APPENDIX: GOVERNMENT RESPONSE TO THE COMMITTEE'S
REPORT ON
THE GLOBALISATION WHITE PAPER
Memorandum from the Secretary of State
for International Development
The Government welcomes the Report from the International
Development Committee in Session 2000-01 on the White Paper: Making
Globalisation Work for the Poor. Detailed points raised in the
Committee's Report are dealt with below.
Paragraph 1: Conclusion 1
We welcome the new policy emphasis on international
development and consider this to be a valuable result of the creation
of a separate Department of State.
The Government shares the view of the Committee.
The creation of a separate Department of State has been crucial
in raising the profile of international development within Whitehall
and the international community. This White Paper represents the
views of the Government as a whole and is the result of wide inter-departmental
and external consultation.
Paragraph 2: Conclusion 2
We welcome the publication of a second White Paper
as an important addition to, and elaboration of, the first (Development)
White Paper.
The Government confirms that this Paper stands alongside
the first White Paper on International Development published in
November 1997, and the Target Strategy Papers published subsequently.
Paragraph 3: Conclusion 3
As with our Report on the first (Development)
White Paper, we do not set out to examine all of the issues raised
in the Globalisation White Paper nor in the memoranda produced
in response to it. However, we hope that this Report, coupled
with the evidence submitted to the inquiry will provide a useful
resource for both the Government and non-governmental groups alike.
Its builds on some of the conclusions of our Report on the WTO
and we hope that it may serve to take forward the debate on the
merits - or otherwise - of globalisation.
The Government hopes that both the White Paper and
the Committee's Report will help raise the level of the debate
on globalisation and development.
Paragraph 8: Conclusion 4
We are impressed with the efforts made by DFID
in conducting a wide-ranging consultation as part of the process
of producing the Globalisation White Paper.
The Government welcomes the Committee's comments
on the consultation process.
Paragraph 10: Conclusion 5
We are concerned about the lack of parliamentary
time allocated to debates on international development. We regret
that there has not been a debate on the Development White Paper,
published in 1997.
The House of Commons debated the second White Paper
on International Development on 3 May 2001. The House of Lords
debated the Paper on 7 February 2001.
Paragraph 11: Conclusion 6
We now have a separate Department of State dedicated
to international development and responsible for considerable
sums of taxpayers money. It is deplorable that the House of Commons
has no opportunity to scrutinise in debates DFID's activities
effectively. We recommend that there should be an annual debate
on international development on the floor of the House.
The Government notes the Conclusion and will consider
the case for an annual international development debate against
other bids for parliamentary time.
Paragraph 13: Conclusion 7
The Committee agrees with the Government that
the ultimate impact of globalisation - positive or negative -
will be determined by the political choices adopted by government,
multilateral institutions, the private sector and civil society.
The Government welcomes this conclusion.
Paragraph 17: Conclusion 8
We agree with the Globalisation White Paper that
support for open trade is not to be confused with support for
unregulated trade. We commend the White Paper for its admission
that "there are substantial inequalities in the existing
international trading system", and for its commitment to
press the WTO to adopt the International Development Targets.
An early priority must now be the identification and elimination
of such inequities and to build the confidence of developing countries
in the international trading system.
The Government is pressing strongly for the next
trade Round to be a 'Development Round' that brings real benefits
to developing countries. However, as the Committee notes, much
remains to be done in order to secure developing country support
to launch a Round. The WTO General Council continues to oversee
an Implementation Review, launched as part of a series of confidence-building
measures, which aims to address developing country concerns about
difficulties faced in implementing Uruguay Round commitments.
The EU and UK position remains that reasonable improvements can
be made to agreements, but that reopening agreements can only
be done in the context of a new Round.
The European Commission put out a paper in December
refreshing their position for a new Round. We welcome the Commission's
attempt to bring developing country concerns into their thinking.
