Developed World must deliver on Gleneagles promises - Kennedy

5.09.18pm UTC (GMT +0000) Tue 29th Nov 2005

Developed World must deliver on Gleneagles promises - Kennedy

Charles Kennedy has challenged leaders of the developed world to take steps to deliver on the promises made at the Gleneagles summit and to make serious strides on behalf of the poorest countries in the WTO trade negotiations in December, in a keynote speech hosted by CentreForum.

Below is Mr. Kennedy's speech in full:

Introduction

Today I would like to talk to you about four of the essential pillars of international development - aid, debt relief, trade, and good governance.

This year, the development focus has been on aid and debt relief at the G8 - and it is now shifting to the WTO trade negotiations in Hong Kong under the Doha Round.

That's why I would like to concentrate my remarks on these areas.

Firstly to look at the agreements made at the G8 Summit at Gleneagles;

Then to look ahead to the Doha trade negotiations in December;

And finally to address the issue of good governance - which is essential if aid, debt relief and the proceeds of trade liberalisation are to help the citizens of developing nations.

I will also argue that we have a duty here at home, in government and in the charity and NGO community, to look at our structures of accountability too.

Aid and Debt - Promises Made, Promises Kept

The G8 Summit at Gleneagles was preceded by a hugely popular campaign - the Make Poverty History marches, the Live8 concerts and other efforts in support of the poorest people in the world.

As a nation, we acknowledged that the world has the wealth and the resources to transform the lives of the poor.

The question is whether there is the international political will to do so.

Make Poverty History is a campaign without end.

If we are to build on the successful mobilisation of opinion, the pressure must continue - at every level - domestic and international.

The facts about global poverty are stark.

Over a billion people - a fifth of humanity - live in extreme poverty.

800 million are permanently hungry;

Tens of thousands of people die from preventable diseases every day.

A child contracts HIV every minute.

Our shared humanity demands action.

But it is also in our national interest to support economic and social development abroad.

As a trading nation, we require stability to increase prosperity.

We need new markets and new opportunities.

If we also start to tackle inequality, we may help to prevent the kind of resentment which can ultimately lead to extremism and terrorism.

The Prime Minister and the Chancellor deserve credit for the focus of the British Presidency of the G8 on development, specifically for Africa.

And we should acknowledge that some progress was made at Gleneagles.

The deal on debt cancellation was a serious step forward for those countries included.

And the promises to increase aid by 2010 should also be welcomed.

But these were the minimum required to claim any kind of success and serious deficiencies remain.

Much of Africa is not part of the new debt-relief initiative.

And the increase in aid of $50bn by 2010 includes a lot of money previously pledged.

Oxfam has calculated that only $16bn of this represents new money over and above existing commitments and trends.

Set this against the sums which it is calculated are needed to meet the UN millennium development goals - some $50bn more a year rather than the current commitment over a five year period - and Gleneagles is clearly a small first step.

In addition, the high level of spin accompanying the summit conclusions, has contributed to undermining the real achievements.

Ultimately the Gleneagles agreement will be judged not by how much was promised, but by how much is delivered.

Pledges on aid are always more easily made than kept.

Germany and Italy have already cited budgetary restrictions which may mean that their Gleneagles promises go unfulfilled;

And, of course, changes of government in donor countries can mean a change of heart.

So it will take sustained political will to deliver on Gleneagles.

First, the pledge to spend at least 0.7% of national income on aid, which is now over 30 years old, must be fulfilled.

15 European Union countries have agreed a process to reach that target by 2015 -a positive step, but one that needs to be matched by other developed countries such as the United States and Canada.

Second, the international community should help the heavily indebted countries which missed out on the G8 debt relief package to make progress in achieving the necessary preconditions for debt cancellation.

If what is needed to deliver on Gleneagles is sustained political will, sustained political courage is needed to deliver on the even bigger challenge of the UN Millennium Development Goals.

Five years on from the Millennium Declaration, sub-Saharan Africa is not on track to meet any of the MDG targets.

In September when the UN met in New York to discuss progress, nothing was agreed to establish a collective action plan for rescuing the MDGs.

Gleneagles was a small part of a process - the wider process must not be allowed to fail.

Trade Liberalisation

As I said at the outset, international development is about sustained progress on a number of fronts.

Aid and debt relief on their own - cannot lift countries out of poverty and maintain them there.

And, if managed badly, an unhealthy aid dependency can develop.

Perhaps the area that has the most potential to deliver the greatest gains over the long-term is a process of sustained economic development underpinned by a system of free and fair trade.

But it is also one of the most difficult challenges facing the international community.

Why?

Because in unpicking the tariff, subsidy and other barriers to trade - and in addressing through trade some of the deeply uneven effects of globalisation - each nation is walking a political tightrope.

On the one hand, if development objectives are to be met, markets in rich countries must be made more accessible to developing countries.

On the other, national political leaders are under pressure to secure the interests of their own traders and businesses.

