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Fair Trade

Mr. Deputy Speaker (Mr. Frank Cook): Order. Right hon. and hon. Members will see that the debate is extraordinarily well attended, but it is limited to 90 minutes. I therefore appeal to all hon. Members to bear that in mind when making their contributions, and ask them to limit their interventions. I shall try to call as many hon. Members as possible.

11 am

Mr. Tom Clarke (Coatbridge and Chryston): I warmly welcome today's debate on trade justice. I am delighted at the response, which is an indication that the subject will dominate today's parliamentary agenda—and that is no bad thing. About 10,000 people are on their way to the Palace of Westminster; they expect to lobby the House, and it will be the biggest lobby on international development since the Brandt report more than 20 years ago. Those people, who have travelled from every part of the United Kingdom to ensure that their Members of Parliament are made aware of their views, will welcome the debate that we are about to undertake.

Not everyone can be in London today, and several hundreds of my constituents have written to me to express their full support for the objective of trade justice. I shall quote from one of those letters:

Hon. Members will have seen from the Order Paper that after only two days, 32 of our colleagues have signed early-day motion 1457 on trade justice. I am pretty sure that by the end of the day that number will have increased substantially. I certainly urge that. We underestimate those deeply held feelings at our peril. I, for one, take those representations seriously, and I am sure that right hon. and hon. Members share my view. Indeed, just before I entered the Chamber I met some constituents who told me that Government action on fair trade does influence whether people vote at elections.

It is with modest relish that I place on record my gratitude for the Government's achievements in international development. In particular, I warmly congratulate my right hon. Friends the Chancellor of the Exchequer and the Secretary of State for International Development, both of whom have been at the forefront of Government initiatives to help developing countries; we all acknowledge the outstanding role of the Department for International Development in dealing with the debt problem.

In that spirit, it is appropriate to welcome to the Department the new Minister, my hon. Friend the Member for Northampton, North (Ms Keeble). I am sure that she will forge ahead with the high standards set by her Department and this Government.

Today's events, including this debate, the lobby and the debate in the Chamber this afternoon, were inspired by the success of Jubilee 2000, as was the Trade Justice Movement, which is growing fast and already includes

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50 organisations that have a combined support of 4 million people. Trade Justice includes aid agencies, such as the Catholic Agency for Overseas Development, Christian Aid, Action Aid, the World Development Movement, Oxfam, the Scottish Catholic International Aid Fund, the Women's Environmental Network and others, including students and consumers.

Those groups campaign on behalf of the developing world and their analyses of the problems should be taken more seriously, because they have first hand and day-by-day experience of them. Each of the non-governmental organisations has its own views, but today they are all united in agreeing that trade plays a vital part in reducing poverty and improving the quality of millions of lives.

Everyone in this field agrees that there are opportunities for fundamental change. A new set of international trade negotiations was launched in Doha in November 2001. Although that provided an opportunity to change the rules, it also posed the threat of the existing rules being extended to cover new areas of economic activity.

The lobby and the events in the House today could not be more timely because, this summer, trade rules will be high on the agenda for three international summits: the European Union heads of state summit in Spain on Friday and Saturday, the G8 summit in Canada on 26 and 27 June and the world summit on sustainable development, to be held in South Africa from 26 August to 4 September. South Africa is an appropriate location for that summit.

Fair trade is about the fight against poverty and sustaining the environment. There are many issues on which we can focus our attention. First, there should be a new approach to protect poor farmers' livelihoods and the environment. Secondly, vital concern has been expressed about the plans to liberalise essential services, including water. I have great reservations about those plans, and I do not believe that I am alone in that view. Thirdly, international corporations have had every opportunity to introduce meaningful self-regulation. As they have failed to do so, we should consider new global action to regulate activities.

Brian Cotter (Weston-super-Mare): Does the right hon. Gentleman agree that, as part of the discussions on the common agricultural policy reforms, a timetable needs to be agreed by the EU leaders when they consider phasing out subsidies of agricultural products?

Mr. Clarke : Yes, I agree entirely. I hope to touch on that point later.

This is not an anti-trade debate, but one that asserts that our trading affairs can be organised so that the benefits go to the many and not the few, that social justice and enlightened self-interest could go hand in hand and that it is not beyond the wit of modern society to protect and even improve the environment that we inherited. As CAFOD said:

It continued:

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I agree entirely.

One of the most debilitating factors in the developing world is commodity prices. What are the problems of sub-Saharan Africa? Africa has 12 per cent. of the world's population, but only 1 per cent. of its exports—a quarter of the share that it enjoyed in the 1970s. In the 1990s, world trade in primary commodities was growing at less than a third of the rate for manufacturing goods. Worse still, the gap is widening.

The decline in the value of many commodities has caused large increases in poverty in many developing countries whose economies may depend on just a few commodities for the majority of their export earnings. For example, Ethiopia depends on coffee for nearly 60 per cent. of its export earnings and Burkina Faso depends on cotton for about half. The problem with declining commodity prices is that production can trap countries into a cycle of dwindling returns, further increasing the debt burden. Real prices of commodities have been on a steady downward trend for decades. Among the reasons for the decline are new technologies, barriers to entry and consumers' relative reluctance to buy more as prices fall. Cyclical periods of over-supply often result.

Over the past few years, the steady decline has turned into an absolute rout for several commodities whose prices have plunged. Coffee prices collapsed by 45 per cent. from 1999 to 2001—a mere couple of years—and are now well below the costs of production for an overwhelming majority of producers. Price falls at these levels have serious consequences. The livelihood of millions of farmers is compromised, children are pulled out of school and families can no longer afford basic medicines or enough food. Oxfam research in 2000 showed that the falling price of coffee in Kenya forced parents to take their children out of school because they could no longer afford the fees. The price fall meant parents' income more than halved in the space of two years.

It is not surprising that in South Africa—the subject of some criticism—European exports of chocolate confectionery at below production prices led to a 21 per cent. decline in the consumption of domestically produced sugar and chocolate confectionery. Meanwhile, rich country producers support market-distorting subsidies that exacerbate the problem of over-supply. The EU is the world's largest exporter of white sugar, but export prices are only a quarter of their production costs. Britain grinds more cocoa than Ghana, yet Ghana relies on cocoa exports for almost a quarter of its total export earnings.

