APPENDIX 14
Memorandum submitted by WWF-UK
— WWF commends the UK Government's
Department For International Development for the timely release
of its White Paper on Globalisation: Eliminating World Poverty—Making
Globalisation Work for the poor. We welcome this opportunity to
respond to the White Paper.
— WWF is an international non-governmental
organisation that works to promote sustainable resource use by
working with people to help protect species and habitats, prevent
destructive resource use and reduce pollution. We are currently
active in over eighty countries.
— WWF has worked for over 10 years
on macroeconomic issues; we have policy units in Geneva, Brussels
and Washington, and staff working on these issues in countries
throughout the world. We have carried out extensive research projects
into the effects of structural and economic reforms [1], the effects
of trade and investment liberalization [2,3] and are involved
in projects worldwide that tackle the twin problems of poverty
and environmental degradation. It is from this basis that we formulate
our response.
— WWF supports many of the initiatives
suggested in the Paper; for example: land tenure reform and improving
access to education, health and financial services for the poor
(chapter 3); special measures to integrate the poor into the market
place (chapter 2); and the actions put forward for improving development
assistance (chapter 7).
— WWF is far from convinced of the
merits of the basic intellectual framework that underpins the
thinking behind the paper. We believe that such thinking is insufficient
to deal with the complex environmental and social problems that
globalisation poses and will not deliver fair and sustainable
growth.
— WWF are concerned with a number of
the points reflected in the White Paper and fear that many of
the critical issues raised by civil society have not been adequately
addressed. Our chief concerns relate to the lack of any serious
commitments to tackle the problem of the unsustainable consumption
of natural resources (chapter 6); a failure to fully recognise
the inequality of economic integration (chapter 4 and 5); and
the lack of any firm proposals/actions to strengthen global environmental
governance (chapter 8).
1. MAKING GLOBALISATION
WORK FOR
THE POOR
AND THE
ENVIRONMENT
1.1 The Globalisation paper talks about
the need for the "new wealth created by globalisation to
be managed wisely to lift millions out of poverty" and ".
. . . if it is managed badly it can lead to their further marginalisation
and impoverishment". Globalisation is inextricably linked
with the neo-liberal economic policies of the past three decades;
although the benefits from such policies have been considerable
they have come at a significant cost to the environment, and are
being captured by a small minority of the world's population.
1.2 There is growing inequality among regions
of the world, among nations within regions and among social groups
within countries. The gaps between relative incomes in the countries
of Latin and Central America, Middle East, North Africa and Africa
and countries of the developed world has widened since the 1970s.
Only in Asia has there been a clear trend towards improvement
during the past twenty years. The average per capita income level
of African countries has fallen by over half in relative terms
since 1965 [4].
1.3 There has been a tendency for countries
to become polarized into high- and low- income clusters. Over
the past 30 years the global growth in income has been spread
unevenly, and the inequality is increasing. The poorest 20 per
cent of the world's population now claims just 1.1 percent of
global income, whilst the richest 20 per cent claims 86 per cent.
Between 1960-1994 the ratio of the income of the richest 20 per
cent to the poorest 20 per cent increased from 30:1 to 78:1 [5].
1.4 The past three decades have also witnessed
an unprecedented destruction of the natural environment: freshwater
ecosystems have declined by 50 per cent; marine ecosystems have
deteriorated by 30 per cent and forest cover has been reduced
by 10 per cent. Global energy use has increased by 70 per cent,
bringing with it the build-up of greenhouse gases and changing
weather patterns [6].
1.5 Economic integration—synonymous
with globalisation—is thus dividing the world into those
that are benefiting from global opportunities and those that are
not, as well as placing an ever-growing pressure on our planet's
ecosystem. These costs, unless properly addressed have the ability
to threaten the stability of the international economy.
