APPENDIX 21
Memorandum submitted by Oxfam
INTRODUCTION
1. Oxfam welcomes publication of the Government's
Globalisation White Paper. The objective of making globalisation
work for the poor is one we share, and the UK Government deserves
considerable credit for being the first major government to publish
a paper that tackles this issue.
2. Similarly, we welcome the broad orientation
of the White Paper. The commitment to achieving structural changes
in order to make markets work for the poor within a rules-based
global system is one that Oxfam strongly supports, as is the re-affirmation
of the 2015 International Development Targets.
3. We also share the White Paper's analysis
that if globalisation can be made to work for the poor, then considerable
progress can be made in reducing poverty but that if we go on
as we are, the poorest countries will be further marginalised.
We agree that neither outcome is pre-determined, and that progress
will depend on the choices made by governments, international
institutions, the private sector and civil society organisations.
4. In responding to the Globalisation White
Paper, the starting point for Oxfam is that globalisation in its
current form is not working for the poor. The expansion of world
markets through increased flows of trade and finance has created
unprecedented opportunities for wealth creation, yet the human
development gains have, to date, been disappointing. 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.
5. We readily acknowledge, as does the White
Paper, that globalisation is creating both winners and losers,
and that some poor people—for example women textile workers
in Bangladesh and workers in the hi-technology industries of Bangalore—have
made substantial gains. But poor men and women continue to be
disproportionately represented amongst the ranks of the losers,
with poor farmers in Mexico and the Philippines seeing their livelihoods
destroyed by competition from cheap imports, and millions of Indonesians
witnessing the human development gains made over a generation
wiped out by the instability of capital markets.
6. Oxfam believes that the current pattern
of globalisation is failing the poor because it is failing to
tackle inequality and to deliver sufficient, equitable growth,
and convert that growth into poverty reduction at the rate necessary
to ensure that the 2015 International Development Targets will
be met. The yardstick against which this White Paper should therefore
be measured is the extent to which it identifies the policy changes
necessary at both national and international level in order to
promote economic growth, redistribution and poverty reduction.
7. We believe that many of the specific
policy commitments contained in the White Paper are welcome, and
we examine some of these in more detail below. In other areas,
we believe the White Paper could have gone further, and again,
we give examples. Finally, we also have some underlying concerns
about the analysis set out in the White Paper, and believe that
in particular, redistribution could have featured more strongly
as an over-arching theme. We will attempt to outline these concerns
in the following submission.
WELCOME POLICY
COMMITMENTS
Among the many policy commitments which we support
are those on:
8. Growth with equity—We are
pleased to see that the White Paper firmly states the Government's
belief that economic growth alone is not enough, and that pro-poor
development requires both growth and equity. Similarly, we share
the analysis that the starting point is important, and that poverty
reduction is more easily achieved in more equal societies. The
White Paper identifies many of the polices required at the national
level to promote redistribution, including land reform, taxation
and public spending on social development priorities, such as
health and education.
9. Corruption—We share the
view that the poor suffer most from corruption and welcome the
commitment to legislate in order to make UK law consistent with
the OECD Convention on Bribery, and to introduce legislation to
strengthen laws on money laundering.
10. Incentives for research into vaccines
and treatments for HIV/AIDS, Malaria and TB—We support
the notion of private/public partnerships aimed at increasing
investment into research and development of drugs and vaccines
to treat the major diseases which affect poor men, women and children.
11. Independent Commission on TRIPs—We
welcome the proposal to establish an independent Commission which
will examine how intellectual property rules might need to develop
in future to take greater account of the interests of developing
countries. This is a complex area of policy, and detailed examination
by a high level Commission seems a good way forward. In preparation
for our forthcoming campaign on TRIPs, Oxfam has undertaken research
on the impact of the TRIPs agreement on access to essential drugs.
Contrary to the White Paper's analysis, we believe there is compelling
evidence that compliance with TRIPs will raise the price of essential
medicines, with devastating consequences for poor households.
While there are some safeguards in place, recent examples concerning
HIV/AIDS drugs in South Africa suggest that these are inadequate,
and often count for very little in practice, as the rules are
frequently threatened by use of trade sanctions. We also believe
that current rules under TRIPs go too far in creating monopoly
marketing rights, as The Economist and others have pointed
out. Our research leads us to challenge the rather more optimistic
analysis of TRIPs given in the White Paper, and we look forward
to presenting our conclusions to the Independent Commission.
