Examination of Witness (Questions 260
- 279)
WEDNESDAY 3 MAY 2000 (Afternoon Sitting)
MS JOYCE
QUIN
Chairman
260. Minister, we are delighted to see you here,
this time in the role of organ grinder, in other words playing
solo. We started this inquiry in the expectation that the new
round would have started in Seattle. One of our conclusions is
that it does not really matter very much, in a funny way. We have
been to the United States, we have been to Geneva and we have
talked to a lot of the parties. It is sensible that we should
wrap-up the inquiry by finding out what the Government thinks
about it. It was referred to now and again, it featured in a statement
about a month ago. What conclusions has the Government drawn from
what happened at Seattle? Does it think that the world has changed
fundamentally because of those events and that if we are going
to move forward with a continued commitment to free trade are
there ways in which we have to act and people we have to consult
so that we achieve a consensus on that? In a sense up to now we
have always been able to presuppose that there was a broad consensus,
however we may have to demonstrate that. If you were giving advice
to Mike Moore as to how you would like the organisation to look
and function, to take account of the events of Seattle, what sort
of advice do you think you might give him?
(Ms Quin) Firstly, let me say, I very
much welcome the opportunity to give evidence to the Committee
at the closing stages of your inquiry. Chairman, can I take this
opportunity of congratulating you on your appointment, since I
have not had a public occasion on which to do that before. Having
been a member of a European Parliament Agriculture Committee under
your chairmanship I am sure that your work as Chairman will be
very successful and I certainly wish the Committee well in its
deliberations on this issue and on other issues.
261. I think you have made a very good beginning,
if I may say so.
(Ms Quin) The question you ask is a very important
one. Obviously the failure of Seattle was a big disappointment,
although with the wisdom of hindsight it was not quite so unexpected,
given that there had been quite a lot of difficulty in the WTO
prior to Seattle, particularly in terms of finding a successor
to Mr Ruggiero. There had certainly been a lot of difficult issues
which certainly made the atmosphere less conducive to a successful
Seattle than we would otherwise have hoped. Nonetheless, perhaps
the jury is still out on how earth-shattering an event it was.
In terms of agriculture we have seen the negotiations taking place
under the basis of the previous Uruguay Round at Geneva. A work
programme has been agreed for the first phase, with members being
invited to submit proposals for the subjects to be discussed in
the negotiations by the end of December. Therefore, there is still
some continuing momentum in terms of the agricultural side. There
is also a lot of discussion going on within the different groupings,
such as the European Union, and also, more generally, about trying
to get a new round launched. Although Seattle was a severe disappointment
and certainly placed a severe obstacle in the way of the discussions
leading to free trade, nonetheless I do not think it is an insuperable
obstacle. I think there is enough adherence to the WTO and its
principles and also enough political will around the world to
make sure that this is a setback but not some kind of terminal
state that we are finding ourselves in. I would certainly encourage
Mike Moore to continue in his efforts to get a new round going
and encourage countries, including the European Union, to work
with him in that undertaking. My opinion is that the European
Union, and in particular Commissioner Lamy are trying to work
to create the conditions for the new round to begin. Although
we have to be realistic and realise that there are problems about
getting the new round launched, nonetheless overall members of
the WTO, both the big blocs within the organisation and the individual
countries, I think, feel that a new round is more important than
simply letting the process stagnate.
262. You said that, in fact, the mechanisms
are engaged following Seattle, even without a formal launch of
a new round. We are now exactly six months from an American presidential
election, do you think it is politically opportune or sensible
to seek to launch a round in advance of that, with the risks of
failing to do so and the repercussions they might have, or do
you think that the sensible course is to try and keep mechanisms
in gear and make a launch once a new president is installed in
the White House?
