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DRAFTING GROUP A

The Chair, Magn�s J�hanneson (Iceland), opened the meeting with a minute of silence to honor those who were killed in the Oklahoma bombing.

The G-77/China said that it had not discussed the drafts on changing consumption patterns and trade, environment and sustainable development and requested that discussion be deferred until Friday. The G-77/China also announced that it had reformulated the Chair's drafts on poverty and demographics and that the texts would be distributed later in the day.

FINANCIAL RESOURCES AND MECHANISMS: In paragraph 3 (ODA), the G-77/China added references to the decline of ODA in absolute terms. The US objected. The US proposed qualifying the ODA target in sub-paragraph 5(a) (new approaches to ODA) as the "0.7% target for those countries which have accepted it." The G-77/China objected. The US proposed a reference to reform measures in recipient countries in paragraph 5(d) (public support in donor countries for raising ODA).

The EU called for a reference in paragraph 7 (trends in private capital flows) to reflect the positive contributions of private capital to sustainable development. In paragraph 8 (private foreign investment), the G-77/China referred to international safety nets to address the negative effects of private capital outflow from developing countries. The US reserved its position.

In paragraph 9 (debt relief), the EU and Australia proposed a reference to the implementation of the Naples Terms. The G-77/China wanted to delete references to the efforts of the Paris Club to improve terms for debtor countries.

In paragraph 10 (innovative measures), the EU and others proposed deleting the reference to debt-for-equity swaps, arguing that the concept is ambiguous. The G-77/China requested specific language on commitments for developed countries. In paragraph 12 (IFIs), the G-77/China called for additional funds for the Bretton Woods institutions to support sustainable development efforts. The US objected to any language that would bind these bodies. In paragraph 14 (GEF), Canada, supported by the EU and Australia, felt that the paragraph did not reflect the GEF's progress and that it was premature to advocate further replenishment. The G-77/China objected and Colombia referred to previous CSD recommendations for additional replenishments. Japan objected to directing the GEF in any way. India highlighted key problems with the GEF, in particular, the extremely slow appraisal process, which takes about 3� years. In paragraph 15 (other funding sources), the G-77/China objected to efforts to direct national action. The US supported its retention. The G-77/China called for deletion of paragraph 16 (environmental taxes). The US, the EU and Canada objected and expressed frustration with the G-77 and China's attempts to replace specific recommendations of the intersessional working group with general reiterations of Agenda 21. Similar arguments were raised regarding paragraph 17 (benefits of economic instruments) and paragraph 18 (obstacles to economic instruments). In paragraph 20 (economic instruments studies), Australia added a reference to the need to dismantle environmentally unfriendly subsidies. The G-77/China called for deletion of the entire paragraph. The US objected.

Despite the Chair's appeal, the G-77/China called for the deletion of paragraphs 20-29, which deal with economic instruments. In paragraph 30 (CO2 permits and joint implementation), the US and the EU called for recognition of the results of the Climate Change Convention COP. The G-77/China called for deletion of paragraph 32 (application of innovative mechanisms to the sectors). The EU, US and Australia disagreed. Morocco said that the complexities of the economic instruments are not fully understood and may present tremendous difficulties for developing countries.

The US called for references to intellectual property rights in paragraph 33 (transfer of ESTs) and to national capacity building policies in paragraph 34 (transfer of ESTs and biotechnology). The G-77/China proposed deleting paragraph 35 (investment in EST). The EU and the US objected.

In paragraph 36 (financing of ESTs), the EU reserved on the reference to EST rights banks.

There was a lengthy discussion about the merits of paragraph 43, which summarizes the key proposals in the draft. The G-77/China called for its deletion, arguing that it merely reiterated the proposals outlined in the draft. The US and the EU called for its retention.

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