Summary report, 23 February – 2 March 1994

At its first substantive session in June 1993, the Commission onSustainable Development (CSD) established two ad hocopen-ended working groups on financial flows and mechanisms andtechnology transfer and cooperation to meet during the CSDintersessional period. These two working groups met at UNHeadquarters in New York from 23 February - 2 March 1994. Theworking groups were composed of governments, which nominatedexperts in order to assist the Commission in its work. The outcomeof these working groups was not intended to be a negotiated textbut an agreed list of policy options/recommendations for theconsideration of the CSD at its 1994 session, which will be heldfrom 16-27 May in New York.

Although the two working groups have prepared lists ofrecommendations to be submitted to the CSD, these lists are notnearly as concrete and forward-looking as some delegates andobservers had hoped. Some government-nominated experts complainedthat the discussions were not technical enough due to the largenumber of representatives from UN missions who participated in themeeting. Some NGOs commented that the discussions repeated much ofthe well-worn rhetoric from Rio and countless otherintergovernmental fora. Some developed country delegates noted thatsmaller fora, such as the government-sponsored meetings held inOslo, Cartagena and Kuala Lumpur, are more productive than largeUN-sponsored all-inclusive intergovernmental working groups. Mostdelegates agreed, however, that little progress was made towardsresolving the North-South differences on the critical issues oftechnology transfer and financial resources and mechanisms duringthese two three-day working group meetings.

A BRIEF HISTORY OF THE CSD INTERSESSIONAL WORKING GROUPS

The Commission on Sustainable Development (CSD) held its firstsubstantive session from 14-25 June 1993 in New York. The agendafor the first session included the adoption of a multi-yearthematic programme of work; items relating to its future work;exchange of information regarding the implementation of Agenda 21at the national level; progress in the incorporation ofrecommendations of UNCED in the activities of the UN system;progress achieved in facilitating and promoting the transfer ofenvironmentally-sound technology, cooperation andcapacity-building; and initial financial commitments, financialflows and arrangements to give effect to UNCED decisions.

In order to facilitate the work of the CSD at its second sessionthe Commission decided to convene two ad hoc, open-endedintersessional working groups on the critical cross-cutting issuesof technology transfer and cooperation and financial flows andmechanisms. These working groups were conceived as meetings ofexperts nominated by governments. The reports of their work were tobe submitted to the CSD at its second session to be held in NewYork from 16-27 May 1994. At the same time the CSD encouragedmember states and others to hold informal inter-sessionalactivities. (For more information on the first session of the CSD,see Earth Negotiations Bulletin Vol. 5 No. 12).

WORKING GROUP ON TECHNOLOGY TRANSFER AND COOPERATION

The Working Group on Technology Transfer and Cooperation, which metfrom 23 - 25 February 1994, aimed to assess to present situationand to suggest specific measures to support and promote access toand transfer of technology, as stated in paragraph 34.18 of Agenda21. Specifically, suggestions to facilitate, promote and financetechnology transfer were to focus on the sectoral clusters underconsideration by the CSD. In 1994 the CSD is considering thesectoral issues of health, human settlements, freshwater resources,solid wastes and sewage, toxic chemicals, hazardous wastes andradioactive wastes. Cross-cutting sectoral issues that the CSDkeeps under constant review include accelerating sustainabledevelopment, consumption patterns, financial resources andmechanisms, technology cooperation and transfer, capacity building,institutions, legal instruments and the roles of major groups.

RELATED INTERSESSIONAL ACTIVITIES

The working group drew heavily on the work of two otherintersessional activities. From 13-15 October 1993 in Oslo, Norway,a workshop on the Transfer and Development of Environmentally SoundTechnologies, was organized jointly by the United NationsConference on Trade and Development (UNCTAD) and the Government ofNorway. This workshop was organized within the context of UNCTAD'songoing work in this field, but was geared towards the work of theCSD as well as an example of how these activities can be bettercoordinated. From 17-19 November 1994 a meeting on the Transfer ofEnvironmentally Sound Technologies, Cooperation and CapacityBuilding was held in Cartagena, Colombia and co-sponsored by thegovernments of Colombia and the United States. This meeting focusedspecifically on technologies dealing with liquid wastes and energyefficiency. (For more information on these two meetings, seeEarth Negotiations Bulletin, Vol. 5 No. 13.)

