Examination of Witnesses (Questions 400
- 419)
TUESDAY 14 JULY 2009
MR MICHAEL
WILLS MP, IAN
LUCAS MP, LORD
MALLOCH-BROWN
AND MS
CARMEL POWER
Q400 Lord Morris of Handsworth: So
where would you see greater adherence to human rights issues,
here at home or abroad where the same business operates?
Ian Lucas: We want to see greater
adherence both domestically and abroad.
Q401 Lord Morris of Handsworth: I
know we do, but the question was your judgment as to where the
greater adherence takes place?
Ian Lucas: I think that international
businesses tend to think of human rights as a foreign issue in
their own minds and what we need to do is to get them to think
about the domestic aspect of the business in human rights terms
as well.
Q402 John Austin: Can I just follow
that up? This is a joint BIS/FCO initiative, and this goes back
to Lady Prashar's comment earlier. There is a perception outside
that whilst the FCO may be beavering away at ethical foreign policy
the emphasis of UK Trade International is business, business,
business. Have you identified any tensions or differences within
this working party on the degree of commitment between the FCO
and BIS?
Ian Lucas: I think that Mark and
I have been getting on very well! I think there is a perception
of difference, for example, in the UKTI and perhaps the Foreign
Office, from outside; but what we are working hard to try to do
is to ensure that for UKTI human rights are just as much on their
agenda as they are for the Foreign Office. That is an important
part of my role, to emphasise that.
Q403 Chairman: Can I come to some
points for Mark. You have said quite a lot about the Kimberley
Process and all those sector-based programmes, but one of the
criticisms we have had of the UK is that it is less effective
at integrating human rights into its more general work in the
EU, the OECD and the World Bank, so what are you doing to try
and promote responsibility of business to protect human rights
in these wider inter-governmental activities, particularly in
the EU?
Lord Malloch-Brown: Although you
say particularly the EU I will start, if I may, with the World
Bank for a moment and then come back to the EU. Things like the
whole issue of transparency in contracting has been very, very
driven and heavily driven by the World Bank but very much at the
instigation of British pressure. Similarly, the World Bank's development
of social and environmental standards, which on the social side
have a number of human rights components to them, is again an
area where there has traditionally been strong British leadership.
So I would argue rather the opposite, that within these foras
we have actually worked to try and mainstream human rights into
their decision-making. With economic institutions there are always
limits. The World Bank is itself insistent that its conditions
for lending have to be primarily based on economic impact and
return and not on human rights issues.
Q404 Chairman: That is the whole
point, is it not? The criticism from Amnesty is that we should
be exercising more leadership in trying to get higher standards
into all these agreements with international organisations to
try and entrench, embody better standards of corporate behaviour
and we are not doing that. That is their criticism, we are not
showing the leadership that they think we should, like we showed
leadership as you mentioned in the Extractive Industries Agreement,
in Kimberley and all the rest of it, but not international bodies.
Lord Malloch-Brown: Those international
bodies are intrinsic to the operation of most of these initiatives.
It would be impossible to do what we are doing on natural resources
without the collaboration of particularly the World Bank. I think
that more broadly there are limits, and I have to be frank about
it. The World Bank particularly is also subject to a lot of push
back, not by companies but by countries arguing that its lending
conditions to them cannot be primarily human rights driven, they
must be economics driven, and over many years the Bank has tried
to push back on that, increase building conditions which in a
sense are there because of their link to development, you cannot
have development unless you have a degree of political freedom
as well as economic freedom. But they are not human rights institutions
and, therefore, getting this mainstreamed is not a straightforward
process; there are many countries which are development successes
but disappointing on human rights and democracy criteria. That
is just a fundamental dilemma at the heart of all of these international
development institutions. The only one I would say which actually
says that you cannot have development without human rights is
UNDP, for which that is a very strong philosophical premise; but
it is not the case in the economic institutions. Just on the EU,
which you have mentioned as well and drew particular attention
to, again I would argue that within the EU's work in this area,
which again I have to stress, is country-based, it is not taking
the international business sector at the abstract global level—
Q405 Chairman: What about the Procurement
Directive; that says how you should go around buying things?
