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countries--certainly in South America--there is no restriction whatever on the way in which intensive farming can be conducted, on the sizes of cages for battery farmed chickens or on any other sort of intensive animal rearing? Clearly, the evils of the way in which animals are treated would tend to become the norm rather than the exception that they are at present.
Mr. Morley : I am aware of that, and my hon. Friend makes a good point. I want standards to be raised in this country and in the European Union in terms of world trade. The danger of GATT is that it will lower standards to the lowest common denominator driven by market pressures. I do not believe that that issue has been properly addressed within GATT.
While there is a place for the free market and for trade, we cannot have unfettered trade which does not take into account the exploitation of the weak by the strong, proper environmental standards, and the exploitation of the world's resources--whether animals or people. Those issues are not dealt with.
I have mentioned genetics, which is a huge growth area in terms of genetically modified animals and foods. This country has procedures in place to look at the ethics and standards of that. Will they be undermined through GATT ? Those areas of science and technology are moving so fast that proper and effective regulation must be put into place.
Another issue is that of countries that produce food in damaging and unsustainable ways. The question of the yellow fin tuna was touched on by my hon. Friend the Member for Nottingham, South (Mr. Simpson). The method of fishing to which he referred not only destroyed large numbers of marine mammals but did so in a cynical
Column 584way. The fishermen were looking for schools of dolphins to indicate where the tuna were. They then shot their nets around the dolphins, destroying them along with the tuna.
Methods of drift netting in the Pacific have caused havoc to endangered turtles, various fish species and marine mammals. Quite rightly, the Americans put a boycott on yellow fin tuna. Those issues are of international importance, and each country ought to have the right to take action by boycotting products if they are being produced in damaging ways.
Another method--which, I am glad to say, is currently banned in some areas- -is re-fishing where dynamite has been used, thereby destroying fragile ecosystems on Pacific reefs. Those issues need to be brought under control and action must be taken on that.
Recently, there was a meeting of the International Whaling Convention, and there is still tension, as hon. Members will know, about certain countries that insist on killing whales, sometimes in defiance of IWC international regulations. There must be action taken--if appropriate--against those countries, and I hope that GATT will not restrict that.
There is also the issue of tropical hardwoods which, in certain parts of the world, are being felled in totally unsustainable ways, causing enormous ecological damage. We ought to have systems within the European Union of identifying companies whose tropical hardwoods come from sustainable areas and involve local ethnic people, so that those companies can be encouraged and rewarded. Countries and companies that defy international law and destroy tropical forests should be boycotted and controlled. GATT undermines that particular situation.
I hope that the Minister will consider four points. First, GATT ought to allow individual countries to prohibit the use of animal husbandry systems or veterinary drugs if that country thinks that they are damaging, inappropriate or against the interests of consumers.
Secondly, each country ought to have the right to prohibit the imports of products that are derived from animals reared in systems that are regarded as unacceptable in terms of welfare, standards and cruelty, or products that have been treated with drugs that have been banned in the European Union.
Thirdly, products that have been produced in damaging or non-sustainable ways should also be subject to boycotts or restrictions within GATT.
Fourthly, I endorse--although time does not allow me to touch on this--all the points made about the exploitation of people around the world. GATT does not take into account the use of child labour and slave labour in certain parts of the world and products derived from that.
GATT should also take into account social issues, the right of people to join trade unions to protect their interests and basic human rights. GATT should not be used as an excuse to level down, to condone and encourage exploitation, and to undermine those countries that are striving for high standards--whether animal production, agriculture, food quality or health and safety of people at work. If we are to get the benefit of GATT--there are potential benefits--those issues must be addressed by the Government, who are responsible for negotiating on behalf of our people.
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Mr. Jim Lester (Broxtowe) : I apologise to the House for not being here for the whole debate, although I indicated that I had previous commitments. I did come in for the opening speeches, and I am delighted to have the opportunity to participate.
