Examination of Witnesses (Questions 1
- 19)
TUESDAY 2 NOVEMBER 1999
RT HON
RICHARD CABORN,
MP, MR CHARLES
BRIDGE AND
MR DARRYL
BROWN
Chairman
1. Good morning, Minister, may I welcome you
and your colleagues, one of whom is from your Department and one
of whom is from the Department of the Environment, Transport and
the Regions.
(Mr Caborn) That is correct. We are joined-up government
now!
2. As you know, we published a report on multilateral
agreement and investment in January this year to which we have
your Government's response, and therefore we are following this
up with looking at the Government's negotiating position before
the Seattle Round which starts at the end of the month. Thank
you for your memorandum. Is there anything you would like to say
by addition to that before we begin questioning you on it?
(Mr Caborn) If I could just bring the Committee up-to-date
because, as you well know, it is a fairly fast-moving scene now
as we move into Seattle in about three or four weeks time. There
were discussions last week in Lausanne and we have had a number
of meetings with EU ministers to try and get our common position
there. If I could just outline where we are at the moment. The
first principle is that we in the UK and the EU are trying to
set the agenda for a comprehensive Round in Seattle. People get
a little mixed up sometimes; all we are trying to do is get the
agenda set in Seattle for the next Round, which we are trying
to get time-limited for three years.
3. The negotiations would be about three years?
(Mr Caborn) What we are saying is, we set the agenda
and we, the EU and the UK, are asking for a comprehensive Round
effectively ruling nothing in and ruling nothing out. Once we
have set that agenda at Seattle that should be time-limited to
three years; and we should try to bring the whole of that negotiation
to a conclusion within a three-year period. That is the framework
we are going into which has been agreed as far as the EU is concerned—to
get the agenda set for a comprehensive Round. We do not see this
commitment as conflicting with other aims of promoting sustainable
development and higher health or environmental standards, indeed
workers' rights or animal welfare. The WTO is concerned with the
rules which govern trade between its member countries. Areas such
as labour and environment standards are primary responsibility
of other organisations like the UN, the International Labour Organisation,
World Bank, OECD and so on. The point we are making there is,
whilst there are linkages, and clear linkages, which we have got
to discuss at Seattle, there are responsibilities for labour,
for example, which is the ILO, and we think that is the best way
to move that forward, and also get clear divisions of responsibility
with the international institutions as well. Issues, in terms
of the environment, are most effectively remedied through domestic
action by national governments or multilateral environmental agreements,
such as the Climate Change Convention. The WTO may in some cases
be able to make a contribution to solving these problems or ensure
obstacles are not placed in the way of solutions. But it cannot
take full responsibility for the environment. As I say, there
are the proper linkages there, and we will probably explore those
in questions. We also believe that the objectives of trade liberalisation
and sustainable development can be mutually supportive. We believe
liberalising trade can help ensure resources are used efficiently.
We think that is important. It should therefore be able to release
those resources and make sure there are projects, such as spreading
cleaner technology and environmental goods and services, which
we think are part of the development of trade liberalisation.
One other area we think is of importance, particularly as far
as the environment is concerned, is the ability to bring developing
countries into the family of trading nations. We need to have
capacity building in those areas. It is something which is already
operational. We believe it needs to become more focusing, and
is an area we think needs to be taken up as far as the Seattle
Round is concerned. As far as the UK and EU commitment to ensure
sustainable development is concerned (which is a key objective,
we hope, of the new Round), the relationship between trade and
the environment is included as a subject for negotiation at Seattle.
We will be pushing that very hard. Therefore, we want the linkages
between trade measures and environmental considerations to be
taken into account throughout the whole of the negotiations. We
believe that gives us win-win opportunities as far as the Round
is concerned. The EU Sustainability Impact Assessment we think
is important here before the Round. We believe it is ground-breaking
work on the likely impacts of trade measures proposed by the EU
for the new Round. A preliminary assessment is being conducted
before Seattle to help inform negotiations. We also want to secure
specific negotiations on trade and environment in the Round on
three specific issues: firstly, the Multilateral Environmental
Agreements (that is the linkage between the rules of the WTO and
the MEAs); secondly, we want to clarify and refine the eco-labelling
programmes, which is to be welcomed and is developing in a fairly
adult way; and we think the WTO could be useful in bringing some
sense to that area; and, thirdly, examining the role of the precautionary
principle in relation to environmental concerns in the WTO rules.
