The co-facilitators of a process geared towards committing to development financing have released a zero draft of the outcome document for a high-level conference scheduled to be held in Addis Ababa, Ethiopia in July.

The document, published on Monday [16 March 2015], pledges to establish a holistic financing framework to ensure future sustainable development and lists a series of eight areas for specific action.

These include domestic public finance; domestic and international private business finance; international public finance; international trade for sustainable development; debt and debt sustainability; systemic issues; technology, innovation, capacity building; data, monitoring, and follow up.

The outcome document of the Third Financing for Development Conference (FfD3), as the July meet is known, agrees to build on earlier financing commitments in the Monterrey Consensus and Doha Declaration. These represent the outcomes of previous FfD conferences in 2002 and 2008, respectively.

The document acknowledges, however, that the global economic outlook has changed substantially since the conclusion of these outcomes and also that current policy, financing, and investment patterns are not delivering adequately to promote sustainable development.

The zero draft is correspondingly geared towards supporting the implementation of the post-2015 development agenda and its planned sustainable development goals (SDGs). An introductory section of Monday’s document identifies key areas of synergy between the SDGs including agriculture, essential social services, infrastructure, investing in ecosystems, and supporting small and medium enterprises (SMEs). 

The document will be discussed by UN members at a drafting session in New York in mid-April. At a previous session in January, delegates reportedly questioned how exactly the FfD3 outcome document would interact with the post-2015 process.

Trade for sustainable development

As with previous FfD outcomes, the zero draft includes a specific action area dedicated to mobilising trade for sustainable development. Some commentators have suggested that Monday’s draft streamlines some of the trade references made in a non-paper designed to facilitate January’s discussions.

The non-paper had included several trade-related ideas that went beyond the SDG targets including the concept of trade financing, the alignment of the WTO’s Aid for Trade initiative with regional and national strategies while addressing productive capacity constraints, and the incorporation of binding social, environmental, and human rights standards in investment agreements.

On this front, however, Monday’s draft pledges to improve safeguards in investment agreements, including a review of investor-state-dispute-settlement (ISDS) clauses, to ensure countries’ right to regulate in areas such as employment and the environment.

Monday’s document also calls for an increase in Aid for Trade to developing countries, particularly the poorest. The WTO will hold its Fifth Global Review of Aid for Trade from 30 June-2 July, with this year’s conference focusing on the theme of “Reducing Trade Costs for Inclusive, Sustainable Growth,” given the post-2015 development agenda context.

The zero draft also proposes that governments hold an open and inclusive discussion on updating the definition for overseas development assistance (ODA) funds and on a proposed indicator for “total official support for sustainable development” (TOSSD).

Multilateral trade

The opening paragraph of the trade section in the FfD zero draft provides a complementary narrative to the trade targets included in a list of 17 proposed SDGs. UN members are set to discuss these goals at a meeting in New York next week.

Building on previously used language, the document supports a universal, rules-based, and non-discriminatory multilateral trading system and “meaningful trade liberalisation” as an engine for promoting economic growth and sustainable development. Flanking policies will also be required to achieve these ends.

Acknowledging slow progress in the current Doha Round multilateral trade talks at the WTO, the document calls for a conclusion of these global trade talks, mirroring language found in the final proposed SDG on means of implementation (MoI). WTO members are currently working to meet a July deadline for finalising a work programme to conclude the Doha negotiations.

The document also urges members to ratify the WTO’s Trade Facilitation Agreement (TFA) and implement a package of other outcomes also secured the global trade body’s December 2013 ministerial conference in Bali, Indonesia.

The TFA is geared towards smoothing customs and border procedures to help boost international trade flows. Trade facilitation issues were dropped from the proposed SDG framework during last year’s negotiation process.

Monday’s zero draft reiterates a commitment found in the proposed SDGs to correct and prevent restrictions and distortions in global agricultural markets, including removing all forms of agricultural export subsidies and disciplining measures with equivalent effect.

The FfD zero draft also says that WTO members should reaffirm that special and differential treatment (S&D) is an integral part of WTO agreements, referring to the Bali ministerial decision on a monitoring mechanism for S&D provisions. This builds on a target listed under a proposed SDG on reducing inequality within and among countries.

The document reiterates a call found in the final proposed SDG to implement duty-free quota-free (DFQF) market access for all products originating from least developed countries (LDCs) in accordance with WTO decisions, including those taken in Bali. Unlike January’s non-paper, however, the zero draft does not specify that DFQF access should be provided to all markets of high- and upper-middle-income countries.

Regional trade

The zero draft underscores the importance of regional integration and regional trade agreements (RTAs) ­– a topic not covered in the SDG targets – but also flags associated policy tensions, according to some experts.

Compared with January’s non-paper, the zero draft language is more positive around the role for RTAs in promoting growth and sustainable development. The January paper had said that a proliferation of such deals may not always foster positive economic, social, and environmental outcomes.

At the same time, the latest draft includes a commitment to work towards reducing fragmentation caused by international trade and investment agreements.

Domestic coherence

Alongside the role of international trade in fostering sustainable development outcomes, the zero draft also highlights the importance of a coherent domestic framework, calling on countries to implement policies and reforms to reap the potential sustainable development benefits of trade.

Examples of such policies can be found in other action areas in the document. The domestic public finance section, for example, refers to a need for transparent public procurement that reinforces sustainable development.

The elimination of harmful subsidies, including those related to fossil fuel production and consumption, are also referred to in the domestic public finance section.

According to experts, fossil fuel subsidies harm the environment by supporting conventional sources of energy, while causing distortions in world trade markets due to impacts on production costs.

Compared with January’s non-paper, the zero draft no longer mentions the need to remove or reduce harmful fisheries subsidies. The new document does refer to fisheries trade issues in the broader call for WTO members to correct distortions in agricultural and fishery markets. 

Experts have warned that fisheries subsidies contribute to overfishing of wild fish stocks – some 29 percent are harvested at a rate beyond biologically sustainable levels according to UN estimates – and are also trade distorting, often putting LDCs at a disadvantage in global markets.