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25 Jun 2003 : Column 1118

Fair Trade

Mr. Deputy Speaker (Sir Alan Haselhurst): We now come to the debate on fair terms for international trade. I must advise the House that Mr. Speaker has selected the amendment in the name of the Prime Minister. There will be an eight-minute limit on Back-Bench contributions to the debate.

4.16 pm

Mrs. Caroline Spelman (Meriden): I beg to move,

There is a terrible sense of déjà vu in holding this debate on our Opposition day exactly one year after our last such debate. If we look back over the past year, what have the Government really achieved in respect of securing fair terms for international trade? We share the frustration of the Trade Justice Movement that so little progress has been made.

Unlike the Secretary of State for Trade and Industry, who wrote in The Guardian this week that she "fundamentally agrees" with the Trade Justice Movement, I can honestly say that although we share many of the movement's demands, we do not share them all. However, we congratulate it on bringing these issues into the public arena and giving us the chance to debate them openly. I shall be holding a trade justice surgery in my constituency on Friday, and I urge Members to take the opportunity, as I know that many are doing, to meet campaigners.

The case for fair rules of international trade is overwhelming. The United Nations estimates that if trade rules worked for poor countries, they could reap benefits of up to $700 billion a year—14 times the amount that developing countries receive each year in aid, and 30 times the amount that they pay in debt repayments.

One of the best parting shots of the outgoing Secretary of State for International Development was made in her withering analysis of the failure of successive trade talks to make any meaningful progress. In her speech on the dangers to Doha at Chatham house on 25 March, she said that

She also said that

on trade-related aspects of intellectual property rights and public health, and on special and differential treatment for developing countries. She described how

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the discussions in Geneva are stalling, destroying trust between World Trade Organisation members and dissipating their willingness to negotiate.

Yet we are only three months away from the next round of the trade talks, in Cancun this September, with very little progress to show for all the efforts made. The post-11 September spirit of contrite concern for the world's poor, which led to Doha being called a "development round", seems to have given way to vested interest, the old complacencies and the status quo.

Chris Grayling (Epsom and Ewell): Does my hon. Friend agree that it is doubly disappointing, because since the last Doha round and within Europe, a step has been taken in the wrong direction? The reality is that there are now fewer prospects than ever for the European Union properly to open up its markets to the producers of the third world.

Mrs. Spelman: My hon. Friend is absolutely right, and I shall mention in a few moments the disappointing results of the most recent common agricultural policy negotiations.

Where is the will to change? We hear plenty of rhetoric about "healing the scars of Africa", but we see little improvement. The poorest countries' share of world trade has dropped by almost half since 1981 and is now just 0.4 per cent. There is an air of business as usual about the place. Last Friday's conclusion to the discussion on reforming the CAP was utterly depressing. Despite all the rhetoric about Britain playing a lead role in Europe, the Prime Minister appears to have capitulated before France and Germany to a deal that leaves the CAP substantially unreformed and the level of subsidies uncut until 2013—only two years before the deadline for meeting the millennium development goals. They were targets that we set ourselves to lift people out of poverty, ill health and missed opportunity, and to ensure that no one is left behind. At the European summit last weekend, the Prime Minister returned without, apparently, having raised the issue of the CAP with the French President and with no mention of the importance of CAP reform in the Council's conclusions.

Agriculture is of key importance because three quarters of the world's poor live in rural areas. Agricultural produce is virtually their only source of cash, and developing countries are particularly vulnerable because production tends to be focused on a small number of cash crops. Yet the rich nations of the world regularly destroy opportunities in growth markets by dumping surplus agricultural production with subsidies from taxpayers' money. One of the starkest examples is in India, which, as the world's largest producer of milk, is unable to compete in the growth market of the middle east because of the subsidised exports from, among other places, Europe. It is a shameful comparison that every cow in the European Union is subsidised by $2 a day, while 3 billion of the world's poor live on less than that amount.

Export subsidies are the most iniquitous feature of the CAP and even France is willing to acknowledge their damaging effects, but where is the will to remove them? The CAP does not now even serve our own farmers well.