That is what we are laying out for Seattle. We have basically
got agreement across the EU, but there are obviously difficulties
with other Member States of the WTO that do not necessarily share
our view on a comprehensive agenda. I think after Lausanne (and
discussions are taking place bilaterally) there is a little optimism
around, that we might be able to get to an agreement on the agenda
for moving, if not to a totally comprehensive Round, much nearer
than I thought four or five weeks ago. I think it is all moving
in the right direction.
Chairman: Thank you for that. Obviously
we would like to start off from base one looking at the rationale
for this coming Round, given that the MAI was a disaster.
Mr Shaw
4. I was pleased to hear you say at the end
that sustainability will underpin the whole of the negotiations;
because earlier on in your opening statement you talked about
almost compartmentalising issues of the environment and employment
and we want to see it all joined up, so that is encouraging. The
NGOs have criticised formulation of the Government's objectives
saying it is just a trade liberalisation to increase flows of
investment, rather than taking account of a more balanced package
of measures with sustainable development underpinning it. What
do you see is the need for further liberalisation of the multilateral
trading system?
(Mr Caborn) First of all, our view is if we can manage
the changes that are necessary towards trade liberalisation then
they will be a key contributor to economic prosperity, to the
growth and creation of jobs and, we hope, to a better quality
of life even for the developed countries. What Gordon Brown has
been doing, along with Clare Short, at the IMF is trying to lift
the debt burden off developing countries and we are now talking
about the last round of that. For the 38 most heavily indebted
poor countries there was a lifting of $100 billion of debt for
that. That was the negotiation at the IMF. We believe once you
start lifting that type of debt and giving them a fighting chance
to come into the family of trading nations, the best way to relieve
poverty and debt of the poorer nations is actually through trade
and not necessarily through aid. Aid is important in many respects,
but the long-term sustainable development of those nations will
be through trade. In the bigger picture of the Government we have
taken steps to start relieving debt on the most heavily indebted
countries—we have done that both at the IMF and inside the
EU; we are now moving towards making sure we create a framework
in which the 134 countries (most of which are developing countries)
can actually feel reasonably secure in the WTO: that it is a soundly
based, rules-based organisation; that it is transparent; and it
has a proper disputes procedure in it. I believe in this next
Round that will need to be refined to make sure those objectives
do operate inside the WTO. That is the framework. In trying to
make sure there is access to the markets, there are a number of
steps we believe the WTO ought to take. We are not negotiating
at Seattle; all we are doing is setting an agenda for the negotiations
to take place in the following three years.
5. Opening up trade will help the developing
countries, but you will also take account of issues such as human
rights and the environment. You will remember the arguments we
had about apartheid. There were those who argued if we continued
sanctions against that country that would cause difficulties and
would damage the prosperity of the country and for the majority
of the people. We did not take that view in Opposition and I do
not think we take that view now. Which sectors do you think need
opening up, and are there any particular countries, apart from
the heavily indebted poor countries?
(Mr Caborn) On the question of apartheid in South
Africa just to put the record straight—that was initiated
by a number of countries through the United Nations and the Commonwealth
and people had access to those organisations. If people believe
countries are acting outside of what are reasonable rules which
a civilised society ought to be living by, then obviously there
are rules. I do not think that is necessarily a question the WTO
will take on. In terms of the developing countries and probably
the heavily indebted countries, there is an argument which we
have put forward for reductions of tariffs as far as those countries
are concerned—a total reduction of tariffs in industrial
goods and in other areas as well. There are areas in agriculture
which we believe are necessary. There are the propositions coming
up from the APEC countries about fast-tracking in certain areas,
in certain groups of tradable commodities. There is a whole series
of propositions on the table for discussion but not at Seattle
(that is setting the agenda), it is for after that you actually
sit down. Propositions for discussion is what we are trying to
get to. Our position is that we have a comprehensive agenda taking
into account the points you were making about getting access for
developing countries to the more developed markets.
6. We moved from deregulation to better regulation.
Is there a case of shifting the focus of trade negotiations from
freer trade to better trade?
