NOU 2008:14 - “Coherent for Development?”

(Preliminary introduction and abstract in english)

1 Mandate and work of the Policy Coherence Commission

Background

The Policy Coherence Commission was appointed by the cabinet on 8 December 2006 on recommendation by the Minister of the Environment and International Development. The task of the commission has been to study how Norwegian policy, beyond purely development aid policy, affects the development in poor countries and to suggest proposals on how Norwegian policies can be modified in order to make it more in harmony with the aim of facilitating economic and social growth in developing countries. The commission has discussed how Norwegian policies that are primarily aimed at regulating domestic conditions affect development and the fight against poverty in developing countries and has considered similar effects of Norwegian initiatives and positions in regional and global organisations and fora.

The commission summarises its discussions in this report and analyses how a more coherent policy for development can be realised. The report describes the challenges this creates for Norwegian policies in the most relevant areas and presents concrete suggestions for initiatives to tackle these. The recommendations include initiatives to adapt Norwegian policies in order to make them more coherent with development goals. They also include initiatives to establish organisational solutions to ensure that a long-term institutional basis can be created within in the Norwegian administration to secure a firm basis for the ongoing work of establishing a more coherent policy for development. The commission also discusses how the private sector can contribute to better policy coherence for development.

Mandate for the Policy Coherence Commission (official version)

“The Norwegian economy is relatively small, and a recent pilot study has shown that Norwegian policy in isolation has relatively little direct effect on poor countries’ economies and their development opportunities. However, it can have a significant effect in combination with other countries’ policies, and through alliances and partnerships where Norwegian viewpoints can be facilitated. Concrete knowledge of the actual effects of Norwegian policy in different areas is currently limited. By improving knowledge and raising awareness of how Norwegian policy as a whole, including both bilateral and multilateral efforts, influences developing countries’ opportunities for economic and social growth, it will be possible to develop a better basis for balancing Norwegian interests against those of developing countries.

This is why the Government has decided to commission an Official Norwegian Report that will analyse points of contact, conflicts of interests and freedom of action. It is intended to improve our knowledge of the effects of Norwegian policy on poor countries, and will provide a better basis for evaluating how it can contribute to reducing poverty in these countries.

The commission will identify the aspects of Norwegian policy that have most significance in principle and practice for combating poverty in developing countries. In practice, Norwegian policy has direct effects on factors that influence poverty. In principle, Norwegian policy sends signals to other OECD countries where it is put into practice in cooperation with other countries, and can exert an influence in international organisations and forums.

The commission is to focus on the following topics as a starting point, but can also evaluate other fields that it finds relevant:

• trade policy in the widest possible sense
• business, competition and labour market policy
• fiscal policy, including efforts via the international economic institutions 
• migration policy, including immigration policy and the transfer of funds to countries of origin
• environmental, energy and resource policy, including food security in the widest possible sense and the management of global public goods such as the climate system
• defence, peace and security policy, including civilian and military contributions to international peace and crisis management operations
• research and development policy (including ICT issues), for example contributions to technological advances of great importance to developing countries.
• Norwegian private-sector investments in developing countries, including corporate social responsibility and anti-corruption efforts
• marine, fisheries and aquaculture policy
• health policy, including the organisation of health-related research and the recruitment of health workers from developing countries, and Norway’s contributions to efforts to resolve global issues related to the control of communicable diseases and environmental health care.

The goal of minimising the negative effects and reinforcing the positive effects of Norwegian policy on the fight against poverty in the South is to form the basis for the commission’s work. The commission is to describe the key problems associated with achieving this goal, and use its expertise to make proposals for how these problems can be resolved.

In its work, the commission should take into account relevant issues arising from the UN Millennium Development Goals, particularly Goal No. 8 and Norway’s progress report on this goal, Global Partnerships for Development, in addition to relevant issues discussed in the white paper Fighting Poverty Together (Report No. 35 (2003-2004) to the Storting) and the white paper on globalisation (Report No. 19 (2002-2003) to the Storting). It should also take account of the Commitment to Development Index, which is published annually by the Center for Global Development, and other key documents the commission considers relevant.

