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Mr. Harry Barnes (North-East Derbyshire): Will the hon. Lady explain the Conservative position on the Tobin tax, which would raise trillions of pounds a year on international currency speculation? The Chancellor of the Exchequer blows hot and cold about the measure, and is in a cold phase at the moment. It would be nice to know where the Conservatives stood on the matter.

Mrs. Spelman: I thank the hon. Gentleman for his intervention, but I do not think that one measure will fix the problems of global poverty. The underlying problem that the measure seeks to address is currency instability, to which many factors contribute. That is the key point.

How does globalisation work to reduce poverty? It increases inward investment and drives economic growth. It has meant that, for the first time, poor countries have been able to harness the potential of their abundant labour to break into global markets for manufactured goods and services. In fact, manufactured goods amounted to less than a quarter of developing countries' exports in 1980, but by 1998 they had soared to 80 per cent.

Poor countries' comparative advantages can be realised when they are able to export freely without unnecessary hindrance. For many people—indeed, for an entire

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continent—the picture seems less rosy. Many billions of people remain excluded from the process of globalisation, for which a number of factors are responsible, including conflict, sickness and poor government. However, many of them are excluded from trade by the prevailing trade systems. As Kofi Annan pointed out last year, poor countries are caught in a vicious circle—they need foreign investment but can offer little to attract it. In order to break out of that cycle, poor countries need to export and to open markets in which their goods can compete.

Here is the authentic voice of business. The chairman of Unilever wrote in the Financial Times last week:

That is from the chairman of a company that has been in Africa for more than a century.

Rich countries continue to impose barriers to trade on their poor neighbours. The most obvious are the punitive tariffs imposed on imported goods. Possibly the most well-known example is the recent decision by the United States to raise tariffs against steel imports, but the USA is not the only culprit. According to an Oxfam report published on 11 April this year, the European Union is more protectionist in respect of poor countries than are the United States, Japan or Canada. In fact, only New Zealand has fully opened its markets to products exported by least developed countries.

The least developed countries lose an estimated $2.5 billion a year in potential export earnings as a result of high levels of tariff protection in Canada, the EU, the United States and Japan. Without tariffs and quotas, poor countries could generate an 11 per cent. increase in their exports.

Hugh Bayley (City of York): Does the hon. Lady welcome the European Union's everything but arms initiative, which removes tariffs from everything but arms for the poorest countries? Does she think that that is at least a move in the right direction and will she explain why it did not happen while the Conservative party was in power?

Mrs. Spelman: I will discuss in some detail what the European Union has done to help and where it could do more. When the Conservative party was in power that initiative had not been proposed, but there is no doubt that it represents progress and I shall say so.

It is difficult to quantify the benefits that would accrue to developing countries if there were total import liberalisation. Some estimates have predicted gains of more than $3 billion each for India, China and Brazil and more than $14 billion for Latin America in total. The Government have pledged a number of times to reduce the import tariffs that face poor countries. Progress has been made. The initiative to which the hon. Member for City of York (Hugh Bayley) referred made a start in providing that free access to poorer countries, but the EU still maintains some of its highest tariff peaks on a large number of imported goods. Canada is another example, as 30 per cent. of poor countries' exports to Canada face peak tariffs.

On a slightly different note, another injustice is that typical exports from developing countries, such as agricultural and labour-intensive products, face far higher tariff barriers when they enter major northern markets than industrial products.

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The Prime Minister announced in his speech to the Labour party conference that we would offer Africa access to our markets, to practise the free trade that we are so fond of preaching. Are we extending free access to Africa? Perhaps the Secretary of State will clarify how market access is to be extended to Africa. What are the tangible steps to better market access? Which countries do we want to help? What objectives have we set and how will we measure success?

At the EU Heads of Government meeting—

Tony Worthington (Clydebank and Milngavie): Does the hon. Lady agree that sugar should have been included under the everything but arms initiative?

Mrs. Spelman: If the hon. Gentleman will forgive me, he has questioned me on a subject about which I know quite a lot as I worked for sugar beet growers for more than 15 years. I wish to give him an informed reply and not a simple yes or no. It is not a simple question. Perhaps he is not aware that, under the protocol signed by African, Caribbean and Pacific countries, many developing countries benefit from the same price as that received by farmers in this country. Automatically removing those preferential terms would create very real problems in the sugar industry of those countries. While I am sure that reform is needed in that area, we must be very careful that it does not hurt our farmers—we must find reforms that will work for them—or have damaging consequences for the most vulnerable farmers.

The Secretary of State for International Development (Clare Short): Everyone is in favour of free and fair trade until it comes to specifics. The hon. Lady has worked in sugar and sugar beet, where there are quotas that privilege certain of the poorest countries. The sugar beet farmers of the United Kingdom and farmers in some of those countries ran a campaign to weaken the everything but arms initiative and access for sugar from the least developed countries, and they succeeded to a degree. The hon. Lady is telling us that we should open our markets to the poorest countries, but she wants a position for the sector in which she has worked that is not as good as the one that she proposes overall. The Government's position was that we should have opened the markets fully to the least developed countries. The compromise was reached because, with the help of many Tory Members, who lobbied—

Mr. Speaker: Order. The Secretary of State will wait her turn.

Mrs. Spelman: It should be remembered, Mr. Speaker, that 50 per cent. of the UK market for sugar is supplied from developing countries, which is unique among the member states of the EU. The Government have a lot of work to do with other EU member states that do not have such an accepting compromise with the developing world and do not allow free trade both from and to such countries.

Simon Hughes (Southwark, North and Bermondsey): Will the hon. Lady give way?

Mrs. Spelman: I want to proceed on this point. We have had an exchange on sugar, and I do not wish to be

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accused of allowing the issue to dominate the debate. This is a short debate, a number of Members want to contribute, and I am sure that the hon. Gentleman will be successful later in catching Mr. Speaker's eye.

At the EU Heads of Government meeting in Seville later this week, the Prime Minister should promote the agenda of furthering free market access for poor countries. Could he make public the list of EU negotiating demands on the general agreement on trade in services, which have to be decided before the end of this month? Hon. Members have a real interest in that. Promoting genuinely free trade should also be high on the agenda in Canada later this month, when G8 countries meet. They have the greatest influence in changing trade rules. At the moment, the World Trade Organisation seems remarkably impotent at tackling human ingenuity in avoiding rules that are designed to free up trade. Reform is needed of the WTO so that it is even more effective. We could do more to tackle the scepticism among developing nations, however, as the WTO does not appear to serve them well.

Here is a practical suggestion for the Secretary of State—could we not provide a panel of lawyers and advisers to help developing nations make the rules of the WTO work better for them?

Roger Casale (Wimbledon): The hon. Lady is making the case for free trade as a motor for development, on which we can agree. Does she repudiate the experience of the previous Conservative Government, however, in tying trade to aid? That left a situation in which developing countries, far from being free to trade, were forced to import goods and services, and, often, arms from this country, which they did not want and did not need.

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