(Mr Caborn) I think that is true. I think that is
why the WTO is there. That is what a rules-based organisation
is about. It is a relatively new organisation, born in the early
1990s, but it is trying to refine its rules. We will be pushing
very hard to make it more transparent in a number of areas. We
want to make sure there is a dispute procedure that is respected
by the 134 countries. We think that is important if it is going
to have credibility. Yes, I think we can move to refine that.
Also what we have to be saying clearly at the international level
is that our responsibilities in the various organisations (like
the ILO for labour, like the OECD in the developed countries,
like the WTO) are specific responsibilities, they do not stand
there in isolation; therefore we have to be clear about the linkages
between those. On the Multilateral Environmental Agreement it
is very important that they are compatible with WTO, and that
WTO is compatible with them. There are now about 200 MEAs which
are operational, and of that there are about 20ish that have got
trade involved in the MEAs. We have to make sure they are linkage
compatible with what we are operating in the WTO. It is right
that those Multilateral Environmental Agreements are there, they
are negotiated and they can link into trade.
7. Do you see the WTO as having a slightly wider
focus and taking account of sustainable development, or that it
should underpin?
(Mr Caborn) We underpin that, in that we have got
Article XX, which is the one that really outlines the question
of sustainable development as far as the WTO is concerned. That
is where the sustainable approach to trade will take place. Before
we go into this Round, there is an environmental impact being
done on that and we take that seriously. There will be an environmental
impact study after the negotiations so, as far as the EU is concerned,
we will be looking to make it as sustainable as possible. It is
not an add-on; it is part of the culture that we have to try and
make sure happens inside all the negotiations. You do not say,
"We ought to put this in at this stage, it is something we
ought to add". If you have got sustainable development as
far as trade is concerned, we believe that is the most efficient
way to do trade. Invariably, if it is unsustainable you may well
get a short-term gain out of it, but in long-term sustainable
economic development it does not work.
Mr Gerrard
8. If we are going to go for a comprehensive
negotiation, which is going to cover a wide range of issues, then
there has to be the possibility that for any individual countries
there are going to be potential gains and losses in different
areas. It is unlikely everybody will get what they want on everything.
Do the developing countries really have the capacity to handle
a comprehensive Round?
(Mr Caborn) I think that is a good question. I think
there are some doubts as to whether they could handle that comprehensive
Round. One of the things that has to be clearly put at the Seattle
meeting is: how do we assist developing countries to have the
capacity to be able to do that? That can be done in a number of
ways and it is something we have to have serious discussions on.
The one thing which will undermine both the negotiation and the
institution itself is if people believe they are not getting a
reasonable and fair deal out of it. It is very important that
at Seattle we do resolve this problem. Mike Moore has been saying
very clearly that capacity building for developing countries is
very important, to give them the expertise and the skills to engage
in a realistic debate about the way the WTO and its policy development
is going. It is something the UK Government has been engaged in
as far as the WTO is concerned, and we think that is a priority
and will continue to push that as a priority. It is important,
if we do not do that it undermines the credibility of the organisation,
if people feel they have not got the skills to deal with it.
9. Clearly, if people feel they are being told
what to do, rather than being able to put them in place, that
is a problem. The figures suggested you have got over 30 developing
countries with no permanent representation in Geneva, and the
USA with about 250 representatives in Geneva. There is a very
obvious problem there. How can we develop the analytical capacity?
We are embarking on negotiations now, is there time to develop
that capacity; and how can we do it; should we be trying to link,
as we set off on this, the agreement that we are going for a comprehensive
Round to that capacity building?
(Mr Caborn) It is a problem that has to be resolved,
that is what I am saying. We are very, very mindful of that; but
we believe what we are doing as a government and not just the
WTO, I hope we are showing and taking a lead in international
organisations, like the IMF—where I have just indicated
the type of debt forgiveness that we have negotiated, and will
continue to develop that policy. The fact we have pushed very
hard and led from the front from the UK Government, to get an
agreement with South Africa and the impact upon that for Southern
Africa, will be considerable. That is the EU/South Africa Trade
Agreement which went through two or three weeks ago. All our actions
have been in the direction of a) facilitating the capacity-building
and b) moving down an agenda of liberalisation of trade. We believe
that is the best way to start addressing some of the real problems
of poverty we have in the world. We want to manage change. Part
of that management of change will be by capacity-building for
countries that clearly do not have those skills, and we will do
that. I do not believe that is a reason for stopping progress
at Seattle. It is acknowledging where we are and trying to rectify
that, and we will do that. We will make sure it is a major part
of the negotiations. As far as the WTO bureaucracy is concerned
we are pushing at an open door because Mike Moore said very clearly
this is one of the areas where we have to find some resolution—I
accept that.
