Previous SectionIndexHome Page

6.19 pm

Mr. Simon Thomas (Ceredigion): It is a great pleasure to take part in this debate. I am grateful to the official Opposition for choosing fair trade as a subject for debate, and should like to welcome the new team at the Department. However, I, too, am disappointed that the Minister dealing with these issues is not a member of the Cabinet. There is a great deal of interest in these matters in my constituency, especially among the churches and chapels, which have been driving the agenda forward. It is great to have the opportunity to talk in the House about issues that, unusually, our constituents know more about and are better briefed on than us.

International trade is a bit like a game of Monopoly, except that the developing countries are joining the game halfway through. The developed countries have already bought Bond street, the dice are loaded, and we are asking the developing countries to make do with Old Kent road. Occasionally, they will get out of jail free and will get £200 from the community chest, but they want to play the game by the same rules as us and have the same opportunity to benefit. Some of the scepticism about what will be achieved by the WTO in Cancun derives from the fact that the development round that dates back to Doha and has not been successful. Developing countries wanted it to succeed so that their faith in the WTO would be restored. The Trade Justice Movement, to be fair, has been trying to drive the public agenda forward. When we look at TRIPS—trade-related aspects of intellectual property rights—and the debates on agriculture and special and differential treatment, we notice some sticking points that have held back progress at the WTO.

The Department wrote a joint letter with the Secretary of State for Trade and Industry to all MPs before our debate about the trade justice lobby and said that the delay in agreeing a solution on TRIPS was "regrettable". However, given the AIDS crisis in southern Africa, it is more than regrettable—it is disastrous. The key to helping those countries is in the hands of the developed countries at the WTO, and the problem must be sorted out before Cancun. Opposition, whether from the United States, the pharmaceutical companies or the multi-nationals must be swept aside, as lives are at stake, and nothing is more important than that. Everything else takes second place.

Something else that is holding things back is the question of negotiating capacity. I am grateful to the official Opposition for including in the motion the proposal that there should be more capacity-building within developing countries. I accept what the Minister said, and the Government are to be congratulated on what they have done in the countries themselves. However, especially given the aim of Geneva negotiations, there is a little bit of shutting the stable door after the horse has bolted. There is no point in helping developing countries with their claims and difficulties with agreements if they cannot be empowered to get the agreements right in the first place.

Special and differential treatment must be enhanced further, as it is an acknowledgement by the WTO that developing countries cannot be treated in the same ways as the rich countries. That difference is at the heart of the Trade Justice Movement. We may disagree about the methods needed to achieve fair trade, but the development movement believes that there is a material

25 Jun 2003 : Column 1153

difference between developed countries and developing countries in their ability to deal with these matters and their starting point for a fair trade agreement. We should recognise that difference in international and multilateral agreements. That is what special and differential treatment means, and it should be strengthened. At Doha, it was agreed that special and differential treatment provisions should be strengthened to make them

In response, the developing countries themselves introduced 85 proposals to make those provisions more precise, effective and operational. The developed countries did not introduce a single proposal along those lines, and the result has been a logjam and no agreement. There must be a significant improvement in that situation.

That is the context in which we need to look at the new issues, particularly investment. I understand why the Government say that they are important and they need to be on the agenda at Cancun. However, as the proposals introduced by developing countries cannot be resolved in the current round, they will doubtless be sceptical when the developed countries propose to include more issues in a series of negotiations that does not seem to be reaching a conclusion.

I have a great deal of sympathy with the proposal from the Trade Justice Movement to sort out the remains of the Doha round and agricultural subsidies, restore faith in the WTO and show that it can work for developing countries and for fair trade. The additional issues must be part of the ongoing march of international trade, but at this stage I doubt whether many developing countries are capable of taking on board the new issues, or are satisfied that they are being treated fairly on other issues.

In an intervention on the Minister, I mentioned GM foods. His reply—that countries must decide for themselves—was helpful. The US Government, of course, do not agree and are using the WTO as a mechanism to drive through their corporate interests in GM foods. We in the EU have argued the

based on environmental, health, animal welfare and ethical grounds. The EU has stated that it

Developing countries should be able to do the same for their citizens. We should not ask for anything less.

My final comments are on liberalisation. I do not share the enthusiasm of some hon. Members for it, because of those loaded dice in the game of Monopoly that I described. The hon. Member for Meriden (Mrs. Spelman) mentioned Uganda and Botswana as examples of countries where liberalisation was working. However, Uganda is crippled by a civil war and has diverted 23 per cent. of its expenditure to defence, and in Botswana it is predicted that 31 per cent. of the work force will be lost through AIDS by 2020. Those statistics show that although certain aspects of liberalisation may be working, TRIPS and the WTO need to be adjusted so that those countries can benefit in full.

25 Jun 2003 : Column 1154

Liberalisation brings huge challenges, changes and opportunities, but it can also be part of the problem. All I ask is that it should be applied where countries believe they have the capacity to deal with it. We should respect the sovereignty of those countries and their assessment of how their economies can best meet the needs of the poor. We must ask what such measures do for the poorest in those countries, not for us, the richest in the world.

