Part 1 of 2 What Millennium Development Compact means

Romeo Austria Reyes, Program Development Advisor UNDP Indonesia, Jakarta

At the Millennium Summit in New York, in 2000, 147 world leaders agreed to adopt the Millennium Development Goals (MDGs). The goals range from eradicating extreme poverty and hunger to forming a global partnership for development. Unlike UN conventions in the past, whose goals were qualitative, seven of the eight MDGs are translated into quantitative and time-bound targets, thereby allowing periodic measurement and reporting of progress.

Indicators that are objectively verifiable and internationally comparable are suggested for each target. For poverty eradication, for instance, the target is to halve the proportion of people who live in poverty and the suggested indicator is the proportion of population whose income is less than one US dollar a day, based on the purchasing power parity.

UNDP's Human Development Report (HDR) 2003, entitled Millennium Development Goals: A compact among nations to end human poverty, analyzed and reported the progress of the world, regions and specific countries, including Indonesia, towards realization of the MDGs. The report also advanced the notion of a Millennium Development Compact whereby poor countries will mobilize and allocate domestic resources and apply democratic and good governance principles for the realization of the MDGs while rich countries will increase aid, provide debt relief and reduce barriers to entry of exports from poor countries to their markets.

The main message from HDR 2003 was that the MDGs are attainable if resources and interventions are matched with the magnitude of the targets. To attain those targets, domestic financial resources will need to be supplemented by external financing. Thus, unless rich countries deliver the financing they pledged at the 2002 International Conference on Financing for Development in Monterey, the report warned that the MDGs would not be met. If current trends are to continue, the world is on track toward achieving only two targets: halving poverty and halving those without access to safe water.

Unfortunately, the proposed compact is everything but fair in terms of reciprocity, joint responsibility and mutual accountability. While poor countries are held responsible and accountable for achieving quantitative and time-bound targets for Goals 1 through 7, the targets for Goal 8, which rich countries are responsible for are open ended and phrased as if they were to be realized on a best effort basis.

Consider for instance the targets for eradication of hunger, reduction of child mortality and improvement of maternal health: halve, by 2015, the proportion of people who suffer from hunger; reduce by two-thirds under-5 mortality rate and by three-quarters maternal mortality rate. Consider, on the other hand, the targets for Goal 8 relating to trade and debt: develop further an open, rule-based, predictable, nondiscriminatory trading and financial system; deal comprehensively with the debt problems of developing countries in order to make debt sustainable in the long term.

If this global deal were to be compared to a bilateral trade agreement, it would be like one country binding itself to reducing tariffs on a set of specific commodities to 0-5 percent by say 2005 and the other pledging to exert its best efforts to reduce tariffs in the future! If it were to be compared to an arms reduction treaty, one would be fully susceptible to verification and the other not at all.

This lack of mutual accountability and susceptibility to measurement and monitoring has prompted HDR 2003 to call on rich countries to also set quantitative and time-bound targets for aid, trade and debt relief. Heeding that call would remove doubt on the seriousness with which rich countries are addressing the global partnership embodied in Goal 8.

While there are no quantitative targets for aid, trade and debt relief, there are indicators suggested by the UN that can be measured and monitored, although they are not linked to Goal 8 targets as such. One of these indicators is Net Official Development Assistance (ODA) as percentage of donors Gross National Income (GNI).

Results from the recent analysis by UNDP on the progress of MDG 8 with respect to aid are not encouraging. Aid from rich countries measured in terms of ODA as a proportion of GNI fell by one-third in the 1990s, from an average of 0.33 percent in 1990- 91 to an average of 0.22 percent in 2000-01; before increasing slightly to 0.23 percent in 2002. Even less encouraging is the low and falling ratio among G-7 members: from 0.31 per cent in 1990 to 0.18 percent in 2002, which is considerably lower than the 0.7 percent reaffirmed at Monterrey. The above numbers suggest that aid fatigue would likely persist despite calls for more aid and more effective aid for the MDGs.

What about trade and debt relief? Once again, the numbers are not very encouraging. HDR 2003 disclosed that tariffs imposed by OECD member countries on manufactured goods from poor countries are more than four times those on manufactured goods traded between them. Rich countries are clearly opening their markets to each other much more than they do to poor countries. In addition to tariff discrimination, the report disclosed that rich countries continue to grant generous subsidies to their farmers amounting US$300 billion per year, which is nearly six times their ODA.

Thus, even if farmers in poor countries become more efficient and competitive in producing certain agricultural products, they will not be able to penetrate the markets of rich countries due to the huge subsidies enjoyed by farmers in rich countries. Taking the dairy subsidy as an example, the annual subsidy per cow in the EU (US$913) is higher than the per capita income in Sub-Saharan Africa ($490).

The Doha round of trade talks is dubbed as a "development" round because of the mandate to deal with phasing out of export subsidies to farm products of rich countries, especially EU, Japan and the U.S., that prevent poor countries from accessing their markets. After more than a century of campaign to liberalize farm trade, it appeared at first glance that a breakthrough had been achieved on 26 June 2003 when the EU farm ministers agreed to reform the EU's common agricultural policy (CAP).