EU Presidency Statement - Follow-up to the International Conference on FfD (Monterrey 2002): The EU Barcelona Commitments

Mr. Chairman,

I have the honour to speak on behalf of the European Union. The acceding countries Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, Slovenia and the countries associated with the EU Bulgaria, Romania and Turkey have aligned themselves with this statement.

First of all the European Union would like to thank the Secretary-General for his comprehensive report under this agenda item.

The EU values this High Level Dialogue as an important occasion to reconfirm our full commitment to the Monterrey Consensus and to review the progress to this date in its implementation. In this respect we believe that the participation of the main stakeholders, such as the Bretton Woods Institutions, the WTO, the private sector and civil society remains critical to ensure coherence in the action of the international community in achieving the Millennium Development Goals. Joint efforts are very much needed to this end: the EU remains firmly committed to the achievement of these Goals. In this regard, I have the honour to recall that the European Union undertook major commitments at the Barcelona Council on 14 March 2002 as its contribution to the Financing for Development process.

The Council of the European Union asked the European Commission to monitor on a regular basis, and report annually on the follow up of the Monterrey commitments.

For 2002-03, the state of play is contained in the summary report distributed by the EU prior to this High-Level Dialogue.

I would like to take this opportunity -before I turn to the commitments undertaken by the EU- to stress two major themes that constitute a cornerstone of the FFD process, namely:

Mobilization of domestic resources

In Monterrey we all agreed that external assistance can be effective only if it takes place within an appropriate domestic environment. The EU would like to reiterate this message conveyed by the Monterrey Consensus and recalled by the report of the Secretary General. Each country has the primary responsibility for its own development. The mobilization and transparent and efficient use of the national and external resources is essential for national development. To this end and under the current economic conditions and prevailing uncertainties, the strengthening of good governance and the implementation of a transparent and accountable public expenditure management system in all countries, including developing countries, is of paramount importance for an effective use of domestic and external public resources in achieving the MDGs.

Trade

Another important element of financing for development, confirmed in the Monterrey Consensus, is increased trade opportunities created through greater trade liberalisation and improved multilateral trade rules. The EU deeply regrets the failure of the WTO's Cancun Conference to make substantial progress. We remain convinced however that a combination of development cooperation activities and the growing liberalisation of world trade can play a crucial role in achieving the Millennium Developments Goals. This is why the EU believes that the negotiations in the WTO framework must resume as soon as the parties are ready to participate again. Everyone should demonstrate the determination and flexibility needed to honour the commitments enshrined in the Doha Development Agenda.

In the context of the Doha Development Agenda, the EU proposed the grant of duty-and quota-free access to products of Least-Developed Countries, the elimination of export subsidies on a list of agricultural products of export interest to developing countries, as well as a constructive solution to address the trade aspects linked to the depressed prices in the current world cotton market. The EU continues to work systematically towards providing a substantial contribution to the reform of those sectors which, like cotton, are of particular interest to developing countries. Within the framework of the ongoing Common Agriculture Policy reform, the Commission has proposed to provide cotton with less and less trade distorting support, by means of decoupling, therefore severing incentives to produce cotton and improving farmer reaction to market signals.

Turning now to the commitments of the EU:

Official Development Assistance

I reiterate here our goal to collectively raise the EU's Official Development Assistance volume to 0.39% of the Gross National Income by 2006, as an intermediate step towards the UN goal of 0.7% ODA/GNI. Four member States have achieved the 0.7% target; several others have agreed on timeframes to achieve this level. Each Member State has committed to strive to achieve at least 0.33% of GNI/ODA by 2006. We will also make efforts towards the target of 0.15% to 0.20% per cent of ODA/GNI for LDCs.

The EU has immediately begun to implement this commitment in 2002. Roadmaps have been established by Member States to attain the goals that we have set and we have established a monitoring system to allow the EU to stay on track in the coming years.

The EU is the largest donor in the world and in parallel the EU is also the largest provider of foreign direct investment to developing countries.

In 2004 ten new Member States will join the EU and this enlargement will be an additional challenge and a new opportunity for Europe to reinforce its commitment to the MDGs. New Member States have undertaken to gradually increase their ODA levels.

Co-ordination of Policies and Harmonisation of Procedures

The Monterrey Consensus was a catalyst for the work on coordination of policies and harmonisation of procedures at the EU level. The European commitment in this field was confirmed by the adoption of the Rome Declaration on Harmonization in February 2003. The Barcelona commitment in this context means that the EU has committed to also move further on areas not specifically covered by the Rome Declaration such as the co-ordination of policies.

