G20 Summit Policy Paper

September 2011

Recommendations for Cannes Summit

Please address general comments and questions to: John Ruthrauff Director, International Advocacy InterAction Co-chair, Global G8/G20 Working Group jruthrauff@interaction.org 1-202-552-6523 Sue Pleming Sr. Director, Communications InterAction spleming@interaction.org 1-202-552-6561 Please refer to page five for contact information for the principal authors of the individual policy sections.

The G20 Summit has evolved from its initial focus on the global financial crisis and macroeconomics to include issues of interest to development NGOs. This paper presents recommendations on six issues. InterActions G8/G20 Task Force calls on the G20 countries to:

Food Security, Agriculture and Nutrition

1. 2. 3. 1. 2. 3. Build on the 2009 World Food Summit and the 2009 LAquila $22 billion commitment. Rebalance donor funds to improve nutrition and reach small-scale producers. Integrate resilience to climate change and civil society partnerships into food security. Implement and enforce laws criminalizing foreign bribery and prohibiting off-book accounts by January 1, 2012. Strengthen no safe haven and asset recovery policies. Establish transparent, accountable public finance management systems, including budget and procurement, by January 1, 2012 and increase aid transparency and accountability. Call on the Financial Action Task Force to ensure the beneficial ownership of all companies, trusts, foundations and charities is made a matter of public record. Require all multinational corporations in their jurisdiction to report their income and taxes paid on a country-by-country basis. Implement the crackdown on tax havens announced by the G20 in April 2009. Promote multilateral approach to tax information exchange with developing countries. Provide tools and resources for countries to set financial inclusion targets that incorporate a full range of financial services and include marginalized groups. Ensure the Financial Inclusion Data and Measurement Task Force emphasizes quality in financial inclusion. Ensure policy frameworks allow informal financial service groups to access formal services. Establish a client protection taskforce in the Global Partnership for Financial Inclusion. Establish a permanent G20 Accountability Framework that is robust, credible, transparent and inclusive. Require G20 Working Groups to seek input from international organizations, governments and civil society on a regular basis and develop systems for on-going transparent consultations.

Corruption

Financial Integrity and Tax Havens

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Financial Inclusion

InterAction 1400 16th Street, NW Suite 210 Washington, DC 20036 202.667.8227 www.interaction.org

Accountability
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Publicize the terms of reference, names and affiliation of all members of Expert Groups six months prior to each summit. Publicize the terms of reference, names and affiliation of all members of Expert Groups six months prior to each summit. The G20 should implement a financial transfer fee and shipping and aviation mechanisms; at a minimum, the U.S. should support other countries in implementing innovative sources of finance.

opment in nations with high rates of child malnutrition. 3. Integrate resilience to climate change and civil society partnerships into food security plans through impact and risk analysis, vulnerability assessments to identify and target the most vulnerable populations and help them develop increased adaptive capacity. Participation of civil society and vulnerable populations are critical to ensure programs incorporate local knowledge and respond to the needs of the most vulnerable. Part of building resilience for the most vulnerable populations should include increased emphasis on creating and supporting social safety nets and social protection programs.

Innovative Financing: Financial Transfer Fee

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Background and expanded recommendations

Food Security, Agriculture and Nutrition
1. Build upon the 2009 World Food Summit and the 2009 G8 LAquila 2009 $22 billion commitment. In light of increased food price volatility, we urge the G20 to support and build upon the goals expressed by previous global leaders on food security. The G20 should establish a robust framework requiring nations to honor previous commitments, including continued progress toward accountability and transparency measures. Previous commitments should be supported by strengthening the UN-based Committee on World Food Security. Rebalance donor funds to improve nutrition and reach small-scale producers. We applaud the continued global focus to reduce child and maternal malnutrition. However, funding for nutrition activities severely lags behind overall funding for agriculture, agro-industries, forestry and fishing. To ensure tangible results for the nearly 1 billion hungry people worldwide, G20 leaders must rebalance donor funds to improve nutrition and reach small-scale producers, especially women farmers. We strongly encourage G20 nations to participate in and support the Scaling Up Nutrition (SUN) movement to raise the priority of direct nutrition interventions and nutrition-sensitive devel-

