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Clare Short rose

Mr. Portillo: I have only a couple of minutes left. I hope that the right hon. Lady will forgive me if I continue.

In the same way as it was Richard Nixon who could go to China, I believe that parties of the right—the Conservative party is one, but there are other such parties in other countries—can do the most to persuade business of its obligations and responsibilities. The strongest case exists for arguing that free enterprise will be the greatest influence in reducing poverty, raising living standards and reducing inequalities. There are powerful examples of companies that, through their investment, have lifted and improved the living standards of people who were previously held in much worse conditions of employment by local mafias and groups of thugs. We know that this is a complicated matter, as developing countries do not wish us to impose labour standards on them that will be protectionism in disguise.

That is another reason for transparency. My party and other right-of-centre parties should be working with enterprise and the private sector to persuade them to be very transparent, to adopt codes of practice, and to open them up to scrutiny, discussion and monitoring. That will demonstrate that enterprise is the solution to poverty in the world and not the cause.

There is a very broad battle to be fought and won. In the end, it is not only a question of development. As long as a vast section of our commentariat—our middle classes—distrusts business, it will be difficult for our enterprise system to function successfully, as it should.

5.24 pm

Tony Worthington (Clydebank and Milngavie): I am delighted to follow the right hon. Member for Kensington and Chelsea (Mr. Portillo) for two reasons. First, although there is a lot of consensus in the House, we are all struggling to find our way forward. He approached the topic with a very welcome openness. I shall return to his second point on transparency and its importance in causing development.

I want to return to the Secretary of State's opening remarks on rejoicing about today, the movements that have been made, and what those movements meant. We have moved from a development model in which a development Minister goes around the world opening her purse or his wallet and disbursing an ever-diminishing amount of money. Development policy must now be Government policy.

The chairman of the Select Committee is present and he will remember what happened the first time members of the Select Committee visited the department of the

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Trade Commissioner in Brussels. That was enormously important and would not have happened in the past. Why should members of the International Development Committee visit the commissioner? We were greeted with pleasure because the relevance of our visit was recognised. I am delighted to say that Pascal Lamy, the Trade Commissioner, will come to speak to us next week about development. That is an enormous step forward because, in the past, the commissioner's job was seen as building fortress Europe. The man responsible for the everything but arms initiative will come here to talk about how he can assist development.

I congratulate the Opposition on choosing this theme. We should take an important step forward and work with the British people. Many of them have realised that appalling trade rules are in place and that such rules benefit the wealthiest companies and the wealthiest countries and poison the future of the poor.

I return to the point about transparency, but wish to refer to an issue that has not been mentioned. It is not part of the Trade Justice Movement campaign, but it involves the most fundamental kind of trade justice. We should take action to stop corrupt rulers and elites robbing countries of their natural resources and condemning their people to poverty.

Simple transparent changes in the accountancy rules and financial regulations for our companies—particularly those that work in extractive industries, such as oil, diamonds and gold—would make an enormous difference. We should require oil companies and others to publish what they pay to the Governments of the countries in which they work. That would curtail the looting that impoverishes developing countries. The campaign, "publish what you pay", has been launched by George Soros, Global Witness and some of our best companies and non-governmental organisations. It would simply require companies to say what they pay to countries in the developing world.

Let me give a personal example. I have been going to Nigeria for about a dozen years, and I had been looking forward to going with the Select Committee to see for the first time Nigeria under a democratic Government. Previously, the country was run by deeply corrupt military dictatorships, and the hon. Member for Blaby (Mr. Robathan) will share my views on that. It was a deeply disillusioning experience to go there.

Nigeria discovered oil and plunged into poverty. There is not the slightest doubt that it is a wealthy country that achieved deep poverty because it discovered oil and because Nigerians robbed their country of its resources. When I went there, it was clear that the gravy train continued. It was a democratic society, and it was clear that the politicians had learned their scripts about the forgiving of debt and returning the Abacha money. However, they could not answer a single question about how much money was going from the oil companies into the Nigerian Exchequer. The oil companies and the Government do not say.

After three years of democratic Government, it should have been possible to point to the schools, the clinics and the services that were there because democracy was in place. However, not one politician or civil servant could point to the improvements that had occurred and that

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would have resulted if 90 per cent. of the oil resources—or whatever the figure may be—had gone into the Nigerian economy.

I do not question the credentials of President Obasanjo, but he is imprisoned by the system within which he has to work. We have probably all worked in circumstances that were mildly corrupt and in which the whistleblower was everyone's enemy. The whistleblower might even fear for his life. The fact that it has been relatively peaceful in Nigeria at a central Government level indicates that the gravy train continues. That will not change until we help by changing our rules. We need to say to BP, Shell, Exxon, Elf Aquitaine and other companies that work in those areas, "Publish what you pay." That would be an enormous step forward.

I back the campaign by George Soros, Global Witness, Oxfam and many of our best companies. BP wants to declare what it pays, but Sonangol, the Angolan company, threatened it with losing future rights if it did. Companies must declare what they pay because then the people will know what resources are in their countries.

Let us take Angola. We rejoice that Savimbi has gone. He was sustained by diamonds. The dos Santos Government in Angola were sustained by oil. But the people of Angola were sustained by nothing. In 2001, the UN had great difficulty raising the $200 million necessary to feed 1 million Angolans who were dependent on emergency food aid. In the same year, Global Witness calculated that more than $1 billion—about a third of state revenue—went missing in unaccountable loans and in paying for highly overpriced military goods, which came in particular from Russia.

We can have no faith that Angolan politicians will put that right on their own. We have to help by ensuring that developed world companies are not part of the problem. About 90 per cent. of Angola's revenue comes from oil. Whereas in the developed world it would be routine for BP, Shell or any other company to publish what it was paying to the Government, that is not the case everywhere.

Global Witness has done wonderful work around the world. I see colleagues in the Chamber who visited Cambodia, where we heard that the forest would be gone within about three years because the military was robbing the country of its forests. There are no resources there.

Global Witness is doing great work in Sierra Leone and Liberia. The simple measure of requiring companies worldwide to say what they put into a developing country would give the people of those countries the power to hold their Governments to account. At the moment, they cannot, and I commend the work of Global Witness and the campaign, "publish what you pay". We all agree about aspirations, but we need concrete specifics on what we should do.

5.33 pm

Mr. David Curry (Skipton and Ripon): I shall concentrate on the agricultural aspects of trade because they have featured heavily in our debate.

When people returned from Doha eight months ago after reaching what was an unexpected agreement, a great deal of optimism was in the air. After all, we had pulled it off. The French had had difficulties but they finally produced acceptable phraseology, although subsequently

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it was slightly disputed, and the Commission said that we had agreed to achieve an accord on the modalities of common agricultural policy reform. Modality does not mean the framework but the detail—the nitty-gritty—of CAP reform, which is to be achieved by May 2003. It is important to realise that we are talking about trade-distorting subsidies. No one is talking about eliminating agricultural subsidies. The Government are talking about transferring subsidies to achieve other public good purposes, however they are defined, away from trade-distorting or production-related subsidies. It is important to be precise about that.

We then had the body blow of what happened in the United States. There is no point in blaming President Bush; the initiative was started by Democrats in Congress. Republicans ran with it and the President did not want to argue against it. Given the characteristic honesty of the Secretary of State, I am surprised that the Government motion does not mention the American Farm Bill. After all, it has been the villain of the piece throughout this afternoon's discussions, and rightly so.

It is envisaged that the Bill will give $190 billion over 10 years to 2 million American farmers. The interesting thing is how the Americans chose to defend it, because Ann Veneman, the Secretary for Agriculture, effectively said, "Over the past four years, we have piled additional appropriations into agriculture year after year. This is not a unique example of sin. We have been doing it all along and we have put in some $30 billion—you just didn't notice it." Now that the big numbers are there, we have suddenly noticed the context, which is the impact on the world trade round.

It is true that the so-called American "cap" in the WTO is just over $19 billion, so the American expenditure falls below that. However the problem is that the Americans seem to be moving towards that almost as if it were a target, whereas other major regimes have made an effort to wind down some forms of support and change their purpose. The Europeans were dragged kicking and screaming into the Uruguay round, but in fact the greatest influence on reform of the CAP has been the restrictions that are in place, which still persist in the Uruguay round, and the demands of retailers and consumers.

What is happening in America is horribly counterproductive. The measure represents a deficiency payment, so increases will go straight through into land prices, and it will provide production incentives, which will keep world prices low. The Bill will not have a long-term benefit for American farmers; I think that it may be of greater benefit to the competitive position of south American farmers. However, it will have a much wider consequence for the rest of the world because the low level of world prices is one reason for the amount of competition on the world markets. That is why it is so easy to export to developing countries and to shut them out of some marketplaces.

The second wider consequence is that President Bush's action in signing the Bill was manna for every protectionist throughout the world, as we can see from the speed and alacrity with which some of the farm lobbies jumped on it. Their dexterity was amazing to behold. The politicians have piled in on top. The odds of reaching agreement on CAP reform and in the WTO round seem to be much longer, and one reason is that the pretext has

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been broadcast from Washington. Its action seemed to be so much at odds with the philosophy so habitually espoused by the Americans.

I venture to say that there is a real challenge for those of us who are strongly pro-American and who instinctively think of America as our partner to persuade that great country to re-engage in collective action in all sorts of spheres across the globe. We have seen the United States apparently refusing that collective action—in discussions on climate change, on the alleviation of poverty, on mechanisms for international justice, on steel and then on the Farm Bill. There is a serious concern that, when we all accept the need for collective action to combat terrorism, such action should spread more widely throughout what we call the international community.

I said that the American action would promote protectionism, so step forward, right stage, Jacques Chirac, who has just been re-elected President of France with an enormous majority. I am sure that the Prime Minister will welcome the defeat of a Socialist Government who were so resistant to liberal economic reforms, but I hope that he has no great faith in President Chirac's conversion to the liberal economic model, which has yet to be espoused with great enthusiasm by any French politician brought up in the Napoleonic tradition.

The real significance is that we are facing the mid-term review of the CAP. Commissioner Franz Fischler is due shortly to produce his proposals. Those who say that the CAP does not change and that it is still a desperate aberration have not noticed what has happened over the years. I have spent almost all my political life fighting for reform of the CAP, and I continue to do so, but it has shifted enormously. It is moving away from production-related subsidies and towards the espousal of rural development more widely, which makes a great deal of sense, and that is one of the purposes of Mr. Fischler's reform.

The Europeans are retreating from production-led subsidies just as the Americans seem to have reverted to production-promoting subsidies. It is extremely important that Mr. Fischler wins his battle with the Council of Ministers, but it now looks like a harder battle to win. President Chirac was a farms Minister, and his main complaint about the CAP is probably that there is not enough of it. It will be a difficult argument to get consensus and build a majority in the Council of Ministers in favour of promoting liberalisation.

Liberalisation is in our interests. Some hon. Members might enjoy eating Polo mints. The sugar-free Polo mints are made by Nestlé Rowntree at York; the fruit-flavoured Polos are made in eastern Europe, because thus they escape the sugar regime and the costs it imposes on business. If hon. Members look at some of the oils produced by Cargill, they will find that investment is now going to Turkey or Ukraine, even though European prices in the grain and oilseed sector are now much closer to world prices and have become manageable.

We have to face the fact that it is entirely possible that in Germany Mr. Schroder will be defeated, if there is indeed a rightward swing taking place across Europe. Edmund Stoiber is promising to liberalise, despite the tradition of Bavarian-run agriculture in Germany, and I doubt that he would be dragged along on French coat tails, as has too often been the story of German policy. However, the Germans want enlargement, and they cannot

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afford enlargement unless there is reform of the CAP and their contribution decreases. There will therefore be pressure on Mr. Stoiber to maintain some form of liberal agenda.

All those factors come together. CAP reform has implications for enlargement, and those two factors combined play into Doha. The important thing for all of us is to maintain that movement for reform so that we are able to benefit developing countries, which stand to gain from trade. The victim concept of world trade is incorrect and misguided. Liberalisation, domestic and international, has benefited developing countries and has reduced poverty. A 2002 World Bank study called "Globalisation, Growth and Poverty" has shown that most effectively.

We need to reassert the WTO agenda. The Prime Minister is dining with Mr. Chirac tonight, and he is shortly to visit north America to discuss the broader issues. It is important that we make the point that liberalisation works. Whether we prefer to describe the case for helping developing countries as philanthropic or self-interested, all of us have a self-interest in ensuring the promotion of liberalisation, so that the world can continue to grow richer through the spread of liberal political philosophy.

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