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Debt Burden

2. Mr. Fraser: What is her Department's policy on reducing the debt burden of developing countries. [18422]

Clare Short: My right hon. Friend the Chancellor of the Exchequer leads on debt policy but, as was set out in the recent development White Paper, my Department has a key interest in the rapid and flexible implementation of debt reduction measures that aim to secure debt sustainability for some of the world's poorest countries. We must try to mobilise international support for more rapid progress if we are to reach international poverty eradication targets.

Mr. Fraser: I am sure that the Secretary of State is more aware than most that Uganda has benefited from debt reduction assistance. Will she assure the House that Her Majesty's Government will call for a yes vote in Uganda's forthcoming referendum on whether to set up a democratic state, and that, if we do not see a yes vote, she will report back and tell us why?

Clare Short: That has nothing to do with debt relief, but it is true that Uganda will be one of the first countries

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to qualify, which is important if it is to sustain the great progress that it has made. It is committed to having a referendum on what form of democracy it should have. My view is that democracy, pluralistic democracy, and the right for people to select the candidate that they want and to oust Governments are crucial. We should not try to foist on Africa our precise model because, in some countries, it has led to terrible division on old tribal lines. I assure the hon. Gentleman that we will always work for the protection of democracy everywhere, but I will not suggest to Uganda that it should adopt our precise democratic model.

Dr. Tonge: Have the Government considered taking any measures to deal with the double standards that exist in multilateral and bilateral aid to countries that are in debt? I am thinking in particular of the difference between our attitude to Indonesia and Mozambique.

Clare Short: There is an enormous difference between our attitude to Indonesia and our attitude to Mozambique. Mozambique is one of the poorest countries in the world and has overcome a terrible civil war. The Mozambique Government are now co-operating with the side they fought in that war, when dreadful atrocities took place. That is a fantastic achievement for the people of Mozambique and for both Government and Opposition there. We believe that, against terrible odds, the Government in Mozambique are trying very hard to bring about development and to eradicate poverty. We want to help them in every way we can.

Indonesia is a middle-income country. As the hon. Lady knows, I have reviewed our aid and reduced parts of it to increase help to sustain forestry and to assist trade unions that are persecuted in Indonesia and non-governmental organisations in East Timor. That has not been easy to organise.

Our attitudes to the two countries are massively different because the needs and natures of their Governments are so different.

Sir Alastair Goodlad: What is Her Majesty's Government's attitude to Zimbabwe's international debts in the light of proposals to nationalise several million hectares of farming land without compensation, with access to the courts apparently to be denied to those who are deprived of their property? Economists and agriculture experts have warned that it will result in the collapse of Zimbabwe's agriculture industry, which is the country's biggest single foreign currency earner and generates two thirds of its domestic economy.

Clare Short: The situation in Zimbabwe is indeed very worrying. We have made our attitude to the current land proposals very clear. I have personally written to the Land Minister and the Minister of Foreign Affairs. We have said that it is true that land is distributed very unfairly in Zimbabwe and that we would be willing to back a properly organised system of land redistribution that gives some land to the poor and enables them to improve their livelihoods and reduces poverty in Zimbabwe, but we will not fund or support in any way a scheme that endangers food production and Zimbabwe's economic health. I hope that Zimbabwe's Government will pull back and go for a properly organised redistribution of benefits to people in Zimbabwe.

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Commonwealth Development Corporation

3. Mr. Flight: When the change in status of the Commonwealth Development Corporation to a public-private partnership will take place. [18423]

Clare Short: I am keen to mobilise new investment through the Commonwealth Development Corporation in the neediest countries in the world as soon as possible, but there are many steps to be gone through, not least to deal with the need for new legislation.

Mr. Flight: Are the Government willing to consider bringing private sector shareholders into the CDC, given that they would help to confer the benefits to which the right hon. Lady has referred? If so, what kind of shareholding might the Government wish to retain, and--potentially--what kind of outside parties would they want to bring in? I think that the House should know where the Government are going.

Clare Short: I am sure that the House should know where the Government are going. My right hon. Friend the Prime Minister spoke about the matter at the last Prime Minister's Question Time and, I believe, the one before that, so there are no secrets; clear statements have been made.

As the hon. Gentleman should know, I have reviewed the CDC's work. It is a very important instrument to secure investment for countries that are not attracting private flows. We want to increase those flows and to use the CDC as a bridge to draw in more. I have therefore looked at the CDC's structure. Because it is wholly Government-owned, it is not allowed to raise private finance because that would count as Government borrowing. I want it to be restructured in a way that will allow the retention of a substantial Government share while leaving the majority of the corporation in private ownership. That will enable us to raise additional flows of investment while leaving a golden share that will entrench the corporation as a development institution encouraging investment in the poorest countries.

