House of Commons - International Development

Select Committee on International Development First Report

THE GLOBALISATION WHITE PAPER

Service sectors

37. British Invisibles noted that relatively little was said in the Globalisation White Paper about the vital role played by the service sector in developing economies. WDM made a similar point, "there is little attention paid to the General Agreement on Trade in Services (GATS) in the White Paper, considering its potential impact on the delivery of vital services to the poor".[77] It went on to request a comprehensive and independent assessment of the impact of past liberalisation of service sectors on the poor.

38. The White Paper could have considered the issue of trade in services in greater depth and in all of its aspects, particularly as it has generated such concern and controversy among NGOs and some developing countries. The Government has, as we discuss below, agreed to set up a Commission on Intellectual Property Rights. We believe a similar commission on trade in services could usefully be established so as to allow an open, impartial debate on the subject.

Urbanisation

39. Care International UK drew our attention to a "surprising omission: a failure to address the specific problems and opportunities of urbanisation".[78] They noted that "as the centres of commerce and finance, thriving cities are the embodiment of globalisation". They went on to note that urbanisation is bringing about one of the most significant transformations in the history of humanity. At present:

"nearly 50 per cent of the world's population live in towns and cities;
one in four urban dwellers live below the poverty line;
Asia, Africa and Latin America accommodate 180,000 new urban dwellers per day — over one million people per week.

By 2025 it is predicted that:

per cent of the world's urban population will live in cities in Africa, Asia and Latin America;
Over three fifths of the world's population will be urban;
Mumbai[79] alone is predicted to have 28 million residents, the same population as present day Kenya".[80]

40. They concluded that vibrant, well regulated and soundly managed cities reduce poverty and increase growth. We agree that urbanisation is an important element of globalisation and one that could well have been addressed in the context of the Globalisation White Paper. We note, however, that the White Paper was intended to stand alongside DFID's various other publications, including its Issue Paper on Urbanisation.

Technology

41. The Globalisation White Paper dedicates a chapter to "Investing in People, Sharing Skills and Knowledge". In this chapter, it sets out how the Government will seek to promote better health and education for poor people, and harness the new information and communications technologies to share skills and knowledge with developing countries. It also sets out how the Government proposes to help focus the UK and global research efforts on the needs of the poor.[81] A number of submissions welcomed the Globalisation White Paper's recognition of the importance of technology change for poverty reduction. However, the Intermediate Technology Development Centre also noted that "it has been our experience that the appropriateness of new technology to the circumstances of women and men living in poverty is rarely explicitly considered by international development organisations and NGOs".[82] Similarly, that "most of the world's technology research and development is designed to meet the needs of the industrialised world, and there is little evidence to suggest that global markets will deliver improved technologies that the poor will find affordable, appropriate and accessible".[83]

42. In examining the Globalisation White Paper, the Committee asked the Parliamentary Office of Science and Technology (POST) for a memorandum commenting, in particular, on questions related to scientific and technological issues raised in the White Paper. Its memorandum is attached as part of the appendices to the minutes of evidence.[84] Two issues raised by POST and by a number of other memoranda received as part of the inquiry are those of information and communications technology (ICT) and health — in particular, means by which access to existing drugs can be improved, and the development of new drugs can be made 'pro-poor'.

Information and communications technologies (ict)

43. The Globalisation White Paper states that "new technologies ... have the potential to help poor people leapfrog some of the traditional barriers to development, by linking them into the global economy, improving their access to knowledge and making government machinery work better".[85] Mark Malloch-Brown, Administrator of the UNDP, has also championed the potential for digital technology and computers to play a role in alleviating global poverty. However, Bill Gates, Chairman of Microsoft, questioned this approach at a conference on 'Creating a Digital Dividend', noting that with 1.2 billion people living on less than $1 a day and 2.8 billion on less than $2, "Mothers are going to walk right up to that computer and say, 'My children are dying, what can you do?' They're not going to sit there and, like, browse eBay or something. What they want is for their children to live. Do you really have to put in computers to figure that out?".[86]