DOCUMENTATION

Together with the annotated provisional agenda contained indocument E/CN.17/ISWG.I/1994/1, the Working Group was presentedwith the Report of the Secretary-General on the transfer ofenvironmentally sound technology, cooperation and capacity building(E/CN.17/ISWG.I/ 1994/2). This document is divided into threesections: the first lists proposals that have emerged from the Osloand Cartagena meetings held prior to the working group; the seconddeals with generic factors affecting technology transfer; and thethird provides a sectoral focus based on the clusters to bediscussed at the CSD session later this year. Each delegation wasalso provided with a compendium of reference materials asbackground information. Significant input included the reports ofthe Oslo workshop and the Cartagena meeting, two papers submittedby the Tata Energy Research Institute on Technology Transfer in theContext of Global Environmental Issues and Access to Modern EnergyTechnologies and Their Transfer to Developing Countries, a paper bythe World Coal Institute on Technology Transfer Opportunities inthe Sustainable Production of and Utilization of Coal, and twopapers commissioned by UNDP from the Innovative Strategies inTechnology and Finance for Sustainable Development Projectinvolving scholars at Harvard University and the MassachusettsInstitute of Technology. E/CN.17/ISWG.I/ 1994/3 contains a letterfrom the Ambassador of Tunisia to the Secretary-General regardingthe proposed establishment of an environmental technology center inTunisia.

REPORT OF THE WORKING GROUP

The Intersessional Ad Hoc Open-Ended Working Group onTechnology Transfer and Cooperation was opened by Amb. RazaliIsmail of Malaysia, Chair of the Commission on SustainableDevelopment on Wednesday, 23 February 1994. He stressed thecross-cutting nature of technology transfer issues.

Marius Enthoven, Director General for the Environment in theMinistry of Housing, Planning and the Environment of theNetherlands was elected Chair of the Working Group. In hisintroductory comments, the Chair noted that using Agenda 21 as astarting point the Working Group should build on the work of otherintersessional meetings. These meetings began to develop anoverview of existing specific problems and barriers to the transferof environmentally sound technology (EST). He urged the WorkingGroup to consider the suggestions in the Secretary-General's reportin the context of: market demand for technology transfer and howthat demand can be stimulated at the national level; thedevelopment of a suitable infrastructure for technology transfer;and the role of transnational corporations (TNCs) in investing intechnology transfer to developing countries.

Items on the Working Group's agenda included an overview of thecurrent situation and trends relating to the transfer ofenvironmentally sound technologies; access to information onenvironmentally sound technologies; institutional capabilities andcapacity building; financial arrangements and technologicalpartnership; and the adoption of the Working Group's report.

Nitin Desai, Under-Secretary-General for Policy Coordination andSustainable Development, introduced agenda item 2, overview of thecurrent situation and trends relating to the transfer ofenvironmentally sound technologies. One reason why the UNCEDprocess attracted so much political energy was the public's growingsense of technological disquiet -- thus science and technology areseen by many as part of the problem. The role of the Working Groupis to show that science and technology can be part of the solution.The Working Group must provide policy makers with judgments despiteincomplete knowledge and must advise the political process.

The representatives of Colombia and the US jointly presented theresults of the Cartagena meeting. The discussion on technologytransfer for handling liquid wastes focused on proposals for actionto be considered by the Working Group: improving access toinformation; monitoring discharges and assessing the risk theypose; improving regulatory frameworks; financing the acquisition oftechnology; strengthening institutions in receiving countries;improving public awareness and support for needed actions; loweringtechnological risks; and minimizing legal obstacles and tradebarriers. The discussion on energy production and use focused onthe following areas: promoting and facilitating policy reforms thataccelerate the introduction of energy efficient technologies,practices and systems; fostering and financing internationaldissemination of information; promoting donor collaboration andcoordination; and working directly with recipient nations indeveloping the necessary absorptive capacity.

OVERVIEW OF THE CURRENT SITUATION AND TRENDS RELATING TO THE TRANSFER OF ENVIRONMENTALLY SOUND TECHNOLOGIES:

A number ofparticipants gave examples of experiences from their own countriesand regions. The Commission of the European Union reiterated itscall for patents to be purchased on commercial terms by governmentsand made available to developing countries. This had been suggestedby the European Union during the UNCED preparatory process. Moreemphasis should be placed on encouraging small- and medium-sizedenterprises to improve their technology transfer performance, aview supported by many others.

The Netherlands, Bolivia, Hungary and others stressed the need totake into account the preexisting conditions for successfultechnology transfer, i.e., the economic infrastructure and climateand human resource development. Uganda noted the present obstaclesto technology transfer should be studied in greater depth as shouldmechanisms to increase the ability of developing countries totransfer technology to other lesser developed countries.

Cuba took up these points linking issues of finance and technologytransfer. Developing countries should be able to choosenon-protected alternatives where a technology is protected bypatent. There was consensus that the private sector should bestrengthened in developing countries. Norway called for a casestudy of how entrepreneurs react to government stimulus of demandto transfer technology. The United States suggested a five-stepprocess: assess national needs and priorities for technologies;analyze the capacity to use them; examine existing sources ofsuccessfully applied technologies, with consideration for thesuitability of the country and its ability to maintain thetechnology; identify the obstacles to its transfer; and search fornew and innovative financial mechanisms to secure the transfer.