Given the present limited knowledge base, the commission will need to acquire more information in various ways. To some extent, the commission will be able to obtain the necessary information through contact with key institutions working in this field, both within the OECD area and in developing countries. The Ministry of Foreign Affairs will assist the commission in obtaining the information it needs from other ministries, research institutions and other public bodies, and from authorities in other countries, including developing countries.” 

Composition and work of the commission

The commission is made up as follows:

• Gunstein Instefjord, department head, Norwegian Church Aid, (chairman)
• Julie Christiansen, former member of parliament for the Conservative Party
• Hildegunn Gjengedal, director, The Brussels Office of The Federation of Norwegian Agricultural Co-operatives
• Anne K. Grimsrud, adviser
• Lars Haltbrekken, head, Friends of the Earth Norway
• Linn Herning, board member in Attac
• Audun Lysbakken, deputy lead, Socialist Left Party of Norway
• Kristian Norheim, international secretary, Progress Party
• Kristin Røymo, head of unit, Færingen
• Nina Røe Schefte, head of environment and social affairs, IKEA
• Åsne Seierstad, author
• Camilla Stang, manager, Ernst & Young
• Malin Stensønes, director, The Norwegian Shipowners' Association's Brussels office
• Arne Strand, senior researcher, Christian Michelsen Institute
• Camilla Bakken Øvald, economist
• Håvard Aagesen, senior adviser and political analyst, Dinamo

The commission members represent a cross section from public administration, research, the business sector, voluntary organisations and culture, and reflect broad international expertise. A total of 29 plenary meetings were held to discuss the work of the commission, and focus groups were also formed with responsibility for the key specialist areas. In order to obtain relevant information and gain insight and feedback on the work and views of the commission, open consultations were held on trade, investments, industry and commerce, the climate, energy and security. The commission and parts of the commission have visited places including Kenya and other developing countries in order to gain first hand experience of the conditions in countries where the effects of Norwegian and international development policies can be seen. They have also visited research institutions and other institutions both in Norway and abroad that work with the problems studied by the commission, and consulted with international experts.

The commission has organised the work in focus groups, with Linn Herning heading the focus group for trade and investment policy, Julie Christiansen heading the focus group for the climate and energy policy, Malin Stensønes heading the focus group for peace, security and defence policy and Kristian Norheim heading the focus group for migration and labour market policies.

The Ministry of Foreign Affairs devised the mandate for the commission and made budget resources available for the work. Statistics Norway undertook the role of secretariat for the commission, with support from the Ministry of Foreign Affairs and a number of research institutions.

2 Abstract - What the study contains

The task of the commission was to consider the possibilities for aligning all relevant Norwegian policies so as to contribute to development in poor countries. The commission discussed the policy in seven areas which it considered particularly relevant with regard to creating a coherent policy for development. The commission has presented its findings and suggested improvements for all areas. The proposals that the commission sees as the most important are summarised at the end of this abstract. In many cases it can be seen that the commission is split both regarding the appreciation of facts and proposals, which reflects the wide range of political views held within the commission. The format chosen in the report implies that some of the topics the commission was appointed to study in line with the mandate are presented as sub-problems under other headings.

In the introduction of chapter 3, the commission discusses its vision for, perspective on and global framework conditions for the work, followed by central problems within the following policy areas:

Trade (Chapter 4). The commission discusses a number of issues concerning trade. The World Trade Organisation is the global forum for shaping international trade rules and regulations and discussion of the WTO-negotiations is therefore central to this report. More specifically, market access and policy space for poor countries and preference systems are discussed, as well as Norwegian positions and different approaches by Norway with regard to negotiations on agriculture as well as products from manufacturing industries and fisheries. Controversial questions concerning the trade of services and intellectual property rights, the equal treatment of countries in relation to agreed trade regulations versus policy space, negotiation procedures that do not always benefit developing countries and the dispute resolution scheme. The chapter also discusses bilateral trade agreements, tourism, consumer policies as well as ethical and fair trade.

The degree to which the investment policies (Chapter 5) adopted by rich countries will be effective and beneficial to developing countries depends on the security situation, set-up costs for doing business, rule of law, how well rooted corruption is the country etc. The development effect of foreign investment is also likely to vary according to factors such as tax revenues, employment and the extent of local supply of goods and services. Investments in developing countries represent an extra uncertainty for investors and some of the areas discussed in this regard include the Norwegian Guarantee Institute for Export Credit’s (GIEK) policies and the organisation of its guarantee schemes, which are central to minimizing this uncertainty. The challenges relating to bilateral investment agreements is a another key problem that is discussed.

A further crucial issue is the investment policy of the Government Pension Fund – Global and its poor focus on developing countries and Africa. The Norwegian state’s social responsibility as an owner and investor and the lack of guidelines for the exercising (execution) of this responsibility are also discussed in addition to investors’ social responsibility in general.

The international financial institutions and the UN (Chapter 6) play a major role in developing countries’ fight against poverty through aid, lending and their more or less forced advice on policy-making. The commission notes the skewed balance of power in the World Bank and The International Monetary Fund (IMF), which results in the developing countries having very limited influence on conditions of major significance to their own development. The commission recommends that Norway promotes greater representation and voting weight for the developing countries in the Bretton Woods Institutions' governing bodies, that the IMF and the World Bank's management are appointed using a more democratic method in the future

Climate change (Chapter 7) is likely to have a more detrimental effect on the poorest countries and population groups than on rich countries, despite the former only being a minor contributor to the problems. This is due to their geographic location, topography and a lack of resources to adapt in many countries. The commission notes that in the worst case scenario climate change can lead to a reversal in the process to reduce poverty. Considering the current rate of development and dissemination of cheap purifying technology and present restrictions in rich countries' energy consumption there is little chance that the world will be able to offset the CO2 emissions which would result from full realisation of the Millennium Development Goal no. 8 in all countries. A coherent policy for developing the poor part of the world will, according to the commission, require rich countries to initiate special measures within energy conservation, a reduction in the use of fossil fuels and in relation to the development and consumption of clean renewable energy. If this is unsuccessful, the climate problem can contribute to cementing global disparities in welfare and income.

Knowledge transfer (Chapter 8). Targeted knowledge-building is a prerequisite for enabling developing countries to follow a positive development path after escaping poverty. Well-developed basic education and vocational training are essential for a good recruitment basis for higher education as well as research of a high standard. The commission notes that Norway makes a relatively small contribution to developing the global knowledge base. Norway’s investments in research are just 1.5 per cent of the GNP, which is well below both the OECD average and that of countries comparisons are normally drawn with.

Intellectual property rights such as patents and copyright are aimed at stimulating research and innovation, but at the same time they also impede public access to new knowledge and technology. A political development aimed at increasingly greater protection of intellectual property rights in Norway and other western countries will result in the reduction of transfer of knowledge and technology to  poor population groups in developing countries. The Policy Coherence Commission discusses this and suggests proposals for how Norway can help to build knowledge.

Migration and money transfers (Chapter 9). International migration can help to improve welfare, not only for migrants and their families but also for the countries that send and receive migrants. Norwegian immigration and integration policy can thereby also help to reduce poverty in developing countries. Research shows that developing countries get the largest financial benefits from emigration of unskilled workers, while the majority of immigrant countries prefer well-educated immigrants. Developing countries also have a great need for people with higher education and skills, but they find it difficult to compete with salaries in the north. Norway has initiated measures to limit active brain drain from developing countries, and the commission has proposals for additional measures.

Migration also generates large cash flows back to the developing countries. The commission discusses how these transfers can be facilitated and how transaction costs can be reduced so that the development effect of the funds can be increased.