6.27 pm

Mr. Colin Challen (Morley and Rothwell): Everybody is in favour of fair trade, from the mightiest corporation such as Rio Tinto Zinc, which proclaims:

but which was described in The Guardian only this Monday as being ready to despoil a large tract of Madagascar's last remaining rainforest, a challenge to which the company's spokesperson responded with gusto, saying:

to the Bush regime, which talks the talk of fair trade, if rather rarely, but walks with a protective ring of steel around its burgeoning economic belly, and the European Union, whose collective fair trade design is pure hypocrisy when one considers its GATS request in the light of its own inability to reform.

Who is against fair trade? Nobody, of course, but too often that means free trade biased in the developed world's favour. Nobody will own up to it, but there is such a mismatch between rhetoric and reality. Corporations, with their new post-Johannesburg role, are in the game with Government support to take control of resources from which they can turn a handy profit, largely because a fair price will not be paid for those resources. But the issue is not just more access to cheap resources or access to cheap labour.

The everyday reality of fair trade was put succinctly in the Harvard Business Review of September last year, in an article entitled "Serving the World's Poor, Profitably", from which we learned:

The European Union, as the Secretary of State for Trade and Industry so rightly said in her article in The Guardian on Monday, is one of the worst offenders in

25 Jun 2003 : Column 1155

making soothing noises about fair trade, because when it gives its cows a greater income than half the world's poor, its soothing noises come across a tad unconvincingly. But it is not just the subsidies and the dumping that should tweak our consciences, it is the lavish demands that the EU is making in this general agreement on trade in services round that should make us hold our heads in despair. Not only do we want to run the services of developing countries—do not forget that our motto is "Serving the world's poor profitably"—we also want to make sure that we can do whatever we like with the profits, which naturally means that the bulk of them will flow back to shareholders abroad rather than stay in the places where they were earned.

We do not like the idea that a country such as El Salvador should want to ensure that 50 per cent. of profits remain; we do not like the idea that locals in Cameroon should want to legislate for foreign investment creating local jobs; we do not like the idea that Malaysia should want to have the power to stop, if it so wished, a foreign takeover of a local company. It also seems that we do not like the idea that some countries want to run water services as a locally-owned mutual benefit society—my hon. Friend the Under-Secretary will be interested in this—just as we want to run our hospitals, so they must not, because if they did the fat cats would not be able to buy them. These measures are no doubt designed to make the flow of foreign investment more likely, but I would argue that such strictures will make developing countries subordinate to the whims of foreign investment, at the expense of local growth and self-government, and of course that will make those countries more rather than less vulnerable to the chill winds that the increasingly volatile climate of globalisation delivers.

There are three questions that must be considered before we go further down the free trade road. The first is, if the common agricultural policy was so successful in developing the post-war farming industry of the EU, why cannot a similar policy be good for the agriculture of developing countries? It is all very well arguing that developing countries want equal access to our markets, and they do, but what goes unsaid is that those countries are in no shape to compete equally—their infrastructure, distribution networks and indigenous markets are much weaker than ours, and they should be able to protect their development of these things until they are better able to compete. Investment should support that process, not suck these countries dry, leaving them in a worse state than before.

Secondly, organisations such as the WTO need root and branch reform to allow equal access and influence to all nations in its negotiations. This is still not the case, despite what we have heard about this afternoon. Extra help has given developing countries better representation, but, as Dr Toufiq Ali, the Bangladeshi ambassador to the WTO has said, the greater numbers enjoyed by developing countries in multilateral negotiations has given them some extra strength, but that is negated when these countries are put under pressure in bilateral agreements. We know that the United States, for example, is chasing bilateral agreements more vigorously than ever before.

Thirdly, the social and environmental dimension of free trade should be on the WTO's agenda. At the moment the WTO is prevented from discussing social

25 Jun 2003 : Column 1156

issues—those fall within the domain of bodies such as the ILO. But who can remember the last ILO ministerial meeting or development round, and who can recall a single decision of the ILO that was enforceable in the same way that WTO decisions are?

China, a new WTO member, is represented on the ILO by a member of the Government sponsored, Government authorized and Government monopolised trade union federation. The repression of trade unionists in China is routine, but the ILO is toothless and the WTO washes its hands. It is time that the ILO's status was raised to that of the WTO, with enforceable rules and penalties.

Free trade dogma increasingly seeks to deny decision-making to democratically elected bodies. Whether it is the US plastic packaging manufacturers' association running to the US Department of Commerce bemoaning the anti-competitive Irish plastic carrier bag tax, or the European Court of Justice telling us that we should not have golden shares in any business, we can see that whatever is perceived as anti-competitive will be attacked, and the hands of Governments will be tied by competition policemen who are answerable only to remote and unelected bodies whose laws no country can overturn. We should pause and think long and hard about how such bodies can be democratised before we allow them to foist more illiberal policies on us.

Next Section

IndexHome Page