ACCESS TO INFORMATION ON ENVIRONMENTALLY SOUND TECHNOLOGIES (ESTS):

INSTITUTIONAL CAPABILITIES AND CAPACITY BUILDING:

The focusof the debate for most participants was how government can exercisepositive influence through its many roles as regulator, procurer,employer and partner by: improving regulatory frameworks;encouraging training of managers and technicians at all levels;eliminating obstacles; and using environmental impact assessments.A number of developing countries stressed that while capacitybuilding at the national level was important, the Working Groupshould focus on international flows of technology transfer andfinance that are necessary to support and develop capacity at thenational level. Capacity building should not continue inperpetuity, rather it should be geared so that local people to takeover. Capacity building should therefore be country driven andlocally controlled. Pakistan used the example of its participatoryapproach to its national conservation strategy. Cuba defined astaged approach: identify national and local needs; identify theextent that new financing is necessary to meet the identifiedneeds; and develop a long-term perspective and plan. Egyptsuggested that a limited number of countries, one or two from eachregion, carry out national case studies on ESTs identifying thereal needs for trained personnel; institutional capacity building;international financing; and the technologies themselves. A smallgroup then met to further elaborate such an idea.

FINANCIAL ARRANGEMENTS AND TECHNOLOGICAL PARTNERSHIP:

Whilemany participants noted that the Working Group on finance wouldfollow the Working Group on technology, and that this Group shouldconfine its discussion to practical issues relating to mechanismsto support technology transfer, a number of participants returnedto the language of Agenda 21 and the agreements reached in Rio. Thedeveloping countries were at pains to reiterate theirinterpretation of Chapter 33 -- industrialized governments had madecommitments to finance sustainable development and technologytransfer towards that end. Despite a downturn in the global economysince Rio, that commitment must still remain and developingcountries cannot be expected to finance their development alonethrough mechanisms such as swaps and private sector stimulation.China complained of the conditions attached to many bilateral aidagreements where the donor country's technology must be used andwhere the price of such technology is inflated above the marketprice. A number of participants discussed the relative values ofjoint ventures and venture capital funds; debt for EST andsustainable development swaps; use of financial incentives; taxholidays and enterprise zones; and the establishment of anenvironmental property rights bank, which should be furtherstudied. Many participants supported the BOT concept(Build-Operate-Transfer). Under this concept a private companybuilds a project, operates it long enough to pay back its debt andto achieve a return on equity and then transfer it to the hostgovernment. BOT is particularly appropriate for large scale plantssuch as municipal waste plants. Japan called for better donorcoordination at the country level and suggested that a separatefinancial facility be created at country level for joint venturesand that the private sector be encouraged in this way.

ADOPTION OF THE REPORT OF THE WORKING GROUP:

The mandategiven to the Working Group by the CSD called for it to "report" itsfindings and suggestions to the next session of the CSD. Despitethis there was confusion among the participants as they tried toresist the temptations of negotiating a final text. The Secretariatproduced a report based on the discussion of the Group and theChair asked that participants note elements that were missing orwhere emphasis may be wrong, and that they focus on the concreterecommendations of the Working Group to the CSD. The room filledwith diplomats accompanying their experts, and the Group movedparagraph-by-paragraph through the document making oral amendments.

The Secretariat's text tried to balance the points made byparticipants and incorporated the work of the two small informalgroups that had met on the proposal for a study of existinginformation resources and on the need for national needsassessments. A number of governments within the G-77 led by Brazilremarked that the overall report while reflecting the specificproposals made did not yet convey the spirit of the discussions.Specifically, the document should not prejudge the inability of theworld community to meet its goals and targets on financial issues.Similarly a number of developing countries, supported by Italy andsome other developed countries, felt that the draft presented bythe Secretariat focused too much on prescriptions for thedeveloping world and not enough on international action that couldimprove situations and trends. Others complained that the documentstressed too much technology for the environment and excludedtechnology for development.

Many preferred the Secretary-General's report that was provided tothe Working Group, which listed a series of concrete suggestions.There was also concern from developing country delegations,including Cuba, Uganda, Benin and Brazil, that while the FinanceWorking Group would follow the technology Group, concreterecommendations could be made by the technology Group forconsideration by the finance Group. Colombia asked that thedocument clearly delineate between the responsibilities ofdeveloping and developed countries.

The discussion of the report stalled a number of times overproblems of definition of intellectual property rights. There wasgeneral agreement that developing countries need to be able todevelop their own patenting capacity. Participants once againbecame confused over differences between technologies that areprivately protected, publicly owned and technologies in the publicdomain. Finally, it was agreed that it would be most useful torefer to technologies that are protected by patent and those thatare not, noting that those that are protected can be eitherpublicly or privately owned. The Philippines stressed thatattention should be paid to the enhanced use of and protection ofindigenous technologies, and that the report should stress that itis concerned only with helpful or environmentally benigntechnologies.

There was eventual agreement that without prejudging therecommendations of the CSD itself the report should recommend thatthe work continue and that arrangements for that work be flexibleand not exclude informal meetings such as those in Oslo andCartagena or the intergovernmental nature of this working group.

