Select Committee on International Development Appendices to the Minutes of Evidence


Memorandum submitted by British Invisibles (BI)[10]

  1.  BI (British Invisibles) welcomes the opportunity to express its views about the recent White Paper on International Development. BI was one of the organisations which submitted comments to the Department for International Development when the White Paper was at its preparatory stage. A copy of that submission is attached.[11] It provides some background on the activities of BI and explains its interest in the subject under discussion.

  2.  BI shares the Government's overall view that opening markets is in the interest of both developing and the least developed countries. We note, however, that, in line with BI's earlier submission, the White Paper stresses the importance of not only the liberalisation of markets but also the need for that liberalisation to be managed carefully and the need for sound, efficient and transparent regulations to be put in place. In that context, BI believes that developing and least developed countries should open their services markets progressively and at a pace which allows change to be absorbed. This concept of progressive liberalisation is of course one of the corner stones of the WTO General Agreement on Trade in Services.

  3.  Generally, therefore, BI supports the approach outlined by the Government as regards the trade and investment issues examined in the White Paper. From BI's standpoint, however, we are disappointed that relatively little is said in the White Paper about the vital role played by the services sector in developing economies. In our earlier submission, we quoted from World Bank statistics, which illustrate this point clearly, and noted the particular importance for developing countries of sectors such as financial services, telecommunications and power distribution. The economic expansion of these countries depends on the availability of services which work effectively. When the White Paper does discuss the importance of efficient services sectors (in paragraph 249 et seq), we find it surprising that there is no reference to financial services at this particular point.

  4.  BI also thinks that, although the White Paper outlines the Government's support for the opening of markets, it does not emphasise sufficiently the important role which foreign firms can and do play in developing markets both as investors and employers. For example, paragraph 94 of the White Paper talks in terms of major benefits being brought about by the opening up of financial and information services but fails to take the point further by discussing the benefits derived from having foreign services providers present in the market. Foreign firms will often bring new skills and new technology, as well as access to global markets, which are not otherwise available easily if at all.

  5.  Indeed, more perhaps could have been made of the above points in Chapter 4, on Harnessing Private Finance. This chapter is rather lukewarm in respect of the benefits for developing and least developed countries of attracting foreign investment, particularly in services sectors. In paragraph 157, for example, in discussing the conditions that generate domestic savings, promote domestic investment and discourage capital flight, we believe that something ought to have been said about the fact that the foreign private sector has the skills, methods and systems to assist in this regard, provided it is given access to markets. We note with approval Box 7 on page 50, which outlines the beneficial role that Transnational Corporations can play in this respect.

  6.  BI welcomes the assertion made strongly in paragraph 185 of the White Paper that a multilateral investment agreement, negotiated in the WTO, would prove to be beneficial to developing countries.

  7.  The White Paper is a timely reminder that, despite what is often alleged to the contrary, the world's poorer countries stand to secure significant net benefit from the additional growth, investment and employment which globalisation can bring. That is the main way in which a key objective of the White Paper—making globalisation work for the poor—can be achieved.

  These comments are submitted on a corporate basis on behalf

Neil Jaggers

Director, Trade Policy, British Invisibles

January 2001

10   On 2 February 2001, British Invisibles was renamed and relaunched as International Financial Services, London. Back

11   Not printed. Back

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