House of Commons - International Development

Select Committee on International Development First Report

FIRST REPORT

The International Development Committee has agreed to the following Report:—

THE GLOBALISATION WHITE PAPER

1. On 11 December, the Government published a White Paper entitled "Eliminating World Poverty: Making Globalisation Work for the Poor".[1] The White Paper's main conclusions focus on: i) promoting sustainable economic growth and trade; ii) new technology and education; iii) strategic development assistance; and iv) stronger international institutions. After 22 years without a White Paper dedicated to international development, in the course of the current Parliament, we have seen two. We welcome the new policy emphasis on international development and consider this to be a valuable result of the creation of a separate Department of State.

2. In 1997, we considered the Government's White Paper on International Development "Eliminating World Poverty: A Challenge for the 21st Century".[2] We commended the White Paper as "an impressive survey of development issues and a long overdue attempt to bring focus and coherence to Government policy".[3] At the same time, we noted that "development must ultimately be viewed as an international effort ... because the challenge of poverty is so large that only an international response can be effective ... the increasing globalisation of trade and finance means that solutions to poverty are often global ones".[4] We went on to recommend that the Government provide more detail of its macroeconomic policy, in particular on the advantages and disadvantages of globalisation. Therefore we welcome the publication of a second White Paper as an important addition to, and elaboration of, the first (Development) White Paper. In considering the White Paper, we further note that it stands alongside DFID's first White Paper, and its Target Strategy Papers — a point made both in the White Paper itself and by the Secretary of State in evidence.[5]

3. The Globalisation White Paper was published on 11 December. The same day, the Committee announced its intention to conduct an inquiry into the Globalisation White Paper and invited memoranda assessing and responding to the contents of the White Paper. The Committee has received some 30 memoranda commenting on the Globalisation White Paper. Many of the submissions were from individuals and organisations that had contributed to the Government's initial consultation process. This Report briefly examines the process of producing the Globalisation White Paper before going on to examine some of the issues it addresses. As with our Report on the first (Development) White Paper, we do not set out to examine all of the issues raised in the Globalisation White Paper nor in the memoranda produced in response to it. However, we hope that this Report, coupled with the evidence submitted to the inquiry will provide a useful resource for both the Government and non-governmental groups alike. It builds on some of the conclusions of our Report on the WTO[6] and we hope that it may serve to take forward the debate on the merits — or otherwise — of globalisation.

The process of producing the globalisation white paper

4. The Prime Minister, in his Foreword to the Globalisation White Paper, stated that the elimination of world poverty "is the greatest moral challenge facing our generation".[7] The Secretary of State for International Development, also in the Foreword, explained that "This Second White Paper analyses the nature of globalisation. It sets out an agenda for managing the process in a way that could ensure that the new wealth, technology and knowledge being generated brings sustainable benefits to the one in five of humanity who live in extreme poverty [on less than US$1 a day]".[8]

5. The Globalisation White Paper was widely welcomed. KPMG were "impressed with the breadth of issues covered in the White Paper and [with] the resulting policy commitments" believing that "this White Paper complements the previous White Paper, and contributes to the global discussion on how to eliminate poverty".[9] Similarly, Traidcraft noted that "it is a significant and serious contribution to the debate about the potential effects of Globalisation".[10] Whilst nearly all the submissions received by the Committee welcomed the objective of a White Paper on globalisation, there were considerable disagreements over some of its contents. We examine some of these issues below. Some submissions also questioned the extent to which the Globalisation White Paper provided details as to how its broad policy objectives are to be realised. Michael Hubbard, University of Birmingham, noted that "The White Paper does set out broad goals for DFID, but chasing each through the recently published strategy papers doesn't produce further detail. Nowhere is there an attempt to prioritise DFID's resource use against these goals, or to review DFID's achievements relative to the 1997 White Paper's objectives".[11] Similarly, Save the Children stated that they were "pleased with the thrust [of the White Paper] of managing globalisation so that it benefits the poor" but "would like to have seen more detail on how it will be done ... while welcoming the breadth of the paper we feel it would benefit from greater detail regarding delivery".[12]

