Examination of Witnesses (Questions 1-19)
16 JULY 2003
RT HON
MARGARET BECKETT
AND MR
DAVID HUNTER
Q1 Chairman: I know that the gentleman
sitting on your right supports Southampton, but would you like
to give us any further details about Mr David Hunter for the record.
Margaret Beckett: This is David
Hunter who has been involved in much of the technical detail of
the negotiations who is our member of the SCA and who has, as
I say, been heavily involved and works with Mr Lebrecht.
Q2 Chairman: We know we have got
a relatively brief session and we are going to focus on the forthcoming
negotiations in Cancu«n because that is clearly the most
important issue in front of us, but we hope to find time to raise
one or two other matters as well. When we last met, which was
two or three weeks ago, we talked about the CAP Mid-Term Review.
I suppose you could look at CAP matters under three headings:
domestic support; export subsidies; and market access. Those are
the sort of three big WTO categories. The agreement in Luxembourg
has given us a narrative, as it were, or a tale to tell on domestic
support. What is the story about export subsidies and market access?
Margaret Beckett: Well, they remain
issues now to be discussed in Cancu«n and no doubt in the
run-up to Cancu«n. There is, I believe, a ministerial meeting—is
it at the weekend, David?
Mr Hunter: The end of July.
Margaret Beckett: —In Montreal
to come and then the Cancu«n meeting begins in September.
As you know, there is an EU offer on the table, in particular,
being prepared to look at export subsidies and my view remains
very strongly what I said to the Committee last time, that whatever
people's particular concerns and disagreements are, the emphasis
from the European Union should be on how far the EU has moved
and how important, therefore, it is that others are willing to
move and brush up their own position. With regard to the exact
position on the export subsidies, I believe we made an offer against
the Harbinson proposals which includes an offer of some reduction
in export subsidies and an average 36% cut in tariffs in line
with the Uruguay Round formula. That remains on the table. I do
not expect that to change between now and September and probably
not in September either. Then there is also the issue of market
access where again none of this is part of the CAP Reform agreement.
The Harbinson text proposes graduated cuts in tariffs and we have
proposed, as I say, an average overall cut of 36% with a minimum
of 15% for the individual tariff line and that is in line with
the Uruguay Round agreement. So we have made what we think are
not unreasonable proposals on the issues of export subsidies and
so on and now it is for people to look at the overall package.
Q3 Chairman: So could one summarise
the European position, which you share, by saying that it is now
for the others to come at us?
Margaret Beckett: Absolutely,
though not so much to come at us, but it is for the others, I
think, to recognise what a huge shift the EU has made and to be
prepared to look again at their own positions if we are to have
a discussion and agreement in Cancu«n.
Q4 Chairman: But you accept that
in order to get a further review, and you have said quite interestingly,
Cancu«n will be a step along the road and to go beyond that,
one could not regard the European position as being definitive
in terms of the final outcome.
Margaret Beckett: I would say
that the European position is close to being so. Certainly I do
not anticipate any signals of a major shift in the EU position
in the period between now and Cancu«n. I go back to what
I said—
Q5 Chairman: Between now and Cancu«n
nobody expects any shift in our position.
Margaret Beckett: I think there
are some optimists out there, but their optimism would be unjustified.
Q6 Mr Drew: Perhaps I can look in
a bit more detail on where you think we are with regard to the
position of ourselves within the EU and WTO negotiations. Is there
anything more that the EU can do to strengthen its position vis-a"-vis
the other players at WTO or is the EU position now signed, sealed
and delivered and immutable so that what we have is what we will
go in with and there is no give at all?
Margaret Beckett: I anticipate
that what we have is what we will go into Cancu«n with. I
think our position is now quite strong and that needs to be taken
on board and understood by other players, whether it be the Cairns
Group, the United States and so on.
Q7 Mr Drew: Have you had feedback
yet from the other groups, obviously Cairns and the under-developed
world, criticising the EU's position or are they just keeping
their counsel to themselves?
Margaret Beckett: Well, there
is a little bit of a kind of going through the motions, you know,
which is really not terribly impressive, but I do not think for
a second that they actually mean that. My guess would be that
they are very surprised by how far the EU has been prepared to
move and I think there are some indications that despite a little
flurry of rhetoric suggesting that really this is not very significant,
it is so regarded and that people are starting to look afresh
at what the prospects now are at Cancu«n. I do not think
I can add anything to that. David has been in Geneva.
Mr Hunter: We have made an effort
to explain the detail of this agreement and what its consequential
impact will be on the EU's trading position and I think as you
work through it, the size of the achievement becomes rather more
apparent to the people who have followed this closely for a period
of years.
Q8 Mr Jack: Secretary of State, one
of the things which I think most concerns that which the WTO calls
the `civil society' which we would recognise as the trade justice
lobby is the damaging effects, as they would see it, of dumping
as occasioned by export subsidy. I have to say that the paper
I have in front of me indicated a 45% reduction in export subsidy,
but a 36% cut in import tariffs. I may be wrong, but—
Margaret Beckett: Is that not
what I said?
Q9 Mr Jack: You said a 36% cut in
export subsidy.
Margaret Beckett: I am sorry.
Q10 Mr Jack: So it was 45. Well,
given that if you have got a 45% reduction, that is still some
way to go, if you had representatives of the trade justice lobby
here now, how would you give them reassurance that the proposed
reduction in export subsidies was in fact going to end what they
perceive as dumping, distortion of other people's agricultural
markets by virtue of subsidised exports from the European Union?
Margaret Beckett: I think there
are two things that I would say and indeed have said to the trade
justice lobby. First of all, I know that they would argue that
there is some way to go, but actually my impression is that most
of them are arguing that we should not have started from here,
which is a perfectly legitimate debate to have, but not the debate
in which governments are presently engaged, so I think there are
two separate arguments almost being muddled together. One is whether
all of this is a good idea and should there be any subsidies for
agriculture, should the WTO exist and so on, which, as I say,
is an interesting debate, but not immediately germane. The other,
coming from that perspective, is whether we are doing enough.
I think on that point, the thing that people are overlooking is
that probably—well, only time will tell, but it is arguable
that one of the key issues that led to the EU having to use export
subsidies and led to the dumping on world markets to which they
object was indeed the link between subsidy and production which
encouraged production for which there was no market, and breaking
that link may turn out to have been one of the most crucial things
that we could do actually to end dumping.
Q11 Mr Jack: Moving on to a line
of inquiry which Mr Drew started, what public reaction has there
been from the other major groupings, the United States, the Cairns
Group and others, to what the EU has done? Has anybody said anything
in public about how they regard the reform package?
Margaret Beckett: To the best
of my recollection, and again I will ask David if he has heard
more on the international circuit than I have over the last few
days, the only public reaction there has been, as one would expect,
is kind of, "Is this really such a big deal?" from people
who do not want to be put under pressure themselves to move because
the EU has moved so substantially. Indeed I can think of, shall
we say, one area of comment which has suggested that this really
is not such a big deal from someone with whom I have previously
had a conversation explaining how fortunate we would be to get
a lot less than this out of CAP reform, so I think there is a
little bit of market management, if I can put it that way, in
terms of people's public reaction, but privately I think there
is a more serious acceptance. David, do you want to add to that?
Mr Hunter: I would only add that
I think that a number of third countries are looking at the deal
and trying to think through what the detailed implications would
be in areas other than market support, ie, in respect of export
refunds and in market access, and gauging that is quite a difficult
exercise, not least since we do not know what the full extent
of decoupling will be as yet and that will have a bearing on the
surpluses that the Community produces and then as it disposes
of them on world markets.
Q12 Mr Jack: If I was sitting in
the Cairns Group and looking at this model which actually has
not started yet and I look at the total financial envelope, the
numbers of which have not changed, and I find that farmers in
the United Kingdom, instead of having direct payments in relation
to crop, can use the money to subsidise whatever they decide they
are going to grow, I might be minded to have a go at that and
say that this is subsidy by another name. Give me a feel for the
vulnerability that you see, notwithstanding decoupling, the fact
that farmers are effectively going to get chunks of money to carry
on growing things.