Those are the proposals and they are being scrutinised. As the hon. Gentleman will know, there is much detailed work to be done and after that we must introduce legislation; but I hope to do all that.

Multilateral Agreement on Investment

4. Mr. McAllion: What is her assessment of the impact of the proposed multilateral agreement on investment on measures to reduce inequalities between rich and poor countries. [18424]

8. Mr. Chaytor: What steps she will take to ensure that the multilateral agreement on investment includes mandatory safeguards against unsustainable economic development in the poorest countries. [18428]

Clare Short: The multilateral agreement on investment is designed to introduce rules for investment flows, primarily between Organisation for Economic Co-operation and Development countries to ensure that foreign investors are treated in the same way as domestic investors. The MAI is not designed for poorer

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developing countries but, of course, it could become a model and we are supporting consultation with them on how their interests can be taken into account. My Department is commissioning a study to look at any implications the MAI may have for these countries. The Government will work towards the eventual establishment of a more widely applicable World Trade Organisation agreement on international investment.

Mr. McAllion: Does my right hon. Friend agree that Governments, in particular the Governments of poor countries, must remain free to impose restrictions on foreign inward investment, whether that is to protect their populations or their environments? If she does, can she assure the House that the Government will never sign up to any multilateral agreement on investment that allows multinationals or transnational corporations to use the World Trade Organisation to overrule restrictions that have been placed on inward investment by Governments in the interests of their people and their environments?

Clare Short: I think that my hon. Friend's concerns are a little misplaced. Overwhelmingly, the desire of poor countries is to attract more inward investment to bring about the development that will enable them to have the full economic growth that will benefit the poor. The multilateral agreement on investment is currently intended to apply only to OECD countries and says only that Governments who sign up to it voluntarily are not allowed to treat domestic investment and inward investment differently. In that agreement, which the Government hope to sign, we are trying to ensure protection for core labour standards and environmental standards, for example. We are trying to ensure that, if it becomes a model for the future, the future interests of developing countries are protected. My hon. Friend's fears are slightly misguided. We need more investment in those countries, not less.

Mr. Chaytor: Does my right hon. Friend agree that in the context of the attempts by some multinational companies to sabotage the current climate negotiations in Kyoto, it is crucial that the present OECD non-binding code of good practice is made binding within the multilateral agreement on investment?

Clare Short: I am not sure whether multinational companies are more to blame than Governments for dragging their feet. Companies can promote advertising campaigns, but Governments are responsible for protecting the future interests of the world's people. That is where the primary responsibility lies. I share my hon. Friend's concern and assure him that we are seeking to have the OECD guidelines on multinationals' corporate behaviour associated with the multilateral agreement on investment.

Mr. Faber: I am sure that the right hon. Lady agrees that trade and investment are essential for developing countries. While the multilateral agreement on investment is a welcome step, when will the Government accept as their goal the complementary policy of global free trade by 2020? The right hon. Lady has not been afraid to adopt other targets. Why will she not adopt that one?

Clare Short: That topic has been raised in the House before, when I am sure the hon. Gentleman was present.

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I have said to him that my view is that broadening trade on beneficial terms is our objective, but that for the very poorest and frailest economies I agree with the recent United Nations Conference on Trade and Development report that a rapid opening up could damage frail economies. We need to include them in the process, but in a way that will enable them to strengthen their economies to take advantage of an opening up. I do not know whether the date that the hon. Gentleman suggests is right. That is the sort of progress that we favour and we are seeking to promote it and work with countries and with the World Trade Organisation to bring it about.

Mr. MacShane: Will my right hon. Friend comment on President Clinton's failure to secure an agreement for a fast track on free trade in the United States? That reflects grave concerns in north America about the failure to add a social dimension to the complex question of trade. Whether on the MAI, which is the subject of the question, or on forthcoming meetings of the World Trade Organisation, can my right hon. Friend assure the House that the Government will side with President Clinton and most other democratic countries in seeking a social element and will not bow to the wishes of multinational companies and authoritarian Governments in the third world?

Clare Short: Obtaining agreement on core labour standards and environmental protection so that globalisation does not lead to a levelling down is an enormously important priority for all the people of the world, wherever they live, otherwise we could have what has been called the rush to the bottom. As my hon. Friend knows, there is no prospect of immediate progress on the adoption by the World Trade Organisation of the human rights clause that many people advocate, but we are seeking to make progress through the International Labour Organisation and by introducing incentives in the European Union's general system of preferences in the form of greater privileges to countries that guarantee core labour standards. I agree with my hon. Friend's analysis, but we must mobilise more international support for that objective.

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