Urged Resources for Human Development At the 1995 World Summit for Social Development held in Copenhagen, governments, recognizing their declining power in the new global economy, agreed to place people at the centre of development and direct their economies to meet human needs more effectively. Specifically, it called upon governments to act at both the national and international level to mobilize resources to meet the demands of advancing the social development agenda. The Social Summit addressed a wide range of resource concerns, involving both the public and private sectors. Sound economic growth, it was generally agreed, provided the best method of increasing resources, although there are substantial disagreements over the best prescription for promoting such growth, particularly in the poorest countries. There were agreements to make structural adjustment programmesprogrammes ostensibly aimed at stabilizing a countrys financial balance sheetmore people friendly. A number of innovative resource proposals were discussed, and some, such as a proposal to increase donor and recipient country social spending, were cautiously embraced. Countries agreed that greater efforts were needed to mobilize domestic spending through progressive, fair and efficient tax collection systems. There was agreement that countries, where appropriate, should cut military spending in favor of social spending. Trade and Development Trade has emerged as a leading issue in the resource debate and divergent views between developing and developed countries, as well as between developed countries, helped scuttle the launching of a new trade round at the WTO talks in Seattle last December. More than $1.5 trillion is exchanged every day on the worlds currency markets and nearly a fifth of the worlds goods and services are traded. Foreign direct investment amounted to more than $400 billion at the end of the century. Yet developing countries, especially the least developed countries, have largely been by-passed by the new trade and financial investment routes. Of the $400 billion in foreign direct investment in 1997. Some 58 per cent went to industrialized countries, 37 per cent to developing countries, and 5 per cent to the transition countries in Eastern Europe and Central Asia. More than 80 per cent of foreign direct investment to developing countries or countries in transition ended up in just 20 countries, with China alone receiving the lions share. Despite a WTO agreement on agriculture that requires countries to lower tariffs, convert quotas to tariffs, and reduce subsidies to their agricultural sectors, developing countries contend that industrialized countries are still using tariff and non-tariff measures to limit imports. This is a move that hurts developing countries to the tune of $700 billion a year. Agricultural subsidies, in 1995, still amounted to $6 billion a year. While some developing countries have seen their exports increase dramatically, such as China, Botswana, and the Republic of Korea, most have not. Manufacturing exports from developing countries rose in the 1980s and 1990s, from 9 to 22 per cent, yet just a dozen countries accounted for all of the increase. In the negotiations for the GA special session, countries have already agreed that there should be "greater universality" of the multilateral trading system, and also that the process of admitting more developing countries and countries in transition into the WTO should be accelerated. Developing countries have pushed for an agreement to increase and improve access for the products of developing countries, especially for Africa and the least developed countries, by eliminating trade barriers and other protectionist measures. Developing countries have also called for new initiatives to stabilize commodity prices, which they are dependent on, in order to stabilize their budgets. Regulation and Tax Reform Most tax systems in place today were developed when the economies of many countries were relatively closed, when few people traveled extensively. Now, with trade and financial liberalization, the Internet, and the era of instantaneous communications, money moves around the world on an unprecedented scale. Governments are under considerable pressure to keep taxes low, while more goods and services appear to avoid taxation altogether. "Now, if you begin to tax capital, it will move somewhere else," according to Vito Tanzi, Director of the IMFs Fiscal Affairs Department. And by using creative accounting, multi-nationals can shift the tax burden among jurisdictions where they operate to where tax rates are lower. "This is eating at the base of the tax system", Tanzi said, who also noted that offshore tax havens offer refuge for between $5-8 trillion a year. With a growth of derivatives and hedge funds, Tanzi said, it is becoming difficult to determine when and where income has been earned. Nevertheless, he said that with time, solutions may emerge. Taxation is as important to developing countries, where weak tax collection systems are unable to collect revenues that could foster social development. "Developing countries do not have the machinery for tax collection," according to Ambassador Arthur Mbanefo, Permanent Representative of Nigeria to the United Nations and Chairman of the Group of 77. "Taxation is very importantthere is no way you can play it down. We have to realize that the 0.7 per cent comes from developed countries taxation of their own nationals." While tax issues have long been considered a hallmark of each countrys sovereignty, countries have shown a willingness to discuss tax initiatives at the special session. For many revenue-related issues, the