Memorandum submitted by the Departmental
of International Development
SUMMARY
This memorandum provides an overview of the
cross-departmental working on development and trade following
the recent restructuring of the machinery of Government. It sets
out the trade policy roles between the Department for International
Development (DFID) and the new Department for Business, Enterprise
and Regulatory Reform (BERR).
It provides information on the new Cabinet sub-Committee
on Trade and both the Ministerial and official level decision-making
structures involved in trade policy. It explains how trade policy
will be developed by the new Trade Policy Unit, staffed by officials
from DFID and BERR as well as the added coherence in bringing
together trade and development policy.
It also brings together information on issues
relating to the OECD and corruption, including the nature of the
restructured UK National Contact Point and the government's increased
efforts in the promotion of guidelines for Multinational Enterprises.
It sets out the work in progress following the OECD review of
the UK implementation of the anti-bribery convention and the supplementary
review being conducted by the OECD Working Group. It also provides
information on the relatively new role of "Ministerial champion"
on international corruption, the UK action plan and the positive
achievements to date.
It presents the role of DFID and other government
departments in working on natural resources and improving economic
and trade governance, and the whole of government approach to
tackling conflict. It also examines the examples of the Extractive
Industries Transparency Initiative, the Kimberley Process Certification
Scheme (KPCS) and the EU Forest Law Enforcement and Environmental
Governance initiatives. It showcases DFID support to establishing
an Expert Panel in the UN and UK support to the recent debates
in the UN Security Council.
It deals with the development aspects of defence
exports, including Ministerial responsibility for export controls
and other arms controls issues, such as small arms controls and
the Government review of the 2002 Export Control Act.
A. TRADE POLICY
DECISION-MAKING
The division of responsibility between the Minister
for Trade and the Minister for Trade Promotion and between the
Secretaries of State for Business, Enterprise and Regulatory Reform
and for International Development
1. The Government announced on Thursday
28 June 2007 that Trade Policy would now be a joint responsibility
of the Department for International Development (DFID) and the
new Department for Business, Enterprise and Regulatory Reform
(BERR) and that Trade Promotion would continue to be a joint responsibility
of the Foreign & Commonwealth Office and BERR.
2. A new Cabinet sub-Committee on Trade
has been established to oversee all the work of the Government
on Trade Policy and Promotion. This Committee is chaired by the
Secretary of State for International Development. The Secretaries
of State for Business, Enterprise and Regulatory Reform and the
Environment, Food and Rural Affairs, the Chief Secretary to the
Treasury and the Foreign Secretary, and the Minister for Trade
Policy are members of the Committee.
3. The Cabinet sub-Committee will decide
as necessary who should be the lead interlocutor on specific issues.
The Secretary of State for International Development will act
as lead interlocutor on trade policy dossiers where there is a
strong development focus, such as the current DDA and EPA negotiations.
However, both Secretaries of State will take appropriate actions
to promote actively the full range of trade policy objectives
with relevant Ministers in other governments.
4. The Minister for Trade Policy, Gareth
Thomas, reports jointly to the Secretaries of State for International
Development and for Business, Enterprise and Regulatory Reform.
His responsibilities include:
— the UK's positions on EU and international
trade policy and operational issues (eg market access, import
restrictions, WTO rules and trade defence);
— current trade negotiations, for example
the Doha Development Round, regional trade agreements and Economic
Partnership Agreements (EPAs) between the EU and African, Caribbean
and Pacific (ACP) countries;
— building the capacity of developing
countries to utilise the benefits of trade to reduce poverty through
aid for trade, capacity building, policy development and research.
He has other responsibilities in his portfolio
for both Departments.
5. The Minister for Trade Promotion, Lord
Jones, reports jointly to the Foreign Secretary and the Secretary
of State for Business, Enterprise and Regulatory Reform. His responsibilities
cover promoting UK exports and inward investment.
Formal decision-making structures between the
ministers and departments involved in trade policy
6. Submissions to Ministers on Trade Policy
will usually be handled by the Minister for Trade Policy. Submissions
requiring Secretary of State level agreement will be submitted
through the Trade Minister to the appropriate Secretary of State,
copied to the other, in line with the lead responsibilities set
out above or as decided by the Cabinet sub-Committee.
