Explanation of Position on the 2018 Financing for Development Outcome Document

Stefanie Amadeo
U.S. Deputy Representative to ECOSOC
U.S. Mission to the United Nations
New York City
April 25, 2018

AS DELIVERED

Good afternoon. I would like to thank the co-facilitators, Ambassador Rattray and Ambassador Duarte Lopes, for leading an efficient, transparent, and highly productive negotiation process. We would also like to thank all of our colleagues for their efforts in achieving a consensus-based outcome for the Forum on Financing for Development (FfD) follow-up.

The United States strongly supports UN efforts in financing for development, especially work to mobilize domestic and private sector resources for development, which we will discuss further in our national statement. We would like to take this opportunity, however, to make important points of clarification on the FfD outcome document itself, and underscore that this non-binding document does not create rights or obligations under international law.

Regarding the reaffirmation of the Addis Ababa Action Agenda, we note that much of the trade-related language in this outcome document has been overtaken by events since July 2015 and is immaterial. Our reaffirmation of the outcome document has no standing for ongoing work and negotiations involving trade.

The United States rejects any attempt to interpret the language in Paragraph 5 to promote state ownership in the economy, or to suggest that governments may deprive private interests of wealth or resources without compensation in accordance with international law or otherwise fail to observe a State’s legal obligations. The United States disassociates from language in Paragraph 21 that suggests that any country or group of countries is more worthy of benefitting from trade agreements than any other country. We do not agree and do not consider this language a basis for future negotiations. Sovereign states sign trade agreements if those agreements are in their interests. Of course, some benefits of trade agreements – including provisions that serve as building blocks for sustainable development – cannot be achieved without parties’ full implementation of those agreements.

With respect to references to the Paris Agreement, we note that the United States announced that it intends to withdraw as soon as it is eligible to do so, consistent with the terms of the Agreement, unless the President can identify suitable terms for re-engagement. Therefore, the Paris Agreement and climate change language in paragraph 6 is without prejudice to U.S. positions. Further, with regard to language on the Green Climate Fund, we note that this is not the appropriate forum to discuss operational issues related to the Fund, such as access by Parties, and that it is not within the mandate of this body to call on or purport to provide guidance to the Fund about its operations.

On intellectual property rights, the United States disassociates from paragraph 10 to the extent that it characterizes “knowledge sharing” as a challenge to development. The United States disassociates from paragraphs 27 and 28 to the extent that they encourage financial assistance to the Technology Bank and characterize technology transfer that is not clearly indicated to be both voluntary and on mutually agreed terms to be a driver of economic growth and sustainable development. For the United States, any such language will have no standing in future negotiations. The United States continues to oppose language that we believe undermines intellectual property rights.

The United States firmly believes that combating money laundering, corruption, and other related crimes is essential to our common security and prosperity. However, we find that paragraph 12 of this document undermines our ability to work together constructively on these challenges. The United States continues to oppose inclusion of the term “illicit financial flows” as we have in prior resolutions, because it is a term with no agreed-upon international definition. In the absence of any common understanding, we should be clearer about the specific underlying illegal activities that produce or contribute to this threat, such as embezzlement, bribery, money laundering, other corrupt practices, or other crimes. We also do not agree with the implication that developing countries are more affected by illicit financial flows than other countries – many of whom have large financial sectors that can be negatively affected by criminal activity. In this context, Member States should focus more concretely on measures they can be taking at home to prevent, investigate, and prosecute corruption in the first instance, so that asset recovery is never needed at all.

In addition, while the disposition of stolen assets to requesting states, prior legitimate owners, and victims of the crime, as outlined in the UN Convention against Corruption, is a key goal of asset recovery, it is only one part of the equation. Equal attention and resources must be devoted to establishing competent domestic frameworks and institutions necessary to facilitate the proper detection and investigation of criminal proceeds and the freezing, seizure, and confiscation of the same. By focusing almost exclusively on the return of assets, this outcome document undermines the balanced approach reflected in the UNCAC. We also do not believe that asset recovery is a tool of sustainable development. While these issues may be linked in some cases, this outcome document implies that they must necessarily be connected. Asset recovery has traditionally served a number of purposes, with law enforcement and fighting impunity being the primary reason that governments created the UNCAC in the first place. We appreciate this Forum's commitment to combatting corruption but reiterate the importance of addressing corruption-related matters, particularly complex technical issues such as asset recovery, through technical subsidiary bodies of the Conference of States Parties to the UN Convention against Corruption in Vienna, where the experts meet regularly.

With reference to Official Development Assistance (ODA), the United States appreciates the timely release by the Organization for Economic Cooperation and Development of its preliminary analysis of 2017 amounts and uses. We thus regret the outcome document’s reliance on outdated OECD information on ODA trends, and the failure to take into account the preliminary information, especially the notable increase in net bilateral ODA to least-developed countries and aid to Africa in 2017. We encourage the ECOSOC to make every effort in future years to be consistent in its use of the most recent OECD evidence on ODA trends.

The United States believes that the multilateral development banks (MDBs) should target their scarce concessional financing to the poorest and least creditworthy countries, and countries' access to concessional financing should decrease as their incomes increase. Rather than try to preserve access to concessional finance, the MDBs' implementation of their graduation policies should aim to smooth the transition away from concessional assistance and consider how to help graduating countries avoid a large drop in overall development finance. While we support efforts by the UN and international financial institutions to develop additional measures of sustainable development outside of per capita income, this should not imply those measures' application to IFIs' eligibility criteria, which remain set by the appropriate governance bodies of each institution. Similarly, MDB activities relating to the SDGs and balance sheet optimization should be set by the governing bodies of the MDBs and are outside the purview of the UN.

On paragraph 25, the U.S. notes that recent data indicate that correspondent banking relationships in some regions are stabilizing, with new relationships potentially being established, while the pace of decline in other regions is stabilizing. The impact to financial stability has been limited, while the concentration of correspondent relationships has slightly decreased, and a variety of structural factors appear to be driving the shift in the correspondent banking market to a new equilibrium. In addition, the U.S. has consistently and publicly maintained that the issue of access to banking services, including correspondent banking, is more appropriately addressed by the existing and ongoing dialogues in fora such as the Financial Action Task Force (FATF), the Financial Stability Board’s (FSB) Correspondent Banking Coordination Group, and the Basel Committee on Banking Supervision. On paragraph 26, we do not agree with the assertion that the IMF is at “the center” of the Global Financial Safety Net, given the significant role that central banks play in responding to crises.

The United States recognizes the significant efforts of the Inter-Agency Task Force (IATF) on Financing for Development to respond to the Addis Ababa Action Agenda’s (AAAA’s) support for an evidence-based follow-up and review process. We emphasize that the roles given to the IATF in the AAAA are to report and advise. The IATF Report is not a consensus document whose findings simply can be transferred to the Forum outcome document without further examination and debate by member states. The United States wishes to express its concern with the assignments given to the IATF, particularly in paragraph 16. We underscore that this request should not be understood as a continuing mandate for the IATF beyond the 2019 report, and we urge the IATF to consult early and often with member states as the 2019 report is prepared.

With these clarifications, we will join consensus on the adoption of the outcome document for the ECOSOC Forum on Financing for Development follow up. Thank you.

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