Select Committee on International Development Appendices to the Minutes of Evidence


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).


  1.1  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.


  2.1  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.


  3.1  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.


  4.1  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.


  5.1  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.


January 2001


  1  Reed, D (ed). (1996), Structural Adjustment, the Environment and Sustainable Development, WWF Macroeconomics Programme Office, Earthscan, London.

  2  WWF-International (1998b). From Liberalisation to Sustainable Development: A Critique of the OECD Paper `Open Markets Matter: the Benefits of Trade and Investment Liberalisation, WWF-International, Gland, Switzerland.

  3  WWF-UK (1999), FDI and the Environment: from pollution havens to sustainable development, WWF-UK Research Report , Godalming: September 1999

  4  IMF (1997), World Economic Outlook. Globalisation: Opportunities and Challenges, Washington D.C., May 1997

  5  WRI, UNEP, UNDP (1998), World Resources 1996-1997, Oxford University Press

  6  WWF-International (1999), The Living Planet Index, WWF-International, Gland, Switzerland

  7  Mabey, N & McNally, R.H.G (1999), FDI and the Environment: from pollution havens to sustainable development, WWF-UK Research Report, Godalming

  8  World Bank (1997), World Development Indicators, World Bank, Washington D.C

  9  WWF-UK (1998), Poverty and the Environment: Facing the real issues, WWF-UK, Godalming, Surrey, UK, November 1998

  10  Dollar, D & Kraay, A (2000), Growth is good for the poor, World Bank, Washington

  11  Baumol, W (1986), `Productivity Growth, Convergence and Welfare: What the long-run data show', American Economic Review, December

  12  The Economist (1999), `Down, but not out of hope', 351 (8117); page 76, The Economist, London

  13  Kelichi, O (1997), "Creating the market economy: the Japanese view on economic development and systemic transition", background paper prepared for the World Bank's 1997 World Development Report, Saitama University and Tsukuba University, 7 August 1996]

  14  The Economist (1999), `Down, but not out of hope', The Economist, 351 (8117); page 76, London

  15  The Economist (1999), "Uncertain prospects", The Economist, 351 (8116); page 23, London

  16  DFID (2000), Strategies for Achieving the International Development Targets: environmental resources and sustainable development for the poor, DFID, London

  17  WWF-Germany (1998), Lipsticks from the Rainforest: Palm Oil, Crisis and Forest Loss in Indonesia: The Role of Germany, WWF-Germany, Frankfurt.

  18  WWF-International and Oxfam-UK (1999), The Effects of Trade Liberalisation on Mexico's Corn Producing Sector, WWF-International, Gland, Switzerland.

  19  WWF-International (1999), The Living Planet Index, WWF-International, Gland, Switzerland

  20  WWF-International (1999), The Living Planet Index, WWF-International, Gland, Switzerland

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