WORKING GROUP ON FINANCE

The Working Group on Finance met from 28 February - 2 March 1994.The purpose of this meeting was to provide a forum where financialexperts could develop a set of policy recommendations to assist theCSD in its deliberations on this issue at its next meeting in May.The experts were not expected to produce a negotiated text nor toreach consensus in their discussions. Rather, the report of theWorking Group became a menu of recommendations and proposedconcrete actions that will be forwarded to the CSD for furtherconsideration.

RELATED INTERSESSIONAL ACTIVITIES

A meeting on financial issues of Agenda 21 was convened in KualaLumpur, Malaysia on 2-4 February 1994 to prepare for this WorkingGroup meeting. Jointly sponsored by the Governments of Malaysia andJapan, the meeting was attended by 57 experts in their personalcapacities and was aimed at providing a forum for eminent personsfrom all over the world to exchange views on the financialdimension of the follow-up of UNCED.

The Kuala Lumpur meeting was organized as an informal open exchangeof views and ideas organized around the specific issues of: theinternational policy environment and economic instruments conduciveto mobilizing domestic and external financial resources toimplement Agenda 21, including matters related to terms of trade,commodity prices and access to markets, various forms of debtrelief, and the feasibility of international fees, taxes andgradeable permits; the national policy environment and economicinstruments conducive to mobilizing domestic and external financialresources to implement Agenda 21, including economic and fiscalincentives and mechanisms, promotion of foreign direct investments,and new schemes for fundraising and voluntary contributionsthrough other private channels, including non-governmentalorganizations. Two consultants' papers and several backgroundpapers were presented at the meeting. The meeting discussedbilateral and multilateral financing mechanisms including OverseasDevelopment Assistance (ODA) and debt reduction and conversion;environmental taxes and subsidies; market-based financialinstruments for CO2 abatement including tradeable permits; privatesector financing mechanisms; financing issues related to thesectoral clusters to be reviewed by the CSD at its meeting in May1994; and other financial mechanisms, including the GlobalEnvironment Facility (GEF); commodity prices and internationalcommodity related environmental agreements (ICREAs); redirectingmilitary expenditures to sustainable development; and transferabledevelopment rights and multilateral implementation of policyreforms.

The report of this meeting, containing specific proposals, was madeavailable to the working group. Some proposals considered worthy offurther consideration included: UNDP's Capacity 21 Programme;corporate environmental funds analogous to GEF; increased rentcapture on natural resources, in particular timber; theestablishment of national environmental funds; the application ofemissions trading to pollutants other than CO2; the introduction ofenvironmental stamps; the creation of a matching fund forsustainable development policy reforms; and taxing land values. Inall cases, issues related to economic efficiency,cost-effectiveness, environmental impacts, equity (in particular,effects on the poor), administrative requirements, andsustainability must be considered.

The meeting asked the working group to pay particular attention tointensifying efforts to increase ODA and debt relief; increasingthe contribution made by the international financial institutions(IFIs) to the financing of sustainable development; encouraging amultilateral process for the coordinated introduction ofenvironmental taxes and the coordinated reduction ofenvironmentally harmful subsidies; utilizing the potential ofmarket-based financial mechanisms for environmental protection; andharnessing the financial contribution of the private sector,especially in cooperation with the public sector, to sustainabledevelopment.

DOCUMENTATION

The provisional agenda for the meeting of the ad hoc workinggroup was contained in document E/CN.17/ISWG.II/1994/1. TheSecretariat prepared a report on Financial resources and mechanismsfor sustainable development: an overview of current issues anddevelopments, as contained in document E/CN.17/ISWG.II/1994/2. Thereport is divided into three parts. In the first part, the reportexamines international finance for sustainable development andfocuses in particular on world economic growth, international tradeand terms of trade, recent trends in ODA, foreign direct investmentand debt relief. In the second part, the report examines thenational policy environment and its impact on financing forsustainable development, especially the increased use of economicinstruments in environmental policies such as taxes, encouragementof private sector financing and the clarification of propertyrights. Part three looks at innovative mechanisms such as debt fornature swaps, other swaps, tradeable permits and venture capitalfunds for greenhouse gas emissions.