Another
important issue is the functioning of informal consultations within
the WTO and the way these feed into the formal decision making
process. Consultations have taken place — and continue —
in Geneva, with the aim of increasing transparency, and the dissemination
of information. The UK and EU fully support measures to increase
internal and external transparency. We have sought ways to formalize
this, including for example seeking WTO General Council agreement
on written guidelines for informal consultation processes (with
sufficient flexibility to allow discretion in individual circumstances).
As part of the response to these concerns, the WTO General Council
has had regular reports on informal contacts. It is expected that
this new approach will be carried forward by the incoming chair
of the General Council, Stuart Harbinson of Hong Kong, China.
Paragraph 20: Conclusion 9
We consider that the proposal to extend market
free access to least developed countries into the EU without equivocation
or dilution was a modest proposal that would have carried relatively
small costs to EU countries whilst having the potential to bring
significant benefits to some of the poorest countries in the world.
It was always possible to couple the proposal with assistance
to other low income countries affected by the proposals. Whilst
the final agreement is undoubtedly a step in the right direction,
delays in the elimination of duties and quotas for least developed
country imports of bananas, rice and sugar show that the EU still
has a long way to go to ensure that rhetoric matches reality in
making globalisation work for the poor.
The Regulation is a good outcome for the EU and the
developing world. The 48 least developed countries (LDCs) are
characterised by their exclusion from world trade: their share
of world trade is less than 0.5%, and falling; their average daily
income is significantly less than a dollar a day. Agreement of
this Regulation will make a real difference to these countries,
particularly if other industrialised countries follow the EU's
lead. Although the original proposal went further in relation
to the sensitive products, we must not underestimate the achievement
in getting agreement at all on an end date for total liberalisation
for products from LDCs. It puts us significantly in advance of
the other Quad members who made commitments to improved LDC market
access — US, Canada and Japan - in terms of the openness
of our markets. The EU will now cover 100% of goods, compared
to 90% in Canada and much less in Japan and the US.
This new Regulation also takes into account the legitimate
concerns of non-LDC African, Caribbean and Pacific (ACP) country
producers, a point which the UK pressed throughout negotiations.
The five year transition period for bananas, and the eight year
transition period for sugar and rice, gives a reasonable time
for vulnerable non-LDC ACP producers to adjust to the additional
competition from LDC imports. It is very important that all commodity
producers start taking action now to increase the efficiency of
their industries over the long transition period. The UK will
work with the EU, multilateral and other donors to ensure that
the adjustment needs of vulnerable non-LDC ACP economies are taken
fully into account in assistance programmes during this time.
Paragraph 21: Conclusion 10
Any dilution of standards in the Ethical Trading
Initiative would obviously damage its developmental impact. We
would welcome the Government's comments on how this can be prevented,
for example through the use of international benchmarks for social
auditing competence.
The Government welcomes the rapidly growing interest
in Corporate Social Responsibility (CSR), but shares the Committee's
concern that this has led to a proliferation of initiatives, including
codes of conduct, labelling and triple bottom-line reporting (reporting
against social, economic and environmental impact). The Ethical
Trading Initiative has set high and sensible standards, which
create real trading opportunities for developing country producers.
Other initiatives may have the unintended consequence of acting
as trade barriers. Developing country producers are often insufficiently
consulted and may be concerned about how to improve their capacity
to respond to CSR standards (eg. with respect to accreditation,
reporting and labelling).
The Government therefore supports greater coordination
between these initiatives. We believe that this will create less
confusion and difficulty for developing countries, as well as
giving the standards and initiatives themselves greater potential
for positive impact. We are currently exploring ways to encourage
and support this.
Paragraph 25: Conclusion 11
The Department has obviously not done enough to
disprove the 'received wisdom that globalisation has been accompanied
by increasing inequality'. More clearly needs to be done to identify
the relationship between trade liberalisation and inequality and
to define the necessary components of pro-poor growth.