12. Reform of the WTO—The White
Paper concedes that the WTO still bears the imprint of a smaller
group of mainly northern countries and agrees that the organisation
should be made more transparent and open. The Government's support
in persuading the WTO to commit to the International Development
Targets is particularly welcome.
13. Support for Capacity Building Measures—A
number of measures aimed at building developing country capacity
for trade policy and negotiations, especially in Geneva, are welcome
eg the 2001 Africa Trade and Poverty Programme. We share the view
that practical measures combined with support for initiatives
such as the Everything but Arms proposal are both significant
in themselves and important as confidence-building measures post-Seattle.
14. Improved Market Access—We
warmly welcome the strong case that the White Paper makes for
improved market access. It recognises that substantial inequities
persist in the international trading system and rightly accuses
northern governments of failing to practice what they preach in
relation to the opening up of markets, particularly in sectors
such as agriculture and textiles. We share the analysis that the
Common Agricultural Policy is a barrier to access and support
the case for reform. We note, however, that there may be disadvantages
to developing countries opening up their own markets within the
context of continuing CAP subsidies. We agree with the call for
an end to quota protection of textiles by 2005, no new protectionism
and tighter regulation of anti-dumping rules.
15. Untying Aid—Much of the
media coverage surrounding the launch of the Globalisation White
Paper focused on the Government's announcement that it will unilaterally
untie the UK aid budget by April 2001. This is a significant move,
and one which NGOs, particularly ActionAid, have been advocating
for some time. Untying the aid budget will increase the effectiveness
of aid spending and also has a symbolic significance, clearly
demonstrating that all British aid will be directed towards the
elimination of poverty rather than the furtherance of national
self-interest.
16. A New Development Bill—We
support the introduction of a new development Bill to consolidate
a poverty-focused approach and to broaden the range of activities
which the Government can support.
17. Poverty Reduction Strategy Papers—We
welcome the emphasis on ensuring adequate civil society participation
in the drawing up of PRSPs and believe it was helpful for the
White Paper to acknowledge that there have been some teething
problems with early examples. We firmly believe that both the
World Bank and the IMF will need to radically alter their ways
of working if PRSPs are to achieve their true potential. We are
pressing for these institutions to support the notion of economic
impact assessments prior to implementation, and would welcome
DFID's support for this proposal.
AREAS WHERE
THE WHITE
PAPER COULD
HAVE GONE
FURTHER
18. Arms—The White Paper repeats
the undertaking given by Stephen Byers at last year's Labour Party
Conference that the Government will introduce a licensing system
for arms brokers and also says that they will work to tighten
international controls at the forthcoming UN Conference on small
arms. While both of these are welcome commitments, Oxfam and other
NGOs such as Amnesty International and Saferworld continue to
be disappointed at the Government's failure to find Parliamentary
time for legislation on Strategic Exports Controls prior to the
Election. And while new proposals on brokering look promising,
we also want action to control licensed production, improve end-use
monitoring and introduce prior Parliamentary scrutiny of arms
licences to potentially sensitive destinations.
19. Education for all—We welcome
the White Paper's commitment that the Government will work to
ensure that primary education is free for all, and the fact that
it reiterates the Dakar commitment that no government seriously
committed to universal primary education should fail through lack
of resources. But we are disappointed that the White Paper fails
to make any mention of plans to take forward the development of
a proposed global initiative on education, also agreed at Dakar.
Despite the fact that the Conference committed the international
community to develop such an initiative "with immediate effect",
progress since Dakar has been slow. We remain concerned that unless
a global mechanism can be developed for linking good national
plans to the promised additional financial resources, millions
of boys and girls will continue to be denied their right to a
free, high quality primary education.
20. Investment—The White Paper
effectively acknowledges for the first time that mistakes were
made with the Multilateral Agreement on Investment. It concedes
that the OECD was not the right forum for negotiating a genuinely
multilateral agreement. It also stresses that any new agreement
must be balanced and flexible, allowing foreign investors to invest
in defined sectors but also recognising the rights of governments
to set their own health, social and environmental standards, and
to legislate in favour of certain regions or sectors. Nevertheless,
it still insists on National Treatment, and possible performance
objectives, which we believe could restrict poor governments from
achieving certain development objectives. The White Paper places
considerable emphasis on the need to encourage foreign direct
investment in developing countries. While we support the case
for the right kind of FDI, we feel that the White Paper downplays
some of the negative consequences of the wrong kind of investment,
and linked to this, the need for better regulation of TNCs. While
there is a welcome emphasis on the OECD guidelines and other voluntary
initiatives aimed at promoting corporate social responsibility,
this is not balanced by measures aimed at introducing binding
international regulation of those who play an increasingly powerful
role in the management of the global economy.