Margaret Beckett: Well, first
of all, it is not irrespective. There are restrictions on what
people will be able to do with the money they receive. Secondly,
I think the thing that again is easy to overlook is that all of
this agreement is against the background of the Brussels Agreement
and the overall ceiling that was then set and that overall ceiling,
it is perfectly true, and this again is something that I think
people like the trade justice movement are overlooking, it is
true that there is no further reduction planned at present in
that overall ceiling, but it is also true that that ceiling will
in time have to accommodate 25 and not 15.
Q13 Mr Jack: I understand that, but
if I was a negotiator on the other side of the fence, I might,
in the nicest sense, choose to ignore that because it is the European
Union as a unity which is doing the negotiating by definition
and not the sum total of the Member State parts. Can you just
give us a feel as to whether in terms of the tactics up to the
meeting at Cancu«n there will be any further tabling by the
European Union of revised modality proposals?
Margaret Beckett: No, I do not
think there will be. We will basically stick to where we are in
the approach to Cancu«n because of the feeling that the EU
has already now moved very substantially.
Q14 Ms Atherton: Secretary of State,
can you tell us from both the EU and the UK point of view what
are the main difficulties with Stuart Harbinson's first draft
on the modalities?
Margaret Beckett: I think I would
identify them mainly as being the feeling that it was somewhat
unbalanced in that what he called on the EU to do is one thing,
but he ignored some of the ways in which other countries support
some of their agriculture in a way which I think the whole of
the EU feels was a somewhat unbalanced overall package. That I
would identify as the main difficulty. Then, as you know, his
proposals for domestic subsidies we believe we have addressed
through the CAP Reform proposal, and we have made a response already
on export subsidies and on market access which we believe gives
us a good approach to the Harbinson proposals.
Q15 David Taylor: Can we turn to
market access and the Doha objective, which was set, of "substantial
improvements in market access" and look particularly at tariff
reductions as a means of achieving that. In the Uruguay Round
tariffs were reduced by an average, I believe, of 36% over six
years with a minimum cut of 15% on any individual product. There
appears to be widespread support for a similar approach this time
with a maximum tariff rate of 25% by value for any item by the
end of the implementation period. Is that the preferred approach
that you have, Margaret?
Margaret Beckett: I am afraid
that the figures do not ring a great bell with me at this moment,
but—
Q16 Chairman: It may be 25%.
Margaret Beckett: Basically the
proposal that we have already put forward we do not intend to
change at this time. That proposal is for a Uruguay model, without
change, to which I think I have already referred with the 36%
overall.
Mr Hunter: The Harbinson paper
proposed a tiered approach to a reduction of tariffs with deeper
cuts on the highest tariffs and smallest cuts on the lowest tariffs.
That would target tariff peaks across all WTO members, but it
is rather uneven in its effect when you have to look at where
individual members have those highest tariffs. Deep cuts of 60%
in the highest category would reduce protection in the EU to quite
low levels in terms of leaving the market vulnerable to a considerable
surge in imports and that, I think, is the difficult part of the
Harbinson proposal for EU Member States.
Q17 David Taylor: In addition to
the tariff rate cuts in the Uruguay Round, there were tariff quotas
to ensure that existing import levels were maintained, were there
not, Mr Hunter? Is that right?
Mr Hunter: Yes.
Q18 David Taylor: The point I would
like to put to either of you is whether something similar should
be adopted on this occasion as well and should we be expanding
tariff quotas? In reality, how much more open will the EU agricultural
market be at the end of this particular implementation period?
Mr Hunter: That is exactly the
sort of technical question that officials will have to bash out
over the coming months. There is a complication of course in that
some of those tariff quotas, minimum access quotas, which were
agreed in the Uruguay Round context cover a number of Central
European Member States who are now members of the European Union,
so there is an issue in there which will have to be resolved as
well.
Q19 Mr Drew: Can I be clear that
market access and the demand to get rid of export subsidies are
going to be what much of the discussion which takes place is around?
Are those going to be the two key areas because obviously there
is going to be a lot of disagreement on that and the US is going
to come at it from one angle, the EU is going to come at it from
another angle and the Cairns Group is going to say that we are
both wrong?
Margaret Beckett: Certainly there
will be substantial discussion, I would anticipate, on both of
those points, but I think that there may also be quite a bit of
discussion on the whole issue of special and differential treatment
in all of these areas which in Cancu«n there will be discussion
on.
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