Eurodad response to the Communication from the European Commission on A Global Partnership for Poverty Eradication and Sustainable Development after 2015

Added 05 Feb 2015
5 February 2015

Before the adoption of the post-2015 agenda and the sustainable development goals, developing countries requested a third Conference on Financing for Development, which will take place in Addis Ababa in July 2015.

The Financing for Development (FfD) process includes negotiations about:
- How to make multinational corporations pay tax and ensure fair global tax standards
- How to solve debt crises, including how to deal with vulture funds
- How to ensure the fulfilment of old commitments to provide development aid
- How to ensure that private investments deliver – and don’t undermine – development
- How to ensure that all countries, including the poorest, are able to participate in global decision making on economic and financial issues.

The first Financing for Development conference took place in Monterrey in 2002, and the second in Doha in 2008. The negotiations for the third FfD Conference have now started, but the EU has so far not presented a comprehensive position. This Communication from the European Commission (EC) was expected to be the first indication of what position the EU will take.

General response
As shown in the check-list below, the EC Communication entitled "A Global Partnership for Poverty Eradication and Sustainable Development after 2015" falls short on almost all the issues that Eurodad considers to be key.

The most noticeable shortcoming is the fact that the headline now doesn’t contain any references to financing for development or even to “means of implementation”, which is the term the EU prefers to use. Instead, the focus is now on a “global partnership”, which is a very unclear concept.

Second, the Communication doesn’t contain any references to the previously agreed decisions and commitments made under the Financing for Development process. In fact, it doesn’t even mention the Monterrey Consensus or Doha Declaration at all.

Third, the Communication states that, “The EU is committed to playing its full part and to working constructively with others” – a promise that doesn’t seem to match the low levels of ambition in the Communication. This promise also doesn’t match up to the fact that the EU is currently refusing to engage in the UN negotiation on a mechanism to solve debt crises, which is taking place in New York this week. While the current debt negotiations were triggered by the aggressive vulture funds lawsuits against Argentina, the need for a debt workout mechanism was in fact acknowledged already in 2002 during the first Conference on Financing for Development.

The reason the EC Communication ignores a number of the issues that developing countries have put on the table could be related to the rumour that the EU Commission and Member States will try to keep their true negotiating position secret in order to appear to be tougher negotiators. Although we hope it’s true that the EU has more to offer than what is contained in the EC Communication, we also find it disappointing if the EU is wasting valuable negotiating time that could have been spent engaging in a constructive dialogue with developing countries focused on finding global solutions to the world’s problems.

Key issues
Developing countries have repeatedly requested that all countries, including the least-developed countries, should get a seat at the table when global tax standards are developed. Under the current system, these tax standards are developed by the G20 and the Organisation for Economic Co-operation and Development (OECD) – also known as the “rich man’s club”.
As an alternative, developing countries have called for the UN to lead the global tax negotiations - a call that has been supported by civil society organisations, as well as by UN Secretary General Ban Ki-moon when he recently published his Synthesis Report and urged countries to consider “the establishment of an intergovernmental committee on tax cooperation, under the auspices of the United Nations”.

Rather than responding to the call to give developing countries a seat at the table, the EC Communication underlines that all countries must implement the global standards that are being developed by the G20 and OECD. This is in spite of the fact that these standards are not designed to work for least-developed countries, and in some cases they can actually damage these countries (this is the case, for example, with double tax treaties).

The Communication does acknowledge the need for country by country reporting, but it fails to mention that this reporting should be made public. It also avoids making any commitments beyond what the EU is already committed to, namely to review its country by country regulation by 2018. Meanwhile, during the UN negotiations last week, the African countries called for “country-by-country reporting for transnational corporation, that is made public and accessible to developing countries’ tax administrations and local civil society”.

The EC Communication also mentions the need for a level playing field between local and international companies, which is positive. However, the Communication doesn’t provide any solutions towards achieving this ambition.

The Communication underlines that, “The scale of blending public funds with loans from international financial institutions and funds from the private sector will continue to grow over the next decades”. The Communication, however, does not include any references to the need for nationally-owned development strategies to drive the use of these financing instruments and the high level of transparency and public accountability needed to ensure that these instruments really do serve development purposes. This is extremely worrying, especially given the strong criticism that the concept of ‘blending’ has received from developing countries and many other actors. For example, the UN Secretary General Ban Ki-moon highlighted in a report to the Development Cooperation Forum:
“Leveraging and blending public and private financing should be guided by development effectiveness principles to prevent drawbacks such as lack of clarity about additionality and purpose; limited influence of donors and recipients on investment design and implementation; diminished transparency and accountability; risk of misalignment of private sector and country priorities; danger of increased debt burden; inattention to small- and medium-sized enterprises; the opportunity cost incurred when use of public money to mobilize private resources does not have the same or a larger development impact than if it had been devoted directly to a developmental purpose; and the risks of misappropriation.”

The EC also stresses the need to create a business environment that is conducive to private sector initiatives, but it fails to qualify this concept. The ‘business environment’ tends to be equal to reductions in corporate income tax, a more lax regulatory environment, unnecessary privatisation of public services, weaker labour and environmental standards, for example when considering the World Bank’s Doing Business rankings. At the same time, it also fails when suggesting concrete proposals for how to enhance compliance with international standards and agreed principles. There is no reference to the need for clear accountability mechanisms for the impacts of public funds channelled through private sector actors.

The Communication does not include any chapter on debt and makes no reference to the need to develop an international mechanism to resolve debt crises. Given the severe debt problems many countries are facing today, this is extremely worrying.


The Communication recognises the need for timetables for delivering on the commitment of developed countries to provide 0.7 % of Gross National Income (GNI) as official development assistance, although it leaves out the word ‘binding’. It also includes references to the importance of ensuring aid effectiveness, which is positive.

The Communication does not respond, however, to the demand from civil society that official development assistance must constitute genuine flows to developing countries.

Developing countries and civil society organisations have called for all countries, including the least-developed countries, to be able to participate in global decision making on economic and financial issues.

The EC Communication does not respond to this request but states that, “the moves towards better governance […] need to be continued” and adds that, “the G7 and G20 agendas are examples of the type of policy commitments that could make a big difference”. With these statements, it does not appear as if the EC recognises the need for a fundamental change in the global decision making processes.

Other issues
One of the few positive elements of the Communication is that, “all countries need systematically to take into account the impact […] that their policies can have on other countries”. However, it seems unlikely that the EC has done this before releasing this Communication, which could have severe negative impacts on other countries, such as developing countries that are suffering from high levels of illegitimate and unsustainable debt or high amounts of illicit financial flows.

Eurodad check-list
The list below refers to the broadly supported civil society position paper “UN Financing for Development negotiations: What outcomes should be agreed in Addis Ababa in 2015?



EC Communication

Mobilising domestic financial resources

New intergovernmental body on international cooperation in tax matters

Not included, but the EC underlines that all countries must implement the OECD outcomes. These outcomes have been criticised for ignoring the interests and realities of developing countries

Comprehensive mandate for the new intergovernmental tax body

Foreign direct investment and other international private flows

Recognition of capital account regulation as a fundamental policy tool and the need to remove obstacles to these policies

Not included

Spell out the significant problems with using public institutions and resources to leverage international private finance

Not included. On the contrary, the EC underlines that ‘blending’ is a key tool without addressing any of the problems with blending

International trade

Review of all trade agreements and investment treaties to identify all areas where they limit developing countries’ ability to handle crises, regulate capital flows, protect livelihoods and decent jobs, enforce fair taxation, deliver essential public services and ensure sustainable development

Not included. Instead of acknowledging the problems related to trade agreements, the Communication states that, “The EU has enhanced the integration of sustainable development into its trade policy

A review of all intellectual property rights regimes (IPR) to identify adverse impacts

Not included. Instead of acknowledging the problems caused by IPR regimes, the Communication states that, “As most of the technologies are owned by business, their transfer can only work on mutually agreed terms, while their intellectual property rights must also be respected”. The role of governments is reduced to “foster the facilitation of technology diffusion” and “provide adequate protection of intellectual property rights according to the WTO rules

ODA and other international public support for development

Binding timetables to meet commitments to provide 0.7% of GNI as ODA

Timetables are included but not ‘binding’

Ensure ODA represents genuine transfers

Not included

Implement a levy on financial transactions and use the revenue to finance sustainable development

Not included

External debt

Reaffirmation of the commitment to agree to a multilateral legal framework for sovereign debt restructuring processes in a neutral forum

Not included. The Communication doesn’t even have a chapter on debt and the EU has disengaged from the UN negotiations on a multilateral legal framework for debt restructuring

Commissioning of independent debt audits with commitments to cancel debt that is found to be illegitimate

Systemic issues: effective, inclusive global governance and monetary system reform

Process to establish a Global Economic Coordination Council at the UN

Not included. On the contrary, the EC highlights that, “the G7 and G20 agendas are examples of the type of policy commitments that could make a big difference”, without addressing the concerns raised about the exclusion of the majority of the world’s countries from decision making

Issuing of $250 billion in new Special Drawing Rights (SDRs) annually, with the majority going to developing countries

Not included

New approaches to measuring progress that go beyond Gross Domestic Product (GDP) and to include social and environmental well-being and inequality, including gender inequality

No concrete proposal is included, despite the fact that this has previously been important for the EU, and the concept still needs to be operationalised

UN initiative on responsible financing standards

Not included

Integration of the women’s rights agenda into the FfD

The Communication includes references to women, but no concrete tools such as, for example, gender budgeting are included

Continuation of the UN agenda to reform financial regulation and the financial sector

No concrete proposal is included