Developed nations resist bid to give agency more powers

Foreign Affairs Cabinet Secretary Amina Mohamed addresses the media at KICC in Nairobi on July 20, 2016. She told reporters that negotiators participating in the trade conference were still discussing a final document to be publicised today. PHOTO | SALATON NJAU | NATION MEDIA GROUP

What you need to know:

  • On Thursday, Unctad Secretary-General Mukhisa Kitui said there was general consensus that his organisation continues to have advisory roles on issues of international economic cooperation.
  • Developing countries argue that bodies like OECD can handle the work with advise from Unctad as is tradition.

African countries have lost their bid for the United Nations body to draw up rules and enhance monitoring of tax cheats among multinationals.

The blow came last evening after delegates to the United Nations Conference on Trade and Development (Unctad) spent the penultimate day trying to iron out contentious issues for a favourable agreement.

Foreign Affairs CS Amina Mohamed, who is also Unctad 14 president, told reporters that negotiators were still discussing a final document to be publicised today.

“We are working hard to address all the issues. Tomorrow, we wind up discussions and we will be at hand to provide detailed information on the outcome of this conference,” she said.

But details emerged that developed nations had resisted the idea of strengthening Unctad to be the main UN agency that regulates global financial rules on taxation as well as tame illicit financial flows in the world.

Developing nations under the Group of 77 and China had pushed the agenda, arguing it would help tame multinationals.

On Thursday, Unctad Secretary-General Mukhisa Kitui said there was general consensus that his organisation continues to have advisory roles on issues of international economic cooperation.

“The mandate of Unctad to help work out issues of governance and cooperation, and particularly principles of a new regime of investment agreements, is not controversial. And is embraced by most members of the UN family, and we expect that to be reflected in the outcome document,” he told the media.

“The negotiations going on include attention to questions of enhancing the work of international cooperation on investment governance,” he added.

It was a vague explanation that tax justice activists camping outside said would not suffice.

The activists issued a declaration of their own, suggesting that Unctad be empowered to watch over private investors, tax evasion, responsible lending by developed nations and control trading systems to ensure they support integration, not divisions.

“The Unctad IV outcome document must give full support to the Unctad mandate on curbing tax evasion and avoidance, including in commodity markets and through investment policies,” the 400 civil society groups said in their 11-page document.

“More broadly, the issue of changing international tax rules and closing loopholes that facilitate and enable international tax evasion and tax avoidance cannot just be dealt by the Organisation for Economic Cooperation and Development (OECD), which excludes the vast majority of developing countries,” they said.

STICK TO YOUR RESPONSIBILITY
The suggestion to enhance Unctad’s mandate from an advisory and research-taking institution to a rule-making body was challenged by the EU and US, who though publicly agreed on the need to go after tax cheats.

Developing countries argue that bodies like OECD can handle the work with advise from Unctad as is tradition.

The OECD, a 35-member intergovernmental organisation, includes rich countries and is meant to draw up economic and trade policies, especially on free markets.

Its members routinely argue that they discuss these issues with non-members and hence it serves everyone, despite accusations that it is a club of the rich.

Activists in turn accused developed countries of pushing their own interests and ring-fencing the global economy from the poor.

“It is extremely important that Unctad gets a strong mandate to develop solutions to solve this crisis. The longer we wait, the more money will be lost,” Tove Maria Ryding, tax coordinator at European Development and Debt, told Nation,

She was referring to monies lost through illicit financial flows.

“The rich countries have a long list of things they want developing countries to do when it comes to taxation, but we currently don’t have any body that can give developing countries independent advice on how to stop tax dodging,” she said. 

On Wednesday night, developed nations managed to have these proposals watered down from the original powerful Unctad to deal with tax rules to the usual body charged with advising others.