SEVENTH SPECIAL REPORT
The Agriculture Committee has agreed to the following
Special Report:—
The Committee has received the following memorandum
from the Ministry of Agriculture, Fisheries and Food, constituting
the Government's Reply to the Sixth Report from the Committee
of the 1999-2000 Session, The Implications for UK Agriculture
and EU Agricultural Policy of Trade Liberalisation and the WTO
Round, made to the House on 28 June 2000.
* * *
Introduction
1. The Government welcomes the Agriculture Committee's
report. This is a response from the Ministry of Agriculture, Fisheries
and Food, which has been agreed with the Department of Trade and
Industry, the Department for International Development, the Department
for Environment, Transport and the Regions, the Food Standards
Agency, the Foreign Office, Her Majesty's Treasury, the Scottish
Executive Rural Affairs Department, the Department of Agriculture
and Rural Development (Northern Ireland), and the National Assembly
for Wales Agriculture Department.
The Committee's general conclusions
2. The Committee's general conclusions were as
follows.
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.
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". 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. 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.
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". 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.
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". 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.
3. The Government welcomes the strong support given
by the Committee to its objectives for the WTO agriculture negotiations.
The Committee recognises that further agricultural trade liberalisation
will have a significant impact on the Common Agricultural Policy,
and should lead to the kind of steady, managed reform of the CAP
sought by the Government and supported by the Committee. Reform
should include reductions in total support as well as its re-targeting
into environmental and rural development measures delivered by
less distorting mechanisms. We acknowledge that there will be
impacts on the UK agricultural industry and rural communities.
Further liberalisation will bring wide economic benefits and lead
to a more competitive and viable industry, but it must also take
account of the social and environmental aspects of sustainable
agriculture. We will therefore continue to emphasise the importance
of measures to conserve and enhance the environment and promote
the rural economy which do not distort trade.
4. We also welcome the Committee's support for a
rules-based trading system as the best way of achieving a stable,
non-discriminatory trading environment. The WTO is essential to
meet the challenge of globalisation, since a rules-based system
allows governments to work collectively to respond to those challenges.
Without a multilateral rules-based trading system, there would
be scope for the arbitrary imposition of trade barriers for protectionist
purposes. Large powerful countries would also be free to exercise
their commercial strength at the expense of the weak.
5. The Government recognises the key importance of
persuading other EU member states of the benefits of our objectives
for the WTO negotiations and the future of the CAP. We are working
hard to develop strategic alliances with member states which do
share our views and also to ensure that the arguments for further
reform are fully understood and are given due weight by all member
states and by the Commission. We intend to keep in close contact
with other key WTO negotiating partners, and also to continue
our consultation of and communication with interested groups in
the UK, in particular as we develop more detailed views on particular
issues during the course of the negotiations.
OTHER RECOMMENDATIONS AND CONCLUSIONS
The Committee also made other principal recommendations
and conclusions 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).
6. The Government is also strongly supportive of
further liberalisation for the reasons given by the Committee.
We intend to engage fully in the negotiations to ensure that these
benefits are achieved to the greatest extent possible.
7. In relation to developing countries, it is true
that some will see direct benefits from improved market access
following liberalisation. However others (particularly countries
in the African, Caribbean and Pacific group) could experience
a loss in the relative value of their trade preferences with the
EU. Developing countries which are net importers of food could
also see an increase in their import bills from rising world prices
following liberalisation. It will be important to provide ways
of allowing these countries to adjust to the changes as well as
appropriate support during this process.
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).
8. We agree that the overall aim must be for the
EU to move away from production-linked subsidies, including the
type of direct payments currently within the blue box, in line
with the commitment to substantial, progressive reductions in
support and protection included in Article 20 of the WTO Agreement
on Agriculture and recently re-affirmed by the OECD Ministerial
Council. Converting these measures to decoupled payments which
would be compatible with green box criteria would be one means
of doing this. An alternative, as mentioned in the Committee's
report, would be to retain the payments but phase them out over
time. It is sensible to keep both options open for now, since
others' views will contribute to the feasibility of particular
outcomes. However, independent of any particular outcome on the
blue box, the Government considers that green box payments specifically
targeted at environmental and rural development objectives will
continue to be necessary in their own right, and that such payments
may also need to meet social objectives notably in peripheral
hill farming areas.
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).
9. The main condition for green box eligibility,
as set out in Annex 2 to the WTO Agreement on Agriculture, is
that measures should have no, or at most minimal, trade-distorting
effects or effects on production. Policy-specific criteria are
also provided for the various categories of measures eligible
for inclusion. In the Government's view these criteria already
provide an adequate assurance that measures with only a secondary
aim of meeting one of the specified policy objectives should not
be included. As an example, for payments under environmental programmes,
eligibility must be determined as part of a clearly-defined government
environmental or conservation programme and be dependent on the
fulfilment of specific conditions under the programme. In addition,
the amount of payment must be limited to the extra costs or loss
of income involved in complying with the programme. These conditions
should make it impossible to include a measure on environmental
grounds which has a primary purpose other than an environmental
objective.
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).
10. The Government considers that the Peace Clause
acts in the interests of all WTO members, not just the EU, in
giving reassurance that if they comply with agreed commitments
for both domestic support and export subsidies, they will have
a degree of protection from challenges possible under other WTO
rules. The prospect of expiry of the Peace Clause is likely to
create significant pressure to conclude the negotiations, which
is welcome, but we agree with the Committee that renewal of the
Peace Clause is likely to be an important feature of a new Agriculture
Agreement. At the same time, in order to justify the continuation
of this protection from challenge, the EU and other WTO members
will need to fulfil their commitment under Article 20 of the WTO
Agriculture Agreement to substantial progressive reductions in
support.
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).
11. The Government agrees that there is scope for
substantial further tariff cuts in the EU, and would also want
to see other WTO members with high tariffs make significant reductions.
There is some way to go before resolving the details of the best
approach to take in reducing tariffs, as well as other aspects
of market access such as reduced-tariff quotas, and the Government
will be consulting further on this issue. We will also need to
consider how tariff reductions fit into the wider reform process
in order to achieve a balanced outcome to the negotiations. However,
we would certainly wish to take into account the distortions caused
by particularly high tariffs and tariff escalation, and the interests
of the least developed countries who may have potential to export
agricultural products.
12. It is Government policy to address the particular
needs of least developed countries as a priority in trade negotiations
and it will continue to pursue duty- and quota-free market access
as a key objective. In this regard, the EU is already committed
to granting duty- and quota-free access to essentially all products
of the least developed countries by 2005, and we will be pressing
for exclusions to be kept to a minimum, at the same time recognising
the EU's obligations to its partners in the African, Caribbean
and Pacific group.
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 ¼
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).
13. The Government welcomes the Committee's support
for its views on the necessity of further reductions in export
subsidies as part of a wider reform process. It is clear that
export subsidy cuts must form part of the outcome of the negotiations.
The process of agreeing these cuts must be matched by decisions
to make corresponding reductions in support prices, so that the
competitiveness of UK food processors and exporters is not damaged.
We also agree with the need to ensure that less obvious forms
of export subsidy are brought within equivalent disciplines, and
will pursue this actively in the negotiations.
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).
14. The Government shares the Committee's wish to
raise welfare standards to the same level across all member states.
During our Presidency of the EU in 1998 the Council agreed a Directive
setting minimum welfare standards for all farm animals; we were
constructive in negotiating an agreement on last year's laying
hens directive; and we look forward to taking an active part in
negotiations on the Commission's proposals for updating the EU
pig welfare rules, which they have promised for later this year.
The Government also recognises that effective enforcement is essential
if these EU agreements are to fulfil their aim. We welcome the
recent strengthening of the Commission's team charged with checking
compliance with welfare rules. And we shall not hesitate to alert
the Commission to evidence of ineffective enforcement where that
is brought to our attention.
15. The three options identified by the Committee
for taking animal welfare forward in the WTO negotiations are
the ones being considered by the Government, and were also raised
for discussion in a paper submitted by the EU to the negotiations
in June 2000. In the same paper the EU made clear that our objective
for raising animal welfare issues was not to provide a basis for
the introduction of new types of non-tariff barriers. However,
we agree with the Committee that there is a great deal of suspicion
from trading partners of the EU's motives in this area, and achieving
consensus on international standards is likely to be an extremely
slow process.
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).
16. The Government welcomes the Committee's support
for our aims in relation to the multifunctional role of agriculture.
Reform of the CAP must result in an agriculture which is commercially
viable and also socially and environmentally sustainable. We must
therefore reduce production-related support, and refocus a proportion
of those funds on policies which are specifically targeted towards
social and environmental objectives and which do not distort trade.
These policies are compatible with the criteria of the green box.
17. This way of addressing the multifunctional role
of agriculture should be acceptable to WTO partners, most of whom
also wish to continue pursuing these types of policies. The term
"multifunctionality" has no agreed definition, and its
use has unfortunately come to be suspected as an attempt to justify
the continuation of production-related support. We agree with
the Committee that it is only by being specific about our intentions
that we will counter this suspicion.
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).
18. The Government believes that it is vital to continue
to take a science-based approach in the development of food safety
standards and of trade restrictions imposed on food safety grounds.
We do not accept that the scientific case for a ban on the use
of hormone growth-promoters has been made. This position is supported
by recent advice from a group of independent UK experts, as well
as evidence from the European Commission's own Committee on Veterinary
Medical Products and the Joint Food and Agriculture Organisation/World
Health Organisation Expert Committee on Food Additives. We will
however continue to fulfil our European obligations by enforcing
the ban in the United Kingdom.
19. We support the concept of the precautionary principle
in order to ensure a high level of consumer protection. However,
there is a need for clear, agreed guidelines on how it should
be applied in the field of food safety. There should be an objective
assessment of the risks, costs and benefits involved in precautionary
action so as to prevent its misuse as a disguised barrier to trade.
We welcome the recent Commission Communication on the precautionary
principle, which provides a useful contribution to the debate.
20. We note that the WTO Sanitary and Phytosanitary
Agreement balances the right to take provisional measures against
an obligation to seek further information within a reasonable
period.
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 actions can be taken on an equitable
and scientifically justified basis (paragraph 55).
21. We agree with the Committee's view. In particular
the requirement in the SPS Agreement to base trade measures either
on agreed international standards or on a scientific risk assessment
is important to ensure that action taken which restricts trade
is properly justified.
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).
22. The Government accepts the value of international
agreements for equivalence of food safety inspection systems.
The UK has supported the work of the Commission in negotiations
with a number of countries outside the European Union. So far
these negotiations have resulted in equivalence agreements being
signed between the EU and four countries. We believe that the
HACCP approach to food safety regulation of food produced in country
should replace the current outdated and prescriptive regulations
in this area. Such an approach, which focuses on outcomes, would
serve both to reduce the regulatory burden on EU businesses and
facilitate the conclusion of further equivalency agreements with
our trading partners.
23. In addition the UK takes an active part in the
work of the Codex Committee on Food Import and Export Certification
and Inspection Systems which is drafting codes in a number of
areas specifically intended to develop harmonisation and equivalence
between member countries in the field of food inspection procedures.
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).
24. The Committee is right to suggest that further
work is needed to clarify the interface between the Biosafety
Protocol[1] and the WTO.
The EU is pursuing this under the broader aim of clarifying the
relationship between Multilateral Environmental Agreements (of
which the Protocol is one) and the WTO rules more generally. This
clarification is part of the EU's agenda for the next WTO round.
Our aim is to achieve improved mutual supportiveness between the
multilateral trade and environment systems so that both are strengthened.
The Government believes it is important to ensure that trade rules
are not used to inhibit the development or application of multilaterally
agreed environmental measures, and equally that environmental
measures are not abused as a form of disguised protectionism.
25. Clearly the Biosafety Protocol will be central
to discussions of the environmental effects of GMOs in the WTO.
The Government agrees that WTO rules and those in other international
agreements should not duplicate but complement each other. In
the context of a comprehensive Round, we stand ready to respond
to any concerns raised by other WTO members.
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).
26. Irrespective of the regulatory procedures in
place to assess the safety of GM foods, it is clear that some
people will choose not to eat GM foods. The Government is fully
committed to enabling consumers to make informed choices about
the foods that they eat. It is important however for any mandatory
labelling rules to be practicable and enforceable.