The Government agrees that there is still much to
be done to raise understanding of these issues. DFID has published
the research commissioned before the publication of the White
Paper, has held detailed discussions with non-governmental organisations
since the publication of the Paper, and is undertaking increased
research in this area. The Government is also pressing for trade
and investment policies to be integrated far more strongly into
the nationally-owned Poverty Reduction Strategies that the international
community is supporting, which set out strategies aimed at achieving
pro-poor economic growth.
Paragraph 26: Conclusion 12
We would welcome further research from DFID on
the movement of skilled people. A cross-departmental approach
in Whitehall is urgently called for.
DFID has commissioned research on the impact of the
migration of skilled people on poverty reduction in developing
countries. This research is examining both the problems associated
with the loss of skilled people, and potential benefits such as
remittances, knowledge transfers and business linkages. It is
designed to help develop policies which will maximise the positive
impacts on development, and minimise the potential negative impacts.
This research is being discussed with all interested Whitehall
Departments. DFID is also undertaking longer term studies on these
issues.
An inter-departmental group has now been established
to look at all aspects of the UK migration policy. DFID is an
active member of this group.
Paragraph 30: Conclusion 13
We agree with the Secretary of State and with
the Globalisation White Paper that migration can play a significant
developmental role through improving skills and the generation
of remittances. At the same time, it is vital that any moves by
developed countries to recruit public service personnel from developing
countries should only take place with the consent of the relevant
authorities and should not lead to skill shortages in such countries.
We recommend that similar guidelines to those already in place
in the NHS are drawn up by all other relevant public authorities.
We also recommend that the Government, in its Response, provide
the Committee with details of how guidelines can be extended to
cover the activities of private recruitment agencies.
DFID is working with other Government Departments,
principally the Department of Health (DoH) and the Department
for Education and Employment (DfEE) on the issue of guidelines
covering the recruitment of staff from developing countries. The
NHS is currently revising a Code of Practice for Trusts which
will, among other things, mean that there will not be recruitment
from Africa. DoH will work with DFID to develop appropriate strategies
that reduce brain drain but maximise the potential for professionals
to gain experience in the UK where this could be of benefit to
poor countries. DFID is also working with DfEE on its polices
on the recruitment of teachers from developing countries.
On the issue of private agencies, DoH believe that
there will be less need to utilise their resources in the future,
and are considering developing concordats with agencies to address
their recruitment practices. DfEE is also discussing recruitment
issues with private agencies.
Paragraph 33: Conclusion 14
At present, it is often left to trade unions to
monitor and implement basic rights, a point made by the Commonwealth
Trade Union Council in their memorandum, "precious union
resources are used to secure justice when it is the responsibility
of the government to enforce the legislation". This is clearly
not acceptable. We call for the Government to set out how core
labour standards can be best implemented, monitored and enforced.
Rights at work are an important component of human
rights. The core labour standards are set out in the ILO Declaration
on Fundamental Rights and Principles at Work and its supporting
Conventions. The UK has ratified all the relevant ILO Conventions.
We welcome trade union efforts to monitor and implement basic
rights, but also recognise that the worst labour standards and
abuse of labour rights occur outside the formal sector where there
is rarely any trade union presence.
The Government gives priority to supporting the elimination
of the worst abuses such as child labour and forced labour and
to strengthen the rights of workers in the informal sector where
most poor people work.
The Government is working in a large number of fora
to support the successful implementation, monitoring and enforcement
of these standards. Internationally, we are providing financial
and technical assistance to ILO and supporting developing countries
interests through our contacts with other international agencies
such as the World Bank. Nationally, our bilateral programmes support
projects which address labour rights. For example, in Andhra Pradesh,
India, DFID is funding the programme for elimination of child
labour and in Nepal we are helping recently liberated bonded labourers.