For many years, adding value to a product that has attracted swingeing tariffs at the point of import into rich countries simply acts as a disincentive to developing countries. For example, fully processed food products are still subject in the EU and Japan to tariffs twice as high as food products in the first stage of processing. That is why people here today are calling for change. Today's events are a democratic challenge to this Parliament, the EU, the World Bank, the International Monetary Fund, and the World Trade Organisation.

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Above all, today's events are a challenge to the conscience of the international community. It cannot be right that over half the world's extremely poor people depend on farming for their livelihoods, but that our trading arrangements should be so blatantly distorted. Nor can it be right that developing countries are being prevented from protecting their poor producers against unfairly subsidised food from rich countries with whom they can never hope to compete. How can we justify the fact that international trade rules are limiting the ability of poor countries to protect their farmers from unfairly subsidised cheap imports?

Chris Grayling (Epsom and Ewell): Does the right hon. Gentleman share the many concerns expressed about the Commonwealth Development Corporation and its changes of policy since the establishment of the public-private partnership?

Mr. Clarke : I would love to go into the issues of the Commonwealth Development Corporation, but that might reduce the time that others have to speak. There may be other opportunities to consider them later, if not today.

During the 1980s and 1990s, the World Bank and the IMF imposed reforms that required many developing countries drastically to cut duties on imported food. Poor farmers lost their markets even at home. The same farmers who try to export their crops face prohibitive trade barriers imposed by the world's richest countries. That cannot be right. Developing countries are also denied the flexibility to support their farmers, as foreign programmes imposed by the World Bank and the IMF cut their subsidies. The World Trade Organisation now also cuts them.

Mr. Stephen McCabe (Birmingham, Hall Green): I congratulate my right hon. Friend on securing the debate. He referred twice to the WTO, which many people regard as a problem in this area, rather than as part of the solution. I do not share that view, but does he agree that the richer countries could ensure that the workings of the WTO are much more open and transparent, which would remove much of the suspicion that surrounds it? Does he also agree that the richer countries could ensure that the poorer countries have proper access through legal representation and a proper secretariat?

Mr. Clarke : I entirely agree with my hon. Friend, and support his calls for such transparency from the WTO and others. The way in which developing countries have been treated is very much in contrast to the reductions in subsidies that rich countries should have made for their farmers under WTO rules. Because of the lack of transparency to which he refers, it is perhaps not widely known that those WTO decisions have been ignored. That is another entirely unacceptable situation.

My hon. Friend's intervention is timely. His views are confirmed this morning in press reports of a United Nations report that makes similar observations. Worse, it says that, if we continue as we are, 100 million more people will be having to survive on $1 dollar a day by

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2015. That has a lot to do with my hon. Friend's point about the lack of transparency in debates on these matters, and the responsibilities of international bodies to respond to the problems.

When Harold Macmillan said that a "wind of change" was blowing throughout Africa, some said that he was ahead of his time. I think not. Forty years on, what is the vision for trade justice in developing countries? I hope that I speak for the thousands of people on today's lobby, those who cannot be here and the aid agencies when I call for people to have the vision to see that it is wholly repugnant that millions of smallholder farmers in the developing world struggle to survive on less than £260 a year in total income while, in contrast, American and European farmers receive on average £15,000 and £11,500 a year respectively in subsidies alone.

We need the vision to see that, whereas international trade rules are essential, they must allow sustainable trading, fairness and intervention where necessary, and to see that such rules can be based on the needs of poor people and environmental sustainability. We need the vision to see that employment need not be based on the exploitation of women or child labour, and to put in place a framework that promotes internationally the acceptance of national development objectives, such as food security, poverty reduction and higher environmental standards. Above all, we need the vision to acknowledge that, in the modern world, a level playing field is no guarantee of a fair game when players are not equally equipped to compete.

The last word should go to the campaign document from the Trade Justice Movement, which says:

Several hon. Members rose—

Mr. Deputy Speaker : Order. I re-emphasise the comments I made at the beginning of the debate. Perhaps I omitted to say then that the winding-up speeches from the three Front-Bench spokesmen will commence 30 minutes before the debate's conclusion. We now have 38 minutes until that time, and 11 hon. Members are seeking to catch my eye. That will make my job difficult, and the jobs of some others impossible.

11.23 am

Mr. Francis Maude (Horsham): I congratulate the right hon. Member for Coatbridge and Chryston (Mr. Clarke) on securing the debate, which is timely. He rightly introduced the debate in a temperate and measured way, and I suspect that as it continues we shall find that there is broad agreement on this subject across the House, which is desirable. This is a hugely important matter, and it is good that the House, in two debates today—one in this Chamber and one on the Floor of the House—is taking it seriously and devoting time to it.

In deference to your strictures, Mr. Deputy Speaker, I shall make only a few points. First, there has been widespread suspicion for the best part of a century that when people use the phrase "fair trade", they mean restricted trade. In the past, that phrase has been code for protection, but the movement that we have heard from today has not referred to it in that way. I exonerate

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it from that criticism. It is important that the Trade Justice Movement does not seem to be, and is not, a cover for protectionism.

I am a passionate believer in free trade. The enlargement of trade enriches everybody but the reality is that free trade is never unregulated or completely free, in the same way that a free market economy is never completely free, nor should it be. Free trade and free markets depend absolutely on a framework of law and rules. To anyone who doubts that, I highly recommend the lecture, which I was privileged to attend last night, given by Hernando de Soto, who made the most powerful case that the biggest friend to poor countries is the establishment of a rule of law, specifically property law. Once there is a system of property law and entitlement to property in the poorest countries, there is the ability for assets to be turned into capital to enable wealth to be created. That is fundamental and without it there will not be sufficient quantity of the right kind of development. The enlargement of good, free trade depends on rules that command respect and consensus, but they must have a fair framework.

