The international
monetary, financial and
trading systems in support
of development
Presentation at the ESCWA Member Countries Regional
Consultation in Preparation for 2008 FFD Review Conference
By Aldo Caliari, Center of Concern
Doha - Qatar
April 30, 2008
Outline
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Follow up process
A holistic approach to trade, financial
and monetary policy
Participation of developing countries in
international economic decisionmaking and norm-setting
Follow up process [I]
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The most crucial systemic issue, because of the
nature of the Monterrey Consensus: more process
than content.
Process characteristics of Monterrey and its follow up:
>All stakeholders, beyond UN
>Coherence
>Convening and coordination role of the UN: political
considerations underpin development policy
>Holistic consideration of all mechanisms for
development financing
Follow up process [II]
Evaluation of follow-up since Monterrey:
Agenda-setting power of the Monterrey
Consensus, beyond the UN.
Main tools, ECOSOC High Level Dialogue and
General Assembly High Level Dialogue, have
proved weak.
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Participation level
Outcomes :Non-negotiating format
Follow up process [III]
Need for strong follow up process:
A variety of formats (FFD Commission, FFD
Council, upgrade of existing process)
But essential features should be:
1) Periodic and frequent
2) Negotiating power (thus, some instances of
existing process would become prenegotiating)
3) All stakeholders, and at the highest level
(“spirit of Monterrey”)
Follow up process [IV]
It should be accompanied by (though not
consist only of):
 Intergovernmental Committee on FFD at
General Assembly level (counterpart for
Secretariat)
 Call for a new conference at Heads of State
level, in a few years
 Strengthened Secretariat machinery
(including FFD Trust Fund)
A holistic approach to trade,
financial and monetary
policy [I]
By definition, it cuts across all chapters.
Importance:
 Unique advantage of the UN-based process compared to other
economic forums (e.g. World Bank, IMF, WTO).
 Useful way to raise the profile and value of the UN as a leader,
rather than follower, with regards to such other processes.
 Strategic way to reframe the agenda and deliberations on a
number of economic policy issues, bringing to forefront
developing country concerns (asymmetries otherwise not
revealed when separately looking at trade, finance or
monetary aspects)
A holistic approach to trade,
financial and monetary
policy [II]
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Exchange rate volatility and trade performance
Issues: 1) Foreign investment, 2) Domestic investment, 3) Access
to international financial markets, 4) erosion and uncertainty
of market access concessions, 5) impact on absolute size of
market access
Lack of adequate institutional structure to provide exchange rate
stability in a credible way (implement para. 54 of MC). IMF
proved a failure at this task (multilateral surveillance).
Role of regional financial and monetary cooperation
Need for domestic policy space to manage the exchange rate
(IMF bilateral surveillance)
What protecting tools in trade and investment agreements?
(Exchange rate safeguards, opt-out clauses)
A holistic approach to trade,
financial and monetary
policy [III]
Financial policy issues in Free Trade and Investment
Agreements, and their Dispute Settlement
Processes
Issue: Do they take into consideration lessons learned
on financial crises prevention and resolution? (East
Asia, Argentina, now US)
Treaty provisions that discipline management of:
Financial sector
Capital account
Sovereign debt
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A holistic approach to trade,
financial and monetary
policy [IV]
Capital accumulation as a framework for trade and
investment
Issue: shaping trade and investment rules not to
increase exports/ attract foreign investment, but to
raise levels of domestic capital:
Relative value of market access
Revenue from natural resource extraction
The addition of value (know-how, technology)
The export –investment nexus and debt service
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A holistic approach to trade,
financial and monetary
policy[V]
Others
A strategic approach to “Aid for Trade”
Financial instability and trade
Foreign Direct Investment and the BOP
The role of multilateral institutions/aid
on governance of the trading system
Export-led strategies in the context of
rising domestic currency-denominated
debt
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Participation of developing
countries in Int’l Ec Policy[I]
The Bretton Woods Institutions
Net result after Singapore + 2008 Spring meetings
decisions: 2.7 % voting power changed hands
Variables in quota formula: GDP, openness, variability,
reserves
Basic votes
Double majorities
Effective voting power not addressed
The broader picture:
Less lending + More surveillance & regulation=can a
governance structure so reliant on funding capacity
of members be any longer justified?
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Participation of developing
countries in Int’l Ec Policy
[II]
Financial standard-setting bodies
Standards and codes in the light of
current crisis (e.g. Basel II)
Implementation (MC para. 57):
12 G7-endorsed Standard and Codes
continue to be part of IMF/World Bank
incentives and sanctions
Design (MC paras. 63 and 57):
No progress registered.
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Participation of developing
countries in Int’l Ec Policy
[III]
Credit rating agencies
Regulation of international finance
The emergence of “new” actors:
Sovereign Wealth Funds, Hedge
Funds, Private Equity Funds
Participation of developing
countries in Int’l Ec
Policy[IV]
Emerging Aid Architecture
Design and monitoring of conceptual and operational aspects.
Definition of aid, review of delivery performance, coordination
issues.
FFD Review should:
. assess the operationalization of Aid effectiveness mandate from
Monterrey Consensus (an assessment of Paris Declaration on
Aid Effectiveness and follow up).
. Strengthen the ECOSOC Development Cooperation Forum as a
far more adequate venue to hold this discussion
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Participation of developing
countries in Int’l Ec
Policy[V]
International Cooperation on Tax
Matters
ECOSOC Committee of Experts, since
2004
Difference in outputs with OECD similar
body: e.g., Model Convention on
Bilateral Taxation
Conclusion: Voice matters
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Thank you
Contact information: aldo@coc.org or
acaliari@coc.org