DFID also support efforts by business to set and uphold labour
standards in their operations and supply chains through organisations
such as the Ethical Trading Initiative and the Resource Centre
for Social Dimensions of Business Practice. DFID also supports
the work of organisations such as Anti-slavery International,
Save the Children and Homenet International, which are helping
poor people to understand and claim their rights, and is funding
trade union development in Indonesia.
Paragraph 35: Conclusion 15
We welcome the Government's pragmatic approach
to capital account liberalisation and to attracting foreign direct
investment to developing countries. We would welcome further details
on the Globalisation White Paper's proposals for 'road maps' for
the opening up of capital accounts and on proposals to discourage
excessive short-term capital inflows.
Capital controls can take a wide variety of forms,
from outright prohibition to market based measures which discourage
capital flows by making them more costly such as a tax. Following
the Asian financial crisis, consensus has been reached that capital
account liberalisation needs to be carefully sequenced with reforms
to strengthen financial sector regulation and supervision. Furthermore,
market based capital controls which discourage short-term volatile
flows (such as foreign currency bank loans of less than six months),
but do not discourage longer term investment, can provide much
needed stability during reform.
While these controls need to be seen as temporary,
we recognise that reforms to achieve the strong, competitive and
well regulated financial sector plus macro-economic stability
required for orderly and sustainable liberalisation may take considerable
time in some developing countries. We believe that the international
financial institutions should support countries in the preparation
of country specific approaches or 'road maps' for reform and its
sequencing, in a clear, planned and sound way. The Government
can assist in this process by providing technical capacity building
support and by ensuring that the international financial institutions
offer balanced and well-judged advice on a country by country
basis.
Paragraph 36: Conclusion 16
We look forward to receiving the note on the Government's
policy on the Tobin Tax promised by the Secretary of State in
evidence.
The note is attached at annex A.
Paragraph 37: Conclusion 17
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 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.
The Government believes that the current
negotiations on trade in services offer important potential benefits
for developing countries, both as importers of services vital
to their development (such as financial services
and telecommunications), and as exporters (such as tourism and
software services). We reject the arguments,
put forward by some NGOs although not by developing countries
themselves, that the General Agreement on Trade in Services (GATS)
forces governments to privatise the provision of public services
such as education and health. Where countries choose to make commitments
to liberalise sectors of their economies under the GATS, the agreement
specifically protects the sovereign right of governments to regulate
for national policy objectives. This point was underlined most
recently by developed and developing countries alike in the March
Special Session of the WTO Council for
Trade in Services.
The Government has no plans to establish a Commission
on Trade in Services. It will continue to provide briefing and
hold discussions with responsible NGOs and other interested parties
on trade policy issues, including services. The most recent meeting
of the Trade Policy Consultative Forum was held at the end of
April.
Paragraph 40: Conclusion 18
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.
The Government has acknowledged the importance and
impact of the process of urbanisation currently taking place in
developing countries, as well as in many transition economies,
and the opportunities that urban areas provide for enhanced national
development and poverty reduction. DFID has recently published
its Target Strategy Paper on "Meeting the Challenge of Urban
Poverty" which outlines the challenges of urbanisation, the
impact of globalisation on urban areas, and priority actions for
the reduction of urban poverty.
Paragraph 45: Conclusion 19
We request further information from the Government
on what measures it is taking to make communications technologies
more accessible for the developing 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.
The Government's approach to Information Communications
Technology (ICT) includes more traditional media. We believe that
a combination of the old and new technologies can lead to benefits
reaching all sections of society.
We have therefore recently launched a £6 million
programme entitled 'Bridging the Digital Divide' which will deliver
advice and support to developing countries on regulatory reform,
and policies to create equitable access for their citizens to
communication technologies. This programme also includes support
for developing country participation in international discussions
on ICT related issues, through the provision of information on
key policy issues, and direct support for developing country representation
at critical international meetings. This support will cover both
the International Telecommunications Union (ITU) and other key
international fora, including WTO. The Government is keen that
developing countries become more influential in these and other
relevant international fora, and recently committed $100,000 in
direct support to developing country participation in the G8 dot
force process.