Corruption
Public reporting by countries on anti-corruption progress will enhance public oversight and increase pressure for greater reform. We commend the G20s goal of leading by example and its commitment to an annual progress report on anti-corruption measures. In the Anti-Corruption Action Plan, we recommend that the G20: 1. Implement and enforce laws criminalizing foreign bribery and prohibiting off-book accounts by Jan 1, 2012. Bribery undermines economic growth, diverts humanitarian and development assistance, subverts environmental, health and safety controls and threatens political stability, energy and national security. Consistent and vigorous enforcement of foreign bribery laws is necessary to effectively reduce foreign bribery in international business and development. G20 nations not already party to the Convention on Bribery of Foreign Public Officials should become signatories and participate in its peer review process. Strengthen no safe haven and asset recovery policies. We welcome the G20 emphasis on preventing access of corrupt persons to global financial systems. The G20 should deny noncooperative nations access to G20 financial sys-

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tems. They should deny safe haven to corrupt officials, their assets and those who have supported their corrupt activities. The G20 should take concrete steps to facilitate the success of the World Bank and UN Office on Drugs and Crime Stolen Assets Recovery Initiative. This should include legal cooperation in tracing, recovering and repatriating assets, and developing mechanisms to promote the transparent use of returned funds. 3. Establish transparent, accountable public procurement and public finance management systems by January 1, 2012 and increase aid transparency and accountability. G20 countries should adopt and urge all countries to put into practice the standards for procurement and public financial management described in Article 9 of the UN Convention Against Corruption. G20 leaders should keep their commitments to increase the transparency of international aid by publishing comprehensive, timely and comparable information. In addition, all G20 members should allocate funding for transparency, supervisory and audit programs.

The G20 should also recognize, in their communiqu, the link between illicit outflows of capital from developing countries, the adverse impact those flows have on poverty alleviation and economic development, and the facilitating role played by the absorption of those resources by tax havens and international financial centers. We urge the G20 to: 1. Call on the Financial Action Task Force i (FATF) to amend its FATF 40 Recommendaii iii tions number 33 , 34 and its FATF IX Special iv Recommendations number VIII and provide that the beneficial ownership of all companies, trusts, foundations and charities be collected upon incorporation and made a matter of public record. Require all multinational corporations in their jurisdiction to report their income and taxes paid on a country-by-country basis and the G20 should call on the International Accounting Standards Board to require the same in the International Financial Reporting Standards. Implement the G20 action on the crackdown on tax havens, announced in April 2009. Promote a multilateral approach to tax information exchange with developing countries, e.g. supporting efforts by the OECD and the International Accounting Standards Board to implement a country-by-country financial reporting standard (CBCR) for companies operating internationally.

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Financial Integrity and Tax Havens

The G20 needs to ensure the reform of financial institutions and markets, held publicly accountable and regulated effectively. Reforms need to address the abusive and risky activities of hedge funds, vulture funds, off-balance sheet transactions and credit rating firms. International tax evasion and avoidance result in large losses to developing country governments when they already face a lack of public revenue. To recoup these losses and spur greater resource mobilization will require reforms. Two key ones are: (1) exchanging greater information between tax authorities in different countries; and (2) strengthening country-by-country reporting standards. The G20 acknowledged the link between tax havens and development by focusing on tax havens in the London Summit of April 2009. At the Toronto summit (June 2010), they requested a new report on the subject by the time of the November 2011 summit in France.

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Financial Inclusion
We applaud the work of the G20 leaders to enhance financial inclusion by increasing access to financial services for low-income people. Improving the range and quality of financial services for previously excluded individuals strengthens their ability to overcome shocks and participate fully and productively as economic citizens. We support the Financial Inclusion Experts Groups establishment of a Global Partnership for Financial Inclusion to implement the G20 Financial Inclusion Action Plan. We are keen to support the groups work around promoting successful regulatory and policy approaches and elaborating

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standards on financial access, financial literacy, and conv sumer protection. InterActions G8/G20 Task Force urges the Experts Group to target the following priorities: 1. Provide tools and resources for countries to set financial inclusion targets that incorporate a full range of financial services and include marginalized groups. Financial inclusion policies need to address savings, credit, insurance and payments. They should focus on excluded segments such as the poor, rural households, women, persons with disabilities and other vulnerable populations. Ensure the Financial Inclusion Data and Measurement Task Force emphasizes quality in financial inclusion by incorporating indicators that track product affordability, convenience and suitability, as well as indicators on clients financial vi capability. Include a broad regulatory framework within the ninth principle of the G20 Principles for Innovative Financial Inclusion, which enables a diverse range of financial services providers (from community-based savings groups, to Microfinance Institutions, to mainstream banks) to effectively serve excluded populations and transition them to formal financial services. Establish a client protection taskforce in the Global Partnership for Financial Inclusion that can address issues of over-indebtedness, transparent and responsible pricing, ethical business practices and the establishment of credit bureaus for low-income people.