Five background papers were also prepared on the sectoral issuesunder review by the CSD at its 1994 session. Background Paper No.1, Financing of Health for Sustainable Development, starts with anoverview of various issues related to the assessment of needs forthe financing of health and discusses a number of technicalapproaches. The paper then analyzes costing health, which issupported by a needs-population matrix. Finally, the paperdiscusses the desirability of a new approach to the financing ofhealth in the context of sustainable development policies.Background Paper No. 2, Financing of Human Settlements forSustainable Development, focuses on the three key areas of shelter,infrastructure and recurrent costs. Within these areas, emphasis isplaced on assessing the needs for financial resources, the adequacyof existing funding flows, and financial policies and mechanisms.Background Paper No. 3, Financing of Toxic Chemicals forSustainable Development, reviews this issue using the frameworkprovided by Chapter 19 of Agenda 21. The analysis of estimates forthe various programme areas focuses on assessing the currentfinancial flows and their adequacy and discusses funding policesand mechanisms. Background Paper No. 4, Financing of HazardousWastes for Sustainable Development, analyzes financial resourcesand mechanisms for hazardous wastes and addresses programme areasA to D of Chapter 20 of Agenda 21. It focuses on the assessment offunding needs, analyzes current flows and their adequacy andevaluates funding policies and related policies. Background PaperNo. 5, Financing of Freshwater for Sustainable, prepared by theWorld Bank contains a detailed discussion of the provision of watersupply and sanitation services the need to address the rapiddegradation of the aquatic environment, in particular in urbanareas of low-income developing countries. The paper also discussesthe cost of providing services and how services are financed. Inthis context, the paper addresses issues such as levels of publicfinancing, relationship between costs and pricing and the questionof subsidies. Finally, the paper analyzes the conventional views offreshwater financing and elaborates on new views of sectorfinancing.

UNCTAD produced four documents. The first paper, "The Strategy of'Joint Implementation' in the Framework Convention on ClimateChange" documents joint implementation regimes, the payoffs undersuch regimes, including potential cost savings and transactioncosts. "Administrative Structures and Procedures for Implementinga Tradeable Entitlement Approach to Controlling Global Warming"describes the necessary components of a facilitating institutionalstructure, monitoring requirements, international precedents, androles for different actors. A third paper, "Study on Model Rulesand Regulations for a Global CO2 Emissions Credit Market,"describes cost/benefit analysis of organized markets, implicationsfor market development of tradeable CO2 emission credits,developing markets, oversight and governance and illustrativetransactions. The fourth document, "An Analytical Approach toEvaluating the National Net Costs of a Global System of TradeableCarbon Emission Entitlement," describes national cost-benefitanalyses of an international carbon abatement policy, identity ofbuyers and sellers, monitoring procedures and net costs. UNCTADalso provided a document on the effect of the internalization ofexternal costs on sustainable development (TD/B/40(2)/6 of 7February 1994). The document describes basic principles, such asthe Polluter Pays Principle and the Resource Pricing Principle.

REPORT OF THE WORKING GROUP

The meeting of the Intersessional Ad Hoc Open-Ended Working Groupon Finance opened in Conference Room 2 on Monday 28 February 1994.Amb. Razali welcomed the experts and said that if financing anddevelopment targets were not met, countries may not feel bound bytheir Agenda 21 commitments. Amb. Razali noted that while noconsensus was expected from the experts he hoped they could narrowand prioritize solutions, allowing for consensus to be achieved bythe CSD in May. Dr. Lin See-Yan of Malaysia was elected Chair ofthe Working Group.

The Chair then introduced Under-Secretary-General for PolicyCoordination and Sustainable Development Nitin Desai who stressedthat financial resource issues should be discussed differently thanduring UNCED as there is now an agreed-to international programme,Agenda 21. It would be a mistake to focus on increases in ODA in ageneralized fashion. The problem of financing is intimately linkedwith the underlying economics of sustainability. The Group'sthinking must extend to joint responsibility and implementation ofthe programme of action. Focusing on modalities on the macro levelalone may miss elements of what needs to be done in certainsectors. The purpose of the working group is to open up new avenuesof dialogue and discussion for consideration by the CSD.

The Chair moved to the adoption of the agenda, as contained indocument E/CN.17/ISWG.II/1994/1 and to the discussion thesubstantive agenda items.

OVERVIEW OF FINANCIAL RESOURCES AND MECHANISMS:

Malaysiaprovided the overview of the following major issues andrecommendations that emerged from the Kuala Lumpur meeting: thereis a need for equitable burden-sharing of adjustment; internationalfinancial institutions should increase annual disbursements todeveloping countries; and there is a limit to debt swaps. A numberof policy options were examined including: possibilities forreforming tax systems by "greening" them; market based instrumentsfor CO2 abatement, with joint implementation as the first step toa more balanced multilateral commitment to CO2 reduction; tradeablepermits; development of private sector financing mechanisms;environmental mutual funds to support sustainable development;reduction of military expenditures; transferable developmentrights; and phasing out of damaging subsidies.