Paragraph 47: Conclusion 20
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.
Substantial progress is being made on taking forward
the White Paper's proposals to increase access and affordability
of existing medicines, and research and development to tackle
the diseases of poverty.
The Government's commitment to a global purchase
fund was announced in February as part of the Global Child Poverty
Initiative. This builds on the political commitment made by African
leaders, the UN, the G8 and the EC to tackle the diseases of poverty.
The fund's initial focus will be on providing resources for preventing
and treating HIV/ AIDS, malaria and tuberculosis.
The Chancellor of the Exchequer introduced several
tax measures in the February budget, in order to provide incentives
to the industry to increase research and development into treatment
and prevention for the diseases of poverty, as well as improve
affordability of new and existing drugs and vaccines. These also
include measures designed to encourage the effective and appropriate
targeting of any drug donations.
The Cabinet Office Performance and Innovation Unit's
Global Health Study will be providing more details about these
and other policy measures to address the twin problems of access
and affordability, and of research and development. Options include
tiered pricing - where companies agree to supply drugs and other
commodities at low prices to poor countries. Strategies to prevent
re-importation to, and maintain price levels in wealthier countries
would be essential. An advanced purchase fund commitment is also
being examined, as a possible incentive for investment in research
and development
.
The Government is continuing to invest in strengthening
health systems - over £1 billion since 1997 - without which
drugs and vaccines will not reach the poor.
Paragraph 48: Conclusion 21
We recommend that, in its Response, the Government
outline actions being taken to help reduce the vulnerability of
developing countries to global environmental change.
There are three pillars to sustainable development
- social, economic and environmental - and the environment is
often neglected totally or given inadequate attention. In consequence,
most environmental trends are negative. The Government therefore
believes that it is crucial that environmental considerations
are mainstreamed in development policies and programmes.
The Government is a strong supporter of the Global
Environment Facility (GEF) which aims to capture global environmental
benefits from biological diversity, climate change, international
waters and the protection of the ozone layer and control of persistent
organic pollutants. We are pushing for a 50% increase in the third
replenishment (from $2 to $3 billion).
Poor people are especially vulnerable to natural
disaster. The increased variability of the climate is a contributory
factor to the floods and other natural disasters we have seen
all over the world in recent years. We have committed over £200
million in the last three years to climate change related activities.
In addition, energy efficiency programmes which reduce carbon
dioxide emissions are a major part of GEF work on climate change
and will help to reduce climatic variations. We will shortly fund
a study to analyse the extent to which climate change will affect
the achievement of the international development targets by developing
countries.
With partners, the Government is looking at the linkages
between environmental degradation and poverty reduction (eg in
China, West Bengal, Bangladesh, Kenya) and, in the light of that
work, we are developing appropriate programmes. We are also working
to ensure that analysis of environmental change/degradation is
integrated into Poverty Reduction Strategies.
We have looked at the links between environmental
stress and conflict, and will be supporting regional work in Africa
that will help partners reduce their vulnerability to such stresses.
The Africa Trade Initiative has a strong focus on the implications
of environmental degradation and is helping to establish links
between environment authorities and Trade Ministries. We are also
helping strengthen the capacity of environmental authorities to
enable them to mitigate environmental degradation that affects
the poor. We have a public service agreement target to build capacity
for more effective environmental management in ten key countries.
The partner countries in which we will work are currently being
decided.
Paragraph 49: Conclusion 22
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.
The Government is working through the OECD's Development
Assistance Committee (DAC), in consultation with eight other countries,
to produce guidance on how development agencies should support
strategies for sustainable development. This guidance was agreed
by the DAC High Level Meeting on 25-26 April 2001. The DAC guidance
sets out key principles which underpin an effective sustainable
development strategy. These include country-ownership, building
on existing strategies, integrating economic, social and environmental
objectives and strengthening and building on existing country
capacity. These principles now need to be disseminated within
the broader international community in the run-up to the Rio +
10 conference next year.