1.6 WWF believes that the globalisation
paper, although containing a wealth of welcomed actions and commitments,
is based on an organizing principle that inherently works against
the poor and the environment. WWF is a firm supporter of market-based
economics. However we believe that economic growth must be encouraged
inside a framework that promotes fair and sustainable development.
WWF urges the government to carry out an assessment of the impacts
of growth, trade and investment on poverty that will inform imaginative
policies to ensure that increased economic activity, where appropriate,
provides for many, not for the few. The results of which would
set in motion the appropriate policies to counter the pernicious
effects of liberalization and promote growth that is fair and
sustainable.
1.7 The developed countries have received
most of the spoils of globalisation and have created the lions
share of destruction. They must therefore shoulder more of the
responsibility to help poorer nations build their economies and
to reverse the present trend of unsustainable production.
2. HARNESSING
PRIVATE FINANCE:
THE RIGHTS
OF MULTINATIONALS
VERSUS THE
RIGHTS OF
SOVEREIGN NATIONS.
2.1 WWF agrees with the need to sequence
capital account liberalisation with financial and macroeconomic
reforms. Given the difficulties and complexities associated with
capital liberalisation we are very interested to see how exactly
the proposed "road maps" to manage the risks associated
with the speed, scale and volatility of global financial markets
will be implemented.
2.2 We have serious reservations about the
proposal that a multilateral investment agreement should
be negotiated through the WTO; the debacle in Seattle clearly
highlighted that such an organization does not work by consensus.
Such an agreement is likely to repeat many of the errors of the
MAI —which failed because a balance between the rights of
investors and sovereign nations could not be achieved. Despite
commitments that a WTO agreement would grant governments' the
flexibility and right to regulate, experience of existing WTO
rules gives no confidence that this will occur.
2.3 WWF does not believe that the WTO—with
its emphasis on market access—is the appropriate institution
to promote sustainable investment. Moreover, the WTO does not
have the competence to deal with these wider social and environmental
issues, as has been clearly demonstrated by past rulings that
have been resolved contrary to the public good. (For a proposed
alternative investment agreement please refer to: WWF (2000),
Directing foreign direct investment to promote sustainable development,
WWF-UK, Godalming).
2.4 The Paper also mentions the need for
competition policy with the WTO—the core element
being the requirement on all countries to introduce competition
law. Care must be taken with such proposals given the different
levels of development of countries. Companies in poorer countries,
for historic reasons, may be unable to compete with foreign firms
and countries must be able to choose whether or not they want
to build their own domestic infant-industries. The Paper fails
to mention what we believe would be key elements of an investment
agreement: rules on transfer pricing and mechanisms to ensure
that there is not a race-to-the-bottom in environmental standards.
There is evidence to suggest such a trend is taking place [7].
2.5 WWF agrees that the private sector has
a key role to play in making globalisation work for the poor people
and sustainable development. Large multinational companies (MNCs)
carry out the bulk of FDI, and have the knowledge and resources
to operate to high environmental standards. The 500 largest businesses
in the world control 25 per cent of the planet's output in GDP
terms. These businesses are therefore at the very core of global
environmental concerns. The UK Government has been at the forefront
of promoting corporate responsibility, for example its
efforts to green ECGD, expand pension funds and public procurement.
However given the scale of impact of these multinational businesses
the solutions need to be more ambitious.
2.6 There needs to be a push for a stronger
code of conduct for multinational businesses that contains binding
core rules and best practice guidelines. At a minimum companies
must be expected to adhere to the existing OECD guidelines, monitored
vigilantly through countries' National Contact Points. Further
positive incentives (eg guarantee start-up costs) need to be introduced
to encourage the development of "environmentally and socially
responsible firms". Citizens' in the recipient countries
must have access to courts as a primary forum for redress against
investors violating social and environmental criteria. There also
needs to be more efforts to help ensure that producers in developing
countries capture a larger part of the price of the good.
