Examination of Witnesses (Questions 1-19)
16 OCTOBER 2003
RT HON
PATRICIA HEWITT,
DR ELAINE
DRAGE, RT
HON HILARY
BENN AND
MS DIANNA
MELROSE
Q1 Chairman: I extend a very sincere
welcome to the new Secretary of State for International Development.
It must be pretty unique to get a complete set of red boxes, as
Under Secretary of State, Minister of State and Secretary of State.
I am not sure that that has ever been done before. We look forward
to working with you constructively. We were also delighted to
see that Baroness Amos was replying to the Government on international
development in the Lords last night, so we must be the only Department
that has a Cabinet Minister in both Houses, which is all very
good news. Different members of the Committee were at Cancu«n
for different bits at different times, except for Dianna Melrose
and Dr Drage, who were there for the whole time—and I suspect
both of them deserve medals for patience and perseverance! We
all have snapshots, and we want to reassure that we are not here
working out why Cancu«n failed, so you can put any offensive
briefing away because we are trying to learn about the process
for moving forward and the lessons that were learnt. In the post
Cancu«n briefing that was sent to us, I picked up two things
which struck me. One was in the CAFOD briefing[1]
They said it was quite difficult for the UK Government to know
always what the European Commission was doing. As many of us said
on the floor of the house, we were all very impressed by what
Ministers and officials did in Cancu«n. It is difficult enough
co-ordinating four departments of state, let alone trying to co-ordinate
15 Member States in negotiations of that kind, plus the Commission.
I wondered whether the Secretary of State had any thoughts about
the practicalities, where trade policy is so much an EU lead,
and whether it is possible to have the Commissioner negotiating
with all these other blocs, and keeping the Member States and
other players informed, and how you felt that went, in terms of
future trade policy.
Ms Hewitt: Chairman, thank you
very much indeed. Can I say how delighted we were to have representatives
of the Committee joining us in the delegation at Cancu«n.
It was very helpful as well as a real pleasure. As far as the
very interesting issue you raise is concerned, clearly it is right—and
it is part of European law—that the European Commission
negotiates on behalf of the whole European Union. What is very
important of course is to get the balance right between the Commission,
who are doing the negotiation on our behalf, and the Member States
and the Ministers, who of course are responsible for the negotiating
mandate. On the whole, I think both at Cancu«n and outside
the formal meeting we have very good relationships with Pascal
Lamy but also with Commissioner Fischler, and their officials.
That worked well for us in Cancu«n. Of course, at the point
where Pascal Lamy is in the Green Room, in intense discussions,
things happen that we do not know about immediately. An example
of that was the continuing Green Room discussions on the Sunday
morning on the Singapore issue, where Commissioner Lamy, quite
rightly in my view, and certainly with our strong support, said
that in the context of an overall agreement on the Doha round,
the European Union would take investment and competition off the
agenda. The Commissioner then came back to Ministers, meeting
as a General Council, and of course we strongly supported him
in having done that. Of course, he had already taken some soundings
at least, which I think led him to the absolutely correct judgment
that that concession needed to be offered.
Q2 Chairman: The second point I picked
up was that the Consumers' Association gave a comprehensive brief[2]They
said: "The key problem we face over the next couple of years
is that there is no compelling reason for the US to engage in
any way at the WTO". I just wondered if the Secretaries of
State had any observation on that.
Ms Hewitt: I think there is a
real concern here. Ambassador Zoellick said in Cancu«n, directly
after the talks collapsed, that the United States would now put
its efforts into negotiating regional and bilateral deals with
the "will do" countries. That is their position. Our
position, as the British Government, and I believe the position
of our colleagues in the European Union, is that top priority
has to be given to multilateral negotiations, and to strengthening
not to weakening the WTO, and to getting the Doha development
round back on track. But the United States certainly does not
wish to be responsible for the failure of the Doha round, and
Ambassador Zoellick himself played an extremely important part
in helping to launch that round in the first place; and particularly
in the wake of September 11, there was a real understanding in
Washington that an international coalition against terrorism had
to be underpinned by an international coalition for economic development.