The Chair then suggested that participants use the report of theSecretary-General, E/CN.17/ISWG.II/1994/2, Financial resources andmechanisms for sustainable development: overview of current issuesand developments, as a basis. Dr. Mostafa Tolba of Egypt said thatthe mandate of the Working Group was to look at the availabilityand adequacy of financial flows. ODA must be examined. Grants playan important role if properly used. Debt for nature swaps havelimited application. He requested further information on paragraph35 of the Secretary-General's report, which stated that in 1992private flows and grants by non-governmental organizationsincreased by $4.8 billion to $16.6 billion. Juergen Holst of theSecretariat said that this figure came from an OECD report. Norwaysaid that in future versions of such a background document it wouldbe helpful not to limit information simply to performance byindustrialized countries. There should also be information on thedeveloping world. Morocco highlighted the growing importance ofprivate investment due to developing country reforms, makinginvestment in them more attractive. Poland disagreed with Egypt,saying that it has had good experience with debt for nature swaps.

China said that developed countries still should try to achieve theagreed target of 0.7% of GNP for ODA. The UK said that fullimplementation of the Trinidad Terms were important for certainAfrican countries and required political will. The Commission ofthe European Union said that trade liberalization by all countriesshould be pursued. Hungary emphasized the need to ensure asupportive international economic climate with regard to phasing insustainable development on a global scale. Hungary, speaking fromexperience of transition from a centrally-planned to a marketeconomy noted that it is of utmost importance to make progress inencouraging free trade and access to markets, and the importance ofmaking trade and environment policies favorable to sustainabledevelopment. Cuba said that developing countries cannot achievesustainable development unless external flows are made available bydeveloped countries. Canada said that the Working Group shouldfocus on what can be recommended for immediate action and whatneeds more extensive coordination. Brazil stated that we shouldtake some elements from the Secretariat's overview and put them tothe test. He also said that GATT was not just a one-way road, thatthe CSD should give elements of input to GATT. Colombia said thatthe problem is not that there is no money, but where is it so thatit can be used more appropriately. Secondly, ODA and domesticresources together are essential.

The US said that paragraph 34 on foreign direct investment isuseful as this is a growth area. In paragraph 11 on trade, he saidthat the North American Free Trade Agreement (NAFTA) sideagreements on the environment could set a model for tradeagreements of the future. The representative of World Citizens'Assembly said that it is useful to maintain a holistic perspectiveon the links between the Secretary-General's paper and the sectors.Financial mechanisms should be strong in consciousness-raising. Therepresentative from Third World Network said that NGOs areconcerned about structural adjustment being attached to new loans,which in the past has been socially and environmentally damaging.

At the start of Monday afternoon's session, the Chair said thatenvironmental problems are more insidious than obvious. Domesticproblems have international ramifications. In principle, countriesshould be moving to full-cost pricing. The Chair then asked expertsto comment on Part Two of the Secretary-General's report. The CzechRepublic said that it has had good results with environmentalcharges on air and water pollution. As stated in paragraph 60, thevolume of subsidies worldwide is large; however, new and additionalresources are small. There are still heavy subsidies for energy andthey are politically difficult to remove. China said that it isimportant to differentiate domestic from international taxes andthat the CSD should consider the rationality and feasibility oftaxes and study public support. Tradeable permits for CO2 does nothave a scientific basis, but studies should still go on. TheNetherlands urged consideration of sustainable consumption andproduction patterns.

REQUIREMENTS, AVAILABILITY AND ADEQUACY OF FINANCIAL RESOURCES AND MECHANISMS:

Chile reiterated a concern expressed by Egypt,China and Norway to consider formal expansion of the Group for realpartnership in calling for a special session in 6-8 months with theWorld Bank, GEF, NGOs, regional banks and the private sector. Hesupported an appendix to the report of the Working Group that wouldcontain a breakdown of debt held by public and private creditors.In addition to listing financial mechanisms in theSecretary-General's report, he supported establishing a fund forprotection of specific ecological preserves from ecologicaldisasters. Sri Lanka said that new funding mechanisms need to beassociated with new and innovative attitudes. The Republic of Koreastressed that national environmental funds play positive roles inenvironmental projects. Benin stated that it is time to apply theprinciple of debt for nature swaps to debt from the multilateralfinancial institutions. Australia said that debt swaps are usefulbut should not replace debt reduction. The UK supported full debtrelief rather than funding additional spending. Cuba supportedColombia in stressing the importance of regional and sub-regionalfinancing. Brazil stated that international focus is a priority.Morocco said that the Working Group's report should contain a clearlink between structural adjustment and environmental protection.

Sweden stated that national environmental funds need a nationalstrategy and institutional capacity to be able to distribute themonies within a fund. The US added that national sustainabledevelopment strategies could provide the framework for thesestrategies. Canada pointed out that the IUCN General Assemblyestablished a programme to investigate national environmentalfunds. The Chair said that he had received a letter from MariusEnthoven, Chairman of the Intersessional Working Group onTechnology, regarding financial arrangements and technologypartnership. This letter recognized that the issue of technologyalso depends on the availability of financial resources and it isessential that new mechanisms and means for technology financinghave to be explored and concrete and feasible mechanismsconsidered. Bolivia reiterated the need for swapping debt forenvironmentally sound technology transfer. China stressednon-marginalization of ODA. France worried that a number ofcountries are using "green" as protectionism, but supportedeco-labelling at the international level for commodities. UNCTAD,supported by Norway, said that a good deal of work had been done ontradeable permits. UNCTAD and UNDP had also done work oninternational commodity-related environmental agreements (ICREAs).The Earth Council said that political support for ODA is needed ifthere is to be specific agreements for specific projects. WorldCitizens' Assembly said that political will could be mobilized.