The Government believes that the label on the strategy
does not matter. Nationally-owned poverty reduction strategies
offer a major new opportunity to put the principles of strategic
planning for sustainable development into practice. One key challenge
is to ensure that Poverty Reduction Strategies support and promote
sustainable development. Where this is achieved, a country's Poverty
Reduction Strategy could serve as its strategy for sustainable
development.
Uganda provides an illustration of what can be achieved.
Uganda's Poverty Reduction Strategy built on an existing process
- so it had strong national ownership and political commitment.
But the earlier draft of the Plan overlooked poverty-environment
links. DFID assisted the National Environment Management Authority
to define these linkages and to lobby for the integration of the
environment. As a result, the Poverty Reduction Strategy now recognises
the importance of poverty-environment linkages, and issues of
longer-term, environmental sustainability. Uganda's Poverty Reduction
Strategy can therefore be seen as a strategy for sustainable development.
The importance of support strategies for sustainable
development is reflected in DFID's PSA target: "gaining international
agreement on the integration of social, economic and environmental
aspects of sustainable development into poverty reduction programmes."
Paragraph 52: Conclusion 23
The Committee commends the Government's decision
unilaterally to untie development assistance.
The Government thanks the Committee for its support
of this decision.
Paragraph 55: Conclusion 24
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.
The Government has been working hard over more than
two years to secure agreement at the OECD's Development Assistance
Committee to a Recommendation on untying for the Least Developed.
At the recent High Level Meeting, the Development Assistance Committee
agreed this Recommendation ad referendum. Although all Member
States have now to confirm that they endorse the Recommendation,
we are hopeful that it will be formalised before the Third UN
Conference on Least Developed Countries in May. This agreement
represents an important step towards the goal of full untying
by all donors.
We are also seeking to ensure that in their bilateral
programmes, EU member states comply fully with treaty requirements
and with the EU Procurement Directives.
Paragraph 56: Conclusion 25
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.
The Government is committed to the provision of fair
opportunities for British consultants to win business. Officials
from DFID and British Trade International (BTI) participate in
regular working party meetings organised by the British Consultants
Bureau to exchange views on development procurement policy and
business opportunities. Trade Partners UK, the trade and overseas
investment arm of BTI, provides market intelligence, seminars
and training workshops on doing business with multilateral organisations,
through its specialist teams in the UK and overseas. The Government's
e-business programme is making a major effort to ensure efficient
on-line access for business to these and other services.
Paragraph 58: Conclusion 26
We welcome the establishment of the Commission
on Intellectual Property Rights and ask the Government to keep
us informed of its progress.
The Commission has now been established. It is headed
by John Barton, Professor of Law at Stanford University in the
USA. He is an expert on intellectual property law, who has long
studied the impact that international and national rules have
on developing countries.
The other members of the commission are:
Daniel Alexander, an intellectual property barrister
from the UK
Professor Carlos Correa, Professor of Economics at
the University of Buenos Aires, Argentina
Dr. R. A. Mashelkar, Director General, Council of
Scientific and Industrial Research, New Delhi, India
Dr. Gill Samuels, Senior Director of Science Policy
and Scientific Affairs, Europe, Sandwich Laboratories, Pfizer,
UK
Dr. Sandy Thomas, Director, Nuffield Council for
Bioethics, London, UK.
The Commission will hold its first meeting in London
on 8-9 May to chart out its objectives and how it will go about
its work. The aim is that it will report to the Secretary of State
for International Development by March next year. The Commission
will be supported by a Secretariat whose members will be drawn
from the staff of the Department for International Development
and the UK Patent Office.
Paragraph 60: Conclusion 27
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.
The Government welcomes this endorsement by the Committee
and is working for its effective implementation.
Department for International Development
May 2001
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