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Human rights obligations frame States’ choices in lead up to Financing for Development

In a new document entitled “Key messages on Human Rights and Financing for Development” the Office of the High Commissioner for Human Rights (OHCHR) teased out several implications of the human rights legal framework for the Financing for Development Conference.

Negotiations towards the adoption of an Outcome Document for the Third International Conference on Financing for Development (FfD), to be held on 13 to 16 July in Addis Ababa, Ethiopia, are already underway. The Conference is mandated to assess progress, made in the implementation of the Monterrey Consensus and the Doha Declaration (on Financing for Development), . . .  identify obstacles and constraints encountered in the achievement of the goals and objectives agreed therein, as well as actions and initiatives to overcome these constraints, and address new and emerging issues, including in the context of the recent multilateral efforts to promote international development cooperation…”

The expected Outcome Document will have, just like previous FFD conferences and the expected Outcome of the Summit on the Post-2015 Agenda, the status of soft law. It is important to bear in mind   that such negotiations do not take place in a vacuum. Hard law obligations embedded in the international human rights instruments previously ratified by countries frame the choices of negotiating countries in terms of what outcomes should or should not be agreed. Thus, the relevance of the guidance provided by the OHCHR and interpreting what such obligations mean for FfD cannot be overstated.

The OHCHR called to endorse a financing framework that equals the ambition of the post-2015 development agenda, reminding that this obligation corresponds closely with the obligation, under core human rights treaties, of States acting individually and collectively to mobilize and allocate the maximum available resources for the progressive realization.

In keeping with the human rights framework, “National financing strategies, fiscal policies, tax systems, subsidies, development plans, and budgets should benefit the poorest and most marginalised and be the product of transparent and participatory processes,” the OHCHR said. At the same time, it recognized that all countries bear responsibilities for international cooperation and to create an international order in which all human rights can be realized, recalling that “Millennium Development Goal (MDG) 8 on a “global partnership for development” was the weakest of all MDGs, lacking time-bound targets, as well as failing to address global inequalities and power imbalances.”  The new global partnership for sustainable development must address tackle global inequities including in trade, finance and investment, as well as combatting corruption, illicit flows of funds, trade mispricing and tax evasion.

Since the role of the private sector in financing the new framework has emerged as one of the most contentious issues on the agenda of the Third FFD Conference, several of OHCHR’s messages are related to the human rights implications of such role. The OHCHR called for the risks and benefits of public –private partnerships and blended finance instruments to be shared equitably: “States have an obligation to actively prevent investments from undermining human rights. They must ensure that all investment activities, including foreign direct investment, comply with human rights obligations. States should establish appropriate regulations and oversight mechanisms to protect human rights from the potentially negative impacts of public-private partnerships and blended finance instruments.”

The Guiding Principles on Business and Human Rights acquire greater importance, the OHCHR also said. “States and businesses should incorporate social, environmental, labour, human rights and gender equality considerations into their activities  and subject public private partnerships to human rights safeguards and rigorous due diligence, including human rights impact assessments.”

Additionally, the document stated the need for “ensuring that the provisions of international trade and investment agreements do not protect investor interests at the expense of State policy space to promote the realization of human rights.” This will be an important item for discussion. The Third FFD Conference finds a different landscape than its predecessor conferences, with a growing unease regarding the constraints imposed by investment treaties on policy space manifested in the withdrawal from such treaties and/or their arbitration mechanisms by States that have been parties to them.

The regulatory action required by the State is strongly emphasized, as the document mentioned the need for legal frameworks that “include human rights and sustainability criteria and align investor incentives with the SDGs. They should go beyond voluntary reporting and require all companies to undertake mandatory Economic, Environment, Social, and Governance (EESG) reporting commensurate with the level of risk posed by their activities.”

Addressing the problems associated to sovereign debt restructuring, the OHCHR said that, in keeping with the obligation to cooperate to mobilize maximum available resources for the progressive realization of human rights, unsustainable debt burdens should not be permitted to threaten State efforts to fulfil their human rights obligations. It called on all States, international financial institutions, relevant United Nations agencies, funds and programmes and the private sector, “to agree to guidelines that ensure sustainable, transparent lending and borrowing that benefits and is accountable to people, taking into consideration the guiding principles on foreign debt and human rights endorsed by the United Nations Human Rights Council.” Indeed, the adoption of the Guiding Principles on Foreign Debt and Human Rights and the adoption of UNCTAD’s Principles on Responsible Sovereign Lending and Borrowing are the two main normative developments taking place this area after the Doha Declaration and that the Third FFD Conference’s Outcome will have to report.

Another normative process underway that is taking place at the very heart of the United Nations and that the Addis Ababa Summit will have to report upon, is the General Assembly’s ongoing negotiations on a multilateral legal framework for sovereign debt restructuring. The OHCHR recognized that “All States would benefit from a permanent, fair and effective sovereign debt workout mechanism.”

The accountability of the financing framework was not exempt from attention in the OHCHR document. As stated above, one of the tasks of the Addis Ababa Summit will be to strengthen what has so far been a feeble follow up mechanism for the Financing for Development discussions at the UN.

The OHCHR called to “regularly review and monitor the global partnership for sustainable development based on specific, measureable, time-bound targets to ensure the accountability of all States for their commitments.” In detailing further its proposal, the OHCHR called for a review that includes a global peer review dimension, draws upon and feed into existing monitoring mechanisms, including by integrating in a structured manner the work of relevant human rights bodies, and goes beyond the tracking of financial flows to assess the development results of such financial flows as well as progress on addressing systemic issues.

Read full Key Messages.

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