(Ms Quin) I think it is more sensible to keep the
mechanisms in place and ready to go when the moment for a new
round seems to be most opportune. It is interesting in that connection
as far as the on-going agricultural discussions are concerned,
that while as I just said, members are invited to submit proposals
for the subjects to be covered in the negotiations by the end
of this year, there was some flexibility agreed both in the case
of the United States because of the presidential elections; and
also, understandably, some flexibility in the case of developing
countries, because of some resource constraints in putting in
place the various mechanisms and procedures that they need to
put in place in order to be able to contribute to the negotiations.
Even in the on-going agriculture negotiations there is some flexibility
for late proposals. It seems to me that that flexibility is also
important in terms of the overall launch of a new round.
263. Have you made any enquiries into which
sectors of agriculture in the United Kingdom would be likely to
feel the heat most and those which might benefit most from further
liberalisation? Most people I see, in this sense, define liberalisation
as a further exposure with European agricultural competition from
North America. There has been some work done, a Silcock fellowship
in pig production, and the author of that suggested that there
was not a future for the volume of pig production in the United
Kingdom or, perhaps, even Europe. If one reads it, it is the scale
of liberalisation which created a single market place.
(Ms Quin) These issues are complex because a large
number of different factors are involved. Depending on how negotiations
proceed and what conclusions are drawn, as far as the various
boxes are concerned, the blue box, the green box and the amber
box, they can all have an effect on the viability of different
parts of our own agricultural industry. I know that in previous
evidence to the Committee comments have been made about this,
both by the National Farmers Union and also by Professor Swinbank.
I agree with the broad thrust of those remarks that were made,
which were, generally, that we feel that British agriculture can
certainly compete well in the European Union framework and can
compete in a more liberalised framework at world level but certain
sectors are capable of experiencing difficulty. Certainly those
sectors where there are additional costs in either the United
Kingdom or in the European Union will find it difficult if there
is just liberalisation and no offsetting factors whatsoever. Professor
Swinbank also mentioned the difficulty for hill farmers, for example.
I agree, again, with the broad thrust of what he had to say. One
has to take into account measures that we ourselves are bringing
forward in the rural development regulation as well as what further
changes may take place in the European Union policy. There are
a large number of factors to take into consideration. Generally
we feel that the majority of British agriculture ought to be able
to compete but an awful lot depends on the progress of the negotiations,
the details of the negotiations and the final shape of any package.
Mr Paterson
264. Good afternoon, Minister, we were in Washington
a month ago and officials in the US were pretty clear that they
blame the EU for the failure of talks in Seattle; do you agree?
(Ms Quin) I do not think it was as simple as that.
Firstly, I do not think in terms of agriculture that agriculture
was the stumbling block which caused the failure at Seattle. Indeed,
quite a large amount of progress had been made in terms of an
agenda for agriculture, basically looking at the reduction in
certain types of support, particularly blue box support, and also
looking and agreeing that there should at least be a framework
for discussing some of the non-trade concerns. There was a basis
for going forward on agriculture. It would still have been quite
a long and, no doubt, difficult negotiation but I do not think
that the failure of Seattle was linked to that. My own feeling
is that Seattle failed more because there was this unfortunate
background. In some areas preparation had not been properly done.
In other areas there has been quite a concentration on disputes,
both in relation to the nomination of the new head of the World
Trade Organisation and also concerns of developing countries and
concerns of a number of countries who felt that the system was
not working particularly well. I think it was more that climate
that contributed to the failure of Seattle rather than pointing
the finger at the European Union or, indeed, any other one particular
factor or one particular country or group of countries.
265. One of the senior American sources that
we discussed this with said the problem went back pre-Seattle,
to Geneva, when it was felt the Commission did not give the EU
Ambassador Roderick Abbott proper authority to come up with the
text to go to Seattle with, to let the ministers sort it out in
Seattle. Do you think the Commission are doing a good job as negotiators
for the EU?