7. At official level there will be a new
Trade Policy Unit staffed by officials from DFID and BERR. It
will be headed by a single Director, reporting to a Director-General
in each Department and to the Minister for Trade Policy. It will
be dual-located, with some teams based in DFID and others in BERR.
There will be teams comprising of officials from both Departments
on key trade policy issues with a strong development focus, such
as the DDA and EPAs.
8. Officials from other departments will
continue to be closely involved and consulted in the normal way
by the Trade Policy Unit. For example, DEFRA will continue to
lead on the trade-related aspects of UK agriculture policy.
B. DIRECTION
OF TRADE
POLICY
How trade policy may evolve under the new arrangements
and DFID's role in policy development
9. Trade policy will be developed by the
Trade Policy Unit following direction from the Minister for Trade
Policy and other Ministers through the Cabinet sub-Committee.
It will continue to draw on experience and expertise from throughout
DFID, BERR and other Whitehall Departments as well as from outside
Government. The Unit will work closely with all interested stakeholders—business,
unions, consumers and civil society.
10. Development is at the heart of UK trade
policy. This is set out in the 2004 White Paper, Making Globalisation
a Force for Good and reconfirmed in the 2006 DFID White Paper.
These new arrangements reflect and reinforce this. More joined
up working and shared leadership will help promote even more policy
coherence.
11. UK business and development objectives
on trade policy are essentially complementary. Where there are
conflicts of interest or objective, they will be discussed in
the normal way between all relevant departments and resolved at
an appropriate level and ultimately at the Cabinet sub-Committee
if necessary.
The impact of the new structure on international
development
12. The PM's objective in giving DFID joint
responsibility for trade policy is to align trade, aid and debt
policy. This will reinforce the role of trade in our development
policy and programmes. Trade is of vital importance to development
and, ultimately, to DFID's mission of reducing global poverty.
The new structure will help us further focus on how trade can
set countries onto the path of sustainable development. And it
will bring more trade expertise into our development discussions.
13. Trade features high on DFID's agenda
and the UK has led the international debate on the importance
of aid for trade since 2005. We have pledged to increase aid for
trade by 50% by 2010 to US $750 million a year and expect to see
increasing focus on the trade dimension of development programmes
over the coming years.
Likely effects on negotiations at the WTO and
with the African, Caribbean and Pacific countries in the Economic
Partnership Agreement negotiations which are scheduled to be completed
by the end of 2007
14. The UK's position already reflects close
working between DFID and BERR in these areas, which will now be
consolidated in the new structural arrangements. UK Government
work on the Doha Round and the EPA negotiations will now be led
by teams jointly staffed with officials from DFID and BERR. This
will ensure coherence and equality between our objectives in trade
negotiations, and our work on reducing international poverty.
C. OECD AND CORRUPTION
Progress on implementing the Guidelines for Multinational
Enterprises and promotion of the risk awareness tool; role of
the UK National Contact Point; and the OECD review of UK implementation
of the anti-bribery convention
Promotion of the Guidelines and the role of the
National Contact Point
15. The Government has significantly increased
its efforts to promote the Guidelines. On 21 May 2007 Hilary Benn
and Ian McCartney jointly wrote to over 50 key UK stakeholders
including business associations, trade unions, civil society organisations
and the media to highlight the Guidelines and the changes that
have been made to improve the effectiveness of the UK's implementation
of them. Furthermore a communication and awareness raising strategy
has been put to the Steering Board for comment. The strategy continues
to develop and the Steering Board will receive regular updates
on actions taken and proposed actions.
16. UK diplomatic missions and DFID offices
in priority countries have instructions to use British business
and local trade union and NGO contacts to promote the Guidelines.
To this end we have produced a standard presentation and accompanying
speaking notes (which includes a reference to the OECD risk awareness
tool) as well as a new promotional leaflet with a covering letter
to send out to their contacts and detailed written guidance on
the NCP complaints process. All this material is available on
departments' intranet systems.
17. The Guidelines are covered in the FCO's
pre-overseas posting training for economic officers. NCP officials
have provided presentations on the Guidelines and the new NCP
structure to the International Chamber of Commerce and UK Trade
& Investment's team of High Growth Market Specialists. Information
about the Guidelines and the NCP is available on the Government's
generic Corporate Social Responsibility website (www.csr.gov.uk).
