Submission
The views of the Alliance of Small Island States (AOSIS) are generally reflected within the submission of the Group of 77 and China. AOSIS associates itself with these expressed views, and takes this opportunity to reiterate the issues of specific concern to small island developing States (SIDS). Within the existing international economic environment, small island developing States face peculiar challenges. Among the many constraints are small and narrow resource bases that do not allow for economies of scale; limited market access; fragile natural environments and vulnerability to natural disasters; and high costs of energy, infrastructure, transportation and communication. Small island developing States need to build their technology capacity through science and technology transfer and the enhancement of information and communication technologies. The particular vulnerability of small island developing States to exogenous environmental and economic events impedes their opportunities for development. Their structural weakness constrains their competitiveness and ability to participate effectively in the international economic and trading system, while the process of globalization compounds the risks of their marginalization. Furthermore, these factors also limit the prospects of these countries’ ability to attract foreign direct investment and other international private flows. The International Conference on Financing for Development should focus on the needs of all developing countries. AOSIS comprises a group of small island developing States that includes least developed countries and middle-income developing countries. Some of their needs are: • Continued access to official development assistance, particularly for access to social investment; • Concessional financing arrangements; • Reduction of debt servicing and debt stock; • Access to private capital flows; • Establishment of a normative and legal framework for the conduct of foreign investors; • Improved access to markets and improved terms of trade for developing countries; • There is a need for a harmonization of the framework used by international trade, development and financial institutions for assessing small island developing States that takes into account their vulnerabilities and special needs; • Small island developing States will continue to require 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 should be given to the establishment of an international fund to stabilize commodity export prices to compensate for loss of export earnings due to major fluctuation in commodity prices; • Special and differential treatment should be made operational and meaningful by tagging it to sectors of specific interest to developing countries; • Small island developing States need financial and technical assistance to support their efforts to strengthen their institutional capacity and human resource base, particularly with a view to building capacity for effective participation in trade negotiations and for implementation of trade agreements; • The sanitary-phytosanitary and subsidies and countervailing measures agreements need to take into consideration the special needs of small island developing States. Consideration should be given to the revision of the WTO rules with a view to granting greater flexibility of subsidies for developing countries; • The Agreement on Agriculture should be amended to take into consideration small island developing States need for waiver of obligation under the agreement whenever agricultural production is severely damaged by natural disasters, given the vulnerability of small island developing States to natural disasters; • There is an urgent need for consideration of a comprehensive set of measures to address the issues of debt management, debt servicing and debt reduction in developing countries for heavily indebted low and middle-income countries; • The particular vulnerabilities of small island developing States are of special concern. These considerations must be taken into account in the review of their capacity to meet and manage debt obligations; • Where heavily indebted developing countries are concerned, there is a tendency towards risk aversion among private capital investors and a general lack of availability of such flows. The HIPC initiative should be enhanced and expanded to include middle-income developing countries. It should be made more flexible and adequate resources should be provided for its financing; • There is a need to establish a more participatory, transparent consultative process between developing countries and the relevant financial institutions and rating agencies; • There is a need to examine the scope for participation of small States in the decisionmaking 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; • International financial and development institutions should strengthen their monitoring mechanisms for performance evaluation of the implementation of assistance programmes for developing countries; • There is a need for an inclusive global forum to promote and enhance cooperation between national tax authorities on international tax policy and investment matters in a balanced and equitable way. Such a forum would enable developing countries to participate in the dialogue and decision-making process on questions of international tax policy and investment, and would take into account differences in size and level of development of countries; • There is a need for a transparent and participatory international mechanism for the implementation of global standards of regulation, operation and best practices in international tax matters that negates the influence of regional or special interest groups of countries; • International financial institutions and creditrating agencies should devise more holistic and relevant credit ranking systems that would induce investors to make more appropriate assessments of the true risk-return scenario in small island developing States; • Greater effort is required on the part of donor countries to meet the international commitments of 0.7 per cent of GNP for ODA. At the same time, donors should commit themselves to avoiding any further reductions in ODA; • Donor countries should commit themselves to achieving their ODA targets within a specified time frame, preferably by the year 2010; • More predictable ODA flows should serve as important leverage for the mobilization of private resources through support for capacity-building, human resource development and the strengthening of the domestic enabling environment.
