Select Committee on International Development Minutes of Evidence

Examination of witnesses (Questions 60 - 79)



  60. It is a question of tariffs.
  (Mr Caborn) In terms of negotiations on the banana regimes the lead department has been MAFF.

  61. May I go back to sugar then? You talk about safeguard clauses and about being able to stem a surge of imports of sugar from least-developed countries by suspending the regime. The record of the European Union on actually taking action in this kind of connection, namely when sugar was coming in through the back door, through the Netherlands Antilles, is extremely slow and very, very difficult to get them to take action. That is our experience in the past, is it not?
  (Mr Caborn) This was part of a discussion we had this morning in my office with some of your colleagues. One or two of the points which were made were very valid points and I gave you an assurance and I give the Committee the assurance that we shall look at that and raise these questions with the Commission about the concerns of yourselves and indeed other back-bench members about the way that the Commission have policed previous regimes and it has been found wanting. We shall raise those questions and when we have the answers back I shall write to the Committee.

Mr Bradshaw

  62. We were just finishing off on the advantages to the consumer of liberalisation of the sugar trade. Are there not also enormous environmental advantages in that the production of sugar from sugar cane, I understand, is far more environmentally friendly than the production of sugar from sugar beet? Is that not the case?
  (Ms Quin) There can be environmental advantages to cane sugar. To be fair, in its reform of the sugar regime the Commission has said that it wishes to look at the environmental implications of the existing sugar regime so there is actually a way in which those issues can be looked at for the future. Sugar beet is, as was being pointed out earlier, often part of a rotation of crops and certainly has some advantages to farmers in the UK as a rotational crop.

Mr Curry

  63. May I just come back to this question of bananas? As we all know, there is a very contentious issue between the United States and the European Union in the WTO on the subject of bananas and this dates back to the British Presidency before the previous one when the banana regime was negotiated. We now have cutting across this another proposal which influences bananas. How do we sort out the knots in this particular piece of string?
  (Ms Quin) Without any doubt it is not easy. The Agriculture Council discussed bananas at its meeting yesterday and basically came out in favour of a mixed tariff quota system leading to a tariff only system in 2005-2006. However, the UK actually voted against this proposal because we were not happy with the safeguards for ACP, particularly Caribbean producers, because of the issue which I know some of you here are very familiar with in terms of the reference period, the historic reference periods which we wanted in order to help the Caribbean producers and the perceived difficulty for the Caribbean producers in having a first-come, first-served system for allocating licences. The Agriculture Council declared itself in favour of the first-come, first-served system as a way of trying to get agreement with the United States and others over the future of the banana regime. We actually feel that is not fair to the Caribbean producers and in any case what is on the table at the moment does not look as though it is going to be agreed to by the United States, so we are still going to have further difficulties in trying to resolve this issue.

  64. This is precisely the point, is it not? If the United States objects to a regime which seeks to give assistance to some of the least- developed countries and some others who might be just a tiny tier above that, how will it react to a generalisation of that preference which would not include countries in South America who are not amongst the least-developed and whose trade is in the hands of American companies which have provoked the conflict we have at the moment. Will this not exacerbate United States/European arguments on this trade?
  (Ms Quin) There certainly could be further difficulties between the United States and Europe and indeed further difficulties within the World Trade Organisation about this. It is disappointing in that I was hopeful a few months ago that the United States might accept a proposal put forward by the Caribbean producers which seemed to us to represent a reasonable compromise, but agreement has not been reached on that and therefore discussions will continue. Obviously the United States will have a new administration in place as from the end of January and I cannot predict at this stage what attitude that new regime would take. Certainly the difficulties look likely to continue.

  65. If as a result of this it did become more complicated and harder to resolve, the people most likely to lose out would be the Caribbean producers.
  (Ms Quin) Indeed and that is one of the reasons why we have been arguing both within the UK and indeed in the wider trade context, for an arrangement which would help the Caribbean more than the current proposals do.

