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House of Commons

Wednesday 8 December 1999

The House met at half-past Two o'clock


[Madam Speaker in the Chair]


Queen's Speech (Answer to Address)

The Vice-Chamberlain of the Household reported Her Majesty's Answer to the Address, as follows:

I have received with great satisfaction the loyal and dutiful expression of your thanks for the Speech with which I opened the present Session of Parliament.

Oral Answers to Questions


The Secretary of State was asked--

World Trade Organisation

1. Mr. Jim Cunningham (Coventry, South): If she will make a statement on the outcome of the World Trade Organisation Seattle meeting on trade with reference to prospects for better trade access for the world's poorest countries. [100348]

The Secretary of State for International Development (Clare Short): As I think everyone noticed, the ministerial conference in Seattle failed to reach agreement on the agenda for the next round of trade negotiations. That is disappointing, but of course it is not the end of the story. Given that three quarters of the members of the World Trade Organisation are from developing countries, we are hopeful that big gains can be made. Under the Uruguay round, it was agreed that new talks would take place on trade in agriculture and services; other agreements are up for review. We will be working with others in Geneva to try to secure agreement on a new round that will bring real benefits to developing countries.

Mr. Cunningham: Will my right hon. Friend ensure that third-world debt and tariff reductions in the developed countries will be high on the agenda? That would facilitate trading arrangements so as to help the third world. I pay tribute to my right hon. Friend: given the adverse conditions in Seattle, she did a tremendous job on our behalf.

Clare Short: I am grateful to my hon. Friend. It is surprising that there was so much enthusiasm for reducing third-world debt, which we all fully share, but not for

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trading opportunities to allow developing countries to make use of that reduction to build up their economies. That is surely the other side of the equation. We agree strongly that various specific improvements are needed, but a reduction in industrial tariffs could be most important and would bring major benefits to developing countries.

Dr. Jenny Tonge (Richmond Park): Does the right hon. Lady agree that developing countries have a problem with their capacity to negotiate trade deals with the World Trade Organisation? I understand that 30 members of the WTO from the developing countries were not able to send delegates at all, and many others sent only tiny delegations. Does the right hon. Lady agree that it was little wonder that the developing country delegations felt angry and humiliated, with the result that the Latin American, Caribbean and African delegations issued statements on the negotiation process itself? Will she ensure that the Government and the European Union build up the capacity of developing countries before the next trade round, so that those countries can ensure that their voices are heard?

Clare Short: The hon. Lady is right. During the past two years, we have worked hard to put resources and expertise into training negotiators, analysts and the business people who have to implement the rules and take the benefits of trading opportunities. We have persuaded the EU to put more effort into that initiative, which was announced at Seattle and will continue.

The reason for the failure was not only that lack of capacity in developing countries. Ironically, we have never had such a representative body trying to negotiate trade agreements. In the past, the GATT--the general agreement on tariffs and trade--was dominated by the rich blocs. Suddenly, the developing countries are at the table and the procedures of the WTO were not attuned to the inclusion of such a large number of countries--so everyone needs to improve. However, the hon. Lady is right: we have been working on capacity building, but we need more of it.

Mr. Alan Simpson (Nottingham, South): Was the Secretary of State able to hold discussions with members of the Indian delegation on the proposals that they were trying to float, on the need for developing countries legitimately to protect parts of their domestic agriculture to the point of food security? They want us to draw new distinctions allowing for the use of agricultural subsidies to promote food security rather than product dumping, and they want to be allowed to protect themselves against the theft of their biodiversity on which food security will depend.

Clare Short: I did not talk to the Indian delegation in Seattle, but I have held various discussions on trade with representatives of the Indian Government. By and large, India takes a protectionist position. The greatest food security is not internal to a country; it is the capacity to purchase enough food from wherever it is needed, and the capacity of all the individuals in the country to purchase the food that they need. Considering food security as an internal issue is not the best way of approaching the subject.

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I am grateful to my hon. Friend for referring to biodiversity, because myths abound on that matter. New inventions are the only intellectual property that can be registered. Under the WTO, there is no threat at all to any traditional knowledge or biodiversity in a country. I am glad to say that that is a myth.

Mr. Peter Lilley (Hitchin and Harpenden): Does the Secretary of State agree with the historian Macaulay that free trade is by far the best thing ever to help the prosperity of mankind, but that it is most difficult to persuade the self-appointed spokesmen of mankind of its merits? In the light of all the criticisms and the organised coalition of attacks on the WTO, will the Government speak out vigorously in favour of free trade and against those who try to use pseudo-humanitarian arguments for protectionism?