21. Debt—Given the Government's
excellent record on debt relief over the past three and a half
years, it is perhaps churlish to criticise the White Paper for
offering nothing new on debt relief. We congratulate the Chancellor
of the Exchequer and the Secretary of State for International
Development once again for their personal efforts on this issue
and we also welcome the flurry of activity at the end of last
year which resulted in 22 countries successfully entering the
HIPC initiative. Nevertheless, we continue to believe that the
level of debt relief delivered by HIPC2 is inadequate, as evidenced
by the fact that many countries who have graduated through HIPC2
are continuing to spend more on servicing their debt than they
are able to invest in health and education. We also believe that
eligibility for debt relief under HIPC2 should be extended to
a wider range of countries. We and other NGOs involved in the
Drop the Debt campaign will continue to press the case for wider
and deeper debt relief in order to reduce debt burdens to sustainable
levels, commensurate with social development priorities. Increased
multilateral debt relief, bringing the IFIs into line with existing
bilateral commitments, could be an important element in this.
22. Aid spending—The White
Paper confirms the figures given in the latest Comprehensive Spending
Review which show that UK aid is set to rise to 0.33 per cent
GNP by 2003-04. We welcome the steady increases in the aid budget
made by the Government and, as with aid untying, believe that
aid spending has both a practical and a symbolic significance
in terms of the UK's commitment to the poorest countries. We note,
however, that if progress continues at the current rate, it will
be sometime before the UK reaches Scandinavian levels of generosity.
UNDERLYING AREAS
OF CONCERN
Inequality
23. The statement that globalisation has
been accompanied by increasing inequality has become received
wisdom in many quarters and Oxfam, along with other NGOs, quoted
figures from the UNDP Human Development Report to back this position
in our White Paper submission. The White Paper challenges this
analysis, and treats the data on purchasing power parity differently
in order to argue that after increasing between 1960 and 1990,
inequality between the richest fifth of the word's population
and the poorest fifth has now started to fall.
24. Without access to the detailed data
behind this assertion, it is difficult to evaluate. The Secretary
of State has offered NGOs a briefing with DFID economists on this
issue. We welcome this opportunity, and will clearly be better
placed to comment in detail on this aspect of the White Paper
after this has taken place. Nevertheless, our initial reaction
to these figures is one of caution, as we find them difficult
to square with other evidence, for example figures given in the
World Development Report which show that average incomes in low
income countries have fallen from 10 per cent to 7 per cent of
average incomes in high income countries between 1996 and 1999.
25. Secondly, drawing a general conclusion
on the basis of figures relating to a specific time period carries
the obvious risk that if the same calculation was made for a slightly
different time period—a few years earlier or a few years
later - it would give a very different result.
26. Thirdly, and again at the risk of stating
the obvious, the problem with averaging out the figures is that
they mask a huge degree of regional variation. As the White Paper
acknowledges, much of the success of the last few years can be
accounted for by economic growth rates in two of the world's most
populous countries, China and India. Meanwhile, it is clear that
many of the poorest countries in sub-Saharan Africa and some middle
income countries in Latin America have fallen further behind.
Average figures also obscure the problem of inequality within
countries, and there is plenty of evidence that this is growing
across a wide range of countries, including China, India and Vietnam,
where it is weakening the link between economic growth and poverty
reduction. This is not to suggest a case for abandoning market
oriented reforms but it does highlight serious problems in the
current reform process.
THE RELATIONSHIP
BETWEEN OPENNESS,
GROWTH AND
POVERTY REDUCTION
27. Our second underlying concern relates
to our first, and centres on the White Paper's analysis about
the relationship between increased openness, economic growth and
poverty reduction. On the basis of a review of recent research
evidence, the White Paper concludes that, on average, the poor
benefit from trade openness in the same proportion as richer households.