Mr Casale

  66. May I ask a question about the bananas proposal and its implications for rice imports, in particular ask the Minister which are the main least-developed countries which might increase their exports of rice as a result of these proposals?
  (Ms Quin) The rice issue is also a complicated one because again we are dealing with two proposals. We have the "everything but arms" proposal on the one hand: we also have some ideas for reform of the rice regime within the European Union which are somewhat inconsistent with the "everything but arms" proposal. Once again, on rice it is particularly hard to predict what will be the outcome. There is tension between those in the European Union who want to support European Union rice producers basically in the southern part of the European Union and other Member States, including ourselves, who import a lot of rice, particularly from the Indian sub-continent, and feel that the import of that rice in any case responds to specific consumer demand in our country and also is a rather different quality and often used for different purposes than rice within the European Union. We are keen to see liberalisation in terms of rice and we have expressed very real concern about the limited nature of the Commission's current proposals for the reform of the rice regime. We believe that the "everything but arms" proposal on rice does offer potential for some of the least-developed countries. I mention again Bangladesh in this sense. We believe that greater liberalisation rather than less liberalisation is what is wanted.

  67. Would there be any particular impact on Basmati rice?
  (Ms Quin) Certainly from the Commission's reform proposals, reform of the internal rice regime, if that is not handled properly, there could be a negative impact on Basmati rice producers and we have been arguing very strongly in favour of the position of Basmati rice.

Mr Jack

  68. Could you tell us what impact these proposals will have on the UK milled rice industry?
  (Ms Quin) It depends on the final version of the Commission's rice reform proposals. The "everything but arms" proposal would not have a significant effect on UK millers, but I do believe that the proposals which the Commission are putting forward on the reform of the rice regime, if it disadvantaged some of our suppliers of rice from overseas, could also disadvantage UK millers.

Mr Wells

  69. Is it likely to disadvantage producers who have a rice quota coming into this country from ACP countries like Guyana?
  (Ms Quin) Regarding the Commission's rice regime reform proposals it is too early to say. In their existing form, but I stress we are at an early stage in this discussion, they would not be particularly helpful, but we have to ensure in the discussions on this that we achieve as many safeguards for those producers as we can.

  70. Is it not a strange way to proceed, to agree a regime and then hope like hell you can get some safeguards written into the regime which is eventually put in place? That seems to me to be the cart before the horse in a big way, is it not?
  (Ms Quin) If you are saying that the "everything but arms" proposal and the proposals for reforms of European Union regimes such as sugar and rice should have gone hand in hand, then I would agree with you. In saying that, let me say that I am not expressing any hostility to the "everything but arms" proposal, which is absolutely right in principle, I simply deplore the failure of the European Union to address the issues of Common Agricultural Policy reform seriously.

  71. I should like to make that clear too. I am in favour in principle of the "everything but arms" proposal but we do have to manage this situation, which is clearly being handled in an extraordinary manner, of making decisions to remove tariffs before you have any of the regimes either for sugar, rice, bananas or even rum in place.
  (Ms Quin) Indeed because those products are sensitive, that is why the "everything but arms" proposal has the phased in approach. It is also why that proposal with regard to rice as well as what we were discussing in relation to sugar, does have safeguard mechanisms.

Miss McIntosh

  72. May I bring the Minister back to the EU sugar regime, and in particular that there is great concern in the farming industry in this country that the proposed reduction in the life of the new regime is planned to be reduced from the normal five years to two years. It has been put to me by local producers that there is a particular problem. I understand that not everybody owns their own quota and I have one farm at least where they have had to lease their quota and pay out for it, whereas I understand that they are not going to be able to plan for this change in the regime from five to two years. If it is agreed in that form, great uncertainty will ensue, in particular, in what is a very capital-intensive and hard-pressed sector, because farmers, as the Minister will appreciate, have to pay up front for the crop a year at a time. They feel it is much better if it can revert to the five-year reform period. What particular advantage does the Minister see in agreeing to changes in the sugar regime for two years which flow from her memorandum, paragraph 10?
  (Ms Quin) No significant change in quotas is being proposed. Also, the quotas are given to British Sugar which then negotiates with individual growers. I cannot comment on the specific case which she raises. It would perhaps be sensible to write to me about it if there is a specific problem with the example she gives. On the other point she makes about the five years as opposed to the two years, the Commission was proposing basically to start a process of reform of the sugar regime after two years. The majority of Member States, as represented in the Agriculture Council, wanted there to be no change from five years. I have to say that both this Government and indeed previous Governments have always argued for sugar reform to come sooner rather than later.

  73. May I put it in a slightly different way? The industry in this country would plead that it should be a five-year in-the-round proposal which is looked at and it is too short-term a view just to look at a reform for two years.
  (Ms Quin) Are you actually referring to the proposed reform of the sugar regime or the "everything but arms" proposal?

  74. The life of the new regime should be foreseen for five years not for two.
  (Ms Quin) If we get a proposal which is agreed for reform of the sugar regime we would certainly hope that that reform would last for a long period of time. We have not said that we only want a reform of the regime to last the two years. What we have said is that we want reform of the regime to be considered within the two-year period rather than simply rolling it over for five years which is what many of the current Member States, as represented in the Agriculture Council, want.

Mr Drew

  75. What is the impact upon the processing industry? Obviously we are talking about farmers here but we also have to be very wary of an important manufacturing capacity in this country. I wonder what assessment has been made of us potentially losing that processing capacity, certainly in terms of the sugar-beet processing.
  (Ms Quin) You are referring to sugar-beet processing.

  76. Sugar beet, but obviously you have an interesting relationship within the processing sector where you have two very large companies who have a balance, one believes this could completely unbalance that.
  (Ms Quin) I have to say that both of the main sugar processing companies in the UK are large companies with a lot of varied interests, indeed British Sugar is active in eastern Europe and Tate & Lyle cane sugar is also active in some areas of eastern Europe; both of them have a lot, quite understandably given the world in which they are operating, of varied interests. It is therefore difficult to say that there would be a simple straightforward effect on those sugar processors. Certainly in discussing with them, they are very well aware of world trends and very much, quite understandably, concerned to maximise their opportunities in that situation. It could be very hard to say today that the effect on the processing industries would be A, B and C, particularly since we are talking about changes which are being phased in and we are also talking about changes to the internal sugar regime which are still uncertain at this stage.

  77. The worry is that if this is wrong, it does not just impact on the primary end of the process, the secondary end will have enormous repercussions, because we are talking about this industry potentially going offshore where it may be cheaper to process and we have to build that into it. We are not talking about maybe two years, but certainly within a period of time of five years then you are seeing a dramatic change in the way in which the food industry, which does have a very strong base in this country, could be affected by these changes.
  (Ms Quin) If you are talking about a five-year period, it is certainly right for all interests to try to look ahead and see in what ways they can best adapt to what is undoubtedly a trend, even if it has been very slow in the case of sugar, towards greater liberalisation of trade and also in view of the commitment that we have to the least-developed countries. Let me say however that we have a lot of very successful food industries who export a lot, who nonetheless do have to pay rather high prices for the sugar they use. There is a large range of interests involved here.

Mr Jack

  78. For the record, can you summarise what MAFF's latest representations will be in the context of the reform of the EU sugar regime?
  (Ms Quin) Yes. We want to see sugar treated in a way which is consistent with our overall reform objectives of the Common Agricultural Policy and in recent years we have supported changes, both the previous Government and this, to the Common Agricultural Policy to move away from high price and production support towards various forms of direct support for producers. For example, we have the arable regime which has changed in recent years and maybe a possible model for the sugar regime to follow. In terms of sugar, we have also had a long-standing policy which I certainly am keen to continue, to have a good balance between beet and cane. We have a strong commitment in negotiating in the European Union, to ensure that our producers, whether it is our beet producers or whether it is our cane refiners, do not lose out in comparison to other European Union interests. Obviously as British Agriculture Ministers we have a very clear commitment to get a good deal for British interests within changes, while at the same time being conscious of our international concerns and our development concerns which are very much aims and objectives of the Government as a whole. I believe that MAFF's policy of reform of the CAP sits in well with the commitments of the Department for International Development and the Department of Trade and Industry in trying to ensure a fairer world trading system, but at the same time ensure that British interests do not lose out disproportionately in the European market of which we are a part.

  79. May I ask you, again for the record, when the current sugar regime was established what the feeling was amongst the United Kingdom beet producers at the time, at the basis upon which the original quotas were allocated?
  (Ms Quin) You are now going back a very long time. Certainly the EU sugar regime has continued largely unreformed for 15 to 20 years. I have to say that I have not got in my mind what representations beet producers made when that regime first came into force and I am not even sure which Government at the time would have negotiated this. Maybe you are able to enlighten me on that. However, whatever view was taken at that particular time, given the situation we are in now, I believe that British Ministers have a responsibility to ensure that British sugar interests do not lose out unfairly as against their European Union counterparts.

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