The best of these businesses - and there are many examples in this country - do not seek preference but rather seek a level playing field on which to compete globally.

But there can be a domestic political imperative to guard jealously any competitive advantage that currently exists.

The whiff of international pork barrel politics is often to be detected at international trade talks.

This is particularly the case when it comes to agricultural tariffs and subsidies.

Meaningful progress on agriculture is likely to be the measure of success in the Doha round of trade negotiations in Hong Kong next month.

But the build up has been characterised by a lot of smoke and mirrors.

Both the US and the EU have floated offers to reduce trade distorting tariffs and subsidies to farmers by 60%.

But in practice, the real reductions on offer are far lower.

The concessions demanded from developing countries by the US could mitigate much of the development benefit.

And French obstinacy still stands in the way of any meaningful reduction in EU production subsidies and tariffs - so the EU finds itself demanding far more in non-agricultural access than it is so far prepared to offer on agriculture.

The EU is right to negotiate to secure increased access to other markets - particularly in services.

But it is wrong to demand so much more than it is prepared to deliver.

Gaining competitive access to food markets is essential for the economies of many developing nations - and essential to meet anti-poverty objectives.

Why?

Because three-quarters of the world's poor live in rural areas.

In developing countries, agriculture accounts for around 27% of GDP and export earnings and almost half of the employment.

In rich countries agriculture accounts for a mere 2% of GDP.

Yet agricultural markets are the most heavily protected.

Tariff levels in OECD countries are on average 12 times the rate for industrial products.

And $1bn a day is spent to subsidise agriculture in developed countries.

The irony is that the EU's CAP subsidies are often hijacked by the large retailers and supermarkets.

Farming remains in crisis and British consumers still pay over the odds.

If the Doha round is lost, it could undo the modest good done by promises of aid coming down the track.

The breakthrough reported last week on the EU sugar regime appears to be a positive step forward.

But the EU concessions presently on the table represent an absolute minimum if the talks are going to proceed.

Trade that is Free and Fair

The debate over trade liberalisation in agriculture goes to the heart of what we mean by trade that is both free and fair.

I do not believe that these are incompatible objectives.

As a liberal, I certainly believe that free markets should underpin attempts to make a success of globalisation;

But as a liberal I recognise the limits of markets when it comes to delivering on social objectives.

Just as I reject the laissez faire approach domestically - so I do internationally.

But equally I would reject those who seek to use the justifiable arguments for 'fair' trade as some kind of anti-globalisation, anti-capitalist campaign.

The crux of the Doha negotiations seems to rest on how far the current system of trade preferences and protectionist tariffs enjoyed by developing countries should be adjusted or abolished in return for access to the markets in rich countries.

I would argue that it is in the long-term interests of developing countries to pursue liberal trade policies.

Yet no-one should pretend that the systemic imbalances that the poorest countries suffer from in the world trading system can be redressed overnight by forcing them to abandon wholesale the protections their fledgling economies currently enjoy.

In the short-term, it may be necessary to maintain protectionist measures that allow the poorest countries to build up capacity and infrastructure.

But if tariff regimes are to remain in developing countries, reduced or otherwise, retention of those regimes should be time-limited and phased out based on the capacity of their economies.

Their long-term aim should be to compete in the world market as open economies.

The principle of non-discrimination which underpins the World Trade Organisation should be maintained.

But so should the provisions for 'special and differential treatment' be respected for the poorest countries.

In the context of the Doha round securing a deal on trade that is both free and fair will mean radically improving market access for the poorest countries, enforcing disciplines on dumping, and unpicking the perverse agricultural tariffs and subsidies particularly in the US and the EU.

Developing countries should not be required to open their markets to subsidised exports from countries that are already much richer than they are.

But this is not an argument for blanket protectionism.

We should not forget that liberalisation of trade in agriculture will benefit the middle-income countries with export-oriented farming sectors such as Brazil, India, South Africa - more than the smallest and poorest developing countries which may not yet have the capacity to compete in world markets.

This means recognising that trade policy cannot be pursued in isolation from development goals.

We should support the pursuit of 'aid for trade' policies to ensure that the poorest nations have the capacity to benefit from trade liberalisation - for example in terms of efficient customs agencies, better trade infrastructure, tax regimes which don't rely on import and export duties, and anti-corruption measures.

It has been said that the WTO is an institution set up to do what is economically necessary but politically difficult.

Achieving an agricultural market that is both free and fair will test the institution and political leader's determination to deliver on both the economic and development agenda.

It is certainly in nobody's interests that reform of trade regimes should fail.

Development through trade is far more likely to be achieved within a credible rules based forum such as in the World Trade Organisation than it is through a series of bi-lateral preferential agreements.

With progressive institutional reform of the WTO, developing countries have the chance to be equal players.

In bilateral agreements, which can often distort their markets and priorities, developing countries are bound in the role of the weaker partner.

The inevitable consequence of failure in Hong Kong would be to undermine the whole structure of multilateralism.