It is fair to make criticisms of GATT, but it is also fair to assume that, if we had not had it, we should have had an infinitely worse situation. As one of those who pressed continuously for GATT and who supported the Government in all that they did in terms of reaching agreement, I feel that it is a worthwhile state of affairs for organising world trade well into the next millennium. It is the first agreement of which I am conscious which sets down rules which will take us into the next millennium. I do not say that for the selfish reason that it should be helpful to Britain and our manufacturing industry. I genuinely believe that GATT will be of overall benefit to the world community. I should like to support all that has been said about the activities of the Prime Minister and other Ministers, but especially those of Sir Leon Brittan in terms of his mammoth negotiations with the United States. I hope that the talent and expertise that he brought to bear in the trade negotiations will be recognised within the European Union. When the curricula vitae of the various people likely to become President of the Commission come to be considered, I hope that the unswerving and devoted work that Sir Leon Brittan has done-- particularly in taking the European Union through those difficult negotiations--will be recognised.
I have always felt that we needed a world trade agreement which took us forward, because I have never felt that Britain's interests, or those of the developing word, were compartmentalised. We could not see our future in terms of employment and development simply by trading ever more sophisticated products to one another. There had to be a system whereby the transfer of resources and the ability of the developing world to improve its position was of direct benefit to the western world, and particularly to Britain.
One has only to look at the way in which Asia has developed in recent times, and at the problems that we have had with Malaysia. When we draw up a balance sheet of what is happening in Malaysia in terms of our exports there, we see that that country's development and the way in which it has become one of the major economies in south-east Asia is very much based on the sort of transfer of technology and assistance that this country has been able to carry out with Commonwealth countries. We see the same in Vietnam and China ; during the past three years our trade with China has increased dramatically as that country's own economy has developed. It was important to get an international agreement which fostered and encouraged that development rather than stifled it.
I was particularly pleased about the agreements on intellectual property. That is a new concept, and the ideas that people have are not made of steel any more. They are not obvious, but they can have dramatic effects ; one computer programme can be of immense importance and tremendous value in terms of organisation. I was horrified to hear the figure that my right hon. Friend the Minister for Industry gave in his opening speech about losses by the phonographic industry world wide as a result of piracy. We are all familiar with music--perhaps not the sort of music that one plays every day--which is available throughout
Column 586the developing world at a nominal cost where new tapes have been pirated in a short time. A famous author told me that his book had scarcely hit the stands in Britain before it was copied and on sale in Singapore. Such copying would not give the author any royalties. We must therefore be vigilant about the concept of intellectual property, which also has a particular role in terms of
pharmaceuticals--in which Boots, a constituency company of mine, has a particular interest.
I am delighted to pay tribute to the President of the Board of Trade and his Ministers for gearing themselves up, well ahead of the White Paper, to promote British interests and exports. I suspect that, nowadays, no Minister from any Department ever goes abroad on a mission without a group of business men and other people who can be introduced so that the long- term interests of Britain are promoted. The significance of such visits has been apparent in many countries. I was recently on a visit to Taiwan with the Select Committee on Foreign Affairs which happened to coincide with a visit from the Minister of State. It was a joyful occasion, because we were able to capitalise on the good will that had been generated. The Minister's role was important because he brought key players with him from Britain to that growing, powerful economy. That visit was important for future trade.
I have a long-held interest in the developing world and I am chairman of the all-party group on overseas development. It is worth noting the significant effect of the Uruguay round on developing countries, because they participated in force in multilateral trade negotiations for the first time. In the Uruguay round they had clear objectives for their agricultural, textile and clothing exports, and for products which had always anomalously remained excluded from previous GATT settlements. It is clear that some wanted to protect their positions in terms of services, intellectual property and laws affecting foreign investment. The impetus to liberalise their own trade, however, whether undertaken under duress or not, had also increased their interest in strengthening a rules-based international trading system. That represents a sea change. For instance, a decade ago Mexico was not even a member of GATT, but now it is a member of the Organisation for Economic Co-operation and Development. India is no longer introverted and aims to trade competitively. The trust that such nations have put in free trade must not be disappointed or controverted.
In the traditional GATT subjects, especially tariffs on manufactures and in traditional primary commodity exports, there is little left for any country to gain because barriers have come down so far already. The Uruguay round does not, unfortunately, reduce tariff escalation very much. Changes will come mainly from adjustments in relative preferences, but average effects will be small.