The consultation process

6. Clare Short told the Committee that "we have engaged in the widest ever consultation undertaken by the Department internationally as well as in Britain, [conducting] discussions with different groupings and representatives around the world and that is part of the objective both to hear what is being said across the world, but to generate a more informed and thoughtful debate about the nature of globalisation and how we can shape it".[13] A document placed on the DFID website in June 2000 set out the Department's consultation strategy for the White Paper which involved targeted seminars and meetings, direct mailing of key consultation documents, the internet site and development magazines. It also proposed various channels for feedback including face-to-face discussions, group/seminar discussions and written feedback.[14]

7. Overall, NGOs and others have been appreciative of the consultation process. CAFOD and Christian Aid noted that they had been provided with an opportunity to provide written submissions, to attend meetings and seminars with civil servants involved in drafting key sections of the Globalisation White Paper and to meet at director level with the Secretary of State on various aspects of the White Paper.[15] In their evidence, they stated that "Christian Aid and CAFOD felt that, broadly, NGOs were listened to with respect and, while we still have serious concerns over aspects of the White Paper, accept that consultation was undertaken in good faith. Our main reservation with the consultation process was the lack of opportunity to comment on a pre-publication draft of the paper, which weakened both the consultation process and the quality of the debate following the White Paper's release".[16]

8. Similarly, the British Consultants Bureau (BCB) noted that "although we in BCB may not be totally in agreement with the policy change [the Department's decision to untie bilateral aid], particularly its timing, we would like to acknowledge the effort made by the Secretary of State for Development and her senior officials in ensuring that BCB was extensively consulted during their drafting and publication of the White Paper".[17] We are impressed with the efforts made by DFID in conducting a wide-ranging consultation as part of the process of producing the Globalisation White Paper.

Parliamentary debate

9. As mentioned above, the Globalisation White Paper was published on 11 December 2000. Whilst it was launched at 11am, copies were not made available to the House of Commons until 1pm. No Statement was made in the House. The publication was made known by means of a Written Answer.[18] The Committee put these points to the Secretary of State, who told us that "why there has been no Statement in the House of Commons is a matter for the 'usual channels' and the 'usual channels' from both ends decided they had other priorities. I noticed at the last Question Time that some MP asked whether we could not have a debate on these matters and I think that would be highly desirable myself and I hope we might be able to persuade the House ... On why the White Paper was launched before copies had been made available in the House, that was some problem with the Vote Office. It was delivered here but not distributed until later".[19]

10. Opportunities for debates on international development are rare. Such debates have, on the whole, been limited to Private Notice Questions on natural disasters and complex emergencies such as Mozambique and Kosovo, and to debates on Committee Reports in Westminster Hall. We are concerned about the lack of parliamentary time allocated to debates on international development. We regret that there has still not been a debate on the Development White Paper, published in 1997.[20] The Globalisation White Paper states that "We are also committed to publishing, as part of the annual Departmental Report of the Department for International Development, an account of progress towards the International Development Targets, which could form the basis for regular parliamentary debates".[21] The Prime Minister has described the elimination of poverty as "the greatest moral challenge facing our generation". He has also stated that "it is also in the UK's national interest. Many of the problems which affect us — war and conflict, international crime and the trade in illicit drugs, and the spread of health pandemics like HIV/AIDS — are caused or exacerbated by poverty".[22] This is indeed the case and should be reflected in parliamentary scrutiny.

11. We now have a separate Department of State dedicated to international development and responsible for considerable sums of taxpayers money. It is deplorable that the House of Commons has no opportunity to scrutinise in debates DFID's activities effectively. We recommend that there should be an annual debate on international development on the floor of the House. This is already the case for defence[23] and we see no reason why it should not also be the case for international development. Ideally the debate should take place shortly after the publication of DFID's annual Departmental Report and would provide an opportunity for the House to assess the expenditure, administration and policy of DFID and to monitor progress towards the international development targets.

Contents of the globalisation white paper

12. Clare Short told the Committee that, "the reason for the White Paper is twofold. One is that since our Department was formed ... there has been a lot of new cross-Whitehall work and we wanted to consolidate that into a statement of Government policy ... to promote an international system which will really encourage development for the poorest countries. The second reason is to address the enormous muddle and confusion there is in public debate about the nature of globalisation, which I find worrying".[24]

