Trade
7. We have made it clear in the past that we believe
that trade has the potential to make a significant contribution
to poverty reduction. We conducted three inquiries into different
aspects of trade during 2007. The first, on EU Development
and Trade issues: an update[9]
involved us taking evidence in Brussels in February from the
Trade Commissioner, Peter Mandelson, and the Commission's Director-General
for Development. We also had the opportunity to meet ambassadors
and other representatives from a number of African, Caribbean
and Pacific (ACP) countries involved in the negotiations on Economic
Partnership Agreements (EPAs) with the EU.
8. In relation to EPAs we believed that the EU should
not abuse its position of strength and should not force ACP states
to make progress on the New (or Singapore) Issues or on regional
integration at an impractical pace. The negotiations were already
behind schedule in March and we said then that the EU needed to
have contingency plans in place, including extension of the World
Trade Organisation (WTO) waiver, should the negotiations not be
concluded within the deadline. We returned to this subject in
our report in November on Development and Trade: Cross-Departmental
Working.[10] Little
progress had been made in the intervening period and we concluded
that time was rapidly running out. We noted that the European
Commission had belatedly recognised the need for interim goods-only
deals by the end of 2007 but that some ACP countries might simply
not be in a position to reach even these by that deadline. We
recommended that the Government endeavour to ensure that pro-development
alternatives were available to countries that requested them.
9. Another common theme of these two reports was
the Doha WTO talks. In March, when we first reported, the prospects
of moving towards agreement seemed more likely. We welcomed the
renewed effort the WTO membership, including the UK, was putting
into securing a deal in the Doha Development Round but we emphasised
that the likely window for a deal was just a few months. Our view
was that transparent and inclusive negotiations, continued political
will and flexibility in key dossiers such as agriculture would
be decisive in securing a deal. However, by the time we returned
to this subject in November, optimism had faded and we concluded
that the Doha process should either be reinvigorated, with unilateral
moves if necessary, or the negotiations should be brought to a
close.
10. Our report on Cross-Departmental Working
also examined the process for and effects of the machinery of
government changes which occurred in June when the new Prime Minister
took office. We had written to Gordon Brown before he moved into
No. 10 to recommend that the complement of ministers in the Department
for International Development be increased from two to three.
As well as a new Secretary of State for International Development
(Douglas Alexander) being appointed in June, we were pleased that
the Government reshuffle also saw DFID gaining two new ministerial
posts and that one of these was a Trade Policy minister with joint
responsibility in DFID and the new Department for Business, Enterprise
and Regulatory Reform. We believed the changes to be broadly positive,
and we welcomed the development emphasis, new lines of ministerial
responsibility and cross-departmental structures which appeared
to have the potential to improve trade and development policy
coherence to the benefit of developing countries. On the other
hand, we expressed reservations about the excessive complexity,
unclear lines of accountability and new layers of bureaucracy
which risked undermining any improved coherence resulting from
the changes. We concluded that it remained unclear how the changes
would be evaluated for their ability to deliver a trade policy
which complements UK development objectives and ensures effective
'joined-up Government'.
11. Our third inquiry into trade issues focused on
fair trade,[11] which
is seen by many as a key tool for development, helping poor producers
to capture a larger share of the gains from trade and so lift
them out of poverty. Consumer support for fair trade has grown
significantly in recent years with a 40% average annual growth
in sales of fair trade products; and the value of goods sold increasing
from £196 million in 2005 to £284 million in 2006. Our
inquiry investigated how donors, and particularly DFID, could
most effectively support fair trade.
12. We concluded that, while fair trade is not a
panacea for an international trading system which serves the interests
of developing countries, it can deliver benefits in terms of access
to and knowledge of international markets. We observed that the
fair trade movement has made enormous progress in recent years,
growing beyond expectations in terms of product coverage as well
as increasing engagement of consumers, especially in the UK. But
we believed that there was still room to grow and that fair trade
could expand its activities, for example by developing standards
for garment manufacturing. We also concluded that fair trade could
have a deeper impact on poverty if it were to target more consciously
the poorest of the poor. Such initiatives require investment and
we recommended that, as the Government had declared its support
for fair trade, and for working more closely with the private
sector in development, it now needed to reassess how it could
advance both these objectives most effectively.
Multilateral aid agencies
13. DFID channels a sizeable proportion of its funding
through multilateral bodies, one of the most significant of which
is the World Bank. It has been our practice each autumn, to hold
an evidence session following the Annual Meetings of the Boards
of Governors of the World Bank Group and the International Monetary
Fund (IMF) to assess the outcomes of these meetings. This year
we decided to conduct a full inquiry into DFID's relationship
with the World Bank. The inquiry is due to conclude in January
2008 and the focus is on assessing the extent to which the World
Bank's priorities are consistent with those of DFID in having
poverty reduction as their main driver. A crucial element of the
inquiry was our visit to Washington in November when we held meetings
with a wide range of World Bank officials, including the recently
appointed President, Robert Zoellick, and Executive Directors
of donor and recipient countries. We also took the opportunity
to meet Dominique Strauss-Kahn, Managing Director of the International
Monetary Fund, and representatives of the US Treasury, the House
of Representatives Committee on Financial Services, the Inter-American
Development Bank and a range of "think tanks" and NGOs.
14. Another element in our work in monitoring the
activities of the World Bank is our contribution to meetings of
the Parliamentary Network of the World Bank (PNoWB). In March
two members of the Committee participated in the PNoWB conference
in Cape Town, South Africa. This was preceded by a one day workshop
on increasing parliamentary scrutiny of Poverty Reduction Strategy
Papers (PRSPs). The conference itself was attended by parliamentarians
from both donor and recipient countries as well as the Managing
Directors of the World Bank, the International Monetary Fund and
the African Development Bank. The main item for discussion was
how to strengthen the role of parliamentarians in scrutinising
the Bank. In addition there were workshops on climate change,
good governance and anti-corruption.
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