44. The Globalisation White Paper continues, "the internet and mobile telephones offer poor countries new things to sell", it goes on to acknowledge that "there is a real risk that poor countries and poor people will be marginalised ... more than half the people in Africa have never used a phone ... in many developing countries, particularly in Africa, logging on is more expensive than in developed countries ... Poor countries are currently on the sidelines of the global economy and it is important that the international community agrees policies and standards that encourage rather than act as a barrier to their entry".[87] The Intermediate Technology Development Group echoed these sentiments, "there is little argument that modern information and communications technologies have facilitated the process of globalisation, and that they are having an impact on developing countries ... the challenge of how ICTs can be made accessible — physically and affordably — to poor people remains ... R&D on content, applications, software and even hardware is not commercially driven with the needs of the poor in mind, and there is a role for development assistance to support the development of poverty-focussed applications".[88] The Parliamentary Office of Science and Technology made similar points, noting that there are two requirements for the development of telecommunications: lowering costs and the expansion of the network to cover all areas. They also stated that any attempt to broaden internet coverage in developing countries will require improved levels of literacy and training, and information in local languages.

45. We request further information from the Government on what measures it is taking to make communications technologies more accessible for the developed world. We also request information on how the Government is proposing to ensure that research and development in this area is appropriate to the needs of developing countries and on efforts to improve developing country representation in relevant organisations such as the International Telecommunications Union.

Pro-poor research

46. The Globalisation White Paper also addresses the issue of pro-poor research, stating that "research that benefits the poor is an example of a global public good which is underfunded. Not enough of the world's knowledge is relevant to the needs of the poor. For instance 90 per cent of the world's disease burden is the subject of less than 10 per cent of all international research on health".[89] Clare Short elaborated on this further in oral evidence stating, "I do think that a major research effort needs to be focussed on the needs of developing countries ... the market will not drive it because there are not enough people to buy consequent drugs".[90] A number of memoranda focussed on the issue of affordable and appropriate drugs. ActionAid, for example, stated that, "the Paper fails to provide specific policies that ensure effective incentives are in place to stimulate, through public and private research, the production of vaccines, therapies and other medical innovations necessary to combat the HIV/AIDS epidemic and other communicable diseases".[91]

47. We welcome a number of innovative proposals outlined in the Globalisation White Paper to encourage pro-poor research, such as the use of public purchase funds to help develop new vaccines against HIV/AIDS, malaria or TB, differential pricing regimes and the use of tax credits. We also welcome the White Paper's announcement that it is developing proposals to increase investment into pro-poor research and development.

The environment

48. Chapter 6 of the Globalisation White Paper addresses "Tackling Global Environmental Problems". Here, the White Paper notes that "Globalisation is creating new challenges for the management of the global environment" and sets out the Government's goal as "meeting the economic needs of the present without compromising the ability of the planet to provide for the needs of future generations".[92] It continues, "the poor contribute least to environmental problems, yet are the most vulnerable to their ill effects. They are forced to live in the most degraded and ecologically fragile areas, and they are least able to cope with the harmful impacts that affect their health and livelihoods, such as water scarcity, indoor air pollution, lack of sanitation, eroded land and loss of living species".[93] The Committee has, itself, seen how the poor are more vulnerable to natural disasters. This was all too evident in the course of the Committee's visits and subsequent inquiries into Montserrat and Mozambique. Similarly, as the Parliamentary Office of Science and Technology point out, vulnerability can be mitigated by access to technology, robust institutional arrangements for emergency response, financing and insurance. They point to the very different consequences of Hurricane Mitch on Central America and the southern USA in March 1998 as an illustration of the extent to which vulnerability and resilience are related to socio-economic conditions.[94] We recommend that, in its response, the Government outline actions being taken to help reduce the vulnerability of developing countries to global environmental change.

49. WWF-UK stated that "since 1970, one third of the Earth's natural wealth has been destroyed".[95] It also called for governments to develop ways of measuring and reducing their citizens' "footprint". Finally, it noted that "National Strategies for Sustainable Development (NSSD) are being prepared by all countries as part of the international development targets ... However these have not even been mentioned in the White Paper".[96] One of the international development targets requires national strategies for sustainable development to be implemented in all countries by 2005, so as to ensure that current trends in the loss of environmental resources are effectively reversed at both global and national levels by 2015. 'A Better World for All', published by the IMF, OECD, UN and World Bank, set out progress towards the 2015 targets. It noted that there had been little progress in improving water supplies, that forests — and species living in them — were disappearing, and that greenhouse gasses were increasing. It made no comment, however, on progress towards the production of national strategies for sustainable development. We recommend that the Government, in its Response to this Report, assess progress towards the production of national strategies for sustainable development, and outline measures being undertaken by DFID to help developing countries produce such strategies.

