Select Committee on Agriculture Sixth Report

VII. CONCLUSION AND SUMMARY OF RECOMMENDATIONS

86. The liberalisation of trade in agricultural products as regulated through the WTO is beginning and will continue to have a profound effect on the UK agricultural industry and on EU agricultural policy. It is important to remember that WTO rules are not forced upon countries, nor is the organisation an undemocratic, self-appointed oligarchy. Instead, it is a governmental club whose members have devised and agreed the rules and are responsible for implementing and amending them where necessary. The number of countries applying to join the WTO testifies to its success. Even China has now recognised the benefits of signing up to a rules-based international trading system which means that all those affected by world trade, which in practice means farmers and consumers as well as importers and exporters, can look ahead to a stable, non-discriminatory trading environment. We do not dismiss those with concerns which have traditionally been considered to be outside the scope of trade negotiations, such as food standards or production and process methods but we believe that the WTO should not be transformed into a sort of universal reform league if this puts at risk its ability to sustain its primary purpose as a rules-based regulator of world trade agreements. We understand the fears expressed by those who see globalisation leading to irreversible and detrimental consequences for traditional rural communities. But we believe that the best way to assist those small farms which find themselves under threat is through reform of the CAP and a gradual shift away from distorting production subsidies to a policy based on clear objectives for environmental protection and rural development. Significant cuts in export subsidies would be a welcome step in the direction of further steady, managed CAP reform.

87. In order to achieve the best possible outcome for UK consumers, farmers and those employed in the food and drink industry, the UK Government needs to work tirelessly to persuade others to understand and share its aspirations for the future. We see three key audiences for this work. First, there are the UK's fellow member states of the EU. The UK Government must take the lead in persuading these other nations of the need for radical reform of the CAP and for adopting a constructive and defensible position in the WTO round. Second, there are the EU's trading partners. With many of these, the UK has special ties because of historical and commercial circumstances. Ms Quin told us that the Government "certainly use those contacts to express our views, to urge for momentum in the WTO process".[255] She believed it to be important "for European countries to be talking very purposefully to developing countries and to our partners in a variety of organisations", both to get the new round launched and to explain the EU's position more clearly.[256] As she explained, it is for the UK to take the lead role in explaining terms such as multifunctionality because our reputation as free traders will make it easier to shake off suspicions of protectionism.[257] Finally, there is a domestic audience which needs to be convinced of the value and benefit of the WTO process. Nick Brown MP alluded to this constituency in his speech in March this year when he observed that "Progress in trade liberalisation requires an understanding amongst farmers, consumers and the wider public of the collective economic gains from freer trade, and the economic costs of protectionism".[258] We believe that it is the duty of the Government to further this understanding. To succeed, it will need to convince this audience that their concerns can be met in a global trading environment and that the WTO is working in their interests, rather than those of the multinationals. The Government must work with the EU and with the WTO itself to increase transparency of the process and to demonstrate the advantages of the WTO rules over border riots and barricades.

88. It is too early in the negotiating process for participants or commentators to be prescriptive as to the details of any final WTO package. However, it is not too early for work to be done to build the foundations for a successful settlement. Joyce Quin recognised that the WTO process should reach a conclusion "that does reach out to all members" and that "it would not be good at all if the outcome is simply seen to be a fix between big powerful groups and does not have the wholehearted support of the developing countries as well as the developed members of the WTO".[259] The efforts of the UK Government to work with the three audiences we have identified could make a significant and worthwhile contribution to ensuring that the WTO Millennium Round emerges from the disaster in Seattle to establish new arrangements for world trade which are and are seen to be advantageous to all concerned.