(Ms Quin) Yes, I think on a whole they are. This is
not a particularly easy task because they are having to combine
the views of a lot of different countries with a lot of different
attitudes and indeed a lot of different histories with regard
to world trading issues. I think that progress was made by the
European Commission in getting a mandate agreed by the General
Affairs Council in October last year. Prior to the General Affairs
Mandate the Agriculture Council itself had agreed to a basic text
which in many ways was a good text because it allowed what I would
say was a very necessary degree of flexibility in the EU approaching
the negotiations. I would not like to see the EU tied to such
a rigid text that it then made any further negotiations extremely
difficult. The text that was agreed by the Agriculture Council
and then endorsed by the General Affairs Council was, I think,
a good statement of our aims and objectives and yet at the same
time had within it sufficient flexibility to approach a complex
series of negotiations. I know that the Commission, as well as
individual countries, put a lot of effort into getting those texts
agreed.
266. Is the Commission keeping you completely
up-to-date with its bilateral meetings?
(Ms Quin) We believe so, yes. Certainly both Nick
Brown and myself have had a number of meetings both with Commissioner
Lamy and Commissioner Fischler. There have been reports by the
Commission to the Agricultural Council. The last such discussion
was at the Agricultural Council in April when a Commission official
was present and brought us up-to-date, as it was then, on the
contacts. There was also a good amount of commitment on the part
of the ministers in the Agricultural Council to move forward and
to try and keep some sense of momentum in the negotiations. There
was also a feeling that the European Union members should keep
up a good dialogue with different groups of countries around the
world in order to try and make sure that the political atmosphere
is more conducive to purposeful negotiations in the future than
it was in the immediate run-up to Seattle?
267. How much agreement is there amongst the
Member States? I felt when we were in discussions with the Americans
there was much that we as an agricultural producer could agree
on.
(Ms Quin) That does not surprise me. We have as a
country—this is not a party political point, it is something
that has been characteristic of different governments—been
much keener on free trade in agriculture than some other European
countries. Indeed, that goes back to the days of our joining the
European community with the protectionist nature of the Common
Agricultural Policy and our feelings about it. Nonetheless, the
situation is more fluid in the European Union than it used to
be, it seems to me. You have more countries interested now in
agricultural reform than was the case in the past. You have more
countries realising that change is necessary, not just because
of the importance of the World Trade Organisation but also because
of the enlargement of the European Union. Although Agenda 2000
was not as dramatic in its conclusion as many of us would have
liked it was a very useful step forward in terms of the reduction
in direct production support and in the creation of the second
pillar of the Common Agricultural Policy on rural development
and trying to move away from the traditional support mechanisms.
All of those matters show that there is a movement within the
European Union. You might say to me, "It is very slow".
The cause of agricultural reform in the European Union has been
agonisingly slow over a very long period. There is more interest
in it now than I remember during my own history of involvement
in the European institutions.
268. Do you think Seattle has stunned the more
recalcitrant Member States into taking a more positive attitude
to liberalisation? Do you think there is a new mood in Europe
in the negotiations stance?
(Ms Quin) I think it is a variety of causes. Seattle
is a cause but so is enlargement of the European Union and so
are budgetary constraints within the European Union, which are
increasingly important, even on the part of those countries who
have done very well out of the agricultural budget. There are
a variety of pressures which are, I believe, pushing along the
path to reform, even if it is slower than many of us would like.
Mr Todd
269. Does the position that Britain holds within
the EU of being—in spite of what you said to qualify this,
I think it is still true—the most free trade orientated
member on agricultural issues give us the chance to act as mediators
between the EU and other trading blocs? We ought to have more
common language to exchange on some of these matters; do we attempt
to do that?