3. CAPTURING
GAINS FROM
TRADE: THE
INEQUALITY OF
GLOBAL ECONOMIC
INTEGRATION
3.1 Over the past fifty years there has
been a large reduction in trade barriers between countries. This
has lead to an increase in global output. However these benefits
have come at significant cost to the environment and have not
been evenly shared. Economic integration over the past two decades
has been accompanied by greater inequality between, and within
countries. Between 1980-96, GNP per capita actually declined in
59 countries—mainly in sub-Saharan Africa, Eastern Europe
and the states of the former Soviet Union. Over the past thirty
years the ratio of income of the richest 20 per cent to the poorest
20 per cent has increased from 30 to 1 to 78 to 1; 1.3 billion
people now live in abject poverty [8] with 60 per cent of the
poorest living in environmentally degraded areas [9].
3.2 Recent research by the World Bank shows
that at best the poor have equal percentage income growth with
the rich as economies expand—this means absolute inequality
will rise and incomes diverge [10]. The economies of the least
developed countries have not converged towards their richer counterparts
as traditional neo-classical growth theory predicts [11]-last
year growth in developing countries stagnated with output around
1.9 per cent [12]. Economic integration is increasingly dividing
the world into those that have and those that don't.
3.3 The White Paper strongly supports the
view that trade openness should be aspired to by all countries
based primarily on the failure of protectionist policies in developing
countries in the 1950s and 1960s and the export-led growth of
the "tiger economies". The fact that trade-liberalised
economies appear to be faring better then non-liberalised economies
does not imply that developing countries should liberalise as
rapidly and as soon as possible. Nor does it mean that there is
no role for protection and state intervention in re-orientating
trade to improve a country's growth performance in the long-run.
3.4 There is ample evidence to showing that
the East Asian miracle was a result of strategic protectionism
and an interventionist government [13]. These countries vigorously
promoted strategic growth by picking and assisting industrial
winners, using strategic tariff setting and providing loans and
subsidies to build up fledgling industries. WWF does not support
protectionism but recognises the problem is not so black-and-white
and that the poorest countries need the opportunity and flexibility
to build their economic base to meet their development priorities.
3.5 The Paper talks of the need for the
poorest countries, to realise their export potential (their
comparative advantage) through greater specialisation. Currently
four-fifths of export earnings in the poorest countries of sub-Saharan
Africa accrues from commodity-related goods [14]. The terms of
trade for primary commodities continues to worsen-dropping over
50 per cent in the last decade. Given the price and income elasticity
of these goods this locks the poorest countries into economic
stagnation at the lower end of a growing inequality. Sluggish
world demand growth, coupled with expanding supply, suggests that
commodity prices will at best not fall [15].
3.6 In order to maintain current levels
of foreign currency a more intensive and damaging use of these
countries' natural resource base is often necessary, particularly
as there is little scope for diversification. It is estimated
that crop yields in Africa could be halved if degradation of cultivated
land continues at the present rate [16]. Increased efforts are
needed to diversify the economic base of such countries. This
will require considerably more assistance from the richer nations
in terms of the transfer of finance, technology and capacity building.
There also needs to be renewed efforts to help stabilize commodity
prices. Without such efforts the development divide is likely
to widen.
3.7 We strongly support the UK Government's
call for reduction on subsidies on agricultural products and the
halting of the practice of tariff escalation.
3.8 We do not share the view that the World
Trade Organisation-with its drive for the dismantling of trade
barriers-is the central conduit to deliver economic benefits to
the poor. The bulk of welfare gains from the Uruguay Round have
accrued to industrialized economies, whilst sub-Saharan Africa
has benefited the least.
3.9 We support many of the Paper's proposals
for reform to the WTO; in particular the proper implementation
of special and differential treatment measures, duty free access
for all least developed country exports and clarification on MEAs
and eco-labelling with WTO rules. However, we would call for more
systemic changes to the WTO and its agreements (see WWF-UK (2000),
Submission to the International Development Committee on the
Implications of the WTO for Development, WWF-UK, Godalming).