The Overseas Development Institute calculates that a
once-and-for-all gain to developing countries resulting from full implementation of the Uruguay round settlement would be worth about $100 billion in extra exports, and more if account is taken of the dynamic effects of trade and specialisation on income growth. Not all developing countries will necessarily be net beneficiaries. It is extremely important that one should not generalise. Some African countries, particularly those which import food, will be marginally badly affected. I am glad to note that the Minister has already announced measures to take that into account.
Mr. Enright : I am rather disturbed at use of the word "marginally" as it is clear that the sub-Saharan African countries will suffer greatly under the GATT agreement. The ODI has already said that. Will the hon. Gentleman comment specifically on the worries about the Lome agreement and the actions currently being taken against that agreement as a result of parts of the GATT agreement ? Those actions are a source of great concern to the majority of Africa.
Mr. Lester : I shall comment on that as I develop my speech. I used the word "marginally" advisedly because the ODI's assessment is that the agreement is nothing like so significant as Christian Aid and others have suggested. For instance, Bangladesh is one of the poorest countries, but it is one of the main beneficiaries of the GATT round as its trade will increase overall by 14 per cent. China, which is not even a member of GATT yet, stands to benefit immensely from trade liberalisation. I cite those examples because they directly affect Britain, especially in terms of our trade with China as it becomes more sophisticated and therefore needs more of our products. More generally, studies conducted by the World bank and the OECD expect world income to expand by 1 per cent. annually--between $200 billion and $300 billion--as a result of full implementation of the Uruguay round. They calculate that developing countries' share of that income, as well as exports, will be about a third. That is a significant share.
In answer to the hon. Member for Hemsworth (Mr. Enright), strong enforcement and dispute settlement powers are needed. The World Trade Organisation should be established as a viable successor to tie the always temporary GATT. The concern expressed by the hon. Member is borne out in a different way, because developing countries are queuing up to be founder members of WTO. That hardly suggests that they have anything to fear. They know where advantages are to be seized under the new trade regime and most of them realise that in the future there will be relatively little mileage left in the culture of preference selling, however honourable its post- colonial origins once were.
In connection with the mid-term review of the Lome convention which is just starting, the ODI has separately calculated for the African, Caribbean and Pacific secretariat what the losers in trade liberalisation will miss and what they should do about it. The ODI recognises that the Uruguay round settlement will lead to a loss overall to the preference-dependent ACP states of just 144 million ecu--a mere 0.7 per cent. of their exports to the European Union market and a much smaller fraction of their total exports. Many of those countries, such as Zimbabwe, will register gains. Food import-dependent states such as Ethiopia and Senegal will lose out more heavily and will have to change their policy. Within GATT we are already taking those losses into account and making provision to help deal with the temporary circumstances.
Mr. Enright : Senegal has already changed its economic policies three times at the behest of international organisations ranging from the World bank and the International Monetary Fund to the European Union. Now it is being asked to change its policy yet again. That is insupportable.
Column 588which are now signatories to GATT. We must make special provision and the Minister of State has already spelt it out. Many of us will be conscious of the difficulties, but overall the Uruguay round represents a major benefit to developing countries. The settlement brings new export opportunities even for Senegal and Ethiopia, not least in the booming Asian market.
I welcome the debate and I support the GATT round. I recognise that, overall, the settlement will benefit rather than disadvantage developing countries. Where we need to make special provision for a handful of ACP countries, we should do just that, but we should also encourage the quickest possible implementation and operation of the GATT agreement.
Mr. George Howarth (Knowsley, North) : This has been a useful, timely debate, because it is right that the House should consider the implications of the Uruguay round. It is important that we spend some time considering not only the advantages of that agreement but hon. Members' fears and predictions about some difficulties that may arise.
Most speeches came from Opposition Members and it is important to acknowledge some of the arguments which have been properly and ably made. I had to miss part of the speech by the hon. Member for Gordon (Mr. Bruce), but I agreed with much of what I heard. We would not disagree with much of what he said about the implementation of trade. It is important to acknowledge that some common ground exists. The speech by the hon. Member for Broxtowe (Mr. Lester) showed the understanding that he has gained from holding positions on all-party groups. It was important for that voice to be added to the debate, from whichever side of the Chamber it came.