That argument perhaps needs to be made again more broadly with
the American administration. I also say—and I have only
just had this report—that on Tuesday, Perez del Castillo
chaired an informal meeting of the Heads of Delegation at the
WTO in Geneva. It is the first full WTO meeting that has happened
since Cancu«n. He set out his proposals for moving things
forward, and I am glad to say that the United States, although
cautious, did say that it was willing to engage, including on
the discussions on agriculture, which will begin in this informal
context next week. The final point I wanted to make is that we
had hoped that agreement on TRIPS and access to medicines would
have been reached last Christmas. As you all know, it very nearly
was; but in the end the United States, which had not been happy
with the agreement that all the rest of us reached in the WTO
last year, did actually come on board in August, in advance of
Cancu«n, because they realised, I think, that if we did not
get that agreement, there would be absolutely no prospect of making
progress at Cancu«n.
Hilary Benn: I was going to make
the point about TRIPS, but Patricia has already covered it. I
think more broadly there have been some other signs in the policy
of the United States of America in the last couple of years that
there is a greater recognition of the argument that Patricia has
just put about the importance of development, of poverty reduction,
if we are going to have a stable and secure world. The fact that
President Bush went to Monterrey and made the announcement that
he did about financing for development, the initiatives that have
been taken on HIV/AIDS—I would say that they were positive
signs as far as the American administration was concerned. We
need to build on those commitments as part of the process.
Q3 Mr Battle: Could I make a point
first about the preparation of the conference, because I thought
our Government and the Departments of Trade & Industry and
International Development and the Secretaries of State and their
teams made a great effort and put in a great amount of work and
commitment to that round. They put a lot of energy into it, and
it kept Parliament and the general public and campaigning bodies
engaged in the process. In a sense, the downside of that is that
the expectations of a great resolution to all the world's problems
was perhaps over-egged. Having said that, if I remember rightly,
there have been ten rounds—Uruguayan rounds previously,
GATT and WTO now. Of those ten, I would say, rather amazingly,
five resulted in agreements and some signature at the end of it;
so five collapsed and five succeeded. This is one of those that
did not manage to draw up a resolution. What assessment have you
done in your departments of the impact of the lack of any agreement
at all at Cancu«n, and what would be the impact on developing
countries, poverty reduction and progress, crucially, towards
the Millennium Development Goals? Have you done a downside assessment
of getting stuck at this point?
Ms Hewitt: The first point I would
make here is that Cancu«n was never going to be the end of
the round. It was a mid-term review. It was, as I said beforehand,
before it happened, a real opportunity to put some badly-needed
political impetus behind the round, because the truth is that
in the last two years we have done almost nothing since we launched
the round, apart from the TRIPS agreement. We missed that opportunity.
We have now to get the round back on track. The main reason why
we have to do so is because, according to all the World Bank estimates,
if we can agree a really pro-poor development round, we could
take 300 million people in the world out of abject poverty. Although
that is not everything that has to be done for the Millennium
Development Goals, it is a very important part of it. We have
certainly not done an assessment of our failure to reach agreement
at Cancu«n precisely because it is not the end of the story.
If I might make two terribly brief points, the first is to underline
the point you started with, Mr Battle, which is the joint working
not only between DfID and DTI but between ourselves and DEFRA.
In the run-up to Cancu«n, I was convening meetings with myself,
Clare Short, then Baroness Amos and now of course Hilary, Margaret
Beckett, Treasury and other interested colleagues, so that we
have a completely "whole of Government" view in which
we all have exactly the same objectives for this round, and we
are all concerting our tactics. That is one reason why of course
we worked so hard to get the Agreement on Agriculture. The other
point is that, as you rightly say, there have been an awful lot
of rounds since the initial GATT agreement in the 1940s. It has
taken fifty years of GATT and WTO to get industrial tariffs down
to where they now are—and they are still not eliminated.
There is no reason at all why it should take anything like that
length of time to deal with the problems of agricultural protectionism,
and therefore to open up both for agricultural and non-agricultural
trade these enormous opportunities for development and growth
above all in the poorer countries of the world.
Hilary Benn: Picking up the point
you made about expectations, a balance has to be struck here.
On the one hand we want higher expectations because, hopefully,
it will drive the political process to achieve a breakthrough.
