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Policy memorandum Ministry of Foreign Trade & Development Cooperation ‘Doing what the Netherlands is good at’ sounds more like ‘Doing what is good for the Netherlands’ 

By 25 July 2022August 8th, 2022No Comments

On Friday the 24th of June, Minister Schreinemacher shared the new policy memorandum ‘Doing what the Netherlands is good at‘ with the Dutch House of Representatives. In this document, the Dutch government presents the new strategy for Foreign Trade & Development Cooperation. It is clear that trade promotion occupies a prominent position in the policy memorandum and that development cooperation gets a dishonourable second place. The policy memorandum thus ignores the worrying trend in which there is less and less room for civil society in the so-called combined and trading countries. It begs the question of whether you can continue to bet heavily on trade growth while the space for civil society continues to shrink? Arisa thinks not. The proposals in the policy memorandum are indeed limited to ‘doing what the Netherlands is good at’, namely: doing what is good for the Netherlands. 

Shrinking civic space is a blind spot in the policy memorandum

There are major challenges in the area of human rights coupled with trade. These are missing or are only discussed minimally in the policy memorandum, just like the limited space for civil society. It seems as if promoting trade only produces winners, while in developing countries, there can be many losers. This policy memorandum suggests that an engaged civil society and respect for human rights can be a consequence of the promotion of trade, when in our opinion, these must be preconditions for trade. 

This is the reality when earning power comes first

Civil society is being silenced worldwide through repressive governments, restrictive legislation, and exclusionary practices. Some laws, such as the Foreign Contribution Regulation Act (FCRA) in India, are specifically aimed at curtailing the freedom of civil society. Human rights defenders are under attack in many countries. The memorandum does not pay attention to this growing problem worldwide. How does the Dutch government include this in its new aid and trade agenda? 

 

Complexity of risk management is bypassed by a voluntary one-stop shop

The International ICSR standards are repeatedly mentioned in the memorandum, but not as the rules that must be explicitly respected. On the other hand, the cabinet does want to ”encourage companies to tackle risks to people and the environment in their value chains, and help them through the one-stop shop”. In doing so, the government ignores the complexity of thoughtfully and earnestly tackling risks and abuses such as corruption, forced labour, caste discrimination, and informal and unorganized sectors. The so-called voluntary one-stop shop is more like a one-way shop, in which the cabinet sees trade as something that is good for everyone. But it isn’t by definition. 

It turns out that in international trade chains, it is still mainly about producing where costs are lowest: both in case of tax and labour costs. Minimum wages are not paid, let alone living wages. This is the reality when earning power comes first: violations of social values and human rights have been part of trade from the start. This must be prevented. A chain approach to address risks in the supply chains of Dutch companies is often too limited. Such a chain approach must be accompanied by accompanying measures and policy. The government should make respect for human rights a touchstone of policy rather than a possible consequence. 

Civil society is being silenced worldwide through repressive governments, restrictive legislation, and exclusionary practices

Other factors also play a role in a problem like child labour, which occurs mainly at the beginning of the supply chain. A broader approach is necessary. Therefore, the government should also focus its tackling of abuses on an ‘enabling environment’ and should help develop a strong civil society and the accessibility and quality of education. Otherwise, a supply chain will only be swept clean, after which the children will end up in other supply chains or the informal sector. In this scenario, a win-win situation in which trade is good for everyone does not exist. Instead, it is only good for the Netherlands. 

Invest in sectoral collaboration, transparency, and an active role of the government

In the memorandum, Arisa misses the relationship between a strong civil society, the business community, and ICSR. Stakeholder engagement is essential in the obligation to conduct due diligence on companies. However, this does require the possibility and ability of stakeholders (trade unions, civil society organisations) to participate in such processes and institutional financing instead of short-term project financing. 

The government’s realistic optimism is insufficiently ambitious for problems on this scale 

With regards to the improvement of international trade chains, the Dutch government is hiding behind a European bill. As it stands, that proposal does not meet the OECD guidelines. Relying on EU policy is therefore insufficient. For the first time, the Netherlands is not on track to achieving the Sustainable Development Goals (SDGs). There are SDGs in which hardly any progress has been made and that are in danger of not being achieved, including the negative footprint of the Netherlands abroad and global crises such as climate change. From that perspective, Arisa finds the realistic optimism with which the government wants to tackle global challenges, such as the climate crisis and the economic rise of authoritarian states, below par. 

Dialogue between companies, trade unions, and civil society organizations is an essential part of the due diligence that is expected of companies

The biggest contribution companies can make to the SDGs is to comply with the guidelines of the OECD and the United Nations, and to ensure that their partners in the supply chain comply with the legislation in their own country. In its support, the government must always promote compliance with ICSR standards based on the OECD guidelines and the UN Guiding Principles. Complying with the ICSR guidelines must therefore be an integral part of any public-private partnership (PPP). This means that the government, as a partner in the PPP, actively promotes and supervises compliance with standards for ICSR and that, in addition to the aforementioned “knowledge institutions and citizens”, PPPs are also open to other stakeholders, such as NGOs, trade unions (also from the production countries). After all, dialogue between companies, trade unions, and civil society organizations is an essential part of the due diligence that is expected of companies. This is not mentioned in the memorandum. 

In summary, we can state that the Dutch government bets that the increase in international trade, with a bit of luck – or call it realistic optimism – also contributes to development cooperation and to increasing and strengthening civil society. But if the Netherlands only does what the Netherlands is good at in the field of foreign trade and development cooperation, and thus does what is good for the Netherlands, it should be ashamed of itself.