There are gaps in financial services access as well as the range and quality of the products offered. Suitable financial services are needed for small and medium enterprises and for individual households, including the poor, very poor and other vulnerable populations such as minorities, people with disabilities and households in post-conflict zones. Financial inclusion policy initiatives should consider the diverse financial needs of each of these segments.

Accountability
We applaud the bold promise in the Leaders Declaration of the Seoul G20 Summit to hold ourselves accountable and to monitor ongoing implementation of their commitments. The G20 Development Working Groups multiyear action plan requires an Accountability Framework to ensure G20 leaders commitments are kept. We urge the G20 to include the following recommendations: 1. Establish a permanent G20 Accountability Framework. To enhance credibility and ensure effectiveness this framework must be robust, transparent and inclusive. The G20 and G8 need to also harmonize their accountability frameworks. Require all G20 Working Groups to open permanent channels to seek and receive input from international organizations, governments and civil society on a routine basis and develop systems for on-going transparent consultations. The G20 should encourage member states to conduct in-country civil society consultations and regional dialogues with nonmembers states. Publicize the terms of reference, names and affiliation of all members of Expert and Working Groups six months prior to each Summit. Meeting notices should be released 20 days before meetings, including the G20 commitments and outcomes under review. The G20 should report on the expert groups assessments and recommendations 60 days before each Summit. Ensure reporting evaluates results against consistent and specific indicators with timetables and recommendations for future action

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Background With full financial inclusion, everyone who can use financial services would have access to a range of products encompassing credit (e.g. enterprise, housing and education), savings, insurance and payments. Products would be affordable, convenient, suited to clients needs and provided with client protection operating principles.

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including resources pledged and delivered. Whenever possible on-the ground monitoring of program implementation and outcomes should inform reporting

Transparency InternationalUSA sshah@transparencyinternational-usa.org Financial Integrity Tom Cardamone, Managing Director Global Financial Integrity tcardamone@gfip.org Tax Havens Neil Watkins, Director of Policy and Campaigns ActionAid USA Neil.Watkins@actionaid.org Financial Inclusion Anita Gardeva, Senior Analyst Center for Financial Inclusion at ACCION International agardeva@accion.org Accountability Rob Lovelace, Senior Fellow Trade Union Sustainability Development Unit LovelaceRE@gmail.com Innovative Financing Keya Chatterjee, Director, International Climate Policy World Wildlife Fund keya.chatterjee@wwfus.org

Innovative Financing: Financial Transfer Fees

The global economic crisis has decimated developing countries economies and reduced the ability of G8 countries to respond to international crises. A financial transfer fee (also called financial transfer tax) could significantly increase resources for crises in developing countries. The fee could apply to nearly all financial transactions, including futures and options, bonds, equities and commodities. Such a fee is of interest to many European governments and supported by France and Germany. Numerous European and U.S. NGOs also support a transfer fee to provide resources for efforts such as development, climate mitigation and education in developing nations. G20 leaders should also support mechanism in the shipping and aviation sectors that would generate new and additional public finance to help developing countries confront the climate crisis. Shipping and aviation mechanisms should be designed to generate finance, reduce greenhouse gas emissions and ensure developing countries do not face unfair burdens or costs. We urge the G20 to: 1. Implement a financial transfer fee and shipping and aviation mechanisms; at a minimum, the United States should support other countries in implementing innovative sources of finance.

End Notes
i The FATF is an inter-governmental body that sets standards and develops and promotes policies to combat money laundering and terrorist financing. It has 36 members: 34 governments and two international organizations. ii Prevent unlawful use of legal persons by money launderers(corporate entities). iii Prevent the unlawful use of legal arrangement by money launderers (trusts). iv Countries should review the adequacy of laws and regulations that relate to entities [especially non-profit organizations] that can be abused for the

Many organizations contributed to one or more recommendations. While the statement is not designed to be a consensus position of the contributors, it has been endorsed by InterActions leadership.

Comments and questions on specific policy sections should be address to the following: Food Security, Agriculture and Nutrition Dan Desai Martin, Associate Director, Public Policy and Advocacy Save the Children ddesaidmartin@savechildren.org Corruption Shruti Shah, Senior Policy Director, Law and Regulation

financing of terrorism. v Excerpt from the G20 Leaders Statement, The Pittsburgh Summit, 2425 September 2009. vi Such indicators can include geographic mapping of service points, number of documents required to open an account, flexibility of product terms and conditions, minimum balance requirements for savings, debt service to income ratio, and a number of other quantitative and qualitative indicators.