Select Committee on International Development Minutes of Evidence

Examination of witnesses (Questions 1 - 19)




  1. Order, order. May I welcome you, Ministers, to this very unique occasion? This is a first for Committees to have a joint meeting. We have the European Scrutiny Committee, the International Development Committee and the Agriculture Committee and we are looking forward to your evidence. Could your advisers briefly introduce themselves?
  (Mr Walmsley) I am David Walmsley, I am the Head of the Trade and Development Policy Unit in DTI.
  (Mr Carden) I am Richard Carden, Director General for Trade Policy in DTI.
  (Mr Brown) Henry Brown, Head of New Crops and Sugar Division in MAFF.
  (Ms Baxter) Christine Baxter, Head of Sugar Branch in MAFF.

  2. My first question is to both Ministers. Could you set out the division of responsibilities between your two departments in relation to the proposals on least-developed countries (LDCs) and the sugar regime?
  (Mr Caborn) Thank you very much for inviting the two Ministers here this afternoon. May I say I think we put that very clearly in our EM on Com (2000)561 (final) document which we submitted to you? That laid out very clearly where the Government is coming from. It is a decision of the Cabinet Committee so it is across Government and we act on the trade side in Europe from my department and on agriculture through the Minister for Agriculture.
  (Ms Quin) Let me add that in terms of what is known as the "everything but arms" (EBA) proposal, that is a proposal which the Department of Trade and Industry take the lead on. In terms of the parallel proposal that the Commission has put forward for the reform of the sugar regime, that is a MAFF responsibility and discussed by Agriculture Ministers in the Agriculture Council.

  3. What steps have you taken to ensure that the UK Government has a coherent approach on access for least-developed countries and the future of the sugar regime?
  (Mr Caborn) We were very clear on this, from the statement made by our Prime Minister in a Mansion House speech a year last November, that we are very supportive of the LDCs having access to the developed world's markets. You probably know that this was a major issue at the World Trade Organisation meeting in Seattle. One has to see this particular discussion this afternoon in the bigger picture of what we are trying to achieve as a Government and indeed what we are trying to achieve in Europe. As I said, the access for LDCs into the developed world's market is very important, as seen from the announcement that Gordon Brown made in terms of restructuring third world debt and what my colleague Clare Short said in the White Paper which she presented, and we believe this is all part of the managing of globalisation of trade which is very important indeed. One has to remember that since 1993, what we have been able to do from Uruguay to where we are now with the WTO, world trade has actually increased by round about 26 per cent. We think it is that type of management of trade in a way which can engage the 140 countries within the World Trade Organisation which is very important indeed. There will be problems in managing that type of liberalisation. We are discussing some of those today and I hope the proposals which are before you from the Commission do actually give the safeguards to the industry, such as the safety valves which are in in terms of surges of imports which would not take place in terms of sugar, and that we shall be able to make sure that we can control that in a fairly effective way. I also hope that the type of representation we have been making inside Europe will at least give some comfort to those who may well be affected by this change in arrangements.

  4. What role is the Department for International Development playing?
  (Mr Caborn) A very big one. If one looks at the White Paper which has just been produced by my colleague Clare Short, then you will see very clearly that we are for assisting in the write-down of debt, and Gordon Brown has been chairing the IMF committee on that. We have taken a lead very clearly internationally to restructure debt for those LDCs, although we do believe that they now have to have access to developed world markets for their goods and services and we are only talking of the 40 or so countries, 0.5 per cent of world trade in its totality. I think DFID have been involved in a very, very positive way in developing that, along with the DTI, along with Agriculture, along with the Treasury.

Mr Curry

  5. The question was about coherence and D-G VI has a sugar reform under way and then, cutting across this and taking everybody by surprise—I think it is fair to say—we had Mr Lamy's proposals for the "everything but arms" imports and DFID tells us that the Government supports the proposal. We need to be clear about it. I take it that is not an issue, that the Government does support the proposals. My question is: what advice is the Ministry of Agriculture giving Mr Fischler about the progress of the sugar reform proposals. Is he telling him to stop them, to put them on ice? Are they advising him to tell Mr Lamy to take sugar out of his proposals? What action is the Government taking to achieve coherence in Brussels?
  (Ms Quin) The question was in fact about coherence.

  6. Yes, but the answer was not.
  (Ms Quin) There has been coherence between Government Ministers in the UK Government about this and for that reason we have been pointing out to the Commission the inconsistencies between what they were originally proposing on the "everything but arms" agreement and the proposals which Commissioner Fischler put forward in terms of reforms of the sugar regime. We believe that it is necessary for the Commission to be coherent in its approach and we have argued that line strongly in the Agriculture Council. For that reason we have argued in the Agriculture Council that simply seeking to extend the existing sugar regime for five years, which many member countries wanted, was inconsistent with the "everything but arms" proposal and therefore it made sense for both sugar reform and the "everything but arms" proposal to go hand in hand.

  7. What reform of the sugar regime would render it compatible with the "everything but arms" proposal?
  (Ms Quin) Obviously a phased transition. The "everything but arms" proposal has a transition built into it and the specific arrangements concerning that transition are still being discussed. In terms of the Commission's proposal on the sugar regime, the Commission's proposal was for no change by and large for two years and the majority of Member States seem to favour no change for five years. Obviously that is not consistent with "everything but arms" and therefore we have been pushing for changes to the sugar regime proposal which are consistent with the "everything but arms" approach.

  8. As MAFF, when you see DFID saying it supports a proposal as an important concession to the world's poorest countries and a confidence-building initiative for a new round of trade talks, when it says that it ensures that the concerns of the non-LDC/ACP countries are addressed but merely states that it is aware of the views of British sugar producers and the sugar industry in Britain, does that cause you a certain anxiety as to the sort of balance of the response?
  (Ms Quin) The Government has been very clear that we want, as far as the UK sugar market is concerned, to continue the balance we have had between beet and cane and indeed our evaluation of all Commission proposals has very much kept that balance in mind. We believe that we can achieve it both through managed change of the Community sugar regime and through the introduction of the "everything but arms" proposal.

  Chairman: We have questions later on the sugar regime and any points you may wish to make to the Committee then, you will be welcome to do so.

Mr Worthington

  9. Can you take us through the steps which now have to be gone through with regard to this proposal? What stage has the Council reached in considering this proposal? Is there a likelihood of an early agreement on this?
  (Mr Caborn) That is a good question. As we understand it there have been discussions at a very high political level in Germany and they have suggested to the Commission that they would want to be helpful for the most "liberal possible" proposal; they are the words which have been passed into the Commission. We understand the Commission are meeting tomorrow. Whether it is actually going to be on the agenda, we are not absolutely sure. What one can be absolutely clear about is that there will not be any principal changes to what is proposed at the moment. There may well be changes at the margins but I cannot give you a clear indication. The question would be whether it becomes operational on 1 January 2001 and the answer is that I could not give that assurance at this stage. There is a Commission meeting tomorrow; which is unusual because it normally meets on a Wednesday. Whether it is going to be on the agenda then I am not absolutely sure. I cannot actually answer your question.

  10. What steps does it have to go through?
  (Mr Caborn) It has to go back to Council.

  11. There is this great conflict between this trade liberalisation which is proposed by Commissioner Lamy and what has been a highly protected regime. One would anticipate that there would be opposition from somewhere for it. How quickly are we going to get a decision? What are the steps the thing has to go through?
  (Mr Caborn) It has to go back to the Commission and it then goes to Council. Once it has been to Council, that will be the final stage. One is hopeful that the Commission can come to a decision in as short a time as possible and that is what we have been saying. What the Germans have been saying could well be helpful in moving that agenda forward.

Mr Dobbin

  12. You have alluded in part to Germany but what views do other Member States have on this issue?
  (Mr Caborn) There is now a general consensus; there are obviously differences between the committees. I think it would be true to say that there are differences in the Agriculture Committee as against the Trade Ministers but there is now a proposition on the table in front of the Commission which is finding favour and one which has been submitted to this Committee and one is hopeful that—it will probably change a little at the margins—it will be the final agreement which could well come out and go to Council. If it goes to Council then that would be accepted.

  13. Has much concern been expressed about what this means for sugar, rice and bananas?
  (Mr Caborn) Very much so. That is why there is the transitional period for those three commodities. They were singled out as the more difficult area and one which needed to be managed more carefully than probably the other areas. That is why the Commission are suggesting, the proposition they have, for those three-year phasing-in proposals a 20 per cent import tariff reduction from 1 January 2001, 50 per cent from 2002, 80 per cent from 2003 and full elimination only from 1 January 2004. I think, rightly so, that the Commission are giving time to manage the change we were talking about. May I just put that into some perspective? We are talking about the LDCs which are exporting. Remember the LDCs are a major consumer, they actually produce about two million tonnes and actually consume three million tonnes. They are exporting around about a quarter of a million tonnes onto the market, compared with a consumption of 12 million tonnes in the European Union and a total production of 18 million tonnes. Keeping these things in some proportion, that is what we are talking about in terms of potential import. If you just bear in mind what I said a little earlier, that there is a mechanism inside the proposals of the Commission, that there is a trigger if there were a surge in imports on sugar. Therefore there is a mechanism there to safeguard any distortions which are beyond those foreseen by the Commission. We can manage the change in a way which is compatible with sustainability.

Mr Wells

  14. May I pin you down on the actual process which you are proposing to agree to? Are you saying that you expect the Agriculture Council to which the Commission has to give agreement to this proposal for "everything but arms", will meet before Christmas and that you will implement the first stage of the reductions on sugar, bananas, rice, and alcohol presumably, as to a 20 per cent reduction in the tariff, in January 2001? If that is so, what is the rush? How can you possibly expect and is it reasonable to expect the countries which have been exporting these products, and indeed those who process it in this country and market it, to adjust their programmes in time for this rushed agreement? Or have I got it wrong?
  (Mr Caborn) You have got it wrong. It will not be the Agriculture Council it will be the General Affairs Council which will make that decision.

  15. Will that meet before Christmas?
  (Mr Caborn) I do not know. The first stage is whether the Commission agree on a joint reference to the General Council.

  16. On the assumption that they do.
  (Mr Caborn) I am not into the game of answering hypothetical questions.

  17. It is not a hypothetical question.
  (Mr Caborn) It is a hypothetical question. I cannot answer whether this subject is going to be on a Commission agenda tomorrow or not. I honestly do not know that.

  18. We are in that kind of chaos, are we?
  (Mr Caborn) No, we are not in that type of chaos, we are just trying to find a sensible solution to difficult problems and if that takes a few more weeks, then that is reasonable.

Ms Jones

  19. I should like to carry on this issue of the transitional timetable which you have just laid down and its effect on what are known as the ACP states, African, Caribbean and Pacific states. As you are aware, the Cotonou Agreement was actually talking about a period of eight to ten years lead time in order to remove the trade barriers progressively. Those states have been working to that timetable. If the "everything but arms" proposal is talking of a lead time of two to three years—you have just laid out the timetable yourself—do you not think that we are in grave danger of, particularly the Caribbean states I understand, whose economies although they are growing are still pretty fragile, expecting countries to make crucial decisions in a much shorter length of time than would reasonably have been expected under the Cotonou Agreement?
  (Mr Caborn) Obviously you are briefed by your Clerks and people, but Article 37 (9) of the Cotonou Agreement, which was signed last June, specifically states that the EU will begin the process by the year 2000, which by 2005 at the latest will grant duty and quota free access to essentially all LDC products. That was said in the Cotonou Agreement and that was Article 37 (9). The EBA proposal is not out of sync with what Cotonou is saying and indeed what the Commission are saying and what I have just quoted to you in terms of that timetable.

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