New policy commitments

50. The Globalisation White Paper makes a number of new policy commitments. Amongst others, they include:

A commitment unilaterally to untie aid by ending the practice of using aid to ensure that a proportion of goods and services are sourced from the UK (with effect from April 2001);

The establishment of a Commission on Intellectual Property Rights to examine the ways in which intellectual property rules need to develop to take greater account of the interests of developing countries;

The provision of £35 million to the World Health Organisation's Global Polio Strategic Plan in an effort to eradicate polio from the world within five years;

An increase in funding for initiatives aimed at strengthening the trading capacity of developing countries and the launch of a new Infrastructure Financing Facility for Africa; and

A commitment to press for a more coordinated approach by the UN system and for open and competitive processes for the selection of top management in multilateral institutions.

Aid untying

51. The decision to untie aid has, perhaps, attracted most attention in the wake of the publication of the Globalisation White Paper. The White Paper states that "the UK Government is totally committed to the multilateral untying of aid".[97] It goes on to state three reasons why tied aid is damaging:

value for money: it is estimated that tied aid reduces the value of that aid by 25 per cent;
inefficiency: it leads to developing countries being supplied with incompatible pieces of equipment, each with different requirements for spares and back-up; and
it encourages a donor-driven approach to development, signalling that donors' major concern is with national contracts.[98]

52. The decision was widely welcomed — universally by NGOs. ActionAid, for example, stated that "This is a major step forward in ensuring that the development interests of poor countries are put above domestic commercial interests. In line with the Government's commitment to the 2015 International Development targets, Britain now stands a far better chance of ensuring aid is used directly to support poverty eradication".[99] The Committee has examined the issue of aid tying on a number of occasions. In our Second Report, Session 1997-98, we recommended that the Government make it a priority of this Parliament to initiate and promote an international campaign for the multilateral untying of aid. More recently, in both the Committee's Reports on DFID's 1999 and 2000 Departmental Reports, we, once again, examined the use of aid tying and DFID's use of local consultants and called on DFID, together with its European partners, to press for the untying of aid. The Committee commends the Government's decision unilaterally to untie development assistance.

53. The British Consultants Bureau (BCB), which represents the largest commercial grouping concerned with DFID consultancies,[100] submitted a memorandum to the Committee on the impact of the untying of UK bilateral aid. They noted that "the sum of money involved in tied aid is in the order of £300 million, of which £190 million is for consultancy ... In addition some of the research-related consultancies benefit from receiving research contracts allocated from another £100 million".[101] They estimated that this is equivalent to some 7 per cent of BCB's members' annual fee earning worldwide and were concerned that "a substantial loss of DFID projects to our international consulting competitors will result in a substantial loss of jobs for people working in or from this country."[102] Whilst accepting that the untying of UK bilateral aid was "effectively a fait accompli", BCB had two principal concerns: that DFID should encourage like-minded countries to untie their bilateral aid, and that "all concerned Government Departments should work together so that the UK's commercial potential to win work under multi-lateral development programmes is maximised".[103]

54. The Globalisation White Paper itself states that "we will work for early and complete EU-wide untying of member states' bilateral aid, and will press this strongly both with the Commission and with other member states. In evidence to the Committee, the Secretary of State was upbeat about the prospects of untying EU aid. She told the Committee that "our legal advice is very clear that it is a breach of the EU's own law ... we really need to put pressure on the Commission to require all countries to untie their aid and that is 60 per cent of worldwide ODA ... we ought to be able to get progress there".[104] She was more pessimistic however, as to the prospects of a wider agreement, "we are pushing very hard currently that everyone should untie their development assistance to start with to least developed countries. It is very difficult. There are some very entrenched bad practices out there. We are still pushing there and we are hoping there might be a push out of a UN conference on least-developed countries ... we are determined to push very hard in the multilateral system and also invite other countries to do what we have done and get on with it and untie".[105]

55. BCB were concerned that the Government had not waited until a larger grouping of like-minded countries had agreed to implement the policy together. Indeed, this has been the central argument given by the Government for not untying aid in the past — that in untying aid bilaterally, the Government would lose influence in negotiating fora such as the OECD.[106] An early multilateral agreement to untie aid is now an urgent priority. We request that the Government keep us informed of progress towards reaching such an agreement within the EU and other multilateral fora such as the OECD.

