APPENDIX: GOVERNMENT RESPONSE TO THE FIRST
REPORT OF THE INTERNATIONAL DEVELOPMENT COMMITTEE: "THE EXPORT
CREDITS GUARANTEE DEPARTMENT—DEVELOPMENTAL ISSUES"
I have pleasure in attaching the Government's response
to the conclusions and recommendations contained in the Committee's
First Report on "The Export Credits Guarantee Department—Developmental
Issues", published on 17 December 1999.
The Report enclosed a number of submissions from
NGOs about ECGD's policies on environmental and developmental
issues and we were able to take these into account in carrying
out the Review of ECGD's Mission and Status.
I am enclosing copies of the Mission & Status
Review Report on which Stephen Byers made an announcement earlier
today.
I would of course welcome any further observations
that the Committee may wish to make.
Rt Hon Richard Caborn MP, Minister for Trade
25 July 2000
INTERNATIONAL DEVELOPMENT COMMITTEE REPORT
"THE EXPORT CREDITS GUARANTEE DEPARTMENT—DEVELOPMENTAL
ISSUES"—REPORT PUBLISHED 17 DECEMBER 1999
ECGD RESPONSE TO THE CONCLUSIONS AND RECOMMENDATIONS
CONTAINED IN THE REPORT
1. We intend to return to these issues in
the New Year and hope that further consultation will take place
before the finalisation of the Review. We do, of course, expect
developmental concerns to be seriously addressed during the course
of the Review and discussed fully in the report of the Review's
findings (paragraph 5).
The Review of ECGD's Mission and Status has taken
full account (as required by its terms of reference) of the relationship
between ECGD's activities and the Government's wider objectives,
including in relation to sustainable development. The Secretary
of State for Trade and Industry also made it clear when he announced
the Review, in July 1999, that he wanted it to consider how ECGD
could help developing countries to emerge from debt and poverty
burdens and return to the international trading community.
Chapter 5 of the Review report looks at ECGD support
for developing countries and the question of debt sustainability
and Chapter 6 looks at what else ECGD will do to ensure its support
for projects is consistent with the Government's sustainable development
and foreign policy objectives.
2. We recommend that the Review propose an
inclusion of the Government's developmental objectives in ECGD's
revised Mission Statement. We will examine with interest the specific
wording proposed by the Review (paragraph 8).
ECGD's new Mission will be "To benefit the UK
economy by helping exporters of UK goods and services win business
and UK firms to invest overseas, by providing guarantees, insurance
and reinsurance against loss taking into account the Government's
international policies." ECGD will also have an objective
"to ensure its activities accord with other Government objectives,
including those on sustainable development, human rights, good
governance and trade."
3. We recommend that the Review investigate
the claim that the high proportion of cover provided by ECGD for
defence equipment is at the expense of non-defence related exports
(paragraph 19).
There is no evidence of ECGD support for defence
business crowding out civil contracts. ECGD's primary remit is
to facilitate the export of capital goods from the UK without
discriminating between industrial sectors. ECGD's support is given
to exporters on a first come (with firm business), first served
basis and so defence-related exports have as much right to ECGD
support as do civil exports.
The same underwriting criteria and premium rates
apply to civil and defence business although defence business
usually attracts more restrictive payment terms.
4. We consider the protection of DFID's budget,
mentioned in the Oxfam recommendation, to be an important principle
in this debate on the forgiveness of ECGD debt. Any write-off
should be borne by the Treasury and should have no implications
for the future funding of DFID. We also believe that it is important
to link debt forgiveness to poverty reduction strategies (paragraph
21).
The Treasury and DFID will agree the budget necessary
to ensure the full financing of this commitment, in the context
of DFID's budget and reflecting the need to ensure that funding
is not diverted from other development needs.
All countries requesting assistance under the HIPC
Initiative must adopt and implement a poverty reduction strategy
developed through a broad-based participatory process.
5. We expect ECGD to review current research
and if necessary commission new research into the impact of ECGD,
and of export credit agencies more generally, on developing economies
(paragraph 25).
Chapter 5 of the Review report looks to the future
and addresses the issue of how ECGD can do more to help developing
countries. ECGD is also to hold a joint seminar with DFID, in
September 2000, to look at how ECAs in general can help developing
countries to reduce poverty and how ECGD can take forward the
implementation of the ECGD Review's conclusions. Members of the
Committee will be invited to attend this seminar.
6. We recommend that the Review place its
policy proposals within a strategy for the internationally agreed
reform of export credit agencies, and that this strategy have
as a priority the elimination of poverty in developing countries
(paragraph 26).
The Review has examined ECGD's aims and objectives
to ensure that its support is consistent with wider Government
objectives for sustainable development. ECGD will press for international
acceptance of its productive expenditure policy and will keep
open the option of applying this to other countries.
As well as developing a set of Business Principles,
ECGD will publish information for customers and others on its
screening and assessment procedures. ECGD will press strongly
for standards of project assessment to be raised multilaterally
and for the adoption of sustainable development principles and
policies by ECAs.
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