Memorandum submitted by British Invisibles
1. BI (British Invisibles) welcomes the
opportunity to express its views about the recent White Paper
on International Development. BI was one of the organisations
which submitted comments to the Department for International Development
when the White Paper was at its preparatory stage. A copy of that
submission is attached.
It provides some background on the activities of BI and explains
its interest in the subject under discussion.
2. BI shares the Government's overall view
that opening markets is in the interest of both developing and
the least developed countries. We note, however, that, in line
with BI's earlier submission, the White Paper stresses the importance
of not only the liberalisation of markets but also the need for
that liberalisation to be managed carefully and the need for sound,
efficient and transparent regulations to be put in place. In that
context, BI believes that developing and least developed countries
should open their services markets progressively and at a pace
which allows change to be absorbed. This concept of progressive
liberalisation is of course one of the corner stones of the WTO
General Agreement on Trade in Services.
3. Generally, therefore, BI supports the
approach outlined by the Government as regards the trade and investment
issues examined in the White Paper. From BI's standpoint, however,
we are disappointed that relatively little is said in the White
Paper about the vital role played by the services sector in developing
economies. In our earlier submission, we quoted from World Bank
statistics, which illustrate this point clearly, and noted the
particular importance for developing countries of sectors such
as financial services, telecommunications and power distribution.
The economic expansion of these countries depends on the availability
of services which work effectively. When the White Paper does
discuss the importance of efficient services sectors (in paragraph
249 et seq), we find it surprising that there is no reference
to financial services at this particular point.
4. BI also thinks that, although the White
Paper outlines the Government's support for the opening of markets,
it does not emphasise sufficiently the important role which foreign
firms can and do play in developing markets both as investors
and employers. For example, paragraph 94 of the White Paper talks
in terms of major benefits being brought about by the opening
up of financial and information services but fails to take the
point further by discussing the benefits derived from having foreign
services providers present in the market. Foreign firms will often
bring new skills and new technology, as well as access to global
markets, which are not otherwise available easily if at all.
5. Indeed, more perhaps could have been
made of the above points in Chapter 4, on Harnessing Private Finance.
This chapter is rather lukewarm in respect of the benefits for
developing and least developed countries of attracting foreign
investment, particularly in services sectors. In paragraph 157,
for example, in discussing the conditions that generate domestic
savings, promote domestic investment and discourage capital flight,
we believe that something ought to have been said about the fact
that the foreign private sector has the skills, methods and systems
to assist in this regard, provided it is given access to markets.
We note with approval Box 7 on page 50, which outlines the beneficial
role that Transnational Corporations can play in this respect.
6. BI welcomes the assertion made strongly
in paragraph 185 of the White Paper that a multilateral investment
agreement, negotiated in the WTO, would prove to be beneficial
to developing countries.
7. The White Paper is a timely reminder
that, despite what is often alleged to the contrary, the world's
poorer countries stand to secure significant net benefit from
the additional growth, investment and employment which globalisation
can bring. That is the main way in which a key objective of the
White Papermaking globalisation work for the poorcan
These comments are submitted on a corporate
basis on behalf
Director, Trade Policy, British Invisibles
10 On 2 February 2001, British Invisibles was renamed
and relaunched as International Financial Services, London. Back
Not printed. Back