ADOPTION OF THE REPORT OF THE WORKING GROUP:

The Chairdistributed the draft report of the Working Group and noted thatthe Working Group's mandate is to look at new ideas and not toignore them because they are not yet developed. Egypt stressed hisrecommendation that some small groups look at the issues of debtswaps and national investment funds. The UK stated that the textseemed balanced, but that it could be "punchier". Brazil, supportedby India, said there should be more concern with internationalcooperation leading to new and additional financial flows. Colombiaagreed with Egypt that the most important elements in the documentare the recommendations the Working Group could make to the CSD onfuture work. The Chair stated that as this was the first meeting,he had very few submissions for concrete action. Benin supportedEgypt and called for the meeting to be suspended so that theSecretariat could draft a concrete list of ideas and proposals forthe CSD to consider. Germany, Chile, Uganda and Norway endorsedthis idea. Canada said that Ministers at the High-Level Segment ofthe CSD would want something concrete to bring home with them. TheChair said that there was a prevailing opinion that the text wasgood and short list of recommendations would be prepared by theSecretariat. Lithuania, supported by Poland, Hungary and the CzechRepublic, expressed concern that the countries with economies intransition were not mentioned.

The Chair suggested that the Secretariat prepare a short text thatwould list the concrete recommendations to the CSD which wouldconclude the report of the Working Group. It should include thefollowing recommendations from the working group to the CSD, andcontained the following points: a) urges the more activeinvolvement of the business and financial community (includingNGOs) in efforts to most effectively mobilize financial resourcesfor the implementation of Agenda 21, including through theproposals contained in this report; b) urges all parties concernedto: strengthen substantially the capacity of internationalfinancial institutions and other international organizations tomore effectively and demonstrably implement Agenda 21; promotepolicy measures that encourage and attract foreign directinvestment and other private capital flows; consider furtherexternal debt reduction and relief measures, including the searchfor innovative ways to address the debt problem; promote themobilization of domestic financial resources for sustainabledevelopment, including through policy reforms and the use ofeconomic instruments and incentives; consider the use of aneffective multilateral forum to best promote the coordination ofpolicy reforms for sustainable development; and c) promotes thesearch for an optimal mix of policies and funding sources tofinance sectoral areas as suggested in this report. The WorkingGroup also recommends that the following proposals need furtherexamination and detailed study through appropriate means, includingworkshops, case studies and pilot projects:

• the concept of international commodity-related environmental agreements (ICREAs);

• tradeable permits;

• removing subsidies;

• reducing military spending; and

• the feasibility, legal modalities and administrative aspects of such measures as international emission charges, internationally tradeable permits, taxes on air travel, and fees and arrangements to cover international environmental disasters, including those related to transportation of hazardous wastes and materials.

The Draft Report of the Ad Hoc Working Group on Finance states thatin future reports it would be useful if greater emphasis wereplaced in the reports and during discussion on exchanging ofindividual country experiences. It was recommended that in thefuture, prior to or during CSD sessions, an informal meeting withrepresentatives of the private sector, including the internationalfinancial institutions and business groups, be organized with aview to facilitating consideration of financial resources forsustainable development. Section A covers Growth, Trade and Termsof Trade. There is a basic consensus that further tradeliberalization will strengthen the expansion of world trade to thebenefit of all countries. Suggestions were made that furtherconsideration could be given to the concept of internationalcommodity-related environmental agreements (ICREAs). In Section B,International Financial Resources, the report says that ODA willcontinue to play an important role in meeting investmentrequirements. Multilateral financial institutions should increasesignificantly their capacity to address sustainable development.The overall favorable growth of foreign direct investment, inparticular in developing countries, is encouraging and needs to befurther promoted through appropriate policies. Uganda called forthe implementation of the Trinidad and Toronto terms. NationalFinancial Resources was covered in Section C. A number of policieswere discussed, such as the role of environmental taxation,property rights, subsidies, military spending and private sectorinvestment in environmental infrastructure. A reform of the fiscalsystem could change the mix of taxes towards environmental taxes,thus, bringing the economy closer to sustainable development bystimulating employment, economic growth and resource conservationand discouraging resource depletion and environmental pollution.Section D, Innovative Financial Mechanisms, states thatinternational mechanisms for the financing of sustainabledevelopment could include international emission charges, tradeablepermits on greenhouse gas emissions, taxes on air travel, and feesand arrangements to cover international environmental disasters.more work needs to be done,especially to examine their feasibility,legal modalities and administrative arrangements. Section F dealswith Multilateral Consideration of Policy Reforms and states thatthe restructuring of the world economy called for by Agenda 21,requires a long-term, on-going, incremental process. Existing foraor a process modeled on proven international negotiating processes(a series of "Green Rounds") should be considered. Under Section F,Financing Sectoral Clusters, there was an emphasis on the need tofocus on pollution prevention rather than on "end-of-pipe"solutions.

