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Preparatory Committee for the Special Session of the General Assembly
entitled "World Summit for Social Development and beyond:
achieving ", social development for all in a globalizing world", United Nations
New York, April 12, 2000
BY CITIZENS' COALITION FOR ECONOMIC JUSTICE (CCEJ)
AND NGO CAUCUS ON CURRENCY TRANSACTION TAX
Mr. Chairman, distinguished delegates, ladies and gentlemen,
I am very honored to speak on behalf of Citizens' Coalition for Economic Justice, based in Korea, and NGO Caucus on Currency Transaction Tax for Human Development.
Five years ago, in Copenhagen, heads of states agreed that enabling environment is very important for social development. During the last five years, however, many countries including Korea experienced most disabling and destructive environment instead of enabling environment. Financial crisis hit severely Korea and several Asian countries, and virtually all the developing world was affected, while the developed world suffered little and even derived some benefits from it. In Korea, unemployment more than tripled, poverty more than doubled, and the income gap between the poor and the rich widened considerably because of the economic crisis.
At this Special Session, you have to make concrete measures to prevent future financial crises. Since the ability of any country to cope with huge, volatile foreign capital movement is very limited, a global cooperation is needed.
An effective way of curtailing the movement of international speculative funds is the Tobin tax, a tax on foreign exchange transactions. It is known that 80% of all speculative transactions occur within seven days or less, and 40% occur within two days or less. Therefore, a currency transaction tax of 0.1 %, for example, would greatly affect short-term buying and selling, but have little effect on trade and long-term investment. Such a tax, if implemented through international agreements could help to stabilise exchange rates, deter speculation, enhance international trade, and prevent future financial crises. * Moreover, it would generate substantial revenue that could be used for development spending. ** The revenue could be collected nationally and distributed between the national and international level.
Another important agreement made in Copenhagen was that social development needs resources. And commitments were made to achieve the target of ODA of 0.7% of GNP of the donor countries. However, ODA has declined, not increased. The average percentage of ODA fell from 0.33% in 1987 to 0.22 in 1997, although four countries, Denmark, Norway, Netherlands and Sweden are providing ODA of more than 0.7% of their GNP. In particular, the most wealthiest countries' record is very disappointing The United States' ODA dropped from 0.21 in 1987 to 0.09% in 1997.
As a result of overall decline of ODA, the share of official development funding in total capital inflows into developing countries fell from over 50% in the 1980s to 20% in the 1990s. This trend has forced developing countries to rely more heavily on private capital flows, especially volatile short-term capital flows, and many developing countries have become the victim. There is an urgent need to reverse the decline of ODA.
Mr. Chairman and distinguished delegates,
I ask you to make a time-bound commitment, for example, to fulfill the agreed target of 0.7% of GNP as soon as possible, and at least 0.5% by no later than 2005.
Second, I ask you to adopt the Canada proposed "further study of the feasibility of a currency transaction tax" .We are not satisfied with this language, and we want international agreement to implement a currency transaction tax be made very urgently. But we know some countries' delegates are not ready to make such an agreement. However, we don't see any reason to oppose the further study of its feasibility.
Third, I call for development and implementation of an International Anti-Poverty Pact. It should request ECOSOC to take responsibility for finalizing and monitoring a Pact which includes a limited number of specific, high priority anti-poverty targets and the key resource mobilization measures which are necessary to help achieve those targets.
Mr.Chairman and distinguished delegates,
If you only repeat the Copenhagen language at the Special Session, it will be very much disappointing. I expect that you will succeed to agree to specific actions and deadlines to prevent disabling environment like financial crisis and to mobilize required resources for social development.
* A newly proposed two-tiered version of the Tobin tax with a minimal rate on all transactions (the basic tax) and a high tax rate (an exchange surcharge) that would be triggered only during periods of exchange rate turbulence, would be better serve as an anti-speculation device.
**The annual value of foreign-exchange transactions is over $450 trillion, and a tax of 0.1% is expected to create $150 billion to $225 billion global revenue, far surpassing the total ODA of OECD countries ($48 billion in 1997), assuming that the level of transactions would fall by 50-67% in face of the tax. ( cf. UN-DESA Discussion Paper, No.11)
Chairman of the International Committee
(Former Secretary General)
Citizens' Coalition for Economic Justice
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