(Ms Quin) Yes, we do. We do not formally mediate,
of course, because the Commission is in the lead on these policies
and we accept the European Union opening negotiating position
and, indeed, contributed quite substantially to the wording in
the mandate. In that sense we are very much loyal members of the
European Union. At the same time, arising out of our history and
our commercial situation we have a good many contacts with a good
many countries. We certainly use those contacts to express our
views, to urge for momentum in the WTO process, the momentum we
hope will lead to the launch of a new round and the momentum behind
the agricultural negotiations. Obviously we do have a lot of linkages
via organisations, such as the Commonwealth, and I think it is
important for European countries to be talking very purposefully
to developing countries and to our partners in a variety of organisations
to try and make sure when the round is launched it can proceed
with some chance of success.
270. Because we obviously have very strong historic
links with many of the key players in the Cairns Group and have
always had perhaps stronger relations with the United States than
many other EU nations which would imply we were in a good position
both to explain more clearly the EU position to some who do not
necessarily instinctively empathise with it but also to communicate
back to other EU members some of the possible options that are
available through greater free trade. It would imply there is
an opportunity for a much more active role on the British part
in these negotiations than would be implied by simply accepting
EU leadership of the negotiating process.
(Ms Quin) We have to accept EU leadership in the negotiating
process because that is the formal arrangement but there is latitude
for countries to be proactive and I believe we are being proactive.
I welcome the point you are making because I think it is a very
important one. I think that for example being well-known as free
traders and wanting to liberalise markets we are in a good position
to explain some of the European attitudes towards such issues
as the environment, animal welfare and so on because I think people
appreciate that we do that not from a basic protectionist viewpoint
but simply because we do recognise that there are some important
non-trade issues that are linked to the trade negotiations. I
think on those specific issues we do have an important role to
play. We know that outside the European Union there is, as has
been touched on earlier, a very great suspicion of European Union
protectionism which goes back to the way that the Common Agricultural
Policy in particular has developed over the years and since we
have always been in the vanguard of seeking to change that policy
and have a more open policy, then I think we do have a good role
to play in explaining some of the other concerns of the European
Union mandate to which we have subscribed.
Mr Borrow
271. The European Union has got a great deal
to gain from further trade liberalisation. I think that is an
agreed position across the EU and I am sure you would agree with
me that even post the Agenda 2000 changes the existing CAP policy
actually causes problems in WTO negotiations. To what extent do
you feel it is going to be necessary for a further round of CAP
reform before we can have any realistic hope of reaching agreement
through the WTO on agriculture?
(Ms Quin) The timing is going to be quite interesting
in this respect because if, say, we get a round under way next
year we are not so far short of the kind of mid-term review period
of the Agenda 2000 process. There is a mid-term review planned
in 2002 and we need to take that opportunity to re-examine Agenda
2000 in the light of changing circumstances. Obviously there will
be enlargement of the European Union, which we cannot put a precise
date on at the moment but certainly there is little doubt that
the first group of countries will join between 2000 and 2006,
so that the concluding stages of the negotiating stage on agriculture
will also be an important time to try and take the reform process
forward. The dairy regime, which was rather run away from in Agenda
2000, nonetheless is up for reform in 2005 but we have to keep
that perspective also in mind. So there are a number of stages
at which the reform process can be raised and hopefully pushed
forward. There are also some aspects of the CAP that were not
dealt with under Agenda 2000. I am thinking of regimes such as
the sugar regime, and that also needs to be looked at in the coming
years. Let me go back to the point you made at the beginning which
is really some wider trade issues which are tremendously important
in this process. It seems to me the food and drink industry more
generally is a very important player in this. Although obviously
we are looking specifically at agriculture, we are also looking
at the food and drink industry for which MAFF has a responsibility
and that industry has, I believe, a lot to gain from liberalisation
and particularly from changes in export subsidy arrangements and
better access to overseas markets. An awful lot of jobs are linked
to the food and drink industry so those are areas of great potential
as well.
272. Do you sense from formal and informal sessions
with our partners in the EU a willingness to confront these issues?
I am thinking particularly of whether you think the dynamic will
change with the enlargement of the EU and that will force some
of the Member States to look at these issues rather than putting
them off?