56. BCB also stated that "Post untying, the UK Government could do much to assist British firms by ensuring that in the multilateral financing institutions, every opportunity is taken to help British consultants win work".[107] We recommend that, in its response to this Report, the Government list efforts which are being made to help British consultants win work both in other countries and in multilateral organisations. At the same time, both ActionAid and BCB were in agreement that more could be done to strengthen the procurement capacity of developing countries. ActionAid stated that "wherever possible, we hope that this will lead to the awarding of newly untied funds to contractors in developing countries and that aid procurement will be used as a resource for development and poverty reduction".[108] BCB were also "entirely in agreement with the argument that firms in recipient countries should be fostered and, provided they are capable and professionally competent to do consultancy work, should be allowed to compete on an equal basis, or perhaps even more favourable terms".[109] We have, previously, commented on the importance of developing the capacity of developing countries to compete for consultancy contracts. In our Report on the 1999 Department Report, we stated that "we are concerned that the vast majority of consultancy contracts are let within the UK rather than within the country concerned".[110] In its response, the Government informed the Committee that it was in the process of implementing a strategy to increase the number of contracts let locally.[111]

Intellectual property rights (ipr)

57. Another new policy commitment is the decision to institute a Commission on Intellectual Property Rights "chaired by an eminent person, and including a representative group of international figures, to look at the ways that intellectual property rules need to develop in the future in order to take greater account of the interests of developing countries and poor people".[112] The proposal for a Commission was welcomed in memoranda received by the Committee.[113] A number of NGOs expressed concerns with existing intellectual property regimes. Oxfam told the Committee, "we believe that there is compelling evidence that compliance with TRIPs will raise the price of essential medicines with devastating consequences for poor households".[114] Clare Short, by contrast, told the Committee that "it is clearly our view that intellectual property protection is in the interests of the poor".[115]

58. The issue of intellectual property rights has been discussed in the course of our Report on the WTO.[116] It is also an issue that has attracted a great deal of attention in recent weeks following a legal challenge by the Pharmaceutical Manufacturers Association of South Africa to South Africa's Medicines Act, which allows for compulsory licensing and parallel importing of key drugs. We will examine these issues in our forthcoming Report on HIV/AIDS. However, we welcome the establishment of the Commission on Intellectual Property Rights and ask the Government to keep us informed of its progress.

CONCLUSION

59. A number of the submissions received by the Committee focussed on perceived omissions within the Globalisation White Paper or, at least, on issues which individual organisations felt merited greater attention. This is, perhaps, inevitable given the breadth of the topic.

60. Clare Short told us that the Globalisation White Paper was "being demanded across the world at great speed ... it is stirring up enormous interest across the international system ... we have had a lot of feedback, very, very high levels of interest, quite a lot of embarrassingly effusive praise ... we do not want people to sign up to every single proposal we make but to get a more informed debate ... I think the White Paper is beginning to generate a more informed positive debate".[117] We agree. Overall, the process of producing the Globalisation White Paper has been a useful one. However the success of the White Paper will depend on the degree to which its proposals are implemented. Whilst the Globalisation White Paper is a good start, we will monitor with interest how far the UK, and the multilateral development agencies to which it contributes, are prepared to go to ensure that globalisation truly works for the poor.

77 Evidence, p.54 Back

78 Evidence, p.18 Back

79 Formerly known as Bombay Back

80 Evidence, p.18 Back

81 Globalisation White Paper, p.34 Back

82 Evidence, p.24 Back

83 Evidence, p.24 Back

84 Evidence, p.84 Back

85 Globalisation White Paper, para.116 Back

86 International Conference on Creating Digital Dividends, Seattle, October 2000, http://www.digitaldividend.org/ Back

87 Globalisation White Paper, paras. 118-121 Back