3.10 Reform of the WTO must go beyond fundamental
process issues of decision-making and transparency, and consider
the appropriate scope of the WTO given its negotiating culture,
expertise and underlying principles. The WTO should be restricted
to core issues, respecting the mandates of other international
institutions (UNCTAD, UNEP) and cooperating with them in their
areas of competence if sustainable development is to be achieved.
3.11 The Paper only pays cursory attention
to the transitional effects of liberalisation. These can cause
permanent environmental and social damage: for example, the conversion
of Indonesian forest to oil palm [17]; and the destruction of
the subsistence livelihoods of Mexican maize farmers' [18]. The
so-called "transition" effects can actually cause pernicious
long run impacts affecting the evolution of human, social and
environmental capital stocks that are vital for the sustained
economic growth of any country.
3.12 An assessment of the social and environmental
impacts (SIA) of any trade agreements must be carried out prior
to their implementation. The results of which would set in motion
the appropriate policies to counter the pernicious effects of
liberalization and promote trade that is fair and sustainable.
This may require the building up of a country's "fundamentals"
(education and health) and/or its institutional and physical infrastructure,
prior to and in tandem with liberalisation, ensuring the proper
sequencing of regulation, empowerment and liberalisation.
4. TACKLING GLOBAL
ENVIRONMENTAL PROBLEMS:
MOVING BEYOND
THE NATURAL
RECOVERY LEVEL
4.1 The White Paper recognises that globalisation
continues to "damage the global environment and that many
of renewable resources—freshwater, forests, plant and animal
species—are being exhausted at a rate beyond their natural
recovery level". WWF firmly agree with these assertions:
WWF's living planet index estimates that since 1970 one-third
of the Earth's natural wealth has been destroyed [19].
4.2 WWF welcomes the fact that the Paper
clearly identifies the consumption patterns of people in developed
countries as the major source of the environmental problem and
there is a need for them to meet their responsibilities.
However, the Paper is very weak in terms of actions to precipitate
such changes. The Government's National Strategy for Sustainable
Development (NSSD) is identified as one vehicle to achieve this.
The UK's NSSD needs to be developed if it is to take into account
how the consumption patterns in the UK affect and influence production
in the developing world and how to ensure sustainable production.
Overall there is a real lack of discussion in the Paper on how
in fact to tackle the problem of ever-decreasing resources.
4.3 The increased efficiency of resource
use is viewed as the main way to counteract this problem. Technological
advances have and will lead to a more efficient use of our natural
resources, but the existing scale of use is putting an ever-increasing
stress on the earth's carrying capacity. Many species, complex
systems and ecosystem services have no man-made equivalent and
cannot be replaced whilst technological advances may be unable
to fix irreversible, unforeseen and potentially disastrous effects
of pollution (e.g. impacts of POPs, climate change). In short
we cannot depend solely on a more efficient use of resources to
tackle the environmental problems globalisation poses.
4.4 In order to achieve the International
Development Targets on poverty and the environment, the issue
of consumption by the richer nations needs to be addressed. Thus
we call on all governments from developed nations to develop ways
of measuring and reducing their citizens' "footprint".
To ensure that the UK Government meets a footprint target they
need to: heighten consumer awareness as to the ecological and
social impacts of their consumption patterns; screen overseas
investments by UK companies and financial institutions; help UK
businesses to use sustainable production techniques (e.g. FSC,
MSC); and ensure that all UK aid, either unilateral or multilateral,
promotes projects and programs that support sustainable development.
4.5 The UK Government has made important
progress in reducing domestic greenhouse gas emissions. We welcome
the UK Government's move to go beyond its Kyoto target to reduce
the UK's CO2 emissions by 20 per cent by 2010. We also welcome
the UK Government's efforts to make the Clean Development Mechanism
an effective instrument for the transfer of clean energy technologies.