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They suffer from exactly the same problem as developing farmers—seeing the middlemen take more and more of the profit on what they produce for diminishing returns at the farm gate.

Dr. Nick Palmer (Broxtowe): Would the hon. Lady be willing to overcome the roadblock by removing the right of nations to declare it an absolute strategic interest to keep the common agricultural policy? She will be aware that there is a qualified majority in favour of going much further than France is willing to go, but France is declaring the CAP to be a vital national interest. Would the hon. Lady be willing to give that up?

Mrs. Spelman: The hon. Gentleman's intervention reminds me of a similar one last year. The point about using the veto in favour of national interest is that it is so frequently abused, and it is the abuse of national interest that presents the real problem.

Farmers in this country suffer from exactly the same problem as developing farmers in seeing middlemen taking more of their profit. I would go so far as to urge British farmers to join the fair trade campaign and demonstrate real solidarity with the world's poor farmers. Like the Columbian coffee farmer, the East Anglian sugar beet producer would then make common cause to balance the power of the big food retailers and supermarkets. Consumers could buy products marked with the fair trade symbol knowing that, at home or abroad, more of the profit will go to the farmer.

Mr. Andy Reed (Loughborough): Does the hon. Lady agree that not just fair trade but co-operative fair trade makes an enormous difference for farmers? On my recent visit to Ethiopia, I visited a coffee co-operative where the vast majority of the profit made along the entire chain went back to the individual farmers, who received probably four times more than they would get if they just sold their produce to the market. Is that an acceptable approach?

Mrs. Spelman: The hon. Gentleman makes a good point. The co-operative principle, whether abroad or in this country, has been very successful in helping farmers to secure more of the value added to their product and ensuring that their farm gate returns rise. It is certainly a principle that we support.

Sir Nicholas Winterton (Macclesfield): My hon. Friend referred to milk and India earlier. Is not it a great shame that this country—for whatever reason, but mainly due to pressure from the European Union—abolished one of the most successful co-operatives of all time, the milk marketing board? Can my hon. Friend assure me that those matters, which have stood British farmers in good stead, will be considered by the Opposition, if not by the Government?

Mrs. Spelman: My hon. Friend makes an important point about a complex and highly competitive international market for dairy produce. It is important to reiterate that we have called for a review of the way in which the present rules governing the dairy industry in this country operate, in view of the intense competition from other large producers, such as

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New Zealand—the lowest cost producer—and Denmark, to ensure that our farmers are able to compete on fair terms with them.

The European Union is not the only offender. The US Farm Bill, which recently granted an extra $100 billion in farm subsidies, distorts world trade in the same way. On a recent visit to Malawi, I learned that 300,000 Malawian farmers had been persuaded by American companies to grow premium grade tobacco. Once the crop was established, the price was driven down to $1.6 a kilo, compared with the subsidised price received by US domestic farmers of more than $6 a kilo. US farmers produced more, the world price fell, and now the Malawians are out of business.

Cotton subsidies are another example. The price of cotton is at an all-time low and cotton farmers in developing countries are suffering most from the plummeting prices. In the US last year, for example, some 25,000 cotton producers received almost $4 billion in subsidies. That is three times more than the US gave in aid to Africa. Oxfam estimates that Africa is losing $300 million a year as a result of cotton subsidies, and that prices would rise by a quarter if the unfair subsidies were eliminated.

Members of the Trade Justice Movement are not against a rules-based system of international trade, but they want it to be fair—and so do I. They are sceptical about the way in which the World Trade Organisation works, because it appears to favour the rich and powerful nations. Rich countries, especially the US, Japan and Canada, and the European Union, have well-funded teams of specialist negotiators, while half of the poorest countries cannot afford them. For that reason, my right hon. Friend the shadow Chancellor has announced that we would help to create an advocacy fund for developing countries to use to provide themselves with high quality legal and economic advice on trade issues. Let us face it, we are not short of lawyers.

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