10. How far are we tied to the concept that
it is not just a comprehensive Round of negotiations but at the
end of that process there will be a single undertaking, that you
accept the outcome or you do not accept it? How far are we tied
to that? Is there a danger if you just have a single undertaking
you are going to be forcing people into what may be sometimes
quite damaging or inappropriate trade-offs between different parts
of the deal that has been arrived at?
(Mr Caborn) I think that is true, and that is why
we have been extremely sensitive in a number of areas. Mr Horam
said about the whole question of the MAI to begin with. The other
one on labour is a very sensitive issue as far as developing countries
are concerned, and to some extent the environment as well. That
is why we have been very careful on how we have approached it.
We do not want any rejection before we even get to the starting
line, as it were. The Joint ILO/WTO Standing Working Forum means
a lot to a lot of people, but what does it mean at the end of
the day is: it means we have got a forum there where labour issues
can now be discussed and bridges can be built; we can start addressing
some of the problems we have out there in some of the developing
countries and they will feel they have a forum which will not
be imposing, is not going to be part of the WTO and is not setting
the rules. Similarly, on the MAI we would like, and will be putting
forward, that the whole question of financing and financial services
should be on that agenda, but it will not be the same. We have
drawn a line under the MAI and the OECD's approach to that. We
believe it was wrong and we drew a line under it. Your Committee
looked at that situation, but we are moving into the WTO where
there are 134 countries who have a right to say that, and the
vast majority of them are developing countries. We hope we can
put that on to the agenda. I cannot give you any assessment as
to the outcome in two or three years' time. All I can say is,
there is a general view now that the managed liberalisation of
trade is the right way to go. There is a fair consensus now coalescing
around that.
11. I understand what you are saying. I think
you have pointed to some specific areas where it looks like we
might get some progress. If you get a forum set up which brings
in the ILO I think most people would welcome that and if you start
to get moves on MEAs. At the end of the day, if what we are going
to say in Seattle is that we want a single undertaking as a result
of this negotiation, might it not be better to say, "Let's
look at where we can get some progress". Is there an area
here where we can get some progress and take a rather more flexible
approach than just going for the single deal at the end of the
line?
(Mr Caborn) You can take that view and it is quite
legitimate and one they have done in the APEX countries. I met
the New Zealand Trade Minister last week and he was saying the
work being put in to what they called the "early harvest",
which are eight sectors APEC are now putting forward, they believe
they have got an agreement; and it is a considerable move forward
when you think about the APEX countries coming down on agreement
on the eight areas and they want to put them on the table. We
are not against that; the only thing is that it has to be part
of the total agreement at the end of Seattle. We are not going
to allow a limitation or a limited part of that negotiation to
take place; we want to see it as a comprehensive Round. That could
be put in what APEC are doing. We do not believe a single undertaking
rules out the early harvest either. That is open for negotiation.
What we have been saying consistently is let people put on to
the table what we want to negotiate, let that be the agenda, let
it be a comprehensive Round.
12. Do you think there is a danger, if it is
not a comprehensive Round, you might get some sliding back into
protectionism?
(Mr Caborn) I think that is a danger. If it is not
a comprehensive Round, the areas you get agreement on could be
undermined by areas you do not get agreement on. Therefore you
can find a back door to protectionism, which is the worst of all
worlds.
13. Are the WTO rules not strong enough to stop
that?
(Mr Caborn) We are saying that the WTO rules have
got to be revisited in a number of areas: linkages on MEAs; the
whole question of the disputes procedure; the transparency; what
we do and do not allow into the public domain. All that, we believe,
has got to be re-visited and put on the agenda for Seattle.
14. Some people are arguing that what we should
do, rather than look for a comprehensive Round and moving forward,
is to concentrate on looking at what has happened following on
from the last Round and say, "Let's review what's happened,
let's repair, let's reform, let's deal with the problems that
have arisen and consolidate the gains that have come out of that
before we start to push ahead". How far do you think that
is a valid point?
(Mr Caborn) I do not think it is a particularly valid
point, because I do not think it is particularly well intellectually
argued out. What they have said is, "Let's stop the clock
and start assessing". The world moves on, the world is moving
on at an ever-increasing pace as we all know. Unless you try to
manage that change in a way that is conducive to liberalisation
of trade, we think that would be a retrograde step. That is not
to say there are not continual assessments, there are. There are
a steady flow of assessments being made in terms of Uruguay. That
is there for debate and I hope will inform the debate. I think
we are conscious of the criticisms of some developing countries,
like India, who are very critical that the gains promised from
Uruguay have not been realised. That is quite a legitimate case
and argument to put forward. I do not think it is an argument
for stopping the process. What we have to say is, "There
is a continuous assessment going on, and we will try to manage
that change in the light of those assessments coming forward".
15. There is some disillusion on this with some
of the things that came out of Uruguay. Just as an example, with
the Trade Related Intellectual Property Rights some of the developing
countries have been very unhappy at the consequences of the TRIPs
Agreement. Are those going to be open for negotiation again; or
are we going to be saying, "We've got the framework there,
we're not going to touch the basic agreement that was made at
Uruguay"? There is disillusion—
(Mr Caborn) It has got to be answered.
16.—that is probably more likely to result
in people sliding back into protectionism and not wanting to sign
up to an agreement if disillusion is what has already happened.
(Mr Caborn) With TRIPs, or any other area people believe
they have a legitimate grievance against, I think it would be
foolish to say that it is set on tablets of stone. You cannot
leave agreements unanswered or, if you do, it will always be a
source of discontent. What I said before is, we want to try to
make sure we re-visit the rules and try to make the WTO more efficient,
more effective and, indeed, a more transparent body. To allow
part of the decisions made in Uruguay not to be put on to that
agenda would be foolish in my view.
Mr Savidge
17. The Government agreed with this Committee's
MAI report that "international agreements on issues such
as trade, investment, employment standards and environmental standards
should be the subject of focused negotiations in appropriately
expert fora . . . it is imperative that in these fora the relationships
between the proposals under discussion and other initiatives,
whether existing or in development, are fully analysed from the
outset. Such analyses must look both at the risks of conflict
and the opportunities for confluence". I was wondering, in
the light of that, what appraisals the UK is currently undertaking
for a new Round on those lines? What risks and what opportunities
have you identified?
(Mr Caborn) Could you give me the reference.
18. That is from the MAI report, paragraph 25.
The report said basically that we should have expert focus fora
where we should be carefully trying to work out where things inter-relate
between them.
(Mr Caborn) This is where we believe the sustainability
assessment we have put into place, as far as the EU and UK is
concerned, should be coming up with an appraisal.
(Mr Brown) The consultants have done the initial phase
of work on that assessment in preparing the methodology which
they have presented to Member States, and to NGOs as well. That
received a very favourable response from Member States and NGOs
in Brussels. The next stage of that assessment is to do a preliminary
qualitative assessment of the likely impacts of the Round itself.
The consultants will be doing that before Seattle. We will have
that to help us when we go to Seattle. That will be there to inform
our negotiating position. The purpose of that assessment is to
balance exactly those sustainable development considerations,
environmental, economic and social factors.
19. At this stage what we will be doing is simply
trying to set up the administrative procedures for doing that?
We are not actually at the stage of trying to get export fora
working out what is required and how they should be inter-related?
(Mr Caborn) First of all, it is not on the agenda
yet. The whole question of the financing is not on the agenda
at Seattle. We have still quite a way to go to get that on. What
we have done as a precautionary move is to make sure for anything
we are likely to put on the agenda that we have done our environmental
assessment on that. That is what Mr Brown has been saying. We
do not take it as read that this is on the agenda for Seattle—it
may not be. We hope it is, and the EU have a position on this,
and it is something we want to put forward.
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