On the other hand, as Patricia says, this is a process which we
have to stick with, despite the disappointments of Cancu«n.
Clearly, there is a political impact because it goes to the heart
of our credibility collectively to demonstrate that we can make
this a development round; so it does have an impact in that sense.
We all understand, having gone into Cancu«n, the benefit
that could flow, particularly in relation to agricultural trade.
When one is weighing up that balance—what one can do to
make a big difference to poor people in poor countries. Opening
up opportunities for agricultural trade, as the studies have shown,
would have a much bigger impact than all of the aid which the
rich "developed" world gives currently—so we understand
it at that level. I think, however, if one is trying to take a
balanced view of what did not happen at Cancu«n, one of the
things that I would certainly say was a positive was that the
developing country voice was heard more loudly and clearly at
Cancu«n than had been the case in the past. We saw that with
some of the alliances that came together in the run-up to Cancu«n.
I think in the long term that is really important because the
more we hear that voice, the better developing countries are able
to articulate what they want, the better chance we have in the
end of reaching agreements that will make a difference to poverty.
So I see that as a plus from what was clearly a disappointment.
Q4 Mr Battle: In terms of the event
itself, without going back over the ruins and trying to interpret
who did what, where and when, it is moving the agenda forward
that is absolutely crucial now, keeping things moving with some
dynamic impetus to make change. I think there is, however, a slight
issue between the question of substance and process. There was
some criticism before the world got to Cancu«n that the preparation
was not as good as it could have been, and agendas and timetables
were not met and the rest of it. I would like your view now, looking
back, on whether the difficulties at Cancu«n were a failure
of the process in general terms, or whether it was the result
of substantial differences. Both of you have mentioned agriculture.
I would like to press one particular point. For example, cotton
loomed very large, and there is some evidence that the Americans
were thinking that perhaps they had over-egged that particular
pudding. Then there was commentary that maybe others had underestimated
the impact that a cotton discussion would have on the whole. Then
there were, of course, the Singapore issues. Do you think that
blaming it on the presence on the agenda of the Singapore issues
was really an excuse for a failure of process, or are there real
issues of substance that are holding up the negotiations and need
to be tackled now, in the background?
Ms Hewitt: The answer is they
were both. There is no doubt at all that there was not enough
progress and preparation before Cancu«n, and that reflects
the fact of all the failed deadlines and so on. Nonetheless, before
we got to Cancu«n there was real, albeit cautious, optimism
that we would make the progress that we needed to make. Although
there were some very difficult disagreements—and cotton
was certainly one of them, where there was no movement at all
from the United States on the issue of their cotton subsidies,
which are devastating the poorest African countries, there were
also advances made in informal discussions. Indeed, the trade
minister of one of the leading G20 countries said to me on the
evening after the talks collapsed that if we had had about six
hours in a green-room discussion on agriculture—which of
course never happened—agreement could indeed have been reached—not
final agreement, but on the framework of negotiations to move
us forward. There was also a quite fundamental problem that we
got into the detailed discussions and negotiations far too late.
There was only 48 hours of detailed negotiations, and with 146
countries doing the negotiations, that is just not enough. The
problem was that there was too much time spent in the first part
of the conference on the large formal session, the opening statements,
the rehearsed positions, which frankly we had been hearing for
the last two years in Geneva. It did not move anything forward.
We then got into the Green-Room process and there was, I think,
quite a widespread expectation that the conference deadline would
be extended, because that is what happens in so many international
negotiations. It happened at Doha, it happened at Johannesburg—and
you have that extra 12/24 hours, whatever it is, and you go through
the night. With the deadline looming, everyone comes into line
and does their compromise, and you move it forward. That of course
did not happen. The Chairman's judgment as they came back into
the Green Room on the Singapore issues, was that there was still
such divergence on that and other issues that it was quite impossible
to resolve things, and at that point there were only a couple
of hours left until the stated closing time of the conference,
and so the thing was finished. There were undoubtedly process
and time problems as well as substantive problems, but it remains
my view that there was a deal that could have been done at Cancu«n,
and I am reinforced in that view by the fact that, for instance,
at the meeting in Geneva on Tuesday, the view, very strongly expressed
by African countries was that they certainly wanted to get the
show back on the road. They were willing to move and wanted others
to move. There is quite a widespread expectation that we should
pick up where we left off at Cancu«n and move forward and
get these negotiations back on track.