In the long-term, that would be disastrous for rich and poor alike.

Governance at Home and Abroad - Accountability and Responsibility

These trade negotiations demonstrate how Europe acting as a trading bloc, through the European Union, can punch its weight on the world stage.

But it is difficult to unpick how exactly the EU is approaching Hong Kong.

The whole process is shrouded in the usual EU secrecy.

Peter Mandelson, the EU Trade Commissioner, is delivered a mandate by a committee of civil servants meeting in private, without published minutes.

How can we in Britain know if what the UK Government is arguing for behind closed doors matches its rhetoric in public?

How can we hold our executive to account in such circumstances?

How can we preach to other nations about open accountable liberal democracy when we fall short of rigorous standards at home?

The Liberal Democrat commitment to international democratisation and human rights is an inseparable part of our development agenda.

Just as the market is an important tool for boosting the economies of developing countries - so political and civil freedoms underpinned by the rule of law are important for ensuring the proceeds of growth are used to attack poverty in those countries.

Aid works best when it is delivering a common set of objectives agreed between donor and recipient nations.

Developing nations must have a degree of ownership if reforms are to be realised and aid used efficiently.

But it is not a coincidence that many of the poorest people in the world live under the most corrupt, lawless and non-democratic regimes.

If we are to help reduce the poverty in which they live, we need mechanisms to ensure the aid provided and proceeds of debt relief reach the people who need it most.

Conditions attached to aid and debt relief initiatives have attracted criticism for exacerbating poverty in some cases rather than reducing it.

What is certainly true is that an inflexible preoccupation with privatisation and a 'one size fits all' approach to services reform in developing countries has not worked.

What is necessary in one country may be detrimental in another.

But we cannot allow ourselves to be sidetracked into a 20th Century debate about private versus public.

We have to concentrate on finding the solutions which best fit a country's needs.

Private sector involvement should be judged solely on its merits; that is, whether it can contribute to poverty reduction and other development goals.

The approach therefore should be to ensure that regular impact assessments are undertaken on the economic and developmental effects of the conditions imposed in return for debt relief and aid.

This must go hand in hand with political and institutional change that promotes good governance in developing nations.

Initiatives to tackle corruption and put in place a more transparent budgetary process will ensure aid is better spent but - more importantly - will promote the accountability of developing world regimes to their own people.

We are right to insist upon accountability and transparency when it comes to how aid money is used.

But equally, the accountability that the donor community insists on should be reciprocal.

The principles of environmental sustainability, human rights and governance apply equally to the governments of rich countries - and for that matter to aid agencies, NGOs and private corporations.

Donor countries, aid agencies and private firms engaged in developing countries have a responsibility to ensure that our systems and practices are compatible with development objectives.

DFID channels over £300m of taxpayers money through UK civil organisations and projects run by NGOs.

NGOs come in all shapes and sizes - from the large professional agencies to small amateur operations.

Where public money is used, it is especially imperative to establish a track record of delivery.

The NGO and charity community has a responsibility here to ensure that their accounting procedures are rigorous, open and transparent.

And people who donate to NGOs too have every right to demand that the money they donate is used efficiently and wisely.

In emergency situations there is evidence that the uncoordinated rush to deliver aid can add to duplication and confusion.

This creates an obstacle to effective aid getting through.

Progress has been made in systems to co-ordinate the delivery of aid between NGOs, the UN, donors and the government of the country involved.

As the recent earthquake in Kashmir and the response to the Tsunami have demonstrated, there is a long way to go before we have an effective international emergency delivery system.

The United Nations remains the organisation best placed to co-ordinate such a response but it needs the capability to react and to deploy relief and rescue workers more swiftly.

At present the UN's ability is dependent on donations from individual member states which are negotiated for each situation.

The development of the United Nations' Central Emergency Revolving Fund is a step forward.

This should at least allow an immediate financial response to individual disasters whilst the appeal goes out to the international community to replenish those reserves.

But rather than the current ad hoc arrangements on logistics, material and expertise, the time has come for a well trained, well-equipped, well-resourced standing UN Rapid Reaction Disaster Relief Force.

Such a force could mean bringing together the current disparate UN disaster assessment and relief units.

In order to be effective a UN Rapid Reaction Disaster Relief Force would require standing logistics, heavy lift transport and dedicated experts. Member states could sign memoranda of understanding with the UN allowing for the immediate release of military and civil assets should the UN Secretary General declare a state of international emergency.

Conclusion

Today I have touched on some of the immediate issues facing the international community in efforts to achieve sustainable development and to tackle the problems facing the poorest countries.

This is not to be exclusive.

Conflict resolution and prevention;

The arms trade;

Tackling disease;

The environment;

All these are part of sustainable development.

And all these require the international political will and political courage to take action.

To deliver on Gleneagles;

To go further and really begin to Make Poverty History;

To ensure that trade is both free and fair;

And to spread the benefits of democracy, free markets and the rule of law so we can help the poorest help themselves.