Examination of Witnesses (Questions 20-39)
16 JULY 2003
RT HON
MARGARET BECKETT
AND MR
DAVID HUNTER
Q20 Mr Drew: Do you think that the
developing world will move positions between the different power
blocs or do you think that they will fasten on to the position
of one of the big three, ourselves, Cairns and the US?
Margaret Beckett: I am not in
a position to answer that question and I am not sure anybody is
not least because it is my impression, and again David has been
closer to the officials from those countries recently, so I will
ask him, but it is my impression that the approach and indeed
the response to the proposals that are about is somewhat fragmented
and because I was not involved when the Uruguay Round was conducted,
I do not know whether that is more the case than then, but that
is certainly my impression, so I am not sure that we are going
to see a developing world position. I think we may see some quite
disparate positions.
Mr Hunter: I think that is true.
The developing countries do not all have identical interests,
partly because they produce and export a different range of commodities
which face different import regimes around the world and partly
because they are at differing stages of development and the Community
has an offer which will permit duty-free access from the, whatever
it is, 48 least developed countries for all their products, except
arms, over a period of years and that is quite a significant concession
to them which they will benefit from and that will cover their
approach and make it rather different from that of the more developed
countries.
Margaret Beckett: And paradoxically
from that point of view, if people are simply saying, "We
want a nice, clear position as to what the developing countries
want", it is even just possible that we have ourselves made
this more difficult, although this may be to the good, because
certainly since Seattle there has been an acceptance that there
is a great deal to be said for assisting and supporting developing
countries and indeed countries that do not have the sophisticated
machinery and official support and so on to actually come to grips
with what WTO negotiations, as other international negotiations,
mean for them. That in itself is probably likely to induce a degree
of fragmentation because people are beginning to see and to have
a certain amount of skills training and so on to support them
in realising that there are disparate interests.
Q21 Mr Lazarowicz: You said earlier
in answer to questions from Mr Jack about the issue of whether
or not there should be subsidies at all that it is not immediately
germane, and of course that is correct, but Stuart Harbinson did
propose that after the ten-year period all developed countries'
export subsidy spending should be phased out and I wonder when
can you envisage the EU as being willing to eradicate all export
subsidies and what kind of timescale might be a reasonable objective?
Margaret Beckett: I think, if
I remember correctly, and David will correct me if I get this
wrong, the EU's negotiating position on this is that we are willing
to discuss phasing out export subsidies without prejudice, I think
that is the phraseology, and that was agreed in Doha, so I am
aware of the Harbinson proposal, but I do not think we can yet
put a timescale on it. It is a useful exchange in one sense because
there is a certain danger of your asking me what I think the EU's
negotiating bottom line is which I am not inclined to say.
Q22 Mr Lazarowicz: And is the UK's
position that it wants to see a phasing out of all export subsidies?
Margaret Beckett: The UK has long
had a position, and I think it is probably fair to say of governments
of varying colours, that we would like to see free trade and we
do not like to see trade distorted.
Q23 Mr Lazarowicz: And what timescale?
Margaret Beckett: Sorry, but that
is another way of asking the same question.
Mr Hunter: Could I just add that
the EU offer already on the table is for a 45% reduction in export
subsidies plus, and it is an important plus, the elimination of
export subsidies of a particular concern to developing countries,
so it is targeted in that way.
Margaret Beckett: But it is a
sort of position of principle and there is not a year number on
it.
Q24 Mr Lazarowicz: What about the
issue of other forms of export support besides subsidy and how
satisfied are you that this is being tackled by the WTO in a serious
way?
Margaret Beckett: Well, we are
not altogether and that is partly what I meant when I said that
we feel that the Harbinson proposal is not altogether well balanced.
If we are going to look at these issues, which we think it is
right to do, then we should look at all the ways in which the
market can be distorted.
Q25 Chairman: Let me put to you,
Secretary of State, a slightly different scenario. You have been
invited to a speech by the American Soya Bean Association in Kansas.