Changes to the structure of the National Contact
Point and how complaints are managed
18. The restructured UK National Contact
Point (NCP) was launched in August 2006. Hitherto, the National
Contact Point had been managed by DTI. Responsibility is now shared
between BERR, FCO and DFID (with BERR taking the lead). One of
these three Departments now takes the lead in managing each new
complaint that the NCP receives. BERR at present has someone managing
the NCP on a full time basis and additionally provides secretariat
support and chairs the NCP Steering Board.
19. The NCP is overseen by a cross-departmental
Steering Board comprising representatives of all Government departments
with an interest in the Guidelines and four external members representing
the CBI, TUC, and two law firms (Doughty Street Chambers and Clifford
Chance) nominated by the NGO community and the All Party Parliamentary
Group on the Great Lakes Region. The Steering Board's principal
role is to oversee the function and effectiveness of the NCP and,
where appropriate, to consider recommendations or offer advice
on a range of issues relevant to the effectiveness of the Guidelines
and their application.
20. Since the new NCP system was launched
it has received four new complaints, in line with the average
of four complaints per year that it was handling prior to the
changes being introduced. But there are indications, for example
through enquiries, that an increase may be in the pipeline. The
Government has set a target for concluding each complaint within
one year of having received it. The new system has not yet been
in place for long enough to assess our performance against this
target.
OECD review of UK implementation of the anti-bribery
convention
21. The OECD Working Group on Bribery (WGB)
on 12-14 March 2007 discussed the follow-up to the UK's March
2005 "phase 2 review" of our implementation of the OECD
Bribery Convention. The Government submitted its written report
for consideration by other Convention parties on 21 February 2007.
Ian McCartney placed copies in the House of Commons library on
21 March 2007.
22. In its follow-up report http://www.oecd.org/dataoecd/43/13/38962457.pdf,
published in June 2007, the Working Group acknowledged that the
UK had made important steps since the March 2005 "phase 2
report" in implementing the Convention and commended our
awareness raising work, in particular. Of the 20 recommendations
made by the Review Team, the Group found that the UK had fully
or partially implemented seventeen. Three recommendations were
assessed as "not implemented". The Working Group decided
to undertake a supplementary review, known as "phase 2bis".
This will include a second on-site visit to the UK within 12 months,
ie by the end of March 2008. The UK is one of four countries undergoing
such a review.
23. The phase 2bis review will focus on
the issues raised in the June 2007 follow-up report, namely progress
with law reform, the UK's framework for criminal corporate liability,
UK law enforcement effort, and the Convention's article 5 and
prosecutorial discretion. The review will provide a useful opportunity
to demonstrate continuing progress and a high level of commitment.
The role of the "Ministerial champion"
on international corruption and the effectiveness of the UK Action
Plan for Combating International Corruption
Background to the Ministerial Champion role
24. The present Ministerial Anti-Corruption
Champion is John Hutton the Secretary of State for the Department
for Business and Regulatory Reform, appointed in July 2007, replacing
Hilary Benn who, as the first Champion, had held this position
from July 2006.
25. This role is a relatively new innovation,
following a recommendation in the Africa All-Party Parliamentary
Group's report on corruption and money laundering, "The Other
Side of the Coin".
The UK Action Plan
26. Closely associated with the Champion
role is the elaboration of an HMG Action Plan which was overseen
by the Champion. The 2006-07 Plan was published shortly after
Hilary Benn's appointment, and the Action Plan for 2007-08 is
currently under finalisation. These plans focus on improving UK
systems to:
— investigate and prosecute bribery
overseas;
— combat money laundering by political
elites and recover stolen assets;
— promote responsible business conduct
in developing countries; and
— support international efforts to
fight corruption.
27. As Champion, Hilary Benn chaired quarterly
meetings of an existing Cabinet Office committee, the purpose
of which was primarily for officials to provide updates on progress
against the Action Plan, identify key actions which might need
the Secretary of State's personal engagement and, most recently,
to develop the Action Plan for 2007-08. The main departments involved
are: MoJ/HO/DFID/FCO/AG's Office/HMT/ BERR with MoD, ECGD, Office
of Government Commerce, SOCA, Crown Prosecution Service, SFO and
the City of London Police and Metropolitan Police also playing
important roles. DFID also played a secretariat role to the Champion.