(Ms Quin) Some Member States are obviously keener
than others to look at these issues. We do have allies in the
reform process recently particularly strongly from Denmark, from
Sweden (which actually changed its own system of agricultural
support not long before joining the European Union and then had
to switch back again in certain sectors) and from Italy which
has expressed a lot of interest and worked with us on various
aspects of reform. It will be interesting to see how other countries
respond to these challenges and whether they conclude that the
agricultural policy in its existing form can continue or whether
they conclude it is simply going to have to be changed much more
dramatically than has been envisaged up to now. I think the latter
course is more likely but I am aware of the dangers of being naively
over-optimistic in this domain.
273. If I can touch on a slightly different
issue but which is related to the whole timetable of reform. There
is the argument as to whether or not we can enlarge reform beyond
agriculture as part of a wider round. The Uruguay Round still
leaves certain things to be sorted out and the rest of the Uruguay
Round for agriculture could continue without there being another
general round of WTO reform. One of the things we have picked
up as we have spoken to different people is that some people say
the peace clause is meaningless because when we get to 2003 things
will meander on and nothing will happen. Other people see the
end of the peace clause as very much the time when everything
will come down and all the reforms the EU should have been doing
and has not done will have to be forced through or action will
be taken through the various mechanisms in the WTO. What are your
views on that? Obviously that again affects the pressure for CAP
reform to the extent of timescales that Europe has got to get
its act together in terms of then being part of a wider round
as well.
(Ms Quin) It is a difficult question to answer very
clearly because I am aware of the arguments that have been put
to the Committee both for and against the expiry of the peace
clause being a cataclysmic event. It is very difficult to be certain
about it. I think that again a lot will depend whether a wider
round has been launched by then, what the momentum within that
wider round is, and whether agricultural discussions have been
subsumed into that wider round. It will also depend a little bit
on what has happened to some of the disputes that currently exist
within the WTO, whether they have been resolved by then, how frustrated
various members of the WTO feel at that point about the lack of
progress, if there has been lack of progress. So it is genuinely
difficult to answer precisely. I would prefer to see the peace
clause as yet another part of the opportunities towards reform
and towards making progress with a new round. It is there, we
know it expires at that point, and that therefore is an important
target we have to keep in our minds along with all the other targets
such as launching a new round and enlargement of the European
Union.
274. Have you been able to make any judgments
as to the tenor of the discussions in the Agricultural Committee
in the WTO? There have been all the problems of appointing the
Chairman. That does not augur well for workmanlike and reasonable
progress over the next two years. Am I being unduly pessimistic
by that interpretation or have you got a different feedback which
says these are teething problems and in a few months' time the
Committee will get down to some realistic hard slog work and the
problems we may fear will not happen?
(Ms Quin) I think I would have been much more alarmed
if the meeting on 23 March in Geneva had simply done nothing but
failed to agree on choosing a Chairman. I am glad that it did
at least agree a work programme. If that agreement had not been
made we would have felt gloomier than we feel at the moment. Obviously
we do need to make progress with finding an acceptable person
to chair the negotiations. It is an irritating feature of the
WTO that it seems to find an enormous amount of difficulty in
agreeing to people to fill positions even though in terms of actually
agreeing some basic texts and agreeing some theoretical starting
points it has been a bit more encouraging. So my answer is if
the meeting had simply stuck on the question of the chairmanship
that would have been pretty bad but the fact it did agree a work
programme is worthwhile.
275. How crucial is it to Britain's interests
that we have a wider round rather than an agriculture round?
(Ms Quin) I think it is immensely important to a lot
of our industries. Certainly in the consultations we have had
both in MAFF and other government departments the support from
sectors of our economy in favour of a round have been very strong.
I think there is a feeling that having a rules-based organisation
dealing with trade issues is immensely important. It does need
periodic bouts of renewed momentum which are given via the round
processes and I feel that is important. I am also struck by the
arguments of colleagues in government, for example Clare Short
at the Department for International Development making a very
strong case for this being in the interests of developing countries
too. I think despite the public perception of much of the debate
around Seattle there is a huge mutual benefit in getting a new
round under way.