My hon. Friend the Member for Hemsworth (Mr. Enright) was customarily eloquent and also knowledgeable on the subject. I do not wish to undermine what he said, but I could not compete with his knowledge of the banana industry in the Caribbean. Suffice it to say that I hope that the House will take his point because the issue is clearly important.
Similarly, my hon. Friend the Member for Alyn and Deeside (Mr. Jones) stoutly defended the aerospace and steel industries. Although I am not exactly a neighbour, my constituency is not far from his so I am fully aware of his constituents' concern about those industries. Some of my constituents work in his constituency, so they keep me informed about the position. My hon. Friend made some legitimate points.
My hon. Friend the Member for Rotherham (Mr. MacShane), in only his second speech in the House, demonstrated his command and knowledge of the detail of the steel industry, which is important in his constituency, and of the social dimensions arising out of world trade and particularly GATT. His speech leads me to believe that we shall hear much more of him on that and related subjects.
The thoughtful speech by my hon. Friend the Member for Nottingham, South (Mr. Simpson) ranged over several global economic, social and environmental issues. Much research had clearly gone into it. My hon. Friend the Member for Islington, North (Mr. Corbyn) took us on a Cook's tour of the world's problems with GATT. Without endorsing every word that he said,
Column 589may I say that it was clear that he had travelled to some of those spots and that his feelings on the subject were heartfelt. We all share some of his concerns on behalf of the poorer regions. My hon. Friend the Member for Glanford and Scunthorpe (Mr. Morley) showed his knowledge and understanding of, and his sympathy for, agricultural communities, wildlife and animal husbandry. It was timely to bring such expertise to the debate and he did so with passion.
I shall not comment in detail on the speech of the hon. Member for Sutton and Cheam (Lady Olga Maitland) because I was not sure that I entirely followed it. Indeed, I was not sure whether the hon. Lady followed her own speech. It was sometimes better informed when she was assisted by the hon. Member for Esher (Mr. Taylor), who helped her at least once. It is usually best to draw a veil over the specific content of her speeches.
We are genuinely concerned that environmental considerations should be built into, indeed entrenched in, GATT. GATT's potential economic advantage --I stress the word "potential"--for freer world trade cannot be bought at the cost of further destruction of our global environment. Some weeks ago, I thought that that point was uncontroversial and that most sensible people would agree that the economic thrust of GATT and its effect on the world environment were connected. However, on re-reading the Prime Minister's statement to the House on 16 December, I began to wonder whether that matter was controversial. Following that statement, my late right hon. and learned Friend, John Smith, asked the Prime Minister :
"On the environment, will the new Multilateral Trade Organisation be given a remit to recognise the importance in the modern world of linking economic development with environmental protection ?"
"There is no question that development will be at the expense of the environment and I do not believe that anyone seriously imagines that that will be a problem."--[ Official Report , 16 December 1993 ; Vol. 234, c. 1271-72.]
Some months later, on 4 June, the Prime Minister was quoted in The Guardian . If Conservative Members are not keen on The Guardian , they can refer to any of the other newspapers that reported it at the time. An article by Paul Brown, the environment correspondent, said :
"John Major, opening the World Environment Day award ceremony yesterday, praised free trade as the answer to the world's environment problems and was immediately accused of dangerous wishful thinking' by one of the winners.
Mr. Major said the opening of markets around the world in the Gatt Uruguay round was the environmental landmark of 1993. Increasing global prosperity was an essential precondition to sustainable development. Trade will be the most powerful means of raising living standards in developing countries and thus open the way for further progress on environmental protection.'
Many of the award winners at the ceremony to honour the United Nations Global 500 Laureates were dismayed by Mr. Major's remarks. Paul Ekins, the only economist among the 39 Laureates honoured yesterday, said the Prime Minister's views had no foundation in fact."
Column 590So there is some controversy and the Prime Minister seems to change his views on the subject, depending on the audience that he happens to be addressing.
