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ADOPTION OF THE REPORT OF THE WORKING GROUP:

The Chair distributed the draft report of the Working Group and noted that the Working Group's mandate is to look at new ideas and not to ignore them because they are not yet developed. Egypt stressed his recommendation that some small groups look at the issues of debt swaps and national investment funds. The UK stated that the text seemed balanced, but that it could be "punchier". Brazil, supported by India, said there should be more concern with international cooperation leading to new and additional financial flows. Colombia agreed with Egypt that the most important elements in the document are the recommendations the Working Group could make to the CSD on future work. The Chair stated that as this was the first meeting, he had very few submissions for concrete action. Benin supported Egypt and called for the meeting to be suspended so that the Secretariat could draft a concrete list of ideas and proposals for the CSD to consider. Germany, Chile, Uganda and Norway endorsed this idea. Canada said that Ministers at the High-Level Segment of the CSD would want something concrete to bring home with them. The Chair said that there was a prevailing opinion that the text was good and short list of recommendations would be prepared by the Secretariat. Lithuania, supported by Poland, Hungary and the Czech Republic, expressed concern that the countries with economies in transition were not mentioned.

The Chair suggested that the Secretariat prepare a short text that would list the concrete recommendations to the CSD which would conclude the report of the Working Group. It should include the following recommendations from the working group to the CSD, and contained the following points: a) urges the more active involvement of the business and financial community (including NGOs) in efforts to most effectively mobilize financial resources for the implementation of Agenda 21, including through the proposals contained in this report; b) urges all parties concerned to: strengthen substantially the capacity of international financial institutions and other international organizations to more effectively and demonstrably implement Agenda 21; promote policy measures that encourage and attract foreign direct investment and other private capital flows; consider further external debt reduction and relief measures, including the search for innovative ways to address the debt problem; promote the mobilization of domestic financial resources for sustainable development, including through policy reforms and the use of economic instruments and incentives; consider the use of an effective multilateral forum to best promote the coordination of policy reforms for sustainable development; and c) promotes the search for an optimal mix of policies and funding sources to finance sectoral areas as suggested in this report. The Working Group also recommends that the following proposals need further examination and detailed study through appropriate means, including workshops, 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 that in future reports it would be useful if greater emphasis were placed in the reports and during discussion on exchanging of individual country experiences. It was recommended that in the future, prior to or during CSD sessions, an informal meeting with representatives of the private sector, including the international financial institutions and business groups, be organized with a view to facilitating consideration of financial resources for sustainable development. Section A covers Growth, Trade and Terms of Trade. There is a basic consensus that further trade liberalization will strengthen the expansion of world trade to the benefit of all countries. Suggestions were made that further consideration could be given to the concept of international commodity-related environmental agreements (ICREAs). In Section B, International Financial Resources, the report says that ODA will continue to play an important role in meeting investment requirements. Multilateral financial institutions should increase significantly their capacity to address sustainable development. The overall favorable growth of foreign direct investment, in particular in developing countries, is encouraging and needs to be further promoted through appropriate policies. Uganda called for the implementation of the Trinidad and Toronto terms. National Financial Resources was covered in Section C. A number of policies were discussed, such as the role of environmental taxation, property rights, subsidies, military spending and private sector investment in environmental infrastructure. A reform of the fiscal system could change the mix of taxes towards environmental taxes, thus, bringing the economy closer to sustainable development by stimulating employment, economic growth and resource conservation and discouraging resource depletion and environmental pollution. Section D, Innovative Financial Mechanisms, states that international mechanisms for the financing of sustainable development could include international emission charges, tradeable permits on greenhouse gas emissions, taxes on air travel, and fees and arrangements to cover international environmental disasters. more work needs to be done,especially to examine their feasibility, legal modalities and administrative arrangements. Section F deals with Multilateral Consideration of Policy Reforms and states that the restructuring of the world economy called for by Agenda 21, requires a long-term, on-going, incremental process. Existing fora or 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 to focus on pollution prevention rather than on "end-of-pipe" solutions.

The Working Group took note of the communication received from the Chairman of the Intersessional Ad Hoc Open-Ended Working Group on Technology Transfer regarding the proposals on measures and mechanisms to finance the transfer of environmentally sound technologies. These proposals fit within the menu of funding mechanisms discussed by the Working Group on Finance. In this regard, it will be necessary to apply the entire range of financial instruments and arrangements identified in the report of the Finance Group to fund technology assistance, in particular to developing countries, besides those identified by the Working Group on Technology.

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