Your flight has been delayed, your baggage has ended up in San
Antonio, you are desperate for a drink and they spend the whole
time banging on at you about how wicked the European Union is
with its farm subsidies and you feel, "Damn them, I'm going
to give them a bit of their own medicine", but what would
you say?
Margaret Beckett: That whatever—
Q26 Chairman: The questioning up
to now has all been defensive about how the European Union defends
its stance. What I am saying is that this is a negotiation where
the European Union is going to have things to say about the United
States and its policy and I am just asking for an outline of your
feeling for where the United States is vulnerable.
Margaret Beckett: I think there
are two things that I would say, apart from hoping that it is
not a dry county that we are in! The first is that whatever may
be said about the European Union and its subsidies and the structure
of its subsidies, even before this latest reform, the European
Union was at least going in the right direction, ie, of reducing
subsidies, and there is scope for endless differential analysis
of who subsidises the most, but maybe we should start by accepting
that we both subsidise too much and that the United States is
actually going in the wrong direction. It is all very well to
say that we high-mindedly do not have a subsidy approach to these
things and we do not have a subsidy regime and it is just that
every year there is an emergency which requires subsidies, but
it leads you up into the same place.
Q27 Chairman: It is slightly perverse.
A year ago we were all saying, "Here's the United States
hurling money at agriculture so fast you cannot see it",
but they have become the big sinners now in this and perhaps the
whole terms of trade, as it were, are beginning to change in the
negotiations, yet a year on it appears yet again as if Europe
is the sort of universal culprit in the dock and the United States,
despite the billions it has hurled at agriculture, seem to be
on the attack again. That is not a balanced negotiation, is it?
Margaret Beckett: No, and I think
we were unfortunate in the timing and we missed the March 31 deadline
and were not able to get agreement as early as one might have
hoped on major changes within the EU. I think that created a perception
that yet again it was the EU that was dragging its feet and in
the meantime the United States, very cleverly, put forward a package
of its own, a skilful package, let me put it that way, and I think
it is that which has led to the perception that it is yet again
the EU that is in the dock. That is why I repeat what I said to
this Committee last time which is that the EU ought not to be
in the dock because the EU has moved dramatically and what we
need is for that to be recognised so that pressure goes on others.
Q28 Chairman: We are used to these
negotiations and thinking of them as significantly an affair between
Europe and the United States with some intervention from the Cairns
Group of which the most vocal tend to be Australia and New Zealand.
We have now got some new players which tend to be the least developed
countries and the lobbies which are supporting their interests,
but it seems to me that occasionally we might forget that they
are what you might call "second world producers" who
are agricultural super powers in the making, and this Committee
has just come back from Brazil, but what interests do you think
they have at stake and what role will they play in the negotiations?
Margaret Beckett: Well, they will
have different interests at stake and this goes back actually
to a degree to the question that David Drew asked me and the answer
that I gave. I think we are probably entering into new territory
in that there will be more disparity between where the interests
of different groups who are all lobbied in general terms and definitions
by developing countries and there will be very real differences
not just between the least developed and those who are more ahead,
but even within those groups as to where their precise interests
lie and I suspect that we may even see the emergence of other
smallish groupings who have some relative interests together.
What I think would be most unfortunate would be if because, as
you quite rightly say, there are countries like Brazil which clearly
have considerable potential, if that led to an approach or a suggestion
that, therefore, there is not really any need to make this a good
development round, I think there is.
Q29 Alan Simpson: Secretary of State,
Supachai Panitchpakdi described the failure to agree on modalities
as "a great disappointment". Since then apparently African
trade ministers have described the EU position as a fudge and
others have described the position about the withdrawal of EU
subsidies as just offering the US the unrestricted right to dump
on everyone. Is there anyone who is not going to be disappointed
at Cancu«n?
Margaret Beckett: I would say
it is inevitable in all international negotiations that there
will be a degree of disappointment for all the parties because
only the people who are not asking for anything will go away not
disappointed. Equally, however, I do not think there is any reason
why there should not also be grounds for a feeling of success.