Clare Short: I have been doing my very best to speak out for the benefits of free trade in promoting the economic growth that the poorest countries need to reduce poverty. The fastest reduction in poverty in human history was part of the east Asian advance when those countries attracted inward investment, created exporting opportunities and then invested in education. Other poor countries need the same opportunity. Those who benefit from all the technology that multinational capital brings are somehow calling for the poorest in the world not to have access to that technology; they are mistaken in that call. I agree with the right hon. Gentleman completely.

Joan Ruddock (Lewisham, Deptford): Does my right hon. Friend think that, despite the failures at Seattle, there is still a chance that all the rich countries will make a binding commitment to tariff and quota-free access on the exports of the 48 poorest countries? If not, does she think that the European Union could unilaterally pursue such a course?

Clare Short: Yes; that was one of the EU's big pushes in the negotiations, and the EU is committed to zero tariff access for "essentially all products" from the least- developed countries. We will go ahead and implement that and we will try to get others to agree to do so too. The United Kingdom believes that such access should apply to all products and not just "essentially all". The least- developed countries have the poorest economies on earth and they make up 0.25 per cent. of world trade. Surely, we can all agree to give them the chance of more trade, and zero tariff access might draw in investment. The EU will go ahead and implement that agreement.

Mr. Gary Streeter (South-West Devon): May I congratulate the Secretary of State, because, in her speech in Seattle, she spoke up for free trade? Does she agree that the collapse of the Seattle talks is a huge setback for the cause of free trade? Does she also agree that the apparent winners were the extremists and anarchists who believe that they wrecked the WTO talks, and that the clear losers were the world's poorest who have so much to gain from steady progress towards global free trade? Is not the credibility of the WTO now in need of urgent restoration? What are her proposals for doing that?

Clare Short: I agree with the hon. Gentleman about the consequences of that strange alliance of forces

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thinking that it had been successful. To damage the WTO is to damage the interests of the poorest nations on earth. The irony is that the WTO is only five years old and that, for the first time, developing countries make up the majority of its members and have a chance to make real gains out of trade negotiations. It is ironic that the negotiations were wrecked.

We need to take the talks forward, but the WTO needs to consider its procedures. The expansion in numbers means that it does not have procedures that are transparent enough for Governments to be clear with their own civil societies about the negotiations. We need to give attention to that, and my right hon. Friend the Secretary of State for Trade and Industry has said that Britain will make that a priority.

Mr. Streeter: This is an important point. Can the right hon. Lady give a little more detail about the reform of the decision-making procedures of the WTO, because there are probably only three options? Does she agree that, whatever decision is finally arrived at, it is vital that developing countries have a fair say and a louder voice in the decisions made by the WTO? The humiliation that they suffered in Seattle by being locked out of the greenroom, as it came to be called, while the EU and the United States negotiated has set back their confidence in our commitment to free trade. We need to reform the procedures to resolve that problem.

Clare Short: The hon. Gentleman slightly overstates the position on the views of developing countries. They were not at the table before. One of the things that may have happened in Seattle is that the United States may have grown up to the fact that the world is globalising and that we need different international instruments to manage it, and certainly all countries and blocs woke up to the fact that developing countries are now at the table. That was a creative outcome of the failure in Seattle.

I agree very much with the hon. Gentleman that there need to be procedures that much more systematically include developing countries in the negotiations. I cannot announce today the new procedures in the WTO; they must be negotiated and agreed by all the membership. However, we agree that it is an absolute priority to get more transparency and more efficient procedures.

Mr. Streeter: Finally, as this is such a huge and important issue, is the right hon. Lady aware that, if she pushes our EU partners to drop unilaterally the EU's tariffs and quotas for all goods and exports from the 48 poorest countries in the world, she will receive the wholehearted support of Conservative Members? We should unilaterally drop our tariffs, set an example and move to global free trade by 2020.

Clare Short: I am grateful to the hon. Gentleman, and I pleased that there is agreement on both sides of the House on the need for zero-tariff access for the least developed countries. We need to get other countries to support that. We have been pushing the EU very hard and, despite the protectionist instincts of some of its members, we have agreement on "essentially all" products, but we need to follow the negotiations about what "essentially all" means, and try to make sure that only a very small

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number of products are excluded. I should be grateful for the hon. Gentleman's help in taking forward those negotiations.

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