89. Our other principal recommendations and conclusions are as follows:

	Trade liberalisation in agriculture
(a)	We believe that the case for further trade liberalisation in agriculture is compelling. It will open up new markets for UK exporters, provide new products for UK consumers and encourage UK farmers to be more efficient and competitive, whilst rationalisation of production will lower costs to the taxpayer. It will also benefit developing countries just as directly and positively as opening markets to their manufactured goods. The impetus it gives to further reform of the Common Agricultural Policy is particularly to be welcomed (paragraph 4).
	The blue box
(b)	We believe that the price of defending the blue box will depend on the evolution of US policy and that the EU should concentrate on converting measures currently within the blue box to green box payments. This would over time simplify the system as well as signify an important shift away from the acceptability of subsidies related to production (paragraph 31).
	The green box
(c)	We believe that the criteria for inclusion in the green box should be defined more clearly by WTO members and that measures should be judged to be within the green box only when their primary purpose is to meet these criteria and not when the qualifying characteristics are merely a secondary by-product of measures (paragraph 32).
	The Peace Clause
(d)	We believe that the true value of the Peace Clause is probably more symbolic than real but that the EU should continue to support its renewal (paragraph 34).
	Tariffs
(e)	We conclude that the EU has scope to offer substantial tariff cuts from the current high levels in most commodities. In doing so, it should concentrate on the most distorting tariffs both for importers and exporters and should offer the greatest assistance to the least developed countries for whom this is an important issue (paragraph 37).
	Export subsidies
(f)	The reduction of export subsidies should be a high priority in any negotiations. We strongly agree with the Minister that the answer to the problem faced by the food industry is further substantial reform of the CAP and we note that the pressures caused by export subsidies make such reform more likely. Within the context of the current negotiations, we agree with the British Poultry Meat Federation that "less obvious forms of export subsidy such as export credits, export guarantees, and food aid should be dealt with in the same way as export refunds". This should help to highlight the use by other countries of such assistance to their exporters and give the EU more room for manoeuvre. We also support the approach taken by the Minister in persuading "our allies ... that we are not here just talking about self-contained agricultural subsidies, we are talking about subsidies which have a very important knock-on effect in terms of the food industry more generally and the economy more generally". Moreover, we agree wholeheartedly with her twin objectives of ensuring that the UK industry is not unfairly targeted in agreeing cuts in export subsidies and of making such cuts "part and parcel of a wider agricultural reform process" (paragraph 40).
	Animal welfare
(g)	We believe that the EU, and the UK Government in particular, must make continued and forceful efforts to clarify objectives on animal welfare and then explain their intentions to individual WTO members prior to the launch of a wider round of talks. We also believe that the EU's position would be strengthened by the adoption of uniformly high welfare standards across all Member States. Of the various solutions suggested, we favour a combination of labelling, green box support and multilateral agreements on issues which cannot be brought into the purview of the WTO (paragraph 47).
	Multifunctionality
(h)	We agree with the Government that it must work to persuade other countries of the real meaning of multifunctionality and project it as representing a dynamic and forward-looking view of agriculture, not shorthand for a reluctance to reform. The EU needs to continue to define objectives and develop policies which express the ability of agriculture to fulfil a multifunctional role. The CAP is not nearly multifunctional enough, and the EU needs to pursue its evolution. We see no reason why reasonable support for goals encompassing the multifunctional nature of agriculture could not be embraced in further green box measures (paragraph 51).
	Hormones in beef
(i)	We recognise that the beef hormones case does highlight the importance of basing trade restrictions on sound science and the difficulties of applying the precautionary principle in the many areas where science is not so clear (paragraph 55).
	The SPS agreement
(j)	There will always be some degree of disagreement among scientists on any policy issue but we believe that the SPS provides a framework in which action can be taken on an equitable and scientifically justified basis (paragraph 55).
	Import inspections of foodstuffs
(k)	We recommend that the Government, through the EU if necessary, work towards the establishment of international agreements for equivalence of food safety inspection systems to remove a potential barrier to trade (paragraph 56).
	Genetically modified organisms
(l)	Given that the Montreal Protocol is now complete, we recommend that the EU restrict discussions on GMOs in the context of the WTO talks to any measures necessary to harmonise WTO rules with those agreed under the Biosafety Protocol (paragraph 58).
	Labelling
(m)	We do not accept that labelling would kill off the technology of genetic modification and we see proper labelling about both safety and production methods as a crucial part of the consumer's right to know and to choose (paragraph 60).
(n)	We recognise that the range of issues on which consumers require information is ever-growing and that this will make it difficult to reach agreement between WTO members who each have different concerns and different approaches to labelling regimes. Nevertheless, we believe that this development makes it even more important that clarification is sought and obtained on the scope of the existing TBT and that the EU should seek to extend it if it should prove inadequate to meet the concerns of consumers. One way to do this would be to introduce mandatory labelling in one instance as a test case. We recommend that the Government ensure that clarification by whatever means is sought (paragraph 61).
	Developing countries within the WTO
(o)	Developing countries must be assisted to make their own representations and negotiate for their own priorities such as food security within the current talks on agriculture and the wider WTO Round (paragraph 68).
	Reform of the WTO
(p)	We recommend that the Government press for the greatest possible transparency and accountability within the WTO with regard to both documents and procedures (paragraph 69).
(q)	We support moves to increase the effectiveness and openness of the disputes settlement procedures but recognise that efficiency should not be sacrificed to a requirement to hold a public inquiry on every issue (paragraph 71).
	Parliamentary scrutiny of the WTO
(r)	We recommend that the Leader of the House, through the House of Commons Modernisation Committee, examine current procedures to see if more effective forms of parliamentary scrutiny could be devised to monitor the work of the WTO (paragraph 74).
	Impact of the Uruguay Round Agreement on Agriculture
(s)	We recommend that the Government, through the EU, ensure that an assessment is made of the impact of the Uruguay Round Agreement on Agriculture and published at an early stage of the agriculture negotiations (paragraph 76).
	Impact of further trade liberalisation on UK agriculture
(t)	As the talks progress, we expect the Government to take into account the potential impact of proposals made during the negotiations upon UK agriculture when contributing to the EU's response to those proposals. We also expect the Government to take particular account of the likely cost and effect upon the competitiveness of UK industry of existing, pending and likely future WTO commitments in implementing new EU or domestic legislation (paragraph 79).
	Impact of trade liberalisation on the UK food industry
(u)	We recognise that the potential impact of measures agreed under the WTO will not be the same in all cases for the food and drink industry as for farmers and that the Government should be mindful of the need to promote the interests of the food sector as well (paragraph 80).
	Impact of trade liberalisation on UK consumers
(v)	We conclude that there are clear benefits for the consumer in trade liberalisation but that the existing safeguards in the form of the SPS and other agreements need to be monitored to maintain food safety and standards to an optimal degree, especially in the context of the new UK Food Standards Agency and the proposed EU Food Safety Authority, and to provide consumers with clear information to enable them to make choices (paragraph 82).
	CAP reform
(w)	We offer our continuing support to the UK Government in its endeavours to persuade other member states of the urgency of radical reform of the CAP and urge the UK Government to pursue that reform more strenuously and to place this issue higher on its own agenda of EU reform (paragraph 85).

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255  Q 269. Back

256  Qq 269-270. Back

257  Q 270. Back

258  Speech, para 19. Back

259  Q 339. Back

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Prepared 4 July 2000