Mr. Jacques Arnold : Will the hon. Gentleman tell us about the relevance of the provisions of the Earth summit agreements signed in Rio de Janiero, which were also negotiated by the Prime Minister ? Mr. Lester rose
I intend to come to the subject of the Earth summit agreements in a moment. [Interruption.] The hon. Member for Gravesham had the opportunity to make his speech ; he made it in his own way and I shall make my speech in my own way. I intend to refer to Rio later and then I shall make some observations on the very argument that he makes. I give way to the hon. Member for Broxtowe.
Mr. Lester : Surely the hon. Gentleman recognises that poverty in many of the poorest countries in Africa is the main reason why their environment is destroyed. One cannot go to a poor country without seeing the total destruction of its environment. The Prime Minister was right to say that raising standards in those countries, so that the people can begin to earn enough to have a stove, to use electricity, instead of cutting down all the trees for miles around their encampment, is of direct benefit to the environment.
Mr. Howarth : I agree with the hon. Gentleman. The key thing, which I intend to discuss in a few moments, is not that we do not want economic development. It is vital and the hon. Gentleman is right to emphasise that- -as indeed, in one of his statements which contradicted an earlier one, was the Prime Minister. The key argument that we wish to make is that economic development cannot take place--I am sure that the hon. Gentleman would agree--at the expense of the environment. [Interruption.] If the hon. Member for Gravesham shows a little patience, which is not customary for him, perhaps he will learn something. As my speech develops, I shall answer some of the arguments that he is trying to make from a sedentary position. It is important that we consider the environment in terms of GATT because there are three vital possible ways in which we need to look afresh at the way in which we consider the issues. The first is the process of harmonising standards under the auspices of the International Standards Organisation. If the process is allowed--several of my hon. Friends referred to that--it could lead to downward pressures rather than increased environmental protection. It could also lead to technology transfer being restricted rather than developed further as we had hoped, and the consequences would be catastrophic to the environment in the developing world. I am sure that the hon. Member for Somerton and Frome (Mr. Robinson) would agree with that.
Mr. Mark Robinson indicated assent .
Mr. Howarth : It is important to provide reassurance--so far absent on the part of the Government--that the GATT treaty cannot and will not be used to challenge international agreements such as the Montreal protocol and
Column 591the Rio conventions. Whatever their failings, none of those agreements-- [Interruption.] The hon. Member for Gravesham is saying, "What rubbish", I think.
Although they are not comprehensive, perfect agreements, they have been welcomed by Opposition Members, for important reasons. However--this is why it is not a red herring--under the GATT arrangements there have already been challenges to the Austrian timber ban on the import of tropical timber and challenges in the tuna--dolphin case, to which several of my hon. Friends referred, as the hon. Member for Gravesham would know if he had bothered to stay in the Chamber for more of the debate. There is already evidence that important environmental considerations are being challenged, and that they are being challenged on the basis of GATT. It is important that those conventions are upheld. I should have been far happier if there had been an article in the agreement listing those important treaties that should be exempt from challenges under the GATT rules. That is a minimum condition that we would need in order to be satisfied that it is environmentally friendly and will not be damaging to the environment.
Similarly, the treaty sets out the inviolable rights of states to independent action--for example, to protect health. Why could not there have been a similar statement, making it clear that nation states still had the right to protect their environment from processes as well as products ? Products are to some extent covered, but often the processes that lead up to the production of those products are not. It would have been more reassuring had there been a statement to that effect.
Although we equally welcome the establishment of the proposed World Trade Organisation, we feel strongly that it needs to be a proper and democratic organisation. The obvious way of ensuring that would be to construct proper lines of accountability that lead to the United Nations. If one is to have an agreement on a global scale, the United Nations is the most appropriate organisation to deal with it. We also believe that the organisation needs to be transparent in its decision making by meeting in public so that people know what it is talking about ; by voting in public so that people know who has voted in what way ; and by receiving and taking evidence in public so that the arguments as well as the decisions made and the votes cast can be assessed.
We feel that, for the process that is envisaged to be valid and useful, there needs to be some commitment that it will have an element of permanence, that it will not run out of steam in 12 months' time without any momentum. There is so much to do that it is important to have some permanence and stability about the way in which decisions are taken. There needs to be a proper appeals procedure, constituted in a fair and accessible way, so that those who fall foul of the system know that there is an opportunity to appeal.