One of the things we tried to do in our own negotiations two or
three weeks' ago—the phrase was "no winners and no
losers"—was to ensure that no country emerged from
that deal in a position where they were absolutely, clearly, totally
net losers, but equally, that nobody emerged being able to say,
"We've triumphed, we smashed everybody else to bits,"
and I think that ought to be the aim for Cancu«n. So, yes,
of course everybody will go away with some disappointments. As
to the African trade ministers, I am not sure if this is before
or after the CAP reform—
Q30 Alan Simpson: It was after.
Margaret Beckett: I would like
to be convinced that they are familiar with the details and appreciate
just how far the EU has moved. That goes back to a point I made
a little earlier which is that one of the things that some of
the campaigners on this issue—with whose campaign I have
no quarrel, it is a perfectly legitimate campaign—may be
overlooking is the fact that one of the things that has led to
the EU dumping on world markets and the consequent need for export
subsidies so to do has been the link between production and subsidy,
because that encouraged production whether or not there was a
market. It may be that in time we will see that shift as one of
the most significant things from the EU's point of view in ending
dumping.
Q31 Alan Simpson: One of the interesting
coincidences of dates and events is that during this Cancu«n
conference over ten days we will also see on 11 September the
implementation of the bio-safety protocol and the application
of the Cartegena principle in law. Can you say what position the
UK is going to take up within those WTO discussions that will
ensure that WTO trade interests are not going to be allowed to
override the environmental protection interests?
Margaret Beckett: As I am sure
you know, we in the UK along with others in the EU argued very
strongly that we had to maintain the right balance between environmental
and trade interests and that that ought to be something which
was potentially on the agenda at Cancu«n. In fact, a couple
of days before most of the official stuff begins the Mexican environment
minister has organised a round table discussion with, from memory,
four environment ministers from across the world invited to discuss
with four trade representatives. I am one of the four environment
ministers. I do not know who else has accepted. I know that on
the trade side he had asked Bob Zoellick and Pascal Lamy. So if
they are able to come that will be a very interesting discussion.
The idea is that the round table will discuss and report into
the Cancu«n talks. The reason I am saying all that is I think
it makes the point that clearly the environment is an issue and
it will be in the background and part of the conversations that
are taking place in Cancu«n.
Q32 Alan Simpson: As the Chairman
mentioned, we have just come back from a visit to Brazil specifically
to look at a number of issues including the GM debate. The environment
ministry there placed great emphasis on the importance of a global
recognition about the place of the precautionary principle and
the right of countries to apply that. Is our own position one
that would seek to have that included and recognised in trade
rules rather than it being left to twin track somewhere, running
alongside but not entirely clearly connected to the discussions
about trade?
Margaret Beckett: One of the things
that we will have to fathom out is how these things interact one
with another. Certainly the proper observation of the precautionary
principle is on delays and the UK's approach and the EU's approach
to the whole issue of GM and GMOs, so it is very much something
that we pursue. As I say, quite how you get that interaction between
that and trade is exactly the sort of thing that is no doubt likely
to be the subject of much discussion not only in Cancu«n
but thereafter.
Q33 Alan Simpson: We were asked about
the current challenge by the US to the EU position on a ban on
the importation of GM crops and GM cultivation as the hidden barrier
to trade as against the arguments about environmental protection.
The question we were asked was whether Britain and the EU are
likely to defend the rights of other countries to apply the precautionary
principle in the same way that we have sought to do.
Margaret Beckett: I repeat, we
do observe and always have observed, as does the EU, the precautionary
principle. As to this issue, I think I am right in saying that
it would be contested that there is a ban in the EU, but what
there is there are applications that are pending and some information
has been sought on those specific applications. In addition, there
has been the suggestion from a number of Member States that because
of the precautionary principle we ought to have the right legislative
background in place before those proposals came forward, in particular
the wish to have legislative approval and legislative proposals
on traceability and labelling, and I am pretty sure I am right
in saying that the European Parliament has now cleared that and
I anticipate that will shortly be resolved. I think there will
be a strong contest. I think there might be the suggestion that
it might lay us open to illegal challenge if anybody said there
was a ban, but what there has been is a delay while it was felt
that the right legislative structures were put in place, but that
should now be well under way.