Q5 Hugh Bayley: I would like you
to stand back from the minutiae of the negotiations—whether
the conference closed too early or whether we pursued the Singapore
issues for too long—and think of the overall strategy. It
seems to be extremely difficult to envisage the circumstances
in which an agreement could be made and signed up to by developing
countries, without substantially more movement by the rich world
on agricultural reform. Is that not the key, the absolutely fundamental
shift that has got to happen in order to secure an agreement?
Ms Hewitt: Let me start by making
a couple of points on that. Agriculture is crucial to this round,
and we have made it clear that it has been our number one priority.
But I do not think that there has been enough appreciation around
the world—and we clearly need to do more on this—of
how significant a move forward the Agriculture Council made in
June. If anybody had said last November or December that the European
Union as a whole was going to agree the principle of decoupling
support for farmers' incomes from levels of production, and thus
open the way to deal with these dreadful export subsidies and
internal trade-distorting subsidies—nobody would have believed
that possible nine or twelve months ago; and yet that was precisely
at the heart of the agreement that was reached in the Agriculture
Council in June. As I indicated, even at Cancu«n, without
finalising the negotiations yet, it would, I think, have been
possible to reach agreement on agriculture. There is the outstanding
issue of cotton, and that is one of the priorities that Perez
del Castillo has identified, and we have clearly got to get progress
on that. There are issues on agriculture for Europe that were
not covered in the June package, and the Commission has now come
forward with its work programme on sugar, olive oil, cotton, tobacco,
all of which will form part of the continuing input into the negotiations.
I think that with the reductions in subsidies, very significant
reductions in export subsidies, that the European Union was able
to offer as a direct result of that June package, coupled with
the prospect of reaching agreement on the elimination of export
subsidies for products of particular interest to developing countries,
you can see the outlines of a deal on agriculture that would be
very good for developing countries, and it would also of course
be good for our own consumers here in Europe.
Q6 Hugh Bayley: On 2 October I went
to Paris for an OECD conference for parliamentarians from 17 different
OECD countries. Crudely, the meeting recognised that there was
an incoherence between the developed world's trade policies, its
development policies, and most significantly, its agriculture
policies. There were MPs from a number of countries, which I would
not have expected, who were shocked, I suppose, by the failures
at Cancu«n into facing up to the need to change agriculture
policies. The Italians, for instance, who would not be the most
likely candidates for CAP reform, had a senator and a member of
the European Parliament there who were saying, "look, it
is important to us to get a trade deal and we are not going to
get it if the EU sticks to the negotiation brief on agriculture
which it took to Cancu«n". Should not the British Government,
which has been at the forefront of pressing for greater movement
on CAP reform, be seizing the opportunity that appears to be there
now to build a consensus within the EU to go further on CAP reform
than was gone at Cancu«n? For instance, in March this year,
Chirac was talking about a total cessation of export subsidies
for a limited period of time. That was watered down before the
EU took its position to Cancu«n. I use that as one example.
Should we not be putting forward a series of proposals which would
move our position to one where there is less cash support for
European agriculture?
Ms Hewitt: We will go on being,
I think, one of the leading and strongest voices in Europe for
agricultural policy reform, but I would just reinforce the point
that the European Union, although we certainly have not reached
a perfect position in terms of CAP reform, is already moving.
That June package was very significant. We have already been able
to offer quite significant improvements to developing countries,
and we do need to see other countries, particularly developed
countries, also making significant offers because, otherwise,
we will find it difficult to move the negotiations forward. It
is also important to remember that there are very significant
differences between the positions of different developing countries,
as this Committee knows very well. We should not treat them as
a bloc, or pretend that there is an identity of interests between
Brazil, for instance, as a very large and rapidly growing agricultural
exporter that needs and wants access to developed country markets,
and the positions of, for instance, the ACP countries, heavily
dependent on preferences. This was one of the big difficulties
in Cancu«n that will have to be overcome. Clearly, as barriers
generally are brought down, the value of those preferences is
eroded and those developing countries risk suffering as a result
of liberalisation. We will have to do more to look at how they
are protected in that position. The formal position of the G21
countries was that they wanted to put an overall cap on Green
Box support for environmental issues, animal welfare and so on.
