CAFOD and South Centre | June 20, 2003
The Catholic aid agency CAFOD and the South Centre, a Geneva-based think tank for developing countries, say in a new report published today that the British government's policy on investment at the World Trade Organisation risks harming the Third World.
In "The Northern WTO Agenda on Investment: Do as we say, Not as we did", CAFOD and the South Centre argue that the UK and other rich countries are pushing a policy that could deny poor countries the very same opportunities that allowed them to develop.
Britain is one of the strongest supporters of new talks on investment at the WTO Ministerial in Cancun Mexico 10 - 14 September. The UK government, along with other EU members and Japan, want the WTO to set multilateral rules to restrict developing countries' ability to regulate foreign direct investment. Britain says an investment agreement will attract foreign investors to developing countries, bringing new capital and technology.
But in "Do as we say, Not as we did", CAFOD shows how the experiences of the USA, the EU member states, and the East Asian economies all point to the opposite conclusion.
CAFOD says that all of today's developed countries discriminated against foreign investment to safeguard their long-term national development. They used, and are still to an extent using, a range of instruments to channel foreign investment towards building up their own national industry.
For example, the UK has used a variety of restrictions targeted against Japanese automobile and electronic companies since the 1970's.
If Britain gets its way, poor countries could be banned from following that example because they will be prevented from discriminating between foreign investors and domestic firms.
Co-author of the report, CAFOD's Trade Analyst Duncan Green says, "All of the now-developed countries restricted the entry of foreign investment to greenhouse their domestic industries. Now rich, those very same countries are saying to poorer countries 'do as we say, not as we did'. It's the kind of hypocrisy that has come to characterise the WTO."
"Our historical survey shows that only when domestic industry reached a certain level of competitiveness did the benefits of non-discrimination come to outweigh the costs. Non-discrimination is an outcome of development not a cause. If non-discrimination is made the starting point, as in the UK's policy, this will only end up hurting the poor. Depriving governments of the ability to implement a successful industrial policy aimed at developing national industry could consign future generations to poverty. The stakes could not be higher."
Between noon on Friday 27 June and noon on Saturday 28 June, tens of thousands of people will lobby their MPs in their local constituencies, in the largest simultaneous lobby of MPs this country has ever seen. CAFOD and Trade Justice Movement campaigners will demand that the UK Government stops backing the push to expand the WTO's remit to include new issues such as investment.
Contact Patrick Nicholson at CAFOD on 0207 326 5559, 07979 781015 or pnicholson@cafod.org.ukCAFOD and South Centre:
