Ann McKechin MP

Labour Member of Parliament for Glasgow North

International Development Bill

7 November 2001

I strongly support the Bill, which consolidates the Government's policy to ensure that our aid budget is poverty-focused and dedicated to reaching the international development targets. The Government's announcement of their intention to end the practice of tied aid is to be commended as a strong signal of our commitment to offer genuine assistance in a spirit of partnership with the developing world, rather than imposing a top-down solution, often with inappropriate and wasteful aid.

A cynic once observed to me that the levels in the UK aid budget before 1997 bore an uncanny resemblance to the amount spent on the purchase of Hawk jump jets by the recipient countries. As the Hon. Member for Richmond Park (Dr. Tonge) mentioned, many of us well remember the scandal of the Pergau Dam case under the Tory Administration, in which aid funds were provided in return for a construction contract that had no economic benefit to the poor of that country. The World Bank has estimated that tying aid reduces the real value of aid by 25 per cent., and the termination of the scheme will allow the Department for International Development to use its funds more effectively and fully.

Since 1997, there has been a shift in Government policy towards co-ordinating the work of all Departments involved in international affairs as well as the Department for International Development--be it the Foreign Office, the Ministry of Defence, the Department of Trade and Industry or the Treasury - with our international poverty reduction and social justice aims. The Chancellor of the Exchequer and the Secretary of State for International Development have taken a leading role at World Bank, International Monetary Fund and G8 meetings, particularly in expressing the need for a comprehensive and effective debt relief programme. Only last week, The Secretary of State for Trade and Industry, speaking on the forthcoming World Trade Organisation talks in Doha, stated that "The round must benefit all developing countries - the smaller ones not just the larger countries. We must agree rules which genuinely reflect their different levels of development."

I am delighted that the Government recognise that the issues regarding our trade policy are integral to the aim of poverty reduction. I acknowledge that the UK has played a leading role in ensuring that developing countries can participate in the World Trade Organisation as equal members. I particularly welcome the announcement that the Department for International Development has doubled the budget for investment in capacity building from £15 million to £30 million over the next three years.

But there is frankly still no level playing field in our global systems of trade. The poorest developing countries are expected to compete on equal terms with countries that operated for years behind protectionism while they industrialised. The liberalisation theory adopted by the World Trade Organisation is based on notions of supply and demand, in which consumers and suppliers negotiate a fair price in the marketplace, but that theory ignores the reality of the poorest people in, say, sub-Saharan Africa who have nothing to offer in the world marketplace.

The theory of trade liberalisation lies at the heart of the problem with an organisation such as the WTO. This is an economic model designed to maximise growth; only later did we develop the notion that poverty could be reduced by the trickle-down of economic growth. Achieving economic, gender or racial equality is well beyond the realms of the theory's own objectives. Certain services, such as the supply of clean water or education, can be seen as a right whether an individual can afford to purchase them or not. Companies will not be prepared to provide such services free; only Governments can do that. However, the notions of rights and democratic decision- making are not an integral part of the theory.

We need to show in the current negotiations that all our international bodies are committed to poverty reduction as a principal policy aim. Even the World Bank and IMF have belatedly found themselves required to address this issue when justifying their policies, although there is still a long way to go in linking the new-style rhetoric of the poverty reduction strategy papers to the circumstances on the ground. As yet, the WTO has still to embrace a specific aim to reduce poverty; that needs to be the core of this week's talks if we wish to create true global security. As I said earlier today in an intervention on the Secretary of State for Trade and Industry, the Department for International Development should, as a first step, ensure that the Government require the WTO to carry out an independent impact assessment of the general agreement on trade in services treaty before there is further liberalisation. Such an assessment has been promised but not delivered. The poor of the world are entitled to see proof of the benefits of the current settlement before any further liberalisation is agreed. If we in the European Union are to prove that we are serious about development, we must open up our agricultural markets and substantially cut the subsidies. I am pleased to see that the Government recognise that problem.

As I have said, the Department for International Development has recognised that more needs to be done to assist the developing countries' capacity to negotiate at the WTO talks this week but, sadly, the agenda is still set by the northern hemisphere. I was disappointed to read in The Guardian yesterday that the current draft agenda was set behind closed doors in a couple of meetings attended by only 21 of the 142 member countries, a pattern which was set in previous trade rounds and continues despite the fact that that--not the demonstrations going on outside--was the principal reason behind the collapse of the Seattle talks in 1999. This practice has caused the exclusion of the majority of WTO members from the all important agenda setting.

Too much influence still rests with the powerful multinational lobbyists who surround the WTO headquarters in Geneva and who continually seek to control the trade agenda. If we truly wish future negotiations to be transparent and democratic, they must be tailored to suit the capacity of those least able to take part. It is frankly disgraceful that 28 developing member countries have no representative at Geneva, and that many more have only one representative to cover up to 40 meetings a week. That is completely inadequate. I call for greater consideration to be given to the need effectively to regulate multinational companies to ensure that sustainable development and true poverty reduction can be achieved. The world needs international trade rules, but to date they have favoured the narrow commercial interests of the north and of the largest corporations, at the expense of the wider public interest and smaller economic enterprises. If we are to have a comprehensive settlement, we also need to consider an effective multilateral agreement on labour rights under the leadership of the International Labour Organisation, and recognition of the need for environmental controls.

We stand now at an important crossroads. We can either retain the status quo and risk greater economic insecurity and income disparity in the south, or take the more difficult choices to provide equity, sustainability and poverty eradication. It should be remembered that the very poorest countries account for only a tiny proportion of foreign investment and, amazingly, they receive only a disproportionately small amount of aid. The European Union aid budget has been mentioned today. In the last few years, that has given less aid, rather than more, to the poorest countries. Opening rich countries' markets, although welcome, will be of limited value in the short and medium term, given that these countries account for less than 1 per cent. of world trade.

It is essential that we consider our poverty reduction strategy on a country-by-country basis and take into account the extent and depth of poverty that apply. As My hon. Friend the Member for Leeds, West (Mr. Battle) said, more emphasis should be placed on increasing domestic and regional trade, rather than principally on an export market directed at the northern hemisphere. Urgent assistance needs to be given to the estimated 71 countries that suffer from unsustainable debts to allow them to provide basic services to their citizens and, just as importantly, to enable them to develop the economic infrastructure necessary to compete in the open market.

Only 23 countries qualify under the heavily indebted poor countries initiative and, to date, only 6 per cent. of their debt has been wiped off. That is disgraceful. We must be prepared to consider ever more radical and quicker debt relief if we are to have any chance of meeting our international development targets.

If we truly wish to eradicate poverty from the world, we in the northern hemisphere must be prepared to make real changes to our lives. If we want the next generation to benefit from a safer world, we must make those changes now.


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