It is also important that the GATT working party on trade and the environment is prevailed upon to report within a year and that the contracting parties agree to follow with an action plan, we hope within two years, so that the momentum built up on the environment can be followed through.
Column 592The most important principal issue, to which several of my hon. Friends referred, is that we seek globally sustainable trade within a fair trading system, rather than the uncontrolled system that several Conservative Members seem to believe is the only way forward. As my hon. Friends have strongly argued, it is now generally understood that economic and social development are indivisible and that acute poverty in the developing world creates a climate that forces individuals and some Governments to collude in environmentally damaging processes and practices.
Similarly, there is an overwhelming case for taking measures and delivering strategies globally to help to close the north-south gap. Several of my hon. Friends referred to that at length. We need to lift the burden of debt and spread the fruits of global economic activity. To put it bluntly, environmental protection cannot be postponed until the third world has grown rich, but nor can it be achieved by keeping it poor.
The key issues on sustainable economic development and the environment remain unresolved. Tonight we are, in effect, asked to trust a Government who, by their words and record, believe in untrammelled free trade but not in fair trade--a Government continually forced to fall back on short-term measures when the world is palpably ready for a global strategy for sustainability. We are asked to trust the Government but, like the rest of Britain last Thursday, our answer must be that we cannot. Although the jury may still be out on GATT, it has already delivered its verdict on the Government's stewardship of trade, industrial development and environmental protection, and they have been found guilty. The sooner the sentence is passed, the better.
The Parliamentary Under-Secretary of State for Corporate Affairs (Mr. Neil Hamilton) : I am pleased by the broad welcome from both sides of the House for the GATT agreement, however much some of it was hedged around by caveats. Many hon. Members, especially on the Conservative Benches, spoke eloquently about the advantages of free trade and welcomed the achievements that the whole world can claim for the GATT agreements.
However, there were exceptions. I was intrigued by the speeches of the hon. Members for Nottingham, South (Mr. Simpson) and for Islington, North (Mr. Corbyn). From the nature of their speeches, I gather that they will not be part of the campaign team of the hon. Member for Sedgefield (Mr. Blair). In fact, there was a certain period aroma about them--circa 1848. The sentiments that they expressed are not often heard today in other parts of the world. The hon. Member for Nottingham, South declared himself in favour of planned trade. Not many countries today claim to plan their trade. Indeed, apart from Cuba, which is moving away from planned trade, I can think only of North Korea.
I am not sure how both hon. Members find a place in a modernised Labour party. Perhaps we will learn more about that in due course. The essence of their case is that trade impoverishes, whereas the lesson of the last couple of thousand years is that trade enriches. Development is everything at which we should aim in third-world countries, rather than seek to reverse it. What sort of position would Germany be in today if the Tollverein had not been created in the middle of the last century and that country was still a motley collection of city states and tiny
Column 593principalities ? Would it be the economic power house that it is today ? The answer is self-evidently no, yet that is exactly the kind of trading system advocated by the two hon. Gentlemen.
That view has gained support in some parts of the European Union, as demonstrated by the results of last week's elections. I never thought that those hon. Gentlemen would be soul mates of my good friend Sir James Goldsmith, but it appears that there is a bond of contact between them that would perhaps surprise Sir James. I understand from my reading of newspaper reports of Sir James's campaign that his view is that the west must be protected against cheap labour economies because of the social upheaval that might be caused in the west as a result of the changed trading patterns that would occur in a relatively short period. I understand that there is an argument on a transitional basis, but the GATT agreements will be phased in over a period, and we seek to take account of that. Overall, enabling trade will increase opportunities for wealth creation all around the world, including in the European Union. That is something that the Government unambiguously welcome.
Now that agreement has been reached, we should not be complacent. There is much work still to do. As my right hon. Friend the Minister for Industry said earlier, if the United Kingdom does not seize the opportunities offered by the new agreement, others certainly will. British industry must act fast. If it does not, it will lose out--which is why the Department is particularly concerned to assist British industry to win in world markets. That is the essence of everything that we do. It was the essence of our competitiveness White Paper published just before the Whitsun recess.