(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).
27. As the Committee notes, labelling is already
covered by the Technical Barriers to Trade agreement, which requires
any regulations in this area to be transparent, non-discriminatory
and not more trade restrictive than necessary to achieve a "legitimate
objective" (including health and safety and the environment).
The Committee is right that there is some uncertainty as to whether
labelling designed to meet wider consumer objectives would be
considered compatible with trade rules, for example relating to
the promotion of animal welfare. The Government wants negotiations
to resolve such areas of uncertainty in order to fulfil our general
wish to provide consumers with the information they need to make
informed choices.
28. Mandatory labelling schemes have been introduced
by some countries, and at the EU level where there are high levels
of consumer concern or specific health, safety or environmental
issues. Nevertheless within negotiations it will be essential
to address the concerns of other WTO members, particularly developing
countries, about the potential for labelling schemes to be abused
for protectionist purposes, and the weak capacity of many producers
in developing countries to meet the higher requirements of mandatory
labelling schemes. Agreeing guidelines among all WTO members may
be the best way to prevent misuse. In considering labelling schemes
generally, whether mandatory or voluntary, the focus should be
on their effectiveness in tackling legitimate objectives.
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).
29. We agree with the Committee that it is vital
that developing countries receive assistance if they are to take
full advantage of the opportunities offered by a new round of
WTO negotiations. Developing countries need more and better support
for the negotiation and implementation of WTO agreements, and
for institution-building. UK technical assistance commitments
for trade currently exceed £15 million. Relating specifically
to the agriculture negotiations, this includes support for a World
Bank programme to strengthen developing country participation
in the negotiations in agriculture and funding of a full time
consultant to work with the South Centre in Geneva in providing
technical support to developing country negotiators.
30. In addition, we continue to press for greater
coherence between the WTO, World Bank/IMF and other relevant agencies
in their provision of trade-related technical assistance, and
practical follow-up to the joint WTO/World Bank/International
Trade Centre statement made at Seattle. We are working to take
this forward with like-minded donors in the EU, and with the World
Bank.
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).
31. We agree with the report's conclusion that there
should be increased internal and external transparency in the
WTO. The Government actively supports this and has been working
with our EU partners to look at ways that transparency can be
improved. Possible measures to improve external transparency include
further de-restriction of WTO documents, an increased use of the
internet, and wider consultation by the WTO Secretariat.
32. We also believe that national governments have
a crucial role to play. That is why we are committed to consulting
widely on issues relating to the multilateral trading system,
and why we included representatives of business, unions and non-governmental
organisations (NGOs) in the UK delegation at the Seattle conference.
In the run-up to Seattle, we produced a consultative booklet which
was distributed to over four thousand people, including NGOs,
business organisations and other interested parties.
33. UK Government Ministers and officials have met
and will continue to meet representatives from NGOs, business,
labour, local government and consumer groups to discuss WTO issues
in the run-up to a new Round. We are also exploring further means
to widen the discussion between Government and civil society,
in order to stimulate informed debate. For example, the DTI website
invites queries and feedback.
(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).
34. The UK supports attempts to make WTO procedures
more transparent. We would have no difficulty in making public
more of the material put into the dispute settlement process.
But we also have to respect the sensitivities of other Governments,
including those of developing countries, many of whom have concerns
about the consequences of conducting disputes more publicly -
for example that richer countries, multinational companies and
NGOs will be more adept at handling publicity than they will be.
There may also sometimes be valid commercial reasons for confidentiality.
Subject to the need to retain the integrity of the system of dealing
with disputes between Governments, we believe that reform should
proceed in parallel with discussions under the built-in agenda
and a new Round.
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).
35. We believe that issues raised in the WTO need
to be fully debated in national parliaments. Growing public interest
in the work on international organisations such as the WTO makes
this scrutiny all the more important. Parliaments have a key role
in ensuring that concerns about the activities of international
organisations are understood and addressed by governments.
