Examination of witnesses (Questions 20
- 39)
WEDNESDAY 20 DECEMBER 2000
RT HON
RICHARD CABORN,
MR RICHARD
CARDEN, MR
DAVID WALMSLEY,
RT HON
JOYCE QUIN,
MR HENRY
BROWN and MS
CHRISTINE BAXTER
20. Did anyone in the EU or in the Commission
consult with the ACP group of states about this timetable directly?
(Mr Caborn) I would imagine there is a continuous
dialogue going on inside the European Union and the ACP. I cannot
give you specific dates. That is a question I shall try to answer
in writing. A piece of paper has just been passed to me so I shall
give you the facts. The first session of the ACP/EU Joint Parliamentary
Assembly took place from 9 to 12 October in Brussels. Pascal Lamy
presented the LDC proposals to the Joint Assembly on 10 October.
The Commission proposals for access for the least-developed countries
was generally welcomed by MEPs and ACP MPs, although several argued
that the preferential treatment for non-LDC/ACP states and highly
indebted poor countries (HIPC) should not be eroded.
21. I have to say that the timetable you read
out is an incredibly tight one. It does raise the question of
just how realistic it is, given that although we are not dealing
with the least-developed countries of the world we are dealing
with countries whose economies are very fragile and they have
been expected to move very quickly.
(Mr Caborn) That is true and one has to bear this
in mind and it is obviously a matter of political decision at
the end of the day. However, when you are faced with countries
like Mozambique, which is one which will be able to access this
type of arrangement and you are talking there of probably one
of the poorest countries in the world with 40 per cent of its
people living below the poverty line on less than one dollar a
day and one in every five children is dead by the age of five,
what we are trying to do, as we have done, is assist in rescheduling
their debt. This country has been successful in helping them,
through Export Credit Guarantee and trying to build up an industrial
base. We are now trying genuinely to complete the virtuous circle
in allowing their product to come into the European Union. We
think we have a moral and a political obligation to those countries
and we believe that managing global trade in the way we are doing
is the right way. That is a Government decision. I am very proud
to be part of that.
22. I understand the intentions behind this.
I have no argument with them, but I think I would just put it
to you that in order to help the poorest countries of the world,
there is no point in them giving extra problems to the next layer
up. Although they are not the poorest countries their economies
are still very fragile. It seems to me that there is no point
making their economies poorer by trying to help the poorest. That
does not actually make sense. I have no quarrels with what the
EU is probably trying to achieve here in terms of health in the
poorest countries; that is not the point. What I am saying to
you is that there is no point in then creating problems for other
fragile economies in attempting to achieve that. That is the point
I put to you. Although I did not attend the Westminster Hall debate,
which I gather took place last month on the sugar regime, I have
actually read the transcript of the debate and questions were
asked there about impact assessment studies being done by the
EU with regard to the "everything but arms" proposal.
Could you confirm whether impact assessments are being done? Do
we know that for certain?
(Mr Caborn) May I first answer your first question?
Of those least developed countries to which you just referred
who are exporting into the Community in terms of the sugar regime,
the 1.3 million tonnes quota which is already there on the sugar
protocol will stop there. The area which could well be affected
is the 300,000 tonnes which is a special preferential sugar regime.
May I again refer back to the White Paper from the Secretary of
State for DFID which says that they recognise that the EBA proposal
will create adjustment challenges for some of the non-least-developed
countries in the ACP group and they will work to ensure provision
of sustainable assistance to help them in the adjustment process.
I think that really is joined-up Government in the sense of what
we are trying to do through the Treasury, through DFID, through
MAFF and also through the DTI. We have a coherent strategy for
how we are going to help the HIP countries but also those who
are exporting into the Community at this time. In terms of the
impact assessments, the answer to that is that I understand the
European Union do have an impact study which they are doing at
the moment and that should be available as and when; I do not
know the exact timetable.
Mr Colman
23. I am pleased that we have moved forward
from essentially "all" to "everything but arms".
I was in Seattle with you and I think it was a great shame that
we could not move faster on that and I am pleased that in the
last 12 months there has obviously been this move forward. Given
that Cotonou came forward with this concept in June and the Assembly
met on 9 October, I am concerned that impact assessments have
not been published over this last 12 months on a regular basis.
I would assume that work has been done on this over the last 12
months and I am a bit astonished that they are not able to be
available for us to see now. May I explore further the nature
of those assessments, whether it is simply bringing forward the
"everything but arms" basis or whether it is what was
wanted in Seattle which was in fact a dismantling of the Common
Agricultural Policy over a period of, say, ten years. What has
been done over the last 12 months? Can we have it put before this
Committee? Are the impact assessments in fact looking at a wider
range, taking us forward ten years, so we are not jumped like
this in the future?
(Mr Caborn) As I understand it the Commission have
been making impact assessments on that and there is a Commission
document which was circulated, COM (2000) 561. The impact on business
and the impact on trade were two of the areas they were looking
into. As far as I understand it there have been no conclusions
of those impact assessments at the moment.
(Mr Carden) The document the Minister is referring
to is part of the proposal which was brought out in October, an
initial impact assessment, in the way the Commission always does
produce an impact assessment with a proposal which has an impact
on business and on trade. They give a broad assessment of the
direction of impact on business and impact on trade. They are
now looking into some of the questions which have been raised
in discussion in Brussels so far but it is not clear that they
are going to produce another formal assessment document.
24. Has the document you are referring to been
placed in the House of Commons Library?
(Mr Carden) Yes. It is part of the proposal which
was tabled in the House.
(Ms Quin) The main thrust of the question relates
to impact studies in terms of "everything but arms".
The Commission's proposals on the reform of the sugar regime do
talk about producing some other studies in relation to the operation
of the sugar market, particularly competitive issues, issues to
do with the future of quotas and also how far price cuts are passed
through to consumers. Several studies have been put forward in
the context of the sugar regime proposals, but they are following
a less rapid timetable than the impact study in connection with
"everything but arms".
25. The question was: out of Seattle was very
much a wish that developing countries should be able to export
into Europe fully without the barriers of the Common Agricultural
Policy. Is in fact an impact assessment being made which is in
train at the moment, looking at how in fact, as is wished by developing
countries, there can be the dismantling of the barriers, not in
the four years which is described in terms of "everything
but arms" initiative, but in terms of the wider situation,
in terms of opening the European Union market to agriculture from
developing countries?
(Ms Quin) I would say that there is not an overall
impact study of the kind you are suggesting. What there is, however,
is a number of mid-term reviews of the Agenda 2000 settlement
looking at a number of agricultural sectors and in what ways those
might have to change, both to conform to our aspirations for least-developed
countries in world trade, also in response to other events such
as enlargement of the European Union.
Mr Jack
26. May I just be clear about the decision-making
timetable in the light of what you have just said about these
impact studies? Will final decisions be made before the impact
studies have been properly assessed?
(Mr Caborn) The answer to that is yes.
27. You are quite happy that the effect on UK
farming and industry will not in detail be known before you agree
these proposals one way or another.
(Mr Caborn) No, what I said was that we are satisfied
with the arrangements which have been made in that communique
to make sure there was no surge in imports into the European Community.
28. That was not the question I asked. Are you
happy that you will make a firm and final decision on a matter
that has profound impact, particularly on UK agriculture, without
knowing what the impact study says?
(Mr Caborn) If there is going to be profound impact,
obviously that would be yes. What I am saying is that the wider
picture, which I tried to put to you a little earlier, was that
we were talking about a quarter of a million tonnes of sugar that
the LDCs put onto the world market, not into the European Union,
and that we are producing 18 million tonnes in the European Union.
We are consuming 12 million tonnes. The LDCs themselves actually
consume some three million tonnes. So we are talking a relatively—relatively—small
percentage of the total sugar production. To safeguard, to make
sure there are no surges in imports, we monitor month by month
and if there were a surge that would be dealt with. I think the
safeguards are in there and that would give us a facility to be
able to manage change in the most effective and transparent way.
29. The fact is that you will not know what
the answer is. May I ask the Minister from the Ministry of Agriculture
whether her department has made any assessment of the impact of
these proposals on UK sugarbeet production? If so, what is the
financial impact?
(Ms Quin) In terms of the fact that we are dealing
with two proposals, both the "everything but arms" and
the vaguer proposals for reform of the sugar regime, some of these
effects are rather difficult to quantify. In the discussions which
we had about it, within the department, we have obviously been
aware of the points which the Minister for Trade has mentioned
in terms of the phasing in of the "everything but arms"
proposal and the fact that there is a safeguard clause and therefore
measures can be taken if there are disruptions to individual markets
or the European market as a whole. Let me say, however, in our
own department's approach to this we have actually adopted a very
similar approach to the reformist line which was adopted by the
previous Government and Agriculture Ministers, of whom you, Mr
Jack, were one. Certainly I know that at the time of the consideration
of these proposals in 1995, the British Government was arguing
for something like a 12 per cent cut in the price of sugar.
Miss McIntosh
30. Mr Caborn's remarks do alarm me. Mr Caborn
seems to underestimate the impact on rural communities like the
Vale of York that a staple product like sugar beet can contribute
not just to the farmers but to the general economy through the
sugarbeet factory just in the City of York outside the Vale of
York. Could the Minister explain to me why the British Government
did not oppose and challenge the choice of Article 133 as the
legal base when this proposal was first put forward? Is he aware
that from that choice of Article 133 two procedural implications,
which have enormous import to producers in this country and to
ACP producers, spring? The first is that no opinion was sought
or could be sought from the European Parliament because of that
choice of legal base. Secondly, the Council of Agriculture Ministers,
who, I would say on the record from this Government and the last
Government, do endeavour to represent farming interests, the Council
of Agriculture Ministers do not formally see the proposal, as
it is the preserve of Foreign Trade Ministers meeting in the General
Affairs Council, as he has said. Was his department, was he himself,
was the Government aware of those two procedural implications
and if so, why did they not challenge that at the time the proposal
was first presented?
(Mr Caborn) Because we believe it is a trade issue
and that is an Article 133 issue, that is where the Trade Ministers
would take that decision and we believe that we have as a Government
been putting forward as our policy the access to the developed
world's markets of goods and services, including agricultural
produce, from the least-developed countries and that is a Government
policy and it was our Prime Minister who spelled that out very,
very clearly indeed in the Mansion House speech he made, when
it was not only essential he said, it was all. That is the Government's
policy and therefore that has been carried through on Article
133 and we would see it as a trade issue. I cannot explain it
any clearer than I have: we do not just see this in isolation.
It has to be seen in the round in terms of debt forgiveness, it
has to see sustainability of LDC economies and it has to be part
of the managed liberalisation of global trade. That is what we
are trying to achieve and in managing that there will be difficulties
but we want to mitigate the worst circumstances and that is indeed
what we do. May I say also that we are talking about a sugar regime
inside the European Union whose prices are two and a half times
greater than world prices?
(Ms Quin) That is absolutely the case regarding the
"everything but arms" proposal. In terms of the proposals
for reform of the sugar regime, that will be considered by the
European Parliament. I understand it is likely to be considered
either in the January or February session of the Parliament. Indeed
given that these things are not hermetically sealed from each
other it would be rather surprising if there were a debate on
the reform of the sugar regime without any reference to the "everything
but arms" proposal at the same time. Since I know both she
and indeed the Minister for Trade and myself have all been former
members of the European Parliament, we do know that under the
European Parliament's rules of procedure there are several ways
for members to bring up issues which are of concern to them, even
if they do not formally come under the consultation arrangements.
Mr Breed
31. May I just explore the situation concerning
quotas of sugar? The Commission is proposing a cut in production
quota. Will this not lead to a general rise in the price of sugar,
and as sugar seems to be involved in almost all processes, inevitably
lead to rises there? Is it not really a retrograde step in preventing
an evolution of the market-led policy for sugar generally? The
Court of Auditors' special report concluded that the allocation
of quotas had had the effect of preserving sugar production in
regions which were not very well suited to it, so that the most
efficient production regions were not having all of the increased
quota that perhaps they should. All that is going to have an impact
on quota in this country. What assessment has been made of the
way in which quotas are going to be handled in respect of our
sugar beet industry?
(Ms Quin) It is a very important question. It seems
to us that the Commission is proposing the reduction in quota
in order to meet WTO commitments which have already been entered
into. However, the quota system as such tends to be a very unsatisfactory
element of the overall sugar regime and is one of the reasons
why the Government is keen to reform the sugar regime. It tends
to ossify the system, it tends to make it a good deal removed
from market realities. Also, it does not do anything to affect
those countries who are very much overproducing sugar, of which
there is a large number in the European Union, as opposed to countries
like ourselves where beet production is less than overall consumption.
It is an unsatisfactory aspect of the regime, but it is virtually
about the only management tool which is available to the Commission
at the moment in order to meet the WTO commitments.
32. Will that mean a reduced or an increased
quota for the sugar beet industry in this country?
(Ms Quin) It will mean a proportional reduction in
sugar beet quotas of all countries.
33. Including the UK.
(Ms Quin) Including us; absolutely.
Mr Todd
34. We have talked about impact assessments
on the UK and on ACP. One of the impact assessments which does
not appear to have been done is on the least-developed countries
themselves. Which countries are likely to take advantage of this
market opportunity?
(Ms Quin) We do have figures about that. There are
of course some ACP countries who are also least-developed countries.
It is important to bear those in mind. There are other countries
in Africa and also in Asia, including Bangladesh, who could in
theory benefit from the "everything but arms" proposal.
However, a lot depends on their capacity, capabilities; a lot
also depends on whether the pattern of trade which exists at the
moment is switched towards the European market to take advantage
of the higher prices in the European market.
(Mr Caborn) There are six LDCs which are exporting
at the moment and the 1998 figures are: Sudan, 120,000 tonnes
a year, Malawi, 60,000 tonnes, Zambia, 70,000 tonnes, Tanzania,
20,000 tonnes, Madagascar, 60,000 tonnes and Mozambique 20,000
tonnes. They are the current ones which are exporting and that
is the amount they exported in 1998.
35. The figure you gave which was 250,000 tonnes
overall against a European marketplace of 18 million tonnes would
indicate a proportion of about two per cent, something like that.
(Mr Caborn) That is what is being exported at the
moment, 250,000 to 300,000 tonnes from those countries.
36. What projection has been given of the likely
outcome of this in terms of investment and development in those
countries?
(Mr Caborn) I do not have any statistics for that.
37. We have seen some efforts from the protagonists
who wish us not to do this which indicate a possible ceiling of
five million tonnes or something like that which, based on one's
knowledge of the economy of these countries, would be hard to
conceive of in any realistic short- or medium-term future.
(Mr Caborn) The safeguard, as I have said and I shall
repeat it, inside the communique from the Commission is that there
is a safety valve in that on surge.
38. But there is a realism valve as well which
is that surely these countries are not likely to be able to develop
this opportunity as rapidly as some appear to wish us to fear.
(Mr Caborn) No; no way. You are absolutely right there.
All the experience has shown, not just in this area but in other
areas as well, that it takes a long time.
39. Is there not another impact assessment which
could be made on the relief of poverty in these countries which
might happen in the five-year period in which opponents of this
wish the proposal to be kicked into touch and not acted on? Is
there a view which could be taken on the impact that might have?
(Mr Caborn) In part that is what we are talking about:
the poverty reduction programmes we are expecting countries to
sign up to when we go for the restructuring of the debt, the debt
forgiveness which we are looking at through the IMF. An assessment
is made there and that could very quickly be crossed over.
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