Peace and security (Chapter 10) are fundamental to the development of states as well as citizens’ welfare. They are therefore important prerequisites for development and the reduction of poverty. Two thirds of Africa’s poor are in countries that are or have recently been involved in conflicts, and the civilian population bears the greatest burden both during and after the conflicts. Countries with weak governance and valuable natural resources are more exposed to conflicts than others. Preventing conflicts, reducing the level of conflict using military means, preventing the use of weapons that to a large extent affect the civilian population and helping to negotiate peaceful solutions are all important poverty-reducing measures. Participation in measures to stabilise the situation in such countries, protect the population against violation of their rights and integrity and getting the parties to find a peaceful resolution are in many cases absolutely vital for other development initiatives to have any effect. Norway takes an active part in the entire range of civilian and military peace initiatives. The Commission discusses how this work can be made more coherent in Norway and internationally in order to contribute to development in the global south.

Contributions from development experts (Appendices). The commission asked four development experts who are either based in or have experience from developing countries, to comment on the commission’s mandate and work. Their interesting contributions have given inspiration to the work and are given as appendices to the report.

The commission’s key recommendations for a more coherent development policy

Trade

1. The commission recommends that greater emphasis is placed on considerations to development when framing Norwegian negotiation positions in the World Trade Organisation (WTO). During negotiations, Norway needs to attach importance to both market access and policy space for developing countries. In relation to its work with the WTO, Norway should try to reduce both direct and indirect export subsidies as far as possible, and undertake a critical review of all Norwegian subsidy schemes in light of this. The majority of commission members also recommend that work is carried out to clarify and expand the definition of public services with the objective of protecting water, health and education from the negotiations. Norway should also reduce its requirements for market access in developing countries within the negotiations for fish and industrial products since the Norwegian export of fish and seafood produce must not be forced at the expense of developing countries' opportunity for duty protection of the manufacturing and sea industry sectors.

2. The majority of commission members recommend that Norway emphasizes asymmetry in bilateral and regional trade agreements so that developing countries are given both favourable market access and protection rights.

3. The commission recommends exemption from VAT for goods certified by independent schemes which guarantee that the product is produced using sustainable production methods, that workers rights are respected and that the price the workers receive is adequate in relation to production and living expenses.

Investments

4. The commission recommends that the Government Pension Fund – Global aims a considerable proportion of the investments at positive screening for renewable energy and relevant climate technology. In this way, the fund can aid a more speedy technology development within sustainable energy and climate-friendly technology. This is an area where Norwegian investments can have a global significance.

5. The commission recommends that a fund is built up over a 5-year period, amounting to NOK 10 billion for investments in low-income countries, with special focus on Africa and the least developed countries (LDC). The funds should be channelled through Norfund, which should be given latitude to increase its administration capacity as investments in poor countries are resource-intensive. The fund should be administered separately from the aid-financed investment portfolio and owned by the Ministry of Finance. The majority of the commission’s members require that strict conditions are set regarding the development effects of the operations of this fund and that knowledge centres in developing countries should be invited to contribute in forming the operational toolkit and governing structures of the fund.

The international financial institutions

6. The majority of the commission recommend a democratisation of the international financial institutions whereby developing countries are given a greater voting weight and the scheme where the USA and EU appoint the institutions’ leaders is phased out.  Economic conditionalities that entail requirements for privatisation and liberalisation should not be utilized by either the IMF or the World Bank. 

Climate and energy

7. The majority of the commission recommend that Norway should work to establish a climate agreement covering all countries, which limits global warming to a maximum of 2oC, and helps balance disparities in welfare and income. This entails poor countries also being given room to increase their emissions and rich countries having to finance emission reductions in developing countries. Emission obligations and the financing of climate initiatives must be based on countries’ historical responsibility and financial capacity, and safeguard the right to development for poor countries. Norway should aim to establish agreements and solutions that ensure financing and the implementation of emission reductions, technology development, technology transfers and adaptations in developing countries.