36. To this end, the Government has been pleased
to contribute to a number of Select Committee inquiries, both
before and after Seattle. These include the Environmental Audit
Committee's Second Report, "World Trade and Sustainable Development:
An Agenda for the Seattle Summit" (November 1999); the House
of Lords European Union Sub-Committee A's report on the EU Mandate
(June 2000), and the ongoing inquiry into the WTO by the International
Development Select Committee. Ministers have also participated
in the House of Commons Debate on the WTO (9 December 1999) and
the House of Lords Short Debate on globalisation (19 April 2000).
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).
37. Most WTO members, including the EU, have placed
a high priority at the start of the agriculture negotiations on
the fulfilment of Article 20 of the WTO Agreement on Agriculture,
including examination of the effects of the Agreement. Papers
discussed at the second negotiating session, held in June 2000,
included background papers by the Secretariat on the use of green
box measures, the agricultural trade performance of developing
countries, and the effects of the reduction commitments on world
trade. Further papers were requested from the Secretariat including
one specifically on non-trade concerns. Most of these papers have
already been or will be published on the WTO website. It will
clearly be important to examine and take appropriate account of
all this material in the new negotiations. We do not believe though
that the outcome should be to delay the process of further trade
liberalisation, thus prolonging measures which distort trade and
slow down improvements in market access, but rather to consider
measures to address social and environmental concerns directly.
38. The Government also intends to keep in close
contact with the sustainability impact assessment of the new negotiations
being commissioned by the EU. The assessment will cover individual
negotiations on agriculture and services, and also a wider round
of negotiations when this is launched.
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).
39. The Government will take the impact on UK agriculture
fully into account when assessing negotiating proposals. Our views
on such proposals will be developed in parallel with views on
the future of CAP regimes, since the two are closely linked. The
Government consistently takes WTO obligations into account when
implementing legislation, and agrees with the Committee that we
also need to take possible future commitments into account as
appropriate. This is one of the reasons for our view that CAP
support should focus in the future increasingly on measures which
achieve social and environmental objectives associated with sustainable
farming but which do not distort trade. In this respect we welcome
the Committee's support for the Rural Development Regulation and
the redirection of support which that represents, while agreeing
that this is only the first step in a longer process.
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).
40. The Government recognises the difficulties that
constraining access to export refunds without matching reductions
in EU support prices is creating for exporters of processed foods.
For the short term, we are seeking more flexible access to Inward
Processing Relief as a partial solution to this problem. However,
we agree with the industry that further reform is the only long-term
answer, removing the need to rely on export subsidies to maintain
competitiveness. As stated above, we will seek to ensure that
any further cuts in export subsidies are matched by decisions
to make corresponding reductions in support prices, so that the
competitivity of UK food processors and exporters is not damaged.
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).
41. We agree with the Committee that there are clear
benefits for consumers from liberalisation, in respect of the
price and choice of food. The SPS Agreement also gives us the
right to impose trade measures where necessary to protect the
safety of food. Food safety remains a key Government concern and
we believe that the measures in the SPS Agreement provide adequate
means to take justified measures to protect public health. The
WTO rules governing the provision of labelling and consumer information
are less clear, but the provision of appropriate information is
a priority for the Government and we support the EU in pressing
for clarification of the rules through the Agreement on Technical
Barriers to Trade.
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).
42. The Government welcomes the Committee's continuing
support for its policy of pressing for radical reform of the Common
Agricultural Policy. We can reassure the Committee that we attach
a great deal of importance to this objective and are working strenuously
already to lay the groundwork for further reform, building upon
the outcome of the Agenda 2000 reforms. This is neither an easy
nor a quick process given the fact that most Member States do
not share our view. We are working to develop strategic alliances
with Member States which do share our analysis and also to ensure
that the arguments for further reform are fully understood and
are given due weight by all Member States and by the Commission.
The timing of these negotiations will be crucial. We need to take
into account the pressures for reform arising from the next round
of WTO trade negotiations and enlargement as well as the political
timetable in key Member States if sufficiently radical change
is to be secured.
Ministry of Agriculture, Fisheries and Food
5 October 2000
1 The official name of the Biosafety Protocol is the
Cartagena Protocol, not the Montreal Protocol. The original intention
had been to agree the Protocol in Cartagena in 1999, and, in recognition
of all the work put into the process by Colombia, this name was
retained in spite of the fact that the Protocol was finally agreed
in Montreal. Back
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