13. The Globalisation White Paper does acknowledge that "The word globalisation is used in different ways. The contested nature of the concept is part of the explanation for the confusion of so much public debate. For some, globalisation is inextricably linked with the neo-liberal economic policies of the 1980s and early 1990s. For them, globalisation is synonymous with unleashing market forces, minimising the role of the state and letting inequality rip. They denounce the increasingly open and integrated global economy as an additional more potent source of global exploitation, poverty and inequality".[25] It goes on to state that "in fact, globalisation means the growing interdependence and interconnectedness of the modern world ... the increased ease of movement of goods, services, capital, people and information across national borders is creating a single global economy".[26] The Globalisation White Paper also notes, however, that the benefits of globalisation are not inevitable, "Managed wisely, the new wealth being created by globalisation creates the opportunity to lift millions of the world's poorest people out of their poverty. Managed badly and it could lead to further marginalisation and impoverishment. Neither outcome is predetermined; it depends on the policy choices adopted by governments, international institutions, the private sector and civil society".[27] The Committee agrees with the Government that the ultimate impact of globalisation — positive or negative — will be determined by the political choices adopted by governments, multilateral institutions, the private sector and civil society.

14. The starting point for Oxfam, in its memorandum to the Committee, was that "globalisation in its current form is not working for the poor ... The benefits of globalisation have been disproportionately captured by rich countries and powerful transnational companies, while poor countries and poor people have been left behind. We readily acknowledge, as does the Globalisation White Paper, that globalisation is creating both winners and losers ... but poor men and women continue to be disproportionately represented amongst the ranks of the losers ... Oxfam believe that the current pattern of globalisation is failing the poor because it is failing to tackle inequality and to deliver sufficient, equitable growth".[28] Clare Short also seemed to acknowledge that globalisation was not currently working for the poor, observing that, "[if] it is left on its present track, [it] will potentially lead to more and more marginalisation of poor countries and people".[29]

15. The Globalisation White Paper contains the Government's proposals for ensuring that globalisation does work in the interests of the poor. Its proposals are reflected by the chapter headings in the Globalisation White Paper: effective governments and efficient markets, investment in social sectors, increased private investment and trade, sustainable use of the environment, and improvements in aid effectiveness and global institutions. As the World Development Movement note, there has been little disagreement between the Government and non-governmental groups on the aims of the Globalisation White Paper, in that globalisation must deliver real benefits to the poor — disagreements have generally been over the policies that will achieve this aim.[30] Oxfam spelt out the two specific areas where they felt that globalisation was failing the poor: the failure to tackle inequality and to deliver sufficient, equitable growth.[31] The vast majority of memoranda received by the Committee reflected these concerns.

Trade liberalisation

16. ActionAid, in their memorandum, stated that " The White Paper is a considered and constructive contribution to the debate on globalisation's effects on poor and marginalised people ... However, it is more optimistic about the benefits for poor people offered by greater trade liberalisation than ActionAid believes is warranted under current international trading rules".[32] Similarly, the International Confederation of Free Trade Unions (ICFTU) "do not share the White Paper's conviction that open markets are always the best way to tackle poverty and that this formula can be applied across the board"[33] and the International Centre for Trade Union Rights (ICTUR) noted "the White Paper is woefully deficient and overkeen, to the point of naivety, to advance market solutions to deep seated social and economic problems".[34] The Committee has already examined the issue of trade liberalisation in the context of its Report on the WTO.[35] In that Report, we strongly supported the WTO as "the only place where global trade development can take place in a way shaped by the developing world ... if the poor are to have any hope of better lives their countries must be given greater opportunities to participate in the global trading system".[36] However, we also cautioned that trade liberalisation must be planned, phased in, and based on clear rules, as well as being accompanied by increased trade capacity and domestic pro-poor policies.

17. We do not propose to re-examine those issues we have already previously addressed in our Report on the WTO. However, we note that the Globalisation White Paper does not call for unreconstructed trade liberalisation. It states that whilst openness is a necessary condition for national prosperity, it is not, in itself, sufficient.[37] The Globalisation White Paper concedes that "the WTO still bears the heavy imprint of the much smaller group of mainly northern countries that have dominated negotiations since the founding of the General Agreement on Tariffs and Trade (GATT)" and that "the WTO should be more open and its rules easier to understand".[38] It also acknowledges that "there are substantial inequities in the existing international trading system ... developed countries maintain significant tariff and non-tariff barriers against the exports of developing countries".[39] We agree with the Globalisation White Paper that support for open trade is not to be confused with support for unregulated trade. We commend the White Paper for its admission that "there are substantial inequities in the existing international trading system", and for its commitment to press the WTO to adopt the International Development Targets. An early priority must now be the identification and elimination of such inequities and to build the confidence of developing countries in the international trading system.

