Statement by Tuvalu
on Behalf of the Alliance of Small Islands (AOSIS)
delivered by HE Mr Enele S Sopoaga, Permanent Representative to the UN and Vice-Chairman of AOSIS

Wednesday 12th November 2003

Second Committee Agenda Item 104: Follow up on the International Conference on Financing for Development

Mr. Chairman,

Tuvalu is honoured to speak on behalf of the Alliance of Small Island States (AOSIS) on the issue under agenda Item 104. As for other AOSIS statements this statement is also aligned with the statement made by the distinguished representative of Morocco on behalf of the Group of G- 77 and China.

The High level Dialogue on Financing for Development held two weeks ago had renewed the commitment of the international community to move forward actions on international financing for development. Whilst the dialogue could have been more interactive, and accessible especially to small delegations, AOSIS Members would like to commend highly the President of the General Assembly and his Office for taking the leadership in launching the initiative and guiding the Dialogue.

We support the proposals contained in the President’s summary of the High Level Dialogue, and hope that they will be seriously considered in the relevant resolutions of this General Assembly Session. We also feel that due consideration should also be given to putting in place an appropriate mechanism, which would effectively monitor and follow-up the process of the Monterrey Consensus within the UN system and with clear linkages to related international agendas.

Mr. Chairman,

The special and unique resource poor circumstances of the SIDS are well acknowledged in all international development agendas. However, some of the critical issues of concern to us in SIDS need to be further underscored here.

As it is known, within the existing international economic environment SIDS face peculiar challenges and constraints. Amongst the many, are the small and narrow resource bases that do not allow for economies of scale; the remoteness from main market access, the fragility of natural environments and unique vulnerability to natural disasters; and the exceedingly high costs of energy, infrastructure, transportation, and of communications. There is also the apparent lack of technological capacity within SIDS and the urgent need to build such capacity through science and technology transfer and through the enhancement of information and communication technologies.

These challenges are unique to SIDS, and are further exacerbated by the extreme vulnerability of SIDS to external forces of economic, social and environmental happenings. In all, they present significant constraints that impede opportunities for development. Our structural weakness constrains our competitiveness and ability to participate effectively in the international economic and trading system, while the process of globalization compounds the risks of SIDS becoming even more marginalized.

When the distances are marked by vast spaces of oceans, the tasks of development, let alone of integrating into the world economy, to these already weak and disadvantaged countries become even more daunting. SIDS need special, innovative and urgent financial assistance to jump start, and to mobilize resources to develop and sustain their comparative advantage.

Furthermore, Mr Chairman, the above factors also limit the prospects of SIDS’ ability to attract foreign direct investment and other international private flows. The risks posed particularly by the environmental vulnerability of SIDS, simply adds on as a further disincentive to FDIs in these small and vulnerable economies. They make the SIDS even more unattractive to investors.

It needs to be noted that measured by the yardsticks and conditionality of the Monterrey Consensus, Mr Chairman, all regions of SIDS are well ahead with the qualifications of good governance, accountability and transparency. The Pacific Islands Forum Economic Ministers Eight Principles of good governance and accountability, for example, was launched in the Pacific region almost some ten years ago long before preparations for the UN FfD, with the aim of improving the investment environment. Yet, like in all SIDS regions we are still to see a significant inflow of FDIs in our regions.

Clearly, it should be more than obvious to the international community then that the "one-size fit-all' policies, have not, and do not work for all developing countries, certainly not for SIDS. For international efforts to succeed, the international community including international institutions should take into account the differences in size and the level of development of SIDS while addressing their specific needs for sustainable development.

Mr Chairman

The International Conference on Financing for Development in Monterrey last year did indeed focus on the needs of all developing countries. But in view of the above backgrounds common in all AOSIS Member States, some of who are also least developed countries (LDCs) and middle income developing countries, of paramount importance to us SIDS is the assurance of predictable flows of foreign direct aid (ODA’s) in the form of direct grants. To many SIDS, ODA is appreciatively the whole development budget, and is instrumental to stability and security. With the erosion of domestic financing resources from elimination of tariffs on imports and the loss of income from preferential treatments on commodities due to WTO rules, the role of ODAs to SIDS has become even more significant particularly for gaps filling in capacity building, human resource development, and strengthening the domestic enabling environment.

In these respects, it is AOSIS earnest hope that the Financing for Development Dialogue process would lead to greater efforts by donor countries to meet the UN agreed target of 0.7% of GNP for ODA, and to commit to avoid any further reduction in ODA in the future. The process should also lead towards concessional financing arrangements, reduction of debt servicing and debt stock, improving access to private capital flows and better access to markets and balance of trade for SIDS.

Mr Chairman

An important source of financial flows to developing countries, particularly also of significant importance to SIDS, is the migrant workers’ remittances from developed countries. For many SIDS remittances from overseas employments as sea-farers, domestic services providers, farming hands, and many semi-skilled labour, as to many developing countries, are a vital source of income. Considering that the recorded migrants’ remittances of $100 billion per year is two times more than the total ODA, AOSIS strongly supports that the issue of migrants rights and security should also be given proper attention on the international agenda, to ensure sustaining this vital source of capital.

In order for the AOSIS Member States and other small vulnerable economies to be better integrated into the world economy, the following issues will need to be given proper consideration as well:

• Harmonization of frameworks used by international trade, development and financial institutions for assessing SIDS that take into account their vulnerabilities and special needs;

• The continuing need for SIDS to have selected preferential market access in the short to medium term. Adequate time frames are necessary to allow for the adjustment to free market conditions and to facilitate diversification of potential growth sectors;

• Consideration for the establishment of an international fund to stabilize commodity export prices to compensate for loss of export earnings due to major fluctuations in commodity prices;

• Special and differential treatment should be made operational and meaningful by tagging it to sectors of specific interest to SIDS and developing countries;

• Need for financial and technical assistance to support and improve SIDS capacity to effectively participate in trade negotiations and in the implementation of trade agreements; and

• Need to examine the scope of participation of Small States in the decision making processes of the International Financial Institutions. As far as is possible, International Financial Institutions should take a regional approach in dealing with development issues. Such a framework could facilitate self-regulation and self-responsibility as well as economies of scale in implementing programmes.

Next year in August, we shall be undertaking a comprehensive review of the UN Programme of Action for the sustainable development of SIDS, adopted in Barbados ten years ago, to identify the causes of failures in the programme’s implementation, and to work out practical actions towards addressing the special challenges and constraints facing SIDS. Whilst preparatory work for the International Conference in Mauritius is ongoing, it is already clear that a major cause of the failures in implementation can be attributed directly to the absence of adequate funding to honour the commitments made in Barbados. The review will therefore focus mainly on the real means of implementation.

As we look forward to working closely with the internationa1 community towards the Mauritius Conference next year, AOSIS hopes that the dialogue process on financing for development will provide a useful mechanism for the further facilitation of addressing the sustainable development needs of small islands developing States like Tuvalu in the future.

Thank you.