The impact that government has on business and on the opportunities to create wealth and jobs should be at the forefront of all our minds. That is not to say that we must make a god of money, but in taking decisions in almost every policy area we should be fully aware of the economic impact, in so far as it is compatible with other policy objectives. We should ensure that it assists our trade rather than restricts or diminishes it.
In that respect, export promotion--which featured in a number of speeches from hon. Members on both sides of the House and particularly in the speech of the hon. Member for Gordon (Mr. Bruce)--is of great importance. The Department has transformed export promotion. This country's 80 top markets are analysed by private sector individuals brought into the Department, who have written market plans and involved industries in the leading economic and trading sectors. As a consequence, the Department is much better informed than before. I hope that, over time, industry will become better informed about the services that the Government can offer and the means by which they can be delivered. That is also important. The Export Credits Guarantee Department is an important element. The hon. Member for Gordon acknowledged that its functions have been extended and the terms on which guarantees are granted have been liberalised. The hon. Gentleman mentioned that a lower premium rate is offered by the Italians for a specific project, and he criticised the higher rates charged by ECGD. In fact, it seeks to match its premium rates to the
Column 594risks attached to a given market. That means that, although rates may be higher in certain markets, they may be lower in many others. The premium is not the only consideration in determining the quality of cover provided. Benefits to exporters include the value of cover. One important difference between the ECGD system and others, particularly in the European Union, is that the department's cover is provided at 100 per cent. of the loan value and is unconditional. In other countries, such as Germany and France, cover is only at 90 per cent. of value and is conditional. There are significant differences between schemes and no doubt one could argue about them, but it is not a sustainable proposition that the ECGD's scheme is any worse than others--although companies that have been unable to obtain cover for a particular project may complain that it is. But let nobody be in any doubt that we support the expansion of world trade and that we want a bigger share of it for Britain. I hope that that is something that will unite the House. There should be unanimity on that point. The debate ranged widely today and I shall try to take up some of the points that were made. They are, however, so numerous that I doubt whether I shall be able to consider all of them in my speech. I shall try to consider some of the main issues.
The hon. Member for Middlesbrough (Mr. Bell) raised the question of trade in services and the expansion of the GATT into GATS. The extension of multilateral rules to trade in services is one of the main achievements, in my view, of the Uruguay round. The agreement lays down a series of general disciplines to which more than 100 signatories will be obliged to adhere. The creation of the GATS framework of principles and rules, including provisions requiring measures affecting trade in services to be fully transparent, will be of benefit in providing predictability and consistency, which UK services suppliers regard as vital. That, of course, is just a first step towards a progressive liberalisation of services sectors, and there are some instances of discriminatory measures being removed or relaxed.
Many countries, in many sectors, have taken on stand-still obligations so that they do not introduce more onerous conditions in the future. That is to be welcomed. I am particularly keen that we should reach an acceptable agreement on financial services, which is a particularly important sector for the United Kingdom. There will be clear benefits from having it covered by multilateral rules. The great majority of countries that participated in the round were prepared to make liberalisation commitments in financial services, but, alas, further work is needed to complete the package. I hope that it will be completed swiftly. In some cases--Canada is a particularly good example--countries undertook to remove or relax existing measures that discriminate against foreign firms, but in most cases countries' liberalisation commitments are based on the stand-still provisions, which I mentioned a moment ago. But, even so, such limited commitments are valuable as they guarantee that current levels of market access for foreign firms will be maintained. When the negotiations concluded, there was a real danger that financial services would effectively be excluded from the GATS package. In particular, the United States was not satisfied with the level of commitments that were being given by some trading partners, particularly far eastern countries, and was not prepared to extend US
Column 595concessions to those countries. It was decided, therefore, to continue negotiations in financial services to provide the opportunity for improved commitments to be made.
Six months after the World Trade Organisation comes into being, all participants will decide finally on the level of their commitments and whether they wish to derogate from the most-favoured-nation principle in any respect, for example, by keeping the ability to make access to their financial services markets conditional on reciprocal access for their companies in other markets. Our Government will work for a satisfactory outcome based on full most-favoured-nation principles, and an outcome in that highly important sector based on bilateral market opening through the use of reciprocity measures could, in my opinion, be very damaging. The prosperity of the City of London depends on its openness and the Government will fight hard to ensure that it is maintained.