8. The majority of the commission suggest that, until a climate agreement is in place that sets a limit for emissions in all countries, Norway allocates 1.5-3% of its annual GNP, which corresponds to around NOK 30-60 billion a year, to measures aimed at reducing the greenhouse gas emissions both in Norway and internationally. Simultaneous to this, Norway needs to undertake efforts to ensure that the 10-20 other richest countries allocate an equal share of their GNP to climate-related measures. The commission believes that Norway needs to be a low-emission society by 2050, with emissions that are at least 90 per cent lower than the current level. This will mean emissions per capita on a par with what the global average must be based on if we are to achieve the goal of limiting global warming to 2oC.

Knowledge policy

9. The commission recommends that Norway prioritises global knowledge needs and the developing countries’ need for knowledge by escalating the public research effort. A minimum of 10 per cent of the research effort should be aimed at this. Global knowledge needs and the developing countries’ need for knowledge should be included in all of the ministries’ sector responsibilities for research, and in the mandate for public research institutions such as universities and university colleges. It is also recommended that the Norwegian authorities impose a provision for public research institutions and recipients of public research funds to make research results publicly available. Norway should undertake international efforts to prevent developing countries being pressurised into introducing a more stringent legal system for intellectual property rights.

Migration

10. The majority of the commission recommend that the immigration of unskilled workers from outside the EEA is permitted, and that Norway to a greater extent attempts to fulfil developing countries’ proposals for the liberalisation of movement of labour in the GATS negotiations. Norway should also initiate the commissioning of a report on how labour migrants can be treated more equally, regardless of country of origin. The commission believes it is important that, pending international guidelines, Norway draws up national guidelines for the responsible recruitment of skilled labour, where measures such as restricting the recruitment of qualified personnel, educating unqualified personnel in Norway and developing compensation schemes are emphasised.

Peace, security and defence policy

11. The majority of the commission recommends that Norway prioritises military aid to UN-led operations, but that it should also provide forces for NATO and EU-led operations where these have the required legality from the UN Security Council. It is also recommended that the government undertakes a review of the current organisation and routines linked to the preparation, initiation, implementation and evaluation of international operations in order to consider improvements with a view to achieve more coherent policies and multi-disciplinarity in all levels of the decision-making process. A national council should be established for handling the entire scope of Norway's involvement within international crisis management, conflict negotiations and peace work.

12. The commission recommends that Norway introduces tracking mechanisms for weapons and ammunitions. Weapons and ammunition that are manufactured in Norway must be marked with the manufacturer, first buyer and production party, and Norway must aim to establish a similar international tagging practice. The majority of the commission also recommend that Norway introduces an end user declaration for weapon exports, also for sales to NATO countries, and sets conditions for any onward sales. A recommendation was further given for Norway to use its ownership interests in the Norwegian arms industry to ensure that the sale of weapons and ammunition is carried out in accordance with rules of a standard equal to those in Norway, including with regard to sales from the group's factories in other countries.

Administrative recommendations

13. The commission recommends that the government considers institutional reforms that can strengthen the political and administrative capacity to develop a more coherent policy for development. The commission recommends that the government strengthens the civil service’s capacity for a collective preparation of political decisions across the traditional boundaries such as the specialist ministries. As in Sweden and the Netherlands, Norway should establish a unit in the Ministry of Foreign Affairs with a remit to monitor relevant policy areas and coordinate this work. A board or liaison committee should be appointed that includes representatives from industry, the trade union movement and the civil society. Various research environments should be commissioned to ensure regular and independent evaluations are carried out to gauge the coherence of Norwegian policies with respect to development .

14. The commission recommends that Norway follows the example of the UK and other European countries, and introduces regular reporting to the Storting (parliament) of the overall effects and results of Norwegian policies in relation to development goals. This reporting should take place at least once during each parliamentary session. The commission also recommends that the government facilitates increased capacity in this field through a more systematic evaluation and analysis of the collective Norwegian presence in developing countries. A regular and independent evaluation of the coherence in policies with respect to development goals should be ensured.