Everything but arms (eba)

18. The European Commission's 'Everything But Arms' (EBA) proposal is an example of just such a confidence-building measure. Under the proposals, all exports (except for 25 tariff lines associated with the arms trade) from least developed countries would be allowed into the EU duty free. The Globalisation White Paper states the EBA proposals are "an important initiative and should help build confidence in a New Trade Round and also to increase economic activities in LDCs".[40] Oxfam, in its memorandum, raised concern that the proposals were being watered down in response to "an extremely hostile reaction from the international sugar lobby, from Caribbean producers and particularly from sugar beet farmers in the EU".[41] In oral evidence, Clare Short rebuffed claims that the proposal had been watered down, "it is all to play for ... we are still trying very hard to hold everyone together ... it is not settled and there are pernicious forces out there who want to scupper the proposal or weaken it or lengthen the phase-in periods and make it less beneficial to developing countries. All of the forces of decency need to combine and make sure that it is carried through ... the least-developed countries are 0.4 per cent of world trade. They are the poorest countries in the world where some of the poorest people in the world live. If we can give them a bit better trade access then they will be able to grow their economies a bit more and improve the life of their people. Surely the European Union can open its markets to these very frail economies".[42]

19. Apparently not. On 7 February, the European Commission formally authorised the EU Trade Commissioner Pascal Lamy to propose modifications to the EBA proposals to the Council of Ministers.[43] The revised proposals were subsequently agreed at the General Affairs Council on 26 February 2001. Under the revised proposals, immediate duty and quota-free access to the EU is to be provided for all products except arms. However, three sensitive products have been exempted: sugar, rice and bananas. Market access for these products will only be fully liberalised between 2002-2006 in the case of bananas, and between 2006-2009 in the case of sugar and rice. To compensate for the longer delay on these products, a duty-free quota will be created to ensure increased market access for least developed countries into the EU until tariffs and duties are removed. The Commission has also pledged that it will monitor imports of rice, bananas and sugar carefully and apply safeguard measures if necessary, to prevent damaging surges. The amended proposals have disappointed those who have been pushing for greater access for least developed countries to the EU's markets and have led some to dub the proposals "Everything But Farms".

20. The Committee has previously supported the EBA proposals, noting that "pro-poor trade liberalisation requires rich trading blocs to liberalise first, to make sacrifices, to demonstrate a desire to see the developing world enter the trading system".[44] We consider that the proposal to extend market free access to least developed countries into the EU without equivocation or dilution was a modest proposal that would have carried relatively small costs to EU countries whilst having the potential to bring significant benefits to some of the poorest countries in the world. It was always possible to couple the proposal with assistance to other low income countries affected by the proposals. Whilst the final agreement is undoubtedly a step in the right direction, delays in the elimination of duties and quotas for least developed country imports of bananas, rice and sugar show that the EU still has a long way to go to ensure that rhetoric matches reality in making globalisation work for the poor.

The ethical trade initiative

21. The ICFTU welcomed the Government's continuing support for the Ethical Trade Initiative[45] noting that it had "become one of the most significant initiatives of its type in the world". But they warned that "the present and growing plethora of initiatives threatens to develop into a competitive free-for-all in which private institutions promote competing and conflicting 'standards' for monitoring supply chains".[46] It goes on to call for the development of authoritative and international benchmarks, ideally within the ILO. Any dilution of standards in the Ethical Trade Initiative would obviously damage its developmental impact. We would welcome the Government's comments on how this can be prevented, for example through the use of international benchmarks for social auditing competence.

1 White Paper on International Development, "Eliminating World Poverty: Making Globalisation Work for the Poor", Cm. 5006, p.6 [henceforth referred to as "the Globalisation White Paper". Back

2 Cm 3789 Back

3 Second Report from the International Development Committee, Session 1997-98, The Development White Paper, HC 330, para. 56 Back

4 Ibid., para. 25 Back

5 Globalisation White Paper, p.13; Q.1 Back

6 Tenth Report from the International Development Committee, Session 1999-2000, After Seattle - The World Trade Organisation and Developing Countries, HC 227 Back

7 Globalisation White Paper, p.6 Back

8 Ibid., p.7 Back

9 Evidence, p.44 Back

10 Evidence, p.108 Back

11 Evidence, p.51 Back

12 Evidence, p.37 Back