Q34 Chairman: Secretary of State,
does the Blair House Agreement constitute a barrier to growing
in Europe those crops which might lead to the production of bio-fuels?
Margaret Beckett: Not as far as
I am aware.
Q35 Chairman: The Blair House Agreement
limits the production of rape on set-aside land and, of course,
rape is seen as the most important feed stock eventually, particularly
for bio-fuels. In that case, is it important to make sure it does
not go through into any further agreement? That is the purpose
of my question.
Mr Hunter: There is an interesting
question as to whether or not the Blair House Agreement still
stands since it was based upon the existence of crop specific
differential payments on oilseeds and we have harmonised payments
on crops even under the present CAP.
Margaret Beckett: It has never
been put to me that the Blair House Agreement is a block, but
it is certainly something I shall investigate.
Q36 Mr Wiggin: Will you be keen to
see effectively the ban on the growing on set-aside of oil seeds
lifted? Will we be able to grow bio-crops? Will that be something
you will get for us?
Margaret Beckett: The arrangements
for set-aside do give a certain amount more freedom. As to whether
or not this is a problem, it is not an issue that has been raised
with me in the past. If I may, I will write to you about it.
Q37 Mr Wiggin: I am very grateful
for that. I do recall asking about set-aside the last time we
met, I brought up the question of whether or not set-aside need
exist at all. My understanding from you was that set-aside would
continue but that consumable crops would not be grown on them.
Obviously crops that can be used for fuel could, by definition,
be consumed although that would not be the intention. How are
you going to deal with this dilemma? Can we proceed? Obviously
there is a huge carbon advantage if we can grow our own fuel.
Margaret Beckett: I think there
are two different issues here, if not three. One is, we entirely
agree with you about whether or not there is a need for set-aside,
we would have liked to see it abandoned. Second, there had been
an attempt to suggest that bio-fuel crops could not be grown on
set-aside land, but that was changed, that was one of the things
we secured during the negotiations. As to whether there is a dispute
there as to whether one might grow something that could be either
bio-fuel or consumed as food, pass. I will definitely write to
you about that.
Mr Wiggin: I would be very grateful.
Q38 David Taylor: A couple of weeks
ago or so I met with members of the north-west Leicestershire
National Farmers' Union and amongst the numerous things they put
to me quite vigorously was their view that the Over Thirty Month
rule should be phased out or ended. Within days—I do not
know whether they thought that I had had some influence on this
or not—the Food Standards Agency was recommending to ministers
that on public health grounds the OTM rule could indeed be dispensed
with and cattle born after August 1996 might, after BSE testing,
enter the food chain from about January 2004 with a complete ending
of the rule by July 2005. That is likely to lead to significantly
greater volumes of beef coming into the market. What assessment
has been made about the impact of that in pricing and other terms?
Margaret Beckett: First of all,
I think we ought to be quite clear that the FSA has put forward
some suggestions and, of course, they put them forward into the
public domain so to speak, but that is not all done and dusted
yet.
Q39 David Taylor: No, but it was
due to happen.
Margaret Beckett: That is one
of the things that we are exploring with the industry. Clearly
there are potential implications. We are also—and I cannot
remember if we have said this to the Committee before or not—pressing
the Commission to propose changes to the Date-based Export Scheme
quite separately from what the FSA was doing on the OTMS per
se and we are pressing that there is this option of moderate
risk status for all of that, but here the EFSA (the European FSA)
becomes involved and that is likely to take some time. We are
in the process of talking to the industry and the Commission about
the full potential impact on the market and what measures one
might take to mitigate that impact. I cannot really say any more
to you than that because those discussions are very much on-going
and I am not sure we have a timescale for a resolution.
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