The new operational arrangements for the new Champion are under
finalisation as is the possibility of having a wider public debate.
Achievements so Far
28. The 2006-07 Action Plan contained 12
actions. The overwhelming majority of these have either been achieved
or have seen positive progress.
29. UK efforts have focused on boosting
UK law enforcement capacity to tackle money laundering by political
elites and foreign bribery by UK companies and nationals, working
in different international fora, eg G8, UN, OECD, and working
in partnership with the private sector. Last year the UK made
excellent progress, establishing a dedicated unit within the City
of London Police to support SFO investigations of foreign bribery
and reinforcing the Met's Proceeds of Corruption Unit. As a result,
£34.6 million of assets stolen by the political elites of
developing countries has already been seized. There are other
areas of progress: SOCA has established new structures to ensure
intelligence is effectively prioritised and linked to targeted
activity.
30. As noted in paragraphs 18-20, BERR with
DFID and FCO launched a revamped National Contact Point (NCP)
to strengthen the effectiveness of the OECD Guidelines for Multi
National Enterprises. The Action Plan also contained reference
to the Extractive Industries Transparency Initiative, with 28
countries now implementing the Initiative. There is wide support
for the idea of new initiatives on transparency in health sector
procurement and the construction sectors.
The future
31. The champion role has been transferred
from DFID to BERR. DFID will continue to work to ensure that international
development is a central driver of the UK's efforts in tackling
bribery and corruption.
32. Modification of the Annual Action Plan
approach is under consideration with the possibility of moving
towards a longer term Action Plan. This would allow stronger strategic
prioritisation against longer term trends.
D. NATURAL RESOURCES
DFID's role in the promotion of improved economic
and trade governance in resource-rich countries, such as through
the Extractive Industries Transparency Initiative
33. DFID is concerned to ensure a "whole
of government" approach to tackling conflict. Formal arrangements
are now in place for BERR to engage with the Global and Africa
Conflict Prevention Pools and the Post-Conflict Reconstruction
Unit on a case by case basis. National Contact Point arrangements
have been revamped to strengthen this area.
34. DFID is committed to supporting the
establishment of an Expert Panel in the UN which could be useful
to monitor the links between natural resources and conflict. DFID,
together with the FCO, are currently considering how an Expert
Panel might add value, what its role would be within the UN system,
and how we can best support its establishment.
Extractive Industries Transparency Initiative
(EITI)
35. EITI enables governments, companies
and civil society organisations to work together under an agreed
workplan that delivers transparency and accountability to revenues
generated from extractive activities.
36. DFID works closely with the FCO to promote
the importance of EITI as a mechanism to improve transparency
and accountability within a countries governance structure. During
the period when the International Secretariat was located within
DFID, the FCO was relied on to ensure communications from the
EITI Chairman were delivered to Heads of State and Heads of Government.
37. DFID represents HMG on the EITI Multi
stakeholder Board. FCO Embassies and High Commissions continue
to play a vital role in promoting EITI to countries that have
yet to sign up to the initiative, engaging with senior government
officials, communicating information and messages, as well as
acting as contact point for the UK relating to EITI. FCO offices
in country, as well as country desk officers in London, provide
information and updates on specific countries when required.
38. DFID and FCO will continue to play an
important role as EITI focuses its attention on engagement with
emerging economies such as China, India, Philippines, Indonesia
and Brazil to sign up to the initiative.
Kimberley Process Certification Scheme (KP)
39. The Kimberley Process Certification
Scheme (KP) for exports of rough diamonds has had significant
success since its introduction in January 2003. All major producers
and traders in rough diamonds are now participants to the KP.
There is scope for further developing the minimum requirements
of the KP, in particular in tightening internal controls in both
producing and trading participants. The KP is also researching
the feasibility of producing diamond "footprints" for
particular regions.