It cites a Dollar and Kraay study which demonstrates that in a
group of 18 developing countries which became more open to trade
after 1980, average growth accelerated, whereas other developing
countries, who became only slightly more open, saw growth levels
drop to near zero. Such evidence is used to back the proposition
that trade liberalisation is good for growth, though the White
Paper acknowledges that whether or not this growth is converted
into poverty reduction depends on broader economic and social
factors.
28. In fact, the developing region which
has opened up most dramatically since 1980 is Latin America, the
region which has achieved the lowest conversion rate for growth
into poverty reduction. During the 1990s, Latin America has achieved
a reduction of only around one per cent in the incidence of poverty,
despite regional economic recovery, and the region is currently
converting growth into poverty reduction at one-third the rate
of East Asia. Such examples suggest that the links between openness,
growth and poverty reduction are far from automatic. And while
the White Paper argues that greater openness was a key factor
in East Asia's success, there is a counter-argument which says
that one aspect of the East-Asian miracle was the initial use
of selective protectionist measures aimed at shielding infant
industries from the full force of global competition.
29. As the White Paper rightly concedes,
the problem with averaging out the statistics concerning the relationship
between trade openness and poverty is that there are cases where
poor people gain from trade less than proportionately and cases
where they gain more than proportionately. It correctly states
that the challenge for policy makers is to reduce the former and
increase the latter, but then offers little in terms of understanding
the circumstances under which trade liberalisation will most benefit
the poor. While the debate as to whether or not trade liberalisation
is generally "good" for the poor will no doubt rage
on, it strikes us that the real priority is to understand the
reasons for current variations and based on this, to identify
the policies necessary to ensure that trade liberalisation does
benefit the poor.
30. We that in mind, we believe that this
section of the White Paper could have placed more emphasis on
the central importance of redistribution. In one quarter of the
143 growth episodes covered in a study for Howard White at IDS,
distribution played a stronger role than growth in increasing
the incomes of the poor.
ACTION AT
THE INTERNATIONAL
LEVEL
31. The White Paper places a great deal
of emphasis on the changes necessary at national level to ensure
that globalisation works for the poor, and the International Development
Targets are met. It is right to do so, because future development
clearly is dependent on the governments and people of developing
countries. But Oxfam believes that their efforts must be coupled
with more radical action and reforms at the international level
if many of the underlying inequities in the current global economic
system are to be addressed.
32. At present, the odds are stacked against
the world's poor in many different ways—they have lower
incomes, poorer health, fewer educational opportunities, less
access to resources such as land and credit, less access to markets
and above all, less of a voice in how the global economy is run.
For this to change, it is not only the governments of developing
countries which need to take action—it is northern governments
and northern dominated international institutions as well.
33. While the White Paper correctly identifies
some of the changes necessary—for example, steps to improve
market access—we are concerned that it may under-estimate
the scale of the changes required and over-estimate the willingness
of northern governments to implement them. The current row over
Pascal Lamy's Everything but Arms proposal provides a good example.
Here we have a proposal to extend free market access to all exports
except arms from the Least Developed Countries into the EU. It
is a modest proposal that would carry relatively small costs to
EU countries whilst bringing significant benefits to some of the
poorest countries in the world. Yet it has provoked an extremely
hostile reaction from the international sugar lobby, from Caribbean
producers and particularly from sugar beet farmers in the EU.
In this case, for the poor to become winners, others who are less
poor will have to lose (or, more realistically, be helped by EU
governments in bearing the costs of adjustment in an increasingly
globalised economy). The final outcome will be an interesting
test of how far EU governments are genuinely prepared to go in
order to make globalisation work for the poor. While we should
avoid slipping into the cynicism and negativism of which the Secretary
of State so rightly warns, it is vital for those on the progressive
side of the argument to be aware of the strength of the forces
ranged against them if they are to rise to the challenge of pressing
forward policy changes aimed at making globalisation work for
the poor.
CONCLUSION
34. There is much in the White Paper that
Oxfam welcomes and we congratulate the Government on producing
a clear statement of policy on this vital and complex issue. Above
all, we welcome the Government's recognition that the future direction
of globalisation is not pre-determined, but a matter of political
will that rests in the hands of governments, international institutions
and civil society organisations. For our part, we support the
Government's objective of making globalisation work for the poor
and will continue to work with them on areas of agreement, to
challenge them on areas where we think they should go further
and to debate with them on areas of difference.
Oxfam
January 2001
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