session is tantamount to a first public hearing. Although agreement may not be reached in Geneva, on these issues, they will be firmly set on the international agenda for future consideration. Countries have already agreed to promote an equitable and progressive broadening of the tax base, improving the efficiency of tax administration and tax collection. Countries have agreed to seek new sources of revenue that could also discourage "public bads", such as pollution. There are a host of proposals still under consideration. These include tax evasion, removing tax allowances for bribes paid to foreign public officials, developing international cooperation in tax matters and exploring methods for dividing the liability of multi-national corporations to pay taxes on profits in different jurisdictions. There are also proposals to limit the use of tax shelters and tax havens and a proposal to study the feasibility of a currency transaction tax. The currency transaction tax, sometimes known as the "Tobin Tax" has drawn considerable attention in recent years. As part of the search for mobilizing new resources, Canada has proposed "further study of the feasibility of a currency transaction tax". Many believe that such a tax could have limited the massive capital flows that caused the Asian financial crisis. However, there is still major disagreement on the need for the tax and even larger questions over who would collect the tax and where the proceeds would go. Some members of the United States Congress have vociferously denounced the proposal. Official Development Assistance (ODA) In Copenhagen, donor countrieswith the exception of the United Statesrecommitted themselves to strive to meet the previously agreed upon official development target of 0.7 per cent of gross national product. Yet at the time of the Summit, ODA levels had already begun to tumble since the historic high earlier in the decade, and this trend has continued to the present time. ODA spending is now at an all-time low, with ODA constituting only 0.22 per cent of developed countries GNPs. Only four countriesDenmark, the Netherlands, Norway, and Swedenhave exceeded the 0.7 per cent target, but even in these countries, levels of ODA have declined, in real terms. Assistance from the United Kingdom and Canada has increased dramatically over the last few years. According to Ambassador Mbanefo, the drop in ODA has hurt many developing countries. "They look forward to getting this aid from the international community, and they are not getting it." The drop in ODA, he said, can be directly traced to the collapse of the Cold War competition between the superpowers. Ambassador Mbanefo said that better use should be made of "what little resources" come from ODA, and indicated that there should be a pooling of these resources, bilateral or multilateral, so they can be used where they are needed most. But Ambassador Mbanefo said the G-77 position was more than just about "handouts." Rather, he stressed that what developing countries need most is an enabling environment "to mobilize our own resources." While hardly dismissing the importance of ODA, Mbanefo said better ways must be found to generate resources. "ODA alone is not going to do it for them." Another idea to increase spending on social programmes that the GA special session will likely encourage is the 20/20 proposal, which was initially agreed to in Copenhagen. The proposal urges donor countries to ensure that 20 per cent of their ODA should be earmarked for social programmes, while developing countries are urged to allocate at least 20 per cent of their national budgets for social development. Although the idea has not been widely adopted, countries have agreed to pursue the proposal at the special session. According to UNICEF officials, developing countries now tend to spend about 15 per cent of their budgets on social programmes, while donors devote only 10 per cent to the social sector. Debt Relief Calls for debt relief, long pushed by a movement of non-governmental organizations that coalesced into a group known as Jubilee 2000, gathered considerable momentum in Copenhagen. Countries agreed there that the international financial institutions and creditor nations should consider innovative measures to relieve the debt burden of developing countries, particularly highly indebted low-income countries. The World Bank and the International Monetary Fund started a debt relief programme for the Highly Indebted Poor Countries (HIPCs) in 1996, but few countries have been able to benefit. As a result, a broader initiative was begun in 1999, that is expected to relieve debt in 36 countries, 29 of which of these 29 are sub-Saharan African countries. To date, however, only five countries, Uganda, Bolivia, Mauritania, Tanzania and Mozambique, have begun to receive debt relief. The "crushing burden of debt interest on interest" eats up almost one-third of Nigerias resources, according to Ambassador Mbanefo, who added that the resources going to repay loans were not going for schools and teachers salaries. Many proposals under consideration at the special session concern the debt issue. There are proposals that creditor countries and institutions move more quickly towards "faster, broader and deeper debt relief" and provide developing countries with a "permanent exit" from the loan rescheduling process. Published by the United Nations Department of Public Information For further information, please contact: Mr. Dan Shepard, Development and Human Rights Section, Department of Public
Information, Room S-1040, United Nations, New York, NY, 10017, U.S.A.
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