Chairman: One of the things we may have to discuss
is how the developing countries are able to articulate their own
interests rather than allow their alleged interests to be articulated
by people with their own agenda.
Mr Paterson
276. Very quickly on enlargement. I recently
met some ambassadors from the applicant countries who said the
main incentive to joining was to escape competition from EU subsidised
exports but they were looking for very substantial derogation
such as 20 years before non-citizens of these Member States could
buy agricultural land. Could you give us an insight as to how
the negotiations are going and what sort of derogations might
be given?
(Ms Quin) Not in any detail because the agricultural
chapters have not been properly opened. I think I am right in
saying the first ones are likely to be opened in June and obviously
agriculture is known as a very difficult part of the accession
procedure. Chapters have been opened and in some cases closed
in much less controversial areas. You will get different messages
from different countries depending on their particular situations.
There will be a lot of discussion over transition periods in a
number of areas. There will be very difficult discussions about
how far existing support mechanisms should be transferred to new
countries. One point that the applicants make (which I have an
enormous amount of sympathy with) is they do not want a European
Union agricultural policy created which is a two-tier system and
treats new members in an entirely different way from existing
members and in an inferior way. Of course at the same time in
my mind that then argues for further support for the agricultural
policies because simply extending the existing mechanisms becomes
extremely expensive and also actually does not make sense in terms
of consumers or the environment or in terms of world trade.
Mr Todd
277. The four areas that have most commonly
come up in our inquiry as key to these negotiations are domestic
support, market access, export subsidies and the blue and green
boxes. Running through those, if we could start with the issue
of the blue and green boxes, do you feel that the blue box is
defensible and worth defending or is it perhaps a better strategy
to look at redefining what the green box means and incorporating
appropriate support mechanisms within that?
(Ms Quin) It is certainly difficult to defend the
blue box as an on-going unchanging mechanism and in fact it does
not sit very well with the Government's agricultural policy which
is very much to move away from the old style production supports
and to move towards a policy of rural development and a policy
which recognises the different roles that agriculture plays. Obviously
given the situation of agriculture in our own country and indeed
in other parts of Europe at the present time I think we are also
keen to avoid very sharp changes. Transition is a very important
principle in any process of this kind. But our general approach
is that the green box is perhaps the key area to focus on in terms
of the agricultural negotiations.
278. So over a period of time you would expect
any supports currently covered within the blue box to disappear
with, if need be, appropriate compensatory changes which are compliant
with green box obligations, in other words are not production
distorting and are focused on particular objectives unrelated
to the run of agricultural concerns.
(Ms Quin) In general terms, yes.
279. Good, okay. In terms of export subsidies
we have had, not particularly surprisingly, some conflicting evidence
which is that some business is still clinging to the wish to retain
export subsidies, but I think you quoted Clare Short's very positive
interest in this round from an international development perspective
and one of those perspectives is the damage that subsidised exports
can do to developing countries' agricultural economies. Would
you agree that export subsidies should be abandoned over a period
of time within this round of negotiation? Should that not be an
objective of United Kingdom policy and, if we can persuade them,
EU policy as well?
(Ms Quin) Yes, I would accept certainly progressive
reduction and eventual elimination of export subsidies is a desirable
objective. I do have sympathy with a lot of sectors of our own
food industry who say to us, quite understandably, that they have
to buy higher than would otherwise be priced European Union products
and therefore they need some compensation for that in terms of
export support. Industries such as the confectionery industry
and the processed food industry and Scotch whisky industry and
so on, they all make representations to us about this and their
representations are soundly based. But at the same time they always
say to us their preferred objective would be an elimination of
the traditional CAP support which creates this distortion of price
between the European Union market and the rest of the world.
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