Another feature of the debate has been the emphasis that Opposition Members have placed on the so-called "social clause"--trade, labour and social standards. That is an important question and I am happy to deal with it. The Government are committed to international action in support of human rights, and to stop the exploitation of children, but trade sanctions or restrictions are unlikely to work, and may in fact do much harm to the trading system. So we oppose moves by some, including France and the United States, to introduce trade rules and labour standards, or a social clause to the World Trade Organisation. Instead, we are promoting proper analytical work in the Organisation for Economic Co-operation and Development to sort out the issues and to see where there are problems that need to be addressed. The UK approach enjoys a good deal of support in the European Community and, indeed, the rest of the world.
Mr. Bell : I am grateful to the Minister for discussing the issue and for putting it on record that the British Government have agreed-- through the OECD--to participate in the analysis of social rights and obligations in relation to trade.
Mr. Corbyn : What does the Minister propose to do when the analysis is complete and it has been demonstrated that child slave labour is being used and disgracefully low hourly rates are being paid in the economic zones of such countries as China ?
Mr. Hamilton : I am surprised that the hon. Gentleman should make such an obviously fatuous point. The idea that China's internal domestic policies will be influenced in any way by the trading obligations that others seek to impose on it is utterly preposterous : all the evidence of recent years shows that that is not so. What we know from the history of the world is that dictatorial, totalitarian regimes tend to occur in poor countries. The best way in which to avoid dictatorships and repressive regimes is to enrich the peoples of those countries, rather than impoverishing them. We seek to expand the opportunities for world trade, to bring the countries into world markets rather than excluding them and hence --not only by example and precept, but by the change that results from economic enrichment--to alter
Column 596the political systems that the hon. Member for Islington, North has spent so much of his life supporting and promoting.
Trade restrictions aimed at enforcing labour standards would almost certainly be unacceptable to the majority of developing countries, most of which behave perfectly respectably in terms of labour rules. The problem is simply that they are poor : any such trade restrictions would be a real excuse for protectionist abuses, which would make people in developing countries poorer, increasing misery and removing hope. I cannot imagine a more selfish option. Moreover, whatever sacrifice British industry might make, I think that we can be certain that some other countries would not be quite so scrupulous : the hon. Gentleman would not achieve his objective even then. Real humanitarian issues such as slavery are best tackled through the United Nations system, as at present. UK law provides for prison-made goods to be banned from the UK, but that law has never been used because of the difficulty of proving the origin of any particular goods. That is a good example of the practical problems that could be expected to arise during attempts to deal with labour issues within the trading system.
Mr. Hamilton : I do not think that we want to go down highways and byways of that kind. Let me deal with the other issues with which serious participants in the debate wish me to deal--in particular, trade and the environment.
Hon. Members have claimed that the WTO agreement will harm the environment or undermine important environmental policies and agreements. Again, I do not see how that can happen. The WTO agreement will not prevent countries from taking steps to protect the environment ; it will help to stop the use of environmental excuses for protectionist purposes.
The UK is committed to proper protection of the environment, and to the maintenance and development of an open, rule-based trading system. That is why the UK has strongly supported the establishment of a WTO trade and environment committee to look further at new rules to reconcile the needs of the environment with the trading system. The UK is particularly sensitive to the need to involve developing countries in the process, because those countries often fear that the environment is used as an excuse to restrict their trade and market access. We must ensure that that does not happen. I can tell the hon. Member for Islington, North that nothing in the GATT round will prevent countries from meeting their obligations under the Montreal protocols.
A number of Opposition Members raised the tuna and dolphin case--in particular, the hon. Members for Glanford and Scunthorpe (Mr. Morley) and for Nottingham, South. I am happy to deal with that point, too. There have been two dispute settlement cases in GATT involving tuna and dolphins. In 1991, a dispute settlement panel upheld a Mexican complaint that the US had banned the import of Mexican tuna in violation of US GATT obligations. In that instance, the US action was aimed at protecting dolphins which swim with tuna in the eastern tropical Pacific--a point mentioned specifically by the hon. Member for Nottingham, South.