I think privately some at least were willing to acknowledge that
that was not realistic, but we do need to convey to our developing
country colleagues the fact that the Green Box and the ability
to shift support for our farmers into the Green Box and detach
it from trade distortion and damage to developing countries is
absolutely central to this process of CAP reform. If the Green
Box is not available, then we are not going to be able to get
through this reform package. Those are the discussions we are
having with developing country colleagues, but that was not recognised
in the formal positions that were certainly the starting-point
in Cancu«n.
Hilary Benn: If one takes a historical
view on the issue of CAP reform, this is something, frankly, that
governments over the last 25 years have all been grappling with.
In that context, as Patricia says, the agreement reached in the
Summer was really significant. As Patricia said, a year ago, or
five or ten years ago, if you said we would get to this point
in CAP reform, people would not have believed that it was possible.
So that is a sign of the importance of that. Although there were
issues, particularly market access, that that did not directly
address. Obviously, it has an important knock-on effect on export
subsidies to the extent that it is successful in reducing production.
Secondly, to very much echo the point about the different interests
of developing countries, with the G20+—and one has to call
it that because the precise number varies as people come on board
and then disappear again—coming together around agriculture,
it is an interesting question to what extent that grouping will
stay together as the round develops. Certainly, the G90 group
(which is actually 62 WTO members, but never mind that) also came
into being in the run-up to Cancu«n on agriculture, and we
helped to facilitate and support the meeting in Addis when they
came together to discuss what they wanted. The African Union part
of that grouping is already talking to us about further support
that we might give about what they do as we take these negotiations
forward, recognising that in the end there has to be a deal—people
have to negotiate, and in order to get that people have to move.
Q7 Hugh Bayley: I have one final
point on how to address policy incoherence within the EU position,
where it exists. I remember when we were taking evidence for our
study, we went to see each of the three Commissioners, Nielsen,
Fischler and Lamy. Commissioner Fischler made it absolutely clear
that he was in the lead as far as the agricultural negotiations
were concerned, and Commissioner Lamy on the rest of the trade
agenda. It seems to me that that is part of the problem; that
you are not getting a proper trade-off between one Commissioner
and another, because they are negotiating in separate columns.
Would it not make sense for the EU to have a single lead negotiator,
and possibly the President of the Commission? Why should he not
lead in the way that our Prime Minister would lead if you had
several departments each with interests to protect in a particular
negotiation?
Ms Hewitt: I have to say that
I do not think that that has been the problem at all. Indeed,
we never got into detailed negotiations on agriculture at Cancu«n,
so in a sense your hypothesis was not tested. My reading of this
is that Commissioner Lamy and Commissioner Fischler have worked
very, very effectively as a duo throughout this.
Q8 Hugh Bayley: Why does Commissioner
Fischler refuse to pass the negotiating brief, then, to Commissioner
Lamy?
Ms Hewitt: They were both at Cancu«n.
They were working absolutely together on this, but the agriculture
part of the negotiations is clearly pretty crucially informed
by what has been going on in the Agriculture Council. It was for
that reason that we had Margaret Beckett as part of our delegation
at Cancu«n, so that had we moved on to agriculture negotiations,
instead of trying to make judgments myself about exactly where
we should end up on agriculture, and having to call Margaret in
London to check the precise details of something, she was right
there beside me, as was Valerie Amos, so that had we got to where
we hoped we were going to get to, we could have made that judgment
together. That was the way that Commissioners Lamy and Fischler
were working. One of the difficulties with these WTO negotiations
is that you have these very big-picture priorities, development
above all; but then you have intensely detailed and technical
negotiations, and you have to have the expertise and the understanding
of the politics as well as the technical detail available to you,
in order to make the right trade-offs. So I do not think that
trying to hand this over to presidents or prime ministers, with
great respect to both of them, would be the right way to go on.
Q9 Chairman: One of the difficulties,
it seems to me, was that developing country trade ministers and
others did not actually see what had happened on CAP reform as
being the big deal that trade ministers here in Europe saw it.
