Eurodad has obtained the joint EU position document for the G20 summit.* The 13 page EU document covers the whole G20 agenda, but this short article gives just selected highlights and quick responses. A more detailed assessment of the G20 agenda and its implementation status is in our accompanying briefing From London to Pittsburgh: assessing G20 action for developing countries released today.
It is telling that the section "strengthening recovery in the world's poorest countries" is by far the shortest.
The EU common position states: “We stand ready to take agreed action against jurisdictions that fail to meet international standards on tax transparency and we will promote this reform swiftly. We support the reform and restructuring of the Global Forum to develop an in-depth peer review in order to review all jurisdictions. the EU supports and asks the FSB to set out criteria by November 2009 for identifying non-cooperative jurisdictions”.
RESPONSE: The EU is split on tax haven reform. Some members which permit secrecy (notably Luxembourg) so that EU and other citizens can evade taxes are very keen to prevent further action and are dragging their feet. The EU does not yet support a new approach to countering tax havens by introducing a multilateral, automatic information exchange.
The EU common position states: “MDBs should put a special focus on the poor since they are the most vulnerable. Since the focus on the poorest should primarily take the form of concessional lending, fair burden sharing in replenishing the concessional windows of MDBs should be achieved swiftly. A potential increase in the ordinary capital resources should be balanced against the replenishment of concessional windows.”
“The possibility to raise additional subsidy resources in the form of direct contributions by members is currently explored by the IMF”.
RESPONSE: the EU has not provided sufficient additional funding for the World Bank and IMF that would enable them to give additional grants or concessional loans to compensate low-income countries for the shock caused by the crisis. All categories of developing countries face a financial shortfall this year, which will force them to cut spending (at a time when Europeans are increasing it) or stop paying foreign creditors. Further funding or a moratorium on debt payments is required.
The EU common position states: “It is important for developing and transition countries to have their voice strengthened in the World Bank Group.”
“The EU is committed to the goal of aligning members' voice and representation with their relative weight in the world economy and reiterates its support for a general quota review by January 2011. [But] While we share the expectation that this review will lead to an increase in the voting shares for dynamic emerging markets and developing countries, the EU insists that the process should be objective and formula-based so that it affords equal treatment to all IMF members.”
"We are not in favour of a reduction in the size of the [IMF] board".
RESPONSE. The over-representation of the European Union, which occupies one thirds of the seats in the World Bank and IMF boards, is the main obstacle to reform. Until the EU comes forward with a consolidation proposal there is not going to be progress on representation. One interim proposal is for double majority voting for certain key decisions, which would The IFIs’ response to the economic crisis is being constrained by the failure to sort out the governance question.
The EU common position states: “full implementation of the $250 billion trade finance package agreed by the G20 summit in London is essential to further support trade flows. EU Member States via their official export credit agencies have made available a total of 100 billion euro (approximately USD 140 billion at current exchange rates) to support short-term trade finance in view of the ongoing crisis. The initiative could be extended to encompass the medium- and long-term segment of the market”.
RESPONSE: the additionality of trade finance provided against the G20 London pledge is very dubious. The amount of trade finance support for low-income countries is very little.
The EU common position states: “We must make progress on improving the transparency of oil markets, including their derivative markets, by making data available on a reliable, wider and more frequent basis. The EU calls for an improvement in the safety of OTC markets for derivatives by introducing appropriate mechanisms to mitigate the risks present in those markets and by increasing their transparency. To this end, the G20 should promote regulatory cooperation to establish and apply consistent international standards”.
RESPONSE: This is timid, the EU should introduce strict position limits that prevent financial companies speculating on essential commodities such as oil and food. This is the core approach in proposed US legislation.
* EU position for the G20 ministerial and governors meeting of 4-5 September 2009. Terms of Reference.