We urge the Government to continue their efforts in the post Hague
negotiations. We look forward to the report of the G8 task force
on Renewable Energy and hope it will lead to a removal of obstacles
to the development of renewables in developing countries.
4.6 In order to integrate environmental
sustainability into development planning the Paper recognises
the need for the World Bank to strengthen its capacity to take
account of sustainable development in supporting Poverty Reduction
Strategies (PRSPs). Up to date PRSPs have not adequately taken
environmental concerns into account. National Strategies for Sustainable
Development (NSSDs) that are being prepared by all countries as
part of the international development target provide a comprehensive
framework for action towards sustainability. However these have
not even been mentioned in the Paper. The Government should support
capacity building in developing countries to implement NSSDs with
the participation of all stakeholders and ensure that these converge
with PRSPs.
4.7 We fully agree that stronger international
institutions and a stronger commitment to sustainable development
is needed in order to shift to sustainable production patterns.
However, the Paper tends to assume that these will not be possible
unless the poorer countries first reach higher income levels (the
Kuznet hypothesis). Evidence points to the fact that there are
simply not the resources and time to wait for this to happen [20].
4.8 Countries from the developed world must
take the initiative and build trust to help poorer nations meet
these environmental targets as well as reducing their own footprint.
We agree that there is a clear need for better co-ordination and
support for Multilateral Environmental Agreements. We welcome
that the Government will push for increased assistance to least
developed countries to participate and benefit form MEAs and press
for a 50 per cent increase in resources for the third replenishment
of the GEF from 2002-2006. The issue of international environmental
agreements is presented throughout as a classic North-South conflict
when much of the contention actually lies between the EU and the
US.
5. STRENGTHENING
THE INTERNATIONAL
SYSTEM: THE
NEED FOR
A GLOBAL
ENVIRONMENTAL GOVERNANCE
5.1 WWF finds the final section on strengthening
the international system rather weak, particularly as it fails
to mention or put forward concrete suggestion on how to improve
global environmental governance. This is a fundamental issue in
the globalisation debate given the global nature of the environmental
problem and the current weak system of governance that exists.
5.2 Countries need to pool sovereignty to
address global issues such as the environment. This has been achieved
primarily through the adoption of Multilateral Environment Agreements
(MEAs). However, global and regional economic agreements such
as the WTO and NAFTA, that intensify competition between countries,
are not only threatening the effectiveness of MEAs but also legitimate
national policies in the areas of health and the environment.
5.3 Efforts are needed to ensure that countries
are not constrained by international law to meet their goals of
sustainable development. International agreements must be able
to respond to the different priorities of different countries
and the overarching principle of sustainable development. There
needs to be clarification within all trade and investment agreements
to ensure its rules are not abused to undermine countries legitimate
environmental concerns (eg NAFTA chapter 11).
5.4 There needs to be a strengthening of
environmental institutions such as UNEP and a greater push for
the mainstreaming of "sustainable development" inside
all economic institutions (eg WB and IMF). Greater coherence between
these multilateral bodies (eg WTO, MEA secretariat and UNEP) is
long overdue. This needs to be driven forward urgently. WWF views
the World Summit on Sustainable Development in 2002 as a key event
for the issue to be discussed and resolved.
5.5 We agree that there is a need for all
international institutions to concentrate efforts on achieving
IDTs, with a greater focus on poverty reduction and policy coherence,
as well as improved co-ordination and monitoring. The UK Government
should work to strengthen the environmental as well as developmental
efforts of the G8, the OECD and the Commonwealth. We are pleased
to see the commitment to mobilise civil society, particularly
in developing countries to strengthen the capacity of poor people
to hold governments and international institutions to account
for progress on poverty reduction. However we believe that their
capacity also needs to be strengthened to hold MNCs to account
for flagrant abuses of environmental regulations.
WWF-UK
January 2001
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out of hope', 351 (8117); page 76, The Economist, London
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14 The Economist (1999), `Down, but not
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prospects", The Economist, 351 (8116); page 23, London
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