The Working Group took note of the communication received from theChairman of the Intersessional Ad Hoc Open-Ended WorkingGroup on Technology Transfer regarding the proposals on measuresand mechanisms to finance the transfer of environmentally soundtechnologies. These proposals fit within the menu of fundingmechanisms discussed by the Working Group on Finance. In thisregard, it will be necessary to apply the entire range of financialinstruments and arrangements identified in the report of theFinance Group to fund technology assistance, in particular todeveloping countries, besides those identified by the Working Groupon Technology.

THINGS TO LOOK FOR IN THE INTERSESSIONAL PERIOD

The reports of the twoWorking Groups will be discussed by the bureau of the CSD andpresented by the Chair to the CSD at its next session. Given thevery active role of the present Chair and bureau, look for someenhancement of these rather bare reports, drawing together issuesupon which the CSD could agree to move forward. The technologytransfer Working Group recommendations on access to informationwill be taken up again at a meeting convened by Canada'sInternational Development Research Center in Ottawa from 11-12April, 1994. Look for terms of reference and the design of a reviewof existing information systems on environmentally soundtechnologies. The US and Colombia, co-hosts of the Cartagenameeting intend to meet together in Washington, immediately prior tothe CSD meeting in May, to assess the results of the meeting, howit should be reported to the CSD and possible follow-up work. TheCSD session will inevitably see the announcement of newintersessional activities, some within the context of Agenda 21follow-up and others owing their roots to other processes butlinked to the CSD. Japan will host a OECD meeting to begin todevelop performance standards for biotechnologies in November 1994.Also look for reports to the CSD of intersessional meetings ofgovernments and NGOs alike.

REPORTS OF THE WORKING GROUPS:

The reports of the twoWorking Groups will be discussed by the bureau of the CSD andpresented by the Chair to the CSD at its next session. Given thevery active role of the present Chair and bureau, look for someenhancement of these rather bare reports, drawing together issuesupon which the CSD could agree to move forward. The technologytransfer Working Group recommendations on access to informationwill be taken up again at a meeting convened by Canada'sInternational Development Research Center in Ottawa from 11-12April, 1994. Look for terms of reference and the design of a reviewof existing information systems on environmentally soundtechnologies. The US and Colombia, co-hosts of the Cartagenameeting intend to meet together in Washington, immediately prior tothe CSD meeting in May, to assess the results of the meeting, howit should be reported to the CSD and possible follow-up work. TheCSD session will inevitably see the announcement of newintersessional activities, some within the context of Agenda 21follow-up and others owing their roots to other processes butlinked to the CSD. Japan will host a OECD meeting to begin todevelop performance standards for biotechnologies in November 1994.Also look for reports to the CSD of intersessional meetings ofgovernments and NGOs alike.

SECOND SESSION OF THE CSD:

The 1994 session of theCommission, currently scheduled for 16-27 May will provide thefirst opportunity for substantive review of the Rio agreements. Asthere has been no formal decision regarding the venue for CSDmeetings, it is expected that the 1994 session will take place inNew York.

According to the multi-year thematic programme of work adopted bythe CSD, the 1994 session will address the following chapters ofAgenda 21:

Cross-Sectoral Issues

--Chapter 2: accelerating sustainable development

--Chapter 4: consumption patterns

--Chapter 33: financial resources and mechanisms

--Chapter 34: technology cooperation and transfer

--Chapter 37: capacity building

--Chapter 38: institutions

--Chapter 39: legal instruments

--Chapters 23-32: roles of major groups

Sectoral Issues

--Chapter 6: health

--Chapter 7: human settlements

--Chapter 18: freshwater resources

--Chapter 21: solid wastes and sewage

--Chapter 19: toxic chemicals

--Chapter 20: hazardous wastes

-- Chapter 22: radioactive wastes

In preparation for this session, the Secretariat has been asked toprepare a number of reports, including: an annual overview reporton progress made in the implementation of Agenda 21; thematicreports corresponding to the Agenda 21 sectoral clusters listedabove; corresponding reports on the activities of IGOs within andoutside the UN system; a report on financial flows and mechanismsto implement Agenda 21; and a progress report on the implementationof Chapter 34 on technology transfer.

Likewise, the Commission asked Governments to prepare reports forthe Commission in accordance with the multi-year thematic programmeof work. These reports must be in one of the official UN languages,not exceed 50 pages, refer to specific facts and data that wouldreflect improvements or degradation of situations, and be submittedto the Secretariat at least three months prior to the start of the1994 CSD session.