Lord Malloch-Brown: If you take
that Procurement Directive—and officials are welcome to
kick me in the pants if I get this wrong—there are real
issues there about ensuring that the procurement process is fully
competitive. We have been frustrated in trying to build in that
kind of conditionality because it often breaches procurement requirements.
Q406 Chairman: This is the whole
point: are we actively showing the leadership within the EU to
advocate that when we set out rules relating to procurement we
build into those procurement rules human rights principles? After
all, the EU is the European Union, it is no longer the Common
Market or the EC, it is much broader than it was, and membership
of the EU is predicated on compliance with the European Convention
and all the rest of it. You cannot be in the EU without being
compliant with the European Convention. So why are we not thumping
the table and saying, "We have to go beyond straightforward
mere commercial interests when we are looking at procurement"?
Lord Malloch-Brown: We are, but
we are pushing on a closed door which is not closed because other
countries want to keep procurement as something where human rights
abusing companies can benefit from it, but because Europe has
developed a procurement system where there is a real wariness
about introducing these actors for fear that they will be used
in ways which actually prevent the European taxpayer getting best
value for money.
Q407 Chairman: Best value at the
expense of human rights in the developing world.
Lord Malloch-Brown: That is the
argument.
Q408 Chairman: Human right within
our own countries.
Lord Malloch-Brown: That is the
argument. There is no doubt which side of the argument we take.
My only point is, and maybe at this point I should defer to Ian
because it is as much a BIS issue as it is an FCO issue, because
of issues in the past about non-transparent procurement there
is within these Procurement Directives a prejudice towards the
best price at the expense of some of these other considerations.
Equally, I can tell you that while that is a tension it does not
lead to conditions of abusive labour, etcetera, in terms of the
contracting that goes on. There is a balance that may not be drawn
where we think it should ideally be.
Q409 Chairman: We will come back
to procurement in more detail later on. Can I come at this from
a slightly different angle now and that is bilateral trade agreements.
One of the things that Ruggie identified was the fact that bilateral
trade agreements can have the effect of suppressing human rights
developments in the host country, and he referred to Sub-Saharan
Africa at paragraph 32 of his report: "Provisions were found
in seven of the 11 host government agreements specified exemptions
from or compensation for the effect of all new laws for the duration
of the project, irrespective of their relevance to protecting
human rights or any other public interest." When Norway got
involved in these things this made sure that these agreements
with which they get involved do not do that; that they do have
proper respect for human rights, but ours do not. Why?
Lord Malloch-Brown: The FCO is
not the lead on these issues.
Q410 Chairman: Ian then.
Ian Lucas: I am not sure if your
characterisation is entirely correct.
Q411 Chairman: This is Ruggie's characterisation:
"seven of the 11 host government agreements specified exemptions
from or compensation for the effect of all new laws for the duration
of the project" and many of those new laws would be, for
example, to protect labour standards.
Ian Lucas: That is your description
relating to the quotation; that was not within Ruggie's quotation.
That is your observation.
Q412 Chairman: That is based on other
evidence that we have had in this inquiry.
Ian Lucas: Within BIS, and I refer
you to the OECD guidelines to which I referred to earlier on this,
that is an extremely important device as far as we are concerned,
both to indicate the general approach that we want to be taking
as a government and for business to be taking in the way that
they conduct business. Those are the guidelines that we want them
to adhere to. In circumstances where the guidelines are for any
reason broken or if we find that there is not the adherence to
the principles relating to human rights that we would like to
see and if that is established then that is clearly something
that will be considered in the future when dealing with that individual
organisation or company.
Q413 Chairman: Why do we not do as
Norway does?
Mr Wills: Can I clarify one point?