Illegal, Unreported and Unregulated (IUU) Fishing
40. DFID's Renewable Natural Resourses and
Agriculture (RNRA) Team has been collaborating for 18 months with
DEFRA Fisheries Directorate (and now their Marine Directorate)
on international fisheries policy, particularly on Illegal, Unreported
and Unregulated (IUU) fishing. This was a follow up to the Ministerial
High Seas Task Force (chaired by DEFRA Ministers Elliot Morley
MP and more recently Ben Bradshaw MP), established with several
partner states and international NGOs to push ahead with concrete
actions to tackle IUU fishing.
41. The joint work with DEFRA addresses
several recommendations of the Task Force as well as others that
the UK has recently prioritised (such as working with our industry
in influencing new EC policy on supply chain security). Although
actions originally focused on international policy, more recently
work has moved towards developing countries and we now have two
new programmes in Africa: (1) SADC (Namibia-led) on IUU policy
leading to an international ministerial conference in Feb 2008
(2) fisheries sector support in Sierra Leone which addresses IUU,
coastguard and maritime security as well as core fisheries management
issues.
Forest Law Enforcement, Governance and Trade (FLEGT)
42. DFID's Forest Governance and Trade Programme
works to promote governance reforms where illegal logging is a
problem and to improve the functioning of markets for wood products.
It does so by supporting reforms in countries that enter into
partnership with the European Union under the Forest Law Enforcement,
Governance and Trade (EU FLEGT) programme. It complements FLEGT
with work with the private sector to promote trade in forest products
from legal and well-managed sources and collaborative work with
other countries, in particular G8 countries and China, to influence
the demand for products from responsibly managed forests.
43. FLEGT focuses on negotiating and implementing
bilateral Voluntary Partnership Agreements (VPAs) between timber-producing
countries and the EU. DFID, together with DEFRA and FCO work within
the EU to negotiate FLEGT VPAs, which will establish a timber
export licensing scheme, including credible control systems and,
where needed, other governance reforms in partner countries, such
as improved transparency and forest tenure reform. When the scheme
is operational in a partner country, unlicensed timber will be
denied entry to the EU single market. DEFRA has responsibility
for the domestic implementation of the FLEGT Regulation and the
public procurement policy on timber.
44. DFID, FCO and DEFRA work closely to
promote the importance of FLEGT as a mechanism to improve global
sustainable forest management. Posts in Africa, Asia and Latin
America as well as G8 countries and China routinely assist in
preparatory work and negotiations. Both DEFRA and FCO fund work
in other countries that is complementary to the work funded by
DFID.
E. DEVELOPMENT
ASPECTS OF
DEFENCE EXPORTS
Impact of the changes in ministerial responsibilities
on defence export licences and application of the "consolidated
criteria" on such exports, particularly criterion 8 on sustainable
development
45. The changes in ministerial responsibilities
will not have any impact on the strategic export licensing process.
Where licences to export arms and other goods controlled for strategic
reasons used to be issued by the Secretary of State for Trade
and Industry, they are now issued by the Secretary of State for
Business, Enterprise and Regulatory Reform (BERR). The Minister
of State for Energy, Mr Malcolm Wicks MP, will continue to have
responsibility for strategic export controls and to oversee the
work of the Export Control Organisation (ECO). Within DFID, Mr
Shahid Malik MP, Parliamentary Under-Secretary of State, is the
minister responsible for export controls and other arms control
issues.
46. As the export licensing authority, BERR
liaises closely with all Departments involved in the licensing
process, including DFID. DFID continues to lead on the application
of Criterion 8, against which licences to developing countries
are assessed for their potential impact on sustainable development.
Other departments may also provide advice on Criterion 8, just
as DFID may contribute to assessments against any of the other
seven criteria, particularly those on human rights and conflict.
47. In its report of 7 August on Strategic
Export Controls, the Quadripartite Committee on Export Controls
(which includes representatives of the IDC) stated "we conclude
that the system for assessing applications against Criterion 8
appears sound and that it is underpinned by a robust methodology."
48. The Government is also conducting a
review of the 2002 Export Control Act. This review is ongoing,
and the Quadripartite Committee have already been involved, and
will continue to be consulted.
49. The UK, led by the FCO, is encouraging
all countries to submit views to the UN Secretary General's consultation
on the Arms Trade Treaty (covering all conventional weapons),
with 97 papers submitted so far (deadline 20 June). The UK is
looking forward to playing an active role in the Group of Governmental
Experts on a treaty when it convenes next year.
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