In 2002 the EU conducted pilot initiatives in four developing countries, (Morocco, Mozambique, Nicaragua and Vietnam) where concrete measures are now either prepared or implemented. The results of the pilots confirmed that substantial progress has been made, namely that improving co-ordination and harmonisation can result in "better value for money". Looking at the future, the European Union will strive to adopt a set of recommendations for action to enhance the level of co-ordination and harmonisation among Member States and the Commission.

Untying of aid

EU Member States are committed to the OECD/DAC recommendation on the untying of Official Development Assistance (ODA) to Least Developed Countries (LDCs). They have all implemented or are in the process of introducing measures for applying this Recommendation to their ODA.

Moreover, the EU Council in May 2003 agreed to the further untying of Community's aid in order to enhance the effectiveness of aid and increase its impact on the fight against poverty.

Trade related technical assistance

The integration of developing countries into the world economy is a priority for the EU. This process should proceed smoothly and gradually, showing due regard for the development priorities of the partner countries.

The EU advocates regional integration as a useful step towards regional market creation and integration into the world economy.

The Member States and the European Commission are largely engaged in a wide and varied programme of Trade Related Technical Assistance (TRTA) including under the Integrated Framework for the LDCs. The EU cumulated initiatives represent a large spectrum that covers the strengthening of long term capacity building, addresses supply-side constraints and supports the improvements in negotiating capacity. The EU Member States and the European Commission provide increasing resources for trade related technical assistance. In total, the EU has committed approximately 2 billion Euro in 2001-2002, or nearly half of the trade related assistance provided by all donors (bilateral and multilateral) and recorded in the Joint WTO/OECD Data Base. In 2002 and 2003 the EU contributed to more than 50% of the 2002 and 2003 budget of the Doha Development Agenda Global Trust Fund that was created by the WTO in 2002, as well as significant funding for the UNCTAD trade-related technical assistance programmes.

Debt relief - The HIPC initiative

Since its launch, in 1999, the enhanced HIPC Initiative has achieved substantial progress, as 27 countries have passed the decision point, of which 8 countries have reached the completion point.

The EU has provided more than half (around 60%) the financing of the HIPC initiative. In addition, all EU Countries have announced their intention to go beyond HIPC targets by providing officially 100% bilateral pre-COD debt relief for all claims on HIPC countries.

We urge all creditors and donors that have not yet done so to provide their share of bilateral debt relief and multilateral financing to the HIPC initiative. The IMF and the World Bank should regularly report the compliance of their member countries with the HIPC commitments, in particular in Article IV surveillance. Official bilateral debt restructuring in the Paris Club should also consider the compliance by debtor countries with their HIPC commitments as creditors.

We are ready to discuss with the IFIs and other donors possible changes in the method to calculate the topping up requirement at the completion point for those HIPC countries were the debt is deemed unsustainable at that time due to severe exogenous shocks and ways to fill the financing gap while ensuring a fair burden sharing.

Strengthening the voice of developing countries

As called for by the Monterrey Consensus, we have encouraged the IMF and the World Bank (and will continue to do so) to consider innovative and pragmatic ways to enhance the voice and effective participation of developing countries in their decision making process. We support improving processes and capacities at the country level, through strengthening PRSP processes and supporting capacity building initiatives, as in the case of AFRITACs.

Innovative ways of financing/Global Public Goods

The EU reaffirms its continued commitment to a global, participatory process on Global Public Goods and welcomes the initiative by France and Sweden, who -with the co-operation of UNDP, have set up an informal International Task Force, which is expected to complete its work in two years and conduct consultations with a broad range of stakeholders.

Staying engaged

The European Union looks forward to continue to staying engaged in the follow-up to the Monterrey Conference. This High Level Dialogue represents the first occasion for stocktaking and we are confident that it will generate momentum to move the process forward. We believe that this first year and half after Monterrey has been fruitful as demonstrated by the commitment shown by various stakeholders in the implementation of the outcome of the ICFD. We are pleased to see that other countries, as well as the Bretton Woods Institution, civil society and the private sector are taking a pro-active role in the follow-up to the Monterrey Consensus. We call on all other partners and stakeholders, and in particular on the WTO, to continue to show the same sense of commitment by participating actively in the Monterrey process.


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