The perception of what had been achieved was very different, depending
on which side you came from. If you talked to the South African
trade minister or others, they just did not see it in that same
way. To what extent between now and the middle of December are
you, as Secretary of State for International Development, going
to be able to engage with colleagues from developing countries
to perhaps influence those perceptions if that is possible?
Hilary Benn: I think there was
an issue of timing, which I think we have addressed in what Patricia
said at the beginning—in other words, giving people time
to absorb and to understand the positions that others have taken,
and then to take that into account before the negotiations actually
start. That is one of the issues we have to address. Certainly,
I think we need to do more to explain what it was that was agreed
in the deal that was done in the summer as far as CAP reform was
concerned. One of the responsibilities there is on all of us,
in the light of what happened in Cancu«n—and I am at
a slight disadvantage because I was not there because I was not
in post—is that we need to reflect on the lessons, and this
afternoon is part of that process. It is very important that we
should reflect upon the lessons because everybody went there with
great anticipation. We all understand the importance of making
progress, for reasons this Committee knows better than anybody
else. In discussions I will be having in my new responsibility,
this is something that will be an important part of those conversations
because we need to understand where developing countries are coming
from. From the contact I had before Cancu«n, it seems to
be pretty clear—and this is why I made the point about the
developing country voice—that there has been a part of the
debate about this that has somehow given the impression that developing
countries are not quite up to the task. There is an issue about
capacity, as you will know; and DfID has done a great deal, in
terms of practical support, to try and build capacity within finance
ministries and trade departments, because that is the best place
to develop the policy in the first place—giving practical
support in terms of paying for people to come to the meetings.
But most important of all my experience is that developing countries,
despite all those difficulties, have a pretty good sense of what
they want and where their interests lie. That is why I do welcome
their voice being heard more loudly, because it strengthens their
position in what is, in the end—and I repeat the point—a
negotiation where everybody has to reach agreement in order to
make progress. Nothing will ever get away from that because that
is the nature of the WTO as an organisation. Actually, I think
it is a strength of the WTO as an organisation, in the way that
it is structured, that it has to proceed on the basis of consensus.
Where you cannot get that, you have disappointment, and where
you do get it, it gives everyone in the end a stake in the final
outcome; and if you do not like it, you do not have to sign up
to it. That seems to me to be really important in the long term.
Q10 Mr Khabra: Patricia, you know
my personal views on agriculture etc., and I take great exception
to the principal remarks made by Franz Fischler in relation to
the proposal of G20 countries on agriculture, co-sponsored by
India, China, and other countries. He said: "I cannot help
getting the impression that they are circling in a different orbit.
If they want to do business, they should come back to mother earth.
If they choose to continue their space odyssey, they will not
get the stars; they will not get the moon; they will end up with
empty hands." They are very offensive remarks actually. You
know that different groupings have formed. How did the emergence
of these groups at Cancu«n—G20, G33 and the African
Union, ACP and LDC—alter the dynamics and negotiating processes
of the ministerials? Will the United Kingdom continue to provide
support to such groupings to enable developing countries to have
a more effective voice?
Ms Hewitt: On the issue of Commissioner
Fischler's remarks, I understand the offence that people took
to those remarks. I think I have to say that it is a pity that
one sentence uttered in the context of very heated discussions
and negotiations has been lifted out and given such very great
prominence and global circulation. Commissioner Fischler, as anyone
who has negotiated with him knows, is a very forthright and open
speaker. That reflects his particular personality. He is also
the Commissioner who personally led and succeeded in driving through
this package of CAP reform in June, which, as I say, six or nine
months previously nobody else really thought was possible. We
wanted it, but a lot of people did not think it was possible.
One has therefore to balance that comment against his real commitment
to CAP reform. It has to be seen in the context of negotiations,
and in particular the formal position in their statement from
the G20+ that they wanted to see ultimately an end to the Green
Box. That is what Commissioner Fischler was commenting on. As
I have said, the Green Box—whatever one thinks about it
in theory—is the foundation of CAP reform, and reform that
is in the interests of developing countries.
Q11 Mr Khabra: