Thank you, Mr. President.
The United States has welcomed the past three days as an important opportunity to discuss the concerns of developing countries in the context of the current economic crisis. We have listened carefully to the statements made in the plenary sessions and roundtables, and have had informative and productive discussions with delegations from every region of the world.
We would like to express our appreciation in particular to the co-facilitators, Ambassador Majoor and Ambassador Gonsalves, for their skill and diligence in producing this outcome document.
Many delegates have offered their interpretations of this outcome over the past three days. Given the large number of issues covered in it, many of which are technical and touch on the mandates of other international institutions, the United States also would like express our understanding of a number of paragraphs. We ask the Secretariat to include our statement in the formal record of this conference.
The outcome offers views in several paragraphs, including in paragraphs 2, 17, 43, 47, and 49, on the governance and operational aspects of the international financial institutions, and the Bretton Woods institutions in particular. The international financial institutions have governance structures, as set out in their respective Articles of Agreement that are independent of the United Nations. Any decisions on reform of the international financial institutions or the manner in which they conduct their business are the prerogative of their shareholders and their respective Boards of Governors. Consequently, my government does not interpret the language in this document as endorsing a formal United Nations role in decisions affecting the international financial institutions or international financial architecture.
With respect to paragraph 15, when countries are facing an acute and severe shortage of foreign reserves which is negatively affecting their balance-of-payments, the United States believes countries should implement appropriate fiscal and monetary policy responses and work with international lending institutions. Trade measures will not solve balance-of-payments problems associated with capital account pressures, a widening fiscal gap, or bank and other corporate failures. The use of trade measures should be avoided, and may only be resorted to when justified and applied in accordance with WTO rules.
The usage of trade measures as described in paragraph 15 is subject to conditions set out in the WTO Agreement, specifically Articles XII and XVIII of the General Agreement on Trade and Tariffs (GATT) 1994, and the Understanding on the Balance-of-Payments Provisions of the GATT 1994. These conditions include a number of requirements that are not reflected in the outcome. The WTO Agreement is the controlling international agreement on this issue, and the United States understands the reference in paragraph 15 in this context. It should also be clarified that there is no provision under the WTO Agreement for use of “trade defense measures” to address balance-of-payment issues.
Paragraph 15 also mentions temporary capital restrictions and debt standstills as mechanisms for addressing shortages of foreign reserves. The United States does not condone the use of capital controls. If used, capital controls and debt standstills should only be taken as a last resort, on a temporary, exceptional basis, as possible breathing space for more comprehensive economic reform, and in accordance with existing multilateral and bilateral frameworks and agreements.
Countries experiencing balance of payments problems need to maintain investor confidence and continued inflows of capital to promote development. However, experience shows capital controls and similar measures undermine investor confidence, reduce capital inflows, and are ineffective at redressing payments crises. Although possibly palliative, they tend to delay necessary policy and economic reforms while raising the cost of capital to domestic small and medium sized firms critical to employment generation. They also impose high administrative costs to enforce.
Paragraph 20 states that regional cooperation, including regional reserve currency arrangements, is to be encouraged. However, all such arrangements may not be beneficial to the international monetary system. Regional reserve currency arrangements should be judged by whether they contribute to regional and global financial stability and promote adjustment when necessary.
With respect to paragraph 25, the WTO is currently engaged in a thorough monitoring and reporting process supported by its Members. Duplicative efforts should not be undertaken across other bodies. The WTO process has been most effective precisely because it has been Member-driven, and the proposals suggested in this paragraph could undermine the existing monitoring and reporting process. The United States believes that all countries need to be vigilant about how they respond to the crisis and avoid protectionist measures. We believe the current situation requires a collective commitment of renewed energy in support of the monitoring function of the WTO, not the possible creation of competing processes.
Paragraph 27 correctly recognizes that as unemployment has risen around the world, jobs for migrant labor have declined, reducing the flow of remittances. As the global economy eventually improves, we are committed, to the extent permitted by our national laws, to allowing labor migration to meet labor market needs.
Paragraph 28 encourages “other donors to work on national timetables, by the end of 2010, to increase aid levels within their respective budget allocation processes toward achieving the established ODA targets.” We interpret this reference to ODA targets to mean donor countries’ individual targets.
Paragraph 34 refers to exploring “the need and feasibility of a more structured framework for international cooperation” in the area of debt. The United States interprets this to mean such a framework should be explored within current international structures addressing debt relief, in particular the Paris Club. We also interpret “equivalent treatment” to mean “comparable treatment”, the customary term used in sovereign debt restructurings.
With respect to paragraph 35, at the London G20 Summit the United States joined others in supporting a general SDR allocation which will inject $250 billion into the world economy and increase global liquidity. SDRs are a monetary asset and not a suitable vehicle for development finance.
Paragraph 37 refers to the need for each country to “regulate its financial markets, institutions and instruments consistent with its development priorities and circumstances, as well as its international commitments and obligations.” We interpret “international commitments and obligations” to include “internationally agreed financial standards”. Such standards are principle-based and allow countries to implement them in a way consistent with their individual circumstances.
Paragraph 38 addresses taxation issues and refers to promoting double taxation agreements. It is our understanding that the reference to promoting double taxation agreements is applicable only in instances in which there is significant double taxation between the relevant jurisdictions and where a double taxation agreement may therefore be appropriate.
Finally, paragraph 54 refers to the creation of a working group to follow-up issues contained in the outcome. In order to be useful and productive, the working group process must be based on the strengths of the United Nations, which lie in its broad development mandate and large field presence. Our strong view is that the UN does not have the expertise or mandate to serve as a suitable forum or provide direction for meaningful dialogue on a number of issues addressed in the document, such as reserve systems, the international financial institutions, and the international financial architecture.
Thank you very much.
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