The 16th Ministerial Conference of the United Nations Conference on Trade and Development (UNCTAD 16) took place last week amid global trade disruptions and a severe funding crisis across the UN system. While these challenges underscore the growing importance of UNCTAD’s role as a heterodox body for trade and other economic policies, they also made it a difficult moment to define the organization’s mandate for the next four years. Nevertheless, the outcome document was adopted by consensus and it includes several noteworthy innovations to UNCTAD’s role. 

Global gathering while the UN system in crisis mode

Delegates were greeted with heavy rains as they entered the recently renovated UN Assembly Hall in Geneva, whose grandeur stands in sharp contrast to the severe budget crisis currently facing the entire UN system. Cost saving was one of the reasons why UNCTAD 16 was relocated from its originally planned host country, Vietnam, to the UN compound in Geneva.  

There was a certain irony in the fact that the official host country for this UNCTAD conference – which, for many, is a UN format to promote heterodox voices of the global south against the global north-dominated development economics course – was Switzerland. However, Geneva holds a symbolic significance as the site of the first UNCTAD conference in 1964. More than six decades later, with 170 delegations and 3,300 participants, UNCTAD 16 achieved a remarkable attendance. It certainly helped that UN Member States already have large, well-established missions in Geneva. 

The high-level speakers at the opening session tried to put a brave face on matters. Mia Mottley, Prime Minister of Barbados, opened proceedings with a rallying battle cry: “Now is not the time to retreat; now is the time to reinvest in multilateralism!” Annalena Baerbock, the President of the UN General Assembly, also tried to inspire hope. She called for debt to be transformed into a tool for development, and for trade to be used as a tool that unites rather than divides. 

The crisis of multilateralism featured in many opening statements. In the words of UNCTAD Secretary-General Rebeca Grynspan: “It has been a tough year for trade, and an even tougher year for trade ministers and foreign ministers.” UN Secretary-General António Guterres highlighted the dire consequences, especially for least developed countries (LDCs): some are now facing “extortionary tariffs” of 40 percent. Grynspan praised the fact that, despite the unilateral tariff hikes by the US, tariff escalation had been prevented, unlike in the 1930s. She welcomed the fact that most players were keeping calm and carrying on, and that global trade remained stable: “The system has learned to bend without breaking,” she concluded. 

In my capacity as Managing Director of GPF Europe, I was invited to contribute a critical perspective at a side-event on the emerging issue of credit ratings and reform of the system of credit rating agencies (CRAs). According to many, this was one of the best and certainly most interactive discussions of UNCTAD 16. I was joined by representatives from the credit rating agency Moody’s, Brazil and independent academia. We used the opportunity to present a to-do-list on CRA reform for UNCTAD and the UN system as a whole – a little sneak preview for our upcoming report on the cost of capital. 

Innovations in debt governance

Perhaps surprisingly, when it comes to actual innovations, debt appears to have attracted more attention than trade. The debt crises continue to play a prominent role in UNCTAD’s deliberations. And for good reason: Today, 3.4 billion people live in countries whose governments spend more on interest payments than they do on education or healthcare. And that number is rising, warned Rebeca Grynspan, referring to UNCTAD’s research on the world of debt. 

Two major innovations played a prominent role at the Conference:

The first is the Borrowers’ Platform, one of the innovations agreed at the Fourth International Conference on Financing for Development (FfD4) in Sevilla this summer. On day one of the conference, UNCTAD 16 devoted a whole ministerial session to the platform, for which UNCTAD might play the Secretariat role, pending a decision by the UN Secretary-General. The design is a work in progress. But it will probably have three pillars: coordination of borrower countries, including joint positioning; capacity development; and creating synergies with other platforms. It is designed to be a platform for borrowers only, i.e. mainly countries from the global south. Some are very committed to it. Ahmed Kouchouk, Egypt’s Minister of Finance, who spoke at the session, stressed that, “Egypt will do whatever it takes to make it happen”. 

The second is the Sevilla Forum on Debt. Here, Spain is in the lead. It was launched prominently at a press conference on the margins of UNCTAD 16, attended by Carlos Cuerpo, Spain’s Minister of Economy; António Guterres, the UN Secretary-General; Rebeca Grynspan; and Li Junhua (UN Department of Economic and Social Affairs – DESA). The forum is due to meet once a year in Sevilla, on the anniversary of the Fourth UN Conference on Financing for Development. Initially, the task will be to discuss responsible lending and borrowing principles. 

However, neither of these two bodies is expected to initiate the long-overdue reforms of the international debt architecture. Although an intergovernmental process for this purpose was mandated at FfD4, this has yet to be implemented. 

Incremental change to the UNCTAD mandate

Given the massive changes in issues within UNCTAD’s remit over the last four years, such as trade and debt, one might have expected a major shift in the organization’s mandate too. But the revolution failed to materialize. The final document from UNCTAD 16 – the Geneva Consensus – is surprisingly conservative. Most articles simply begin with “continue to ...”. But perhaps that in itself could be hailed as a success for UNCTAD, because a reduction in its mandate is at stake at every Quadrennial Conference. The new mandate continues to encompass the three pillars of consensus building, research and technical assistance. In addition to the core area of trade, UNCTAD continues to cover a range of other areas, from investment and debt to climate change and the digital economy.

It appears that UNCTAD’s mandate in the area of development financing and international financial architecture has been strengthened following the Sevilla Conference. For example, UNCTAD is to support work on responsible lending and borrowing. And, for the first time, the organization’s mandate explicitly includes climate financing. Interestingly, no consensus could be reached on a mandate for UNCTAD to work on progressive taxation, inexplicably due to an objection by the EU, which supported the political decisions of the G20 process and the FfD4 conference in this area; only taxes in the context of investment are mentioned. The G77 proposal for a biannual forum on international financial architecture reform also failed to achieve consensus.

The Geneva Consensus was indeed adopted by consensus, late on the last day of the conference, which cannot be taken for granted these days. Most see the agreements made as a good basis for UNCTAD’s work over the next four years. UNCTAD would certainly welcome an extra budget to implement it. As things stand at present, 77 jobs will be lost at UNCTAD next year, which represents 20 percent of the total workforce. This will undoubtedly make the challenges of providing their important services to member states even greater than ever before.