Article 45(2)(d) of the Procurement Directive enables contractors
to exclude suppliers if they have been found guilty of human rights
breaches. So it is not the case that this cannot be taken into
consideration—it can be. Also, it is perfectly open for
public sector procurers to stipulate compliance for basic human
rights principles as well, particularly when we are talking provision
of care services or things which directly engage human rights
provisions as well. So it is not that we do not think that these
things are important, but there are opportunities to bring this
into play and we need to make sure that they are done across the
public sector—it is a very wide ranging sphere of business
and what we are all engaged in doing is seeing as far as possible
that these principles are brought into play in procurement.
Ian Lucas: I need to find out
precisely what you are advocating and consider it and I will come
back to you.
Q414 Lord Dubs: This again is to
you, Ian, and it is about Export Credit Guarantees. We have heard
suggestions that the Export Credit Guarantee Department does not
have adequate procedures to ensure that the projects that are
guaranteed by the UK will not contribute to human rights abuses
overseas. How, if at all, does the ECGD prevent British taxpayers'
money being used in projects that might contribute to human rights
abuses?
Ian Lucas: The approach with relation
to the Export Credit Guarantee Department is the same and adheres
to the principles that we have indicated already in the evidence
session to date, so that if there are individual instances or
allegations relating to particular contracts or credits then we
would want to know about them and to look at them in the context
of the principles that I have outlined.
Q415 Lord Dubs: But where does the
onus lie? How do you react to the suggestion that human rights
assessments should be conducted on any project seeking export
credit guarantees? They have to look at it and see whether any
project meets the human rights standards.
Ian Lucas: The ECGD is primarily
a commercial department and that is the way in which it approaches
the guarantees that it is talking about. The whole focus of the
work of the Department will have to change if a capacity was created
to, for example, investigate the human rights' position in another
part of the world relating to the credit guarantees. What we need
to do is ensure that embedded in the work of the Department is
an understanding of the importance of human rights and the way
in which the work of the Department is conducted. It is very difficult
for the ECGD to carry out the type of assessment you are describing.
Q416 Lord Dubs: It could do if they
were geared up to doing that sort of assessment.
Ian Lucas: It would entirely change
the work that it does because at the present time the work that
it does is primarily to assist UK business in commercial operations.
We want UK business to conduct business with respect to human
rights and that is the overarching framework that we want to see
but it is not specifically the role of the ECGD to link in or
use as a basis of their decision-making the issues which you are
raising.
Q417 Lord Dubs: Obviously implicit
in my question is the suggestion that they should be, but do you
accept that limiting measures designed to protect human rights
in order to meet business interests of UK companies might be inconsistent
with the framework proposed by Professor Ruggie?
Ian Lucas: I do not think they
were limiting in the way that you describe it. I think that there
is a fundamental assumption which underpins the work of the Department
as a whole, that we have respect for human rights and the way
that we approach matters; but it is not a question of allocating
individual tasks or investigations relating to human rights to
individual departments. We need to have an overarching approach
and the work of the Department needs to be conducted with respect
to that overarching approach and not specifically directing itself
to individual investigations relating to human rights in each
individual case.
Q418 Lord Dubs: I understand what
you are saying but if the ECGD are aware of human rights, unless
they look at individual projects they are not going to know whether
these projects are liable to breach human rights. In other words,
it is all right saying, "Yes, of course we are aware of this,"
but unless it is their responsibility to look at it they may miss
out.
Ian Lucas: I think it is their
responsibility to consider the human rights position because it
is part of their existing impact analysis, but what they cannot
do is assess the human rights' position for each individual application
in the way that they commercially assess each individual application.
But they have to have regard to human rights both in the context
of each of the applications that they are considering but also
in the context of the overall approach of the Department.
Q419 Lord Dubs: My last question
is this: but could not the ECGD ask an individual business that
is seeking support to do human rights assessment and to provide
that to the Department?
Ian Lucas: I think that the present
position is that human rights are considered as part of the process.
I think that that is the correct approach, rather than requesting
a business to make a human rights assessment and to present it
to the Department; I do not think that that is the correct burden
to impose on that individual business.
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