It is incumbent on the developed world and rich countries to set an example. With the best will in the world, that is not happening at the moment. I am a strong supporter of the Bush Administration in the United States, but recent developments in trade have caused widespread concern and dismay. The United States should be a role model for the benefits of free trade, and the response to isolated domestic pressure—for example, the steel tariffs and the recent farm Bill—is profoundly disturbing. It has damaged US leadership in the trade negotiations, which is crucial. It is not particularly helpful that the European Union has reacted like an outraged maiden aunt, as if the idea of protectionism had never occurred to anyone in the EU. The European Union's record on the promotion of free trade has not been perfect, by a long way.

My main point is that the developed world, rich countries and the collections of rich countries such as the European Union must set an example and not wait for negotiations to open their markets. We should not be waiting for the pressure of world trade negotiations to make grudging concessions but looking for opportunities unilaterally to open markets and to be confident about it. We must understand that the point about open markets and free trade is that they benefit everybody, even if it is done unilaterally. Hong Kong, for example, was founded on the principle of being a free port and having the most open possible approach to trade. Hong Kong did not wait until there were multilateral negotiations, play its cards close to its chest and refuse to give anything up until there were reciprocal arrangements with others. It simply said, "This is what is going to be the key point about Hong Kong," with the result that it has become one of the most prosperous places in the world. The rich, developed world should have the confidence to believe that that is what free trade does. We should not think of it as giving up things in advance, but as a benefit to ourselves and others, because open economies prosper.

The European Union, like the United States, must get a grip on the matter and start to set a better example. There is a huge danger that US action on steel and the farm Bill will provoke retaliation from the EU and counter-retaliation by the United States, which has

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horrible echoes of the 1930s, when a series of beggar-thy-neighbour action and reaction turned a downturn into a sustained global depression. We must be careful about that, and we hope that the Government and others can persuade President Bush and his Administration to change their ways, but we should not just wait for that. The European Union should change the way that it approaches the issue.

It is impossible to tackle the problem without addressing the common agricultural policy, because it is the most flagrant, offensive and damaging example of protectionism anywhere in the world. If the EU remains resolutely opposed to making not only tinkering reforms, but radical changes and devising a wholly different conception of today's needs, the EU's ability to lead globally in such matters will continue to be seriously impaired. There is a price to be paid, not just by the developing world that suffers through the CAP's distortions, but by us. We all suffer and live in a poorer country because of the CAP's deprivations. The European Union is poorer than it needs to be because of the CAP.

Norman Lamb (North Norfolk): I agree with the right hon. Gentleman's comments about the need for reform of the common agricultural policy, but does not the need for unanimity in changing that policy make reform impossible? As long as that remains, the policy will not change.

Mr. Maude : The hon. Gentleman has made a very tempting point, but if we go down that path, we will take up the rest of the debate and I do not think that we should do that.

My central point remains that rich countries must set an example and start acting unilaterally. There undoubtedly exists a sense of rich countries neurotically hanging on to their cherished protections, and it fuels the idea in developing countries that the World Trade Organisation's multilateral trade negotiations are basically a rich man's racket. They are not and must not be, and we must be careful not to allow them to be seen as such.

To counter that sense, developed countries must start to take the initiative to open markets, eradicate subsidies and remove protections. We must not wait for the pressure of negotiations. The central truth is that the enlargement of trade and open interchange of goods, services, information and people—which form the curious but not new phenomenon called globalisation—will benefit everyone. It will benefit the environment. The director of the WTO powerfully made the case that poverty is the enemy of the environment. Rich cities are cleaner than poor cities, and economic growth is the friend, not the enemy, of the environment.

The Trade Justice Movement lobby made a point about the regulation of multinationals. We sometimes have the illusion that multinationals roam the world, completely unfettered, to lay waste and loot along the way. That is not true. Multinational companies do not exist in the ether above national jurisdictions. Every time a multinational company wants to do something, it does so within a national jurisdiction. The fact is that a multinational works in many different national jurisdictions, operating subject to laws and regulations.

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The idea that we should have a supranational structure of law to regulate multinationals is simply absurd. National Governments all set a framework of rules to balance their interests as they see fit and encourage multinationals to do business there.

Several hon. Members rose—

Mr. Maude : If hon. Members will forgive me, I am almost at the end.

Individual Governments will judge the balance between being liberal enough to encourage multinationals to invest and do business there, which they rightly think enriches them, and having proper protections according to the standards and demands of their people. That applies much more strongly in a democracy, where Governments are subject to popular pressure, and less strongly where democracy is less powerful. Alongside that I make the point that multinational companies need to understand their responsibilities. We are in the fortunate position today in the developed world that there is an establishment consensus in favour of free trade, enterprise and capitalism; but it is a fragile consensus. It depends on multinational companies understanding their responsibilities to the environment and to future generations. They must reinforce that consensus and do nothing to undermine it.

I support most of what the right hon. Member for Coatbridge and Chryston said in opening the debate. There will be a wide degree of agreement, but I urge the Government to use their undoubted influence within the European Union to continue to make the case for theEU to start to open markets unilaterally, rather than waiting for the pressure of negotiations to do it.

11.15 am

Mr. Hilton Dawson (Lancaster and Wyre): I am grateful for the chance to speak, especially as I indicated that I have to leave the debate in about 10 minutes to attend some other House business. I apologise to you, Mr. Deputy Speaker, and to other hon. Members. I congratulate my right hon. Friend the Member for Coatbridge and Chryston (Mr. Clarke) on obtaining the debate and on his opening speech. I should also like to congratulate the Under-Secretary of State for International Development, my hon. Friend the Member for Northampton, North (Ms Keeble), on her appointment to one of the best jobs in Government.

I shall be extremely brief. First, Garstang in my constituency is the world's first fair trade town. Since it took that successful initiative it has twinned with New Koforida, a town in the cocoa-producing area of Ghana. Many other towns and cities have followed its example and I hope that Lancaster will do so soon. It is part of the inspirational example that our constituents set us, such as with the campaigns over debt and the campaign today for trade justice.

The right hon. Member for Horsham (Mr. Maude) made a powerful case for the merits of international trade. Whatever one's perspective on that, no country has ever developed successfully by turning its back on

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the benefits of international trade. However, if we are to address the 2015 international development targets of, for instance, halving international poverty, we must make trade work really well for the people of the poorest countries of the world, particularly Africa. We must strengthen the good intentions and progress that the Government have made to ensure that intentions are translated into international actions to address these issues.

The progress that was made at Doha was vital. I support all the concerns of the Trade Justice Movement campaign. I would like to see a development box within the WTO agreement on agriculture. I would like to see the Government supporting a ban on patents on plant genetic resources to protect farmers in developing countries. I would like to see an independent impact assessment of the general agreement on trade in services. I would especially like to see some legally binding regulation of international companies to ensure that they comply with internationally agreed standards on corporate responsibility.

I have an example of that. Other hon. Members will have witnessed, as I have, the grotesque poverty and despair of the people of Angola. It is a potentially wealthy country with enormous resources in oil and diamonds. It has a population of 12 million and is the size of western Europe. It is officially listed as the worst place in the world for children to grow up: a third of Angolan children die before the age of five. With the honourable exception of BP, international oil companies will not publish what they pay to the Angolan Government for that vital resource. We know from a recent global witness report that the year before last no less that $1 billion unaccountably disappeared from Angola. It was salted away and not used to the benefit of the people of Angola.

Ann McKechin (Glasgow, Maryhill): My hon. Friend has raised a crucial point, which was also made, in part, by the right hon. Member for Horsham (Mr. Maude). It concerns the way in which the poorest countries in the world regulate foreign trade and investment in their countries. Many of those countries have no competition laws, some have introduced them only recently, and few have the capacity and the resources to sufficiently enforce them against huge multinationals. Does he agree that it is implicit that future WTO negotiations should incorporate agreements about multinationals and how they conduct their business?

Mr. Dawson : I agree absolutely with my hon. Friend. I hope that at the G8 and in other forums in which the Government are to have a strong presence in coming weeks, that point and the one about the transparency of the involvement of multinationals—from whatever country—will be powerfully made.

11.41 am

Sue Doughty (Guildford): I congratulate the right hon. Member for Coatbridge and Chryston (Mr. Clarke) on having secured this important debate. I am pleased to have an opportunity to speak, because a large number of my constituents will be coming here, and because so many people in the country—not only in the run up to today's mass lobby, but over the years—have taken the trouble to keep Members of Parliament

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informed. For example, St. Peter's school in my constituency regularly books time in my surgery to ensure that I am on message on the issue and organises peer group events at the school in order to spread the word. Poverty and inequality on the scale that we see today are unacceptable. Even more unacceptable is the fact that many of the trade problems could be solved: people and countries could be moved out of debt if the major Western economies were to take bold steps to end not only debt but the scandalous use of trade tariffs, about which we have heard so much today. We have to test every policy to ensure that, rather than continuing the flow of resources from developing to developed countries—a rather shameful legacy from colonial days—we start to reverse it. Instead of the top countries gaining the most, they should be lending assistance to the poorest countries. The present situation cannot be right.

Consider these things: it takes one month for a woman working in the textile industry to earn enough money to buy one of the shirts that she produces to be sold at Marks & Spencer. Of the 50 shirts that she produces, she can keep one. Five billion people live on incomes of less than $1 a day, while trade barriers cost the poorest countries $480 billion annually—that is 14 times what they receive in overseas development assistance. The major argument, especially in troubled times, concerns not only social justice, to which everybody in the Chamber subscribes, but also the need to recognise, in everything that we do, that trade does not cross borders, but armies will. That was a 19th century saying, but it has never been truer than it is today.

The NGOs have done a wonderful job, not only in drawing our attention to injustices but in doing their best in the field to set some of them right. We must go a lot further. Quakers have been working in central America. They run long-term rather than short-term projects in some of the neediest parts of the world. They have studied the agricultural sector, which is shrinking all the time. People working in what would be the natural agricultural economy are being driven into urban areas. They are facing a wall of tariffs from the United States and the European Union, which makes it difficult for small farmers to compete and make a living from agriculture.

The G7 Governments need to reduce tariffs and then eliminate them in the EU and the USA so that farmers in countries such as Honduras and Nicaragua have the chance to sell in the real world at competitive prices. In central America, too great a reliance is placed on a small number of vulnerable commodities. Problems with production or difficulties with market access result in poverty on a grand scale. We must therefore look at opening up new markets for those countries, in order to remove those risks.

We recently saw the Greenpeace demonstration on sustainable timber at the Cabinet Office. Another piece of good news in the run up to the world summit in Johannesburg is the fact that environmental bodies and aid organisations are working on a much more common agenda. We no longer need to think of rain forests as interesting museums with many plant species and biodiversity—full stop. We should be talking about them as places where people live—that is so much better.

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Last week, the Environmental Audit Committee heard that DEFRA officials have still not got their act together on sustainability. The question that will keep arising is how much longer it will take the Government to put in place rules of the sort that firms such as B & Q were following 10 years ago. We should not need Greenpeace to audit our sustainability; the Government should have good policies and good practice in place. We want to do something, but we lack joined-up government.

I will be as brief as I can, but I have considerable concerns about the arms trade. In 2000, the Chancellor announced the end of export credit guarantees for arms sales to 63 of the poorest countries, yet the Government are still sending bodies to a defence exhibition in 2002 entitled, "Africa, Aerospace and Defence". We know that arms are still being sold to the poorest countries in Africa. Trade Partners UK will be at the exhibition, as will the Defence Manufacturers Association, which will be sponsoring the United Kingdom's arms companies.

When considering the problems of fair trade, we must look at the wider issues—about how the Government are backing today's aspirations, whether Government Departments are working cohesively, and whether we have joined-up government delivering on those aspirations.

11.48 am

Andy Burnham (Leigh): I will be extremely brief. Lots of figures are cited in such debates, but one figure says it all. Yesterday's edition of The Guardian published a letter from Professor Keith Popple of Southampton institute, who said that the combined wealth of the world's three richest men is more than the combined wealth of the world's 48 poorest nations. That chilling fact alone is graphic evidence that free trade has failed to produce a more equal world, and that changes to world trade rules are needed if we want to see the world's wealth spread more fairly. We need to be clear that trade alone will never solve those differences, but will exacerbate them. It is natural for a market to punish the weak, not to help them.

As my right hon. Friend the Member for Coatbridge and Chryston (Mr. Clarke) said, 10,000 people are en route to Westminster to lobby us on those issues. We see many lobbies at Westminster, but today's is different. People are taking the trouble to come here today not out of self-interest but because they want a fairer world, and for that reason alone it behoves us to listen carefully to their arguments. One such person was my constituent John Humphrey. He came to see me a few months ago to say that he was organising a lobby of Parliament. John was passionately committed to overseas development, and worked for much of his life giving practical assistance to developing countries and raising awareness of those important issues. He was the founder of the CAFOD group at St Catherine's Church in Lowton in my constituency. Sadly, John died a few weeks ago and will not be at the lobby today, but the fact that so many people are making the trip from my constituency will serve as a lasting tribute to him and his tireless work.

I hope that Ministers will give careful consideration to the calls that are being made. People are right to challenge policy in this area and to ask constantly for

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Governments to do more. The Doha declaration makes progress in calling for special and differential treatment for developing countries. We need tangible evidence of what that means and special exemptions for the agricultural industries of developing countries so that they can begin to make progress and compete only when they feel able to do so.

We are discussing issues today that affect the future of mankind and the world, but I am not sure how many column inches we or the lobby of Parliament will get in tomorrow's newspapers. When that is set against the frenzy of coverage about who in No.10 said what to whom in Black Rod's Office, it shows that, sometimes, the cut and thrust of domestic politics gives a false impression of what is really important. Perhaps the most useful purpose of today's debate and lobby will be to help to put things into a proper perspective.

11.50 am

Chris Grayling (Epsom and Ewell): I, too, will keep my remarks brief. This is an extremely important occasion. As hon. Members have said, we ignore our constituencies at our peril and there is no doubt about the strength of feeling about this issue in our constituencies. I have received petitions from St Giles' and St George's churches in Ashtead, from Ruxley Lane church, St Mary's in Cuddington, St John's in Stoneleigh and from constituents across my area. They are all adamant that they want the issue to be addressed properly at an international level.

I shall pick two points from the petitions on which politicians from all sides can agree. First, poverty eradication must be a key objective for all of us. Secondly, trade can be a powerful driver for improvement around the world, but trade rules have to be enforced to ensure that rich as well as poor countries abide by them.

With that as a background, I should like to make four brief points. First, following on from the comments of my right hon. Friend the Member for Horsham (Mr. Maude), it is simply not acceptable for Europe and north America to pursue protectionist policies in key areas, particularly in agriculture, and then to expect other countries to adopt free trade practices without considering the implications for themselves. We have to set the example. The common agricultural policy is not sustainable in its current form. US policy to protect north American farmers is not sustainable in its current form. That practice will have to change. Free trade must mean free trade.

Ms Julia Drown (South Swindon): The hon. Gentleman says that free trade must mean free trade. However, does he appreciate the experience of the east Asian countries, which reduced poverty massively over a generation but did so partly through protectionism and closed markets? Would he support that sort of arrangement if it would relieve poverty in the poorest parts of the world?

Chris Grayling : I thank the hon. Lady for those comments. It is important to recognise that in some cases, WTO rules make illegal local practices, legislation

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and support for economies in the developing world. To that extent I have some differences with those who advocate big international policies. National Governments know what is best for their own people. We risk centralising international trade issues to too great a degree.

My second point is about the Commonwealth Development Corporation, reflecting concerns raised with me by constituents who believe that the corporation no longer plays the role that it once did. I know that my hon. Friends on the Conservative Front Bench have made this point to the Government on several occasions. It is not right and proper for a development organisation in the third world to be seeking a specific return as a prime objective. Its job is to alleviate poverty and to encourage development in those countries, and that goal should not be lost.

Thirdly, we need to think small as well as big. If one lesson has been learned from generations of aid and encouragement to developing countries, it is that big projects that involve mass lending to Governments are not those that make the biggest difference. Policy should be as strongly focused on small projects, small-scale support and the encouragement of individual businesses, developments and producers as it is on big international issues.

My final point is about action. One of the most consistent messages that I have been receiving is that of dissatisfaction with high-sounding words about international trade and aspirations to engender free trade and remove barriers. There have been lots of summits and expensive meetings around the world, but there has there has been precious little action. If the Government take away one message from this debate, it must be that talking is not enough and that action is needed. I hope that our Government and other Governments around the world will ensure that action is taken to sort out a proper future for international trade in the developing world.

11.55 am

Ann McKechin (Glasgow, Maryhill): I will try to be brief. I congratulate my right hon. Friend the Member for Coatbridge and Chryston (Mr. Clarke) on securing this debate. I also congratulate the members of this afternoon's mass lobby, which I hope will persuade the Government of the need to ensure that the forthcoming WTO negotiations are debated in Parliament so that the voice of civil society is properly heard.

The world's poor countries believed that the implementation of the agreements that they signed at the Uruguay round of talks—the precursor to the WTO—would bring them the benefits of increased access to the markets of the north, but, to date, those benefits have failed to materialise. The failure to tackle the needs of the south and, by implication, of the world's poorest citizens has led to a growing suspicion that the forthcoming negotiations will further fudge the issue of reforming the tariffs imposed by the north, particularly US agricultural subsidies and the EU's common agricultural policy. The effect of such policies has been exacerbated by the continued problem of the subsidised dumping of products on the markets of the south.

There is also a fear that the north, encouraged by the powerful and influential multinational corporation lobby, will use all its muscle to push the south into

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binding agreements to liberalise many of its markets, including services, with little or no opportunity adequately to regulate foreign investment in a way that would benefit its citizens.

Given the history of manipulation, developing countries are understandably losing faith in the apparent good intentions of their wealthier WTO colleagues. The WTO's credibility in terms of achieving a fair balance between the south and the north is at stake. We must approach the talks in a spirit of openness and transparency, and with a strong and permanent commitment to new measures that will eradicate poverty.

Let us not forget that the WTO is a negotiating forum for legally binding commitments, and all members, not just the privileged few, must be able to participate effectively if they are to take advantage of it. By putting services on the negotiating table, however, the new Doha round has considerably increased the work load on all delegations. The WTO must immediately give the greatest priority to ensuring that appropriate resources are provided for the full and effective participation of developing countries. The funds that our Government provide for capacity building are welcome, but they should be made available as a matter of right, not of charity.

Urgent progress must be made on eliminating tariffs and escalators, and on substantially reducing subsidies in the north. However, the new negotiations must not take a one-size-fits-all approach. Speaking to the all-party group on overseas development, the Chancellor rightly said that a managed, staged approach was required to open up trade in the south. It is not simply a question of increasing foreign direct investment to less-developed countries, but, crucially, of putting in place national and transnational regulatory systems to encourage investment and provide sustainable and widely distributed benefits.

If we are truly committed to a negotiation round based on development and on poverty eradication, we must accept proper scrutiny of our proposals, and put in place adequate mechanisms to assess their impact. Such independent impact assessment has been promised, but the WTO is still to deliver it.

It is not enough to indulge in rhetoric about the benefits of trade liberalisation; we must demonstrate its benefits. If our agreements are shown not to provide real progress towards development, we in the north must show flexibility and the courage to act in the interests of those who need our help most. Millions of people still live in absolute poverty.

11.59 am

Mr. Steve Webb (Northavon): I congratulate the right hon. Member for Coatbridge and Chryston (Mr. Clarke) on securing this debate and, in particular, on bringing a moral dimension to it. I also welcome the Minister to her role. I hope that in six or 12 months' time, when she is in the midst of all the technical detail and jargon, she will remember that this is a fundamentally moral issue. It cannot be right for the rich west to subsidise food, sell it below local market prices and undermine local producers.

Free trade has a role, but there must be two fundamental limitations on it. First, we must protect those who face unfair competition, such as small local

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farmers. I hope that the Minister will tell us the Government's thinking on the idea of a development box for agriculture in the current negotiations.

The second limitation on free trade is purely that many of the trading nations are not democracies. Therefore, although the benefits of trade may go to the nation, it finds itself in a small number of pockets. As part of the free trade agenda, I hope that the Government will pursue democracy in many such nations. Without it, free trade does not benefit the poor people about whom we are most concerned.

12 noon

Norman Lamb (North Norfolk): I congratulate the right hon. Member for Coatbridge and Chryston (Mr. Clarke) on securing the debate. It is important that the issues be discussed, especially when Parliament is being lobbied. I also want to pay tribute to the work of the charities and non-governmental organisations. They have done much to raise the profile of the issue, which is one of great urgency.

I want to refer to Oxfam's analysis of trade rules, especially in the report "Rigged Rules and Double Standards". In that report, Oxfam produces a double-standards index to test the performance of the developed world against the rhetoric that it often uses to talk about free trade. That test clearly shows that the European Union and America are the worst offenders when it comes to the gap between the rhetoric and reality of policies.

The case for freeing trade and for making fairer trade rules for the developing world within a clear legal framework is strong, as the right hon. Member for Horsham (Mr. Maude) rightly said. Ultimately, fair trade can be much more effective than aid alone, but there should not be only one or the other; the two should work in tandem. Aid especially should be directed at improving the competence of developing countries to trade effectively and fairly with the developed world.

Hand-in-hand with that, improvements in governance are needed in much of the developing world. My hon. Friend the Member for Northavon (Mr. Webb) pointed that out, and I endorse his point. In our recent Oxfam-funded visit to India, we saw how important such improvements are. Corruption needs to be cut out, and the market within India needs to be freed up. The country has no single market, but 35 states with massive tariff barriers between them.

I especially want to pursue the importance of consistency between Government policy on trade in all its forms and the provision of development assistance to the developing world by the Department for International Development. The Department has a new test. Under the International Development Act 2002, development assistance must be designed to alleviate poverty and pursue the concept of sustainable development. However, it is no good the rich west salving its conscience by paying out aid if, at the same time, such work is undermined by our policies on trade and, as my hon. Friend the Member for Guildford (Sue Doughty) said, on arms sales to the developing world.

In stressing that point, I want to refer to the sale of the air traffic control system to Tanzania. That was a clear example of an unfair, unjust, unacceptable and almost certainly corrupt trade with one of the world's poorest

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countries. I shall give some of the facts of the case. In 1997, the Ministry of Defence gave preliminary clearance under its F680 procedure to the export by BAE Systems of an air traffic control system to Tanzania. It was a military system; the Government knew that in 1997. They knew that because the application was made to the Ministry of Defence for the export of a military system.

On the basis of that preliminary clearance, BAE Systems entered a binding contract with the benefit of a soft loan from Barclays bank—it had to be given on concessional terms in order to meet IMF rules. The equipment was built and $15 million was paid to BAE Systems before the export licence was considered. Essentially, the MOD's preliminary clearance presented the Department of Trade and Industry with a fait accompli when it came to consider the application for an export licence. In considering export licence applications, it is supposed to apply what are called consolidated criteria. Those criteria take into account the need to look at the country's development needs. Those were totally ignored in that case.

Dr. Nick Palmer (Broxtowe): How does the hon. Gentleman address the fact that we might have a qualified view of an arms deal or some other deal and that the Government in the developing country might have a different view? We give Governments the right to defend themselves. In what circumstances does he believe that we have the right to override the judgment of a developing country about its self-defence needs?

Norman Lamb : My point is that our Government's policy must be consistent. It is no use giving development assistance money to one of the poorest countries in the world if, at the same time, we give an export licence for a system that is of no use to that country. I shall expand on that in a moment.

The result of the contract is that one of the world's poorest countries has increased its debt, just after receiving debt relief from this country and others, to the tune of £28 million. It has purchased a system that, as we now know from the International Civil Aviation Organisation, is totally inappropriate to its needs. Tanzania does not have an air force, yet it has bought a scandalously expensive military air traffic control system. I am told that a civilian system would have cost about $5 million. Why was that deal completed? It does not make any sense for Tanzania and I understand that the President of Tanzania has now written to the Prime Minister making that point and asking for the Government's help in extricating itself from the deal. Why did Barclays subsidise the deal? Its involvement does not make sense and should be investigated. Why would a commercial organisation subsidise an inappropriate arms deal to a very poor country? The loan had to be on concessional terms to get past IMF rules, because the country had been in receipt of debt relief. I have been told that bungs were paid to facilitate the deal. There should be a full investigation into that scandal.

This country wastes masses of public money.

Mr. Maude : Will the hon. Gentleman give way?

Norman Lamb : I have little time, so I shall not.

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We spend millions of pounds in development assistance and in debt relief for one of the poorest countries in the world, yet Tanzania has been left with a massive debt and the only one to profit from the deal is a British arms company. We are talking about fairer trade. The MOD cannot be allowed in future to effectively bind the DTI without the knowledge of DFID. DFID did not even know that the application had been made in 1997—contrary to the principles of sustainable development—to foist a military system on one of the world's poorest countries.

We are all calling today for fairer rules for international trade, in particular for the developing world. I am also calling for consistent Government policy so that one Government Department cannot totally undermine the work of another.

12.9 pm

Mr. Nick Hawkins (Surrey Heath): I congratulate the right hon. Member for Coatbridge and Chryston (Mr. Clarke) on having secured the debate, and I welcome the Minister to her new responsibilities. The right hon. Gentleman is aware that, in addition to this debate, Conservative Members have chosen to allocate one of our Opposition days for a debate on this very important subject, especially to mark the fact that such a significant lobby of Parliament is taking place today. Such a debate seemed appropriate to my hon. Friend the Member for Meriden (Mrs. Spelman), the shadow Secretary of State for International Development. I am sure that many hon. Members who were unable to catch your eye in this debate, Mr. Deputy Speaker, will want to participate in the debate in the House.

As my right hon. Friend the Member for Horsham (Mr. Maude) and my hon. Friend the Member for Epsom and Ewell (Chris Grayling) have said, we believe passionately in free trade. It is the greatest engine for poverty reduction. It is more effective than aid alone ever could be, and as the hon. Members for Northavon (Mr. Webb) and for North Norfolk (Norman Lamb) said, aid and trade need to work in tandem.

We congratulate all those who have written to their Members of Parliament and those who are attending Parliament today on bringing the issue, once again, to the attention of Parliament and the public at large. Happily, more people have been lifted out of poverty around the world in the previous 50 years than in the 100 years before that. It is good to know that, in spite of all the problems that remain in many parts of the world, since 1960, child death rates and malnutrition rates have halved in developing countries.

Much of the credit for that must go to the wealth that has been created by increased international trade. We should be aware, however, that many countries have not reaped the benefits. As several speakers have already said, corruption is one of the major problems. I think it was the hon. Member for Northavon who said that the lack of democracy in many countries is the problem. It is important for all those who care about these issues to focus on corruption and lack of democracy as much as on the obligations of the developed world and the importance of negotiations in organisations such as the World Trade Organisation. We can do a great deal to promote democracy and good governance around the world, and to try to reduce the extent to which the corruption of the rulers of so many developing countries is harming their citizens.

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We recognise that, partly because of corruption, exports in many poor countries do not expand, so those countries do not reap the benefits of globalisation. Again, partly because of corruption, farming becomes unsustainable in many countries, for example, in Zimbabwe, where there is a deliberate attempt to hand over huge amounts of land to the leader's cronies, with the result that there is likely to be a substantial failure in the staple maize crop there. We were briefed recently by someone who has worked in Africa for the Commonwealth Development Corporation and Oxfam during the past 10 years, and who said that corruption and cronyism may well lead to famine.

We are aware that life expectancy throughout the world is increasing, but in many African countries, it is falling, not least because of the tragic spread of HIV. We are very much aware that Africa will not meet the international development target of halving the number of people living in poverty by 2015. There will be a need to reform trade rules to ensure that globalisation becomes a truly effective force worldwide. The reform should focus on ensuring truly free trade.

As my hon. Friend the Member for Epsom and Ewell pointed out, the common agricultural policy is unsustainable in its current form. Trade barriers in the form of tariffs are wrong. As my right hon. Friend the Member for Horsham said, although we support President Bush on many issues, we do not want the United States to resort to protectionism, as it could only do damage. Tariff barriers deter foreign investment and raise prices. Lower trade barriers encourage trade and inward investment, and allow other poor countries to expand their exports and to benefit from their comparative advantages. That is shown by the number of poor countries that have already been able to expand their range of exports away from primary commodities to manufactured goods and services.

There are continuing concerns about the way in which high tariffs, even in the EU, Japan and Canada, block out poor countries. It is of particular concern that the imports on which poor countries want to focus are the very commodities that are blocked by high tariff barriers.

Hugh Bayley (City of York): I am delighted to hear the hon. Gentleman repudiating so many of the policies that his party pursued when it was in government when the proportion of GDP spent on aid was halved from 0.5 per cent. to 0.25 per cent. Does he recognise that, if we reduce agricultural subsidies by reforming the CAP and make it more possible for African farmers to import their beef and cereals into Britain, there will be a consequence for British farmers as there will be less demand for British beef and cereals?

Mr. Hawkins : The hon. Gentleman is right that we need to ensure that all our national interests are taken into account. However, I regretted giving way to him when I heard him reducing what had been a helpful and constructive debate to cheap party-political point scoring.

Trade liberalisation has many dimensions. It must involve the reform of agricultural subsidies. We must bear in mind that total OECD subsidies represent two thirds of Africa's total GDP. Rich countries must keep

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their side of the bargain. Trade liberalisation also means increasing the use of the private sector in the provision of services in poor countries, which the Government and the Conservatives support. We recognise that some members of the Trade Justice Movement oppose it, but we point out to those who lobby us on this matter that trade liberalisation has historically encouraged economic growth and investment. In a large number of developing countries, the provision of essential public services, especially clean water, has not been given a high enough priority by those who govern them. It must be welcome if private companies can provide such services, greater capital investment and expertise.

Studies show consistently that poor citizens suffer the most from corruption. Trade liberalisation is a good way to tackle corruption and encourage good governance, and is therefore in the best interests of the poor. We do not agree that it would be sensible to concentrate first on greater regulation of multinational companies, as that would deter the vital foreign investment that poor countries urgently require. Evidence suggests that the involvement of multinational companies brings higher wages, higher safety and environmental standards, and more rights for workers. The idea that globalisation is a race to the bottom in poor employment practices is wrong. On the Conservative Benches, we believe that poor countries need more trade and investment and that we should not put barriers in the way of greater investment.

These issues must be tackled by the Government in the forthcoming EU Heads of Government meeting in Seville later this week, in the G8 meeting in Canada later this month and in the world summit on sustainable development in Johannesburg later this year. Conservatives are calling on the Government—in this debate and again later today—to show leadership. Rhetoric should be followed up with action.

12.20 pm

The Parliamentary Under-Secretary of State for International Development (Ms Sally Keeble) : I welcome this important debate. The high attendance in Westminster Hall this morning shows the high level of support among hon. Members and the public for tackling this issue. I thank hon. Members for their good wishes, and I agree with those who said that I have the best job in the Government. I also sincerely congratulate my right hon. Friend the Member for Coatbridge and Chryston (Mr. Clarke) on securing the debate today. He has demonstrated a keen interest in this subject for a long time. As a former shadow Secretary of State for International Development, he should take much credit for the development of thinking about this important issue.

In the short time available, I shall set out some of the Government's basic principles, but I also want to respond to hon. Members' specific points. Several hon. Members will have another opportunity to explore the issues again this afternoon. I want to pay tribute to the work done by the Trade Justice Movement lobby. The existence of the campaign and the lobby has undoubtedly raised the profile and importance of the trade and development movement at a particularly important time for international discussions. Trade justice issues will be at the top of the agenda. The Government have been given a clear mandate on that by the public.

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The Government are committed to ensuring that poverty reduction is at the centre of their work in international aid. The hon. Member for Northavon (Mr. Webb) was right to point out that it is a moral imperative as much as a political problem. He was also right to draw a distinction between the simplicity of the moral position and the complexity of the rules that have to be negotiated. The Government have grasped that particular nettle. The hon. Member for Surrey Heath (Mr. Hawkins) should realise that the Government have shown great leadership, not just at home, but abroad, in setting out clear markers about the goals themselves and how best to realise them.

We recognise that trade has an important role in helping to achieve the millennium development goals. In recent decades, countries that have taken the opportunity offered by more open world markets have taken the greatest strides in reducing poverty. The World Bank estimates that continuing to open markets to trade could lift an additional 300 million people—about a quarter of our target for the year 2015—out of poverty. By expanding access to ideas, technology, goods, services and capital, trade openness can create the conditions for faster economic growth and help to reduce poverty.

My right hon. Friend the Member for Coatbridge and Chryston and the hon. Member for Lancaster and Wyre (Mr. Dawson) spoke about the impact of the reduction of commodity prices on levels of poverty in the least developed countries. The Government are examining several issues in that respect, one being value change. It is important that countries that produce the commodities are also able to manufacture and process them. That comes back to the issue of the trade barriers and tariffs. It is one of the reasons why it is so important to dismantle them if we are not just to deal with poverty in the developing world, but to provide sustainable economic growth in those countries.

There is also the issue of the dependence, especially of rural communities, on a small number of basic commodities. Commodity prices have a completely disproportionate impact on rural poverty. Diversification is therefore important. The Government, and my Department in particular, have provided support for the Fair Trade movement and there is growing awareness of the need to ensure that the products that are procured by our major retailers come from sources that comply with fair trade requirements.

My hon. Friend the Member for Birmingham, Hall Green (Mr. McCabe) made an intervention about transparency. That was important because it is one of the issues that will be raised by today's lobby. Indeed, my colleagues and I had discussions about that this morning with some of the NGOs. We are sympathetic to

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the representations of the developing nations and are working with them and the NGOs. We are also financing support for the pursuit of cases in trades disputes so that the developing nations have access to some of the levers of justice.

The right hon. Member for Horsham (Mr. Maude) made an interesting and thoughtful speech about the relationship between free trade and regulation and about the contradictions in the position of the US, which, while espousing free trade, protects its own industries in certain areas. The Government recognise that. We are pressing internationally and in Europe to ensure that we can end some of the protectionism that has so damaged the developing countries. We are also working on governance issues in the developing countries to ensure that they have the framework to provide the regulation for trade within their countries. Quite a number of hon. Members raised issues about corruption and the importance of ensuring that the benefits of trade reach the populations and do not remain with small numbers of the elite.

My hon. Friends the Members for Leigh (Andy Burnham) and for Glasgow, Maryhill (Ann McKechin) made some important points about the suspicion that exists in many areas about the role of tariffs and trade barriers. One of the reasons why it is so important that we dismantle them and encourage trade is the enormous amount of finance that that can produce, including for the least developed countries. For example, the World Bank estimates that if we reduced by about half the current level of tariffs and barriers, we would produce around US $150 billion a year for the developing countries. That is roughly three times the international aid budget worldwide. It gives an idea of the scope of what can be achieved through trade, as compared with what will be available, even with the best will in the world, through aid.

The hon. Member for Epsom and Ewell (Chris Grayling) raised issues about the Commonwealth Development Corporation. Because of time constraints I will not deal with those points now, but I will ensure that he receives a written reply. Investment in developing countries is critical and being able to source financing for a whole range of projects has created pressure. My Department has been looking at ways to ensure that there is an opportunity for further investment in those countries. My hon. Friend the Member for Glasgow, Maryhill raised issues about the development box. We welcome the way that the discussion of that has focused attention on the need to address the special circumstances of developing countries.

In conclusion, this has been a brief dress rehearsal for the debate this afternoon. I reiterate that the Government have shown real leadership in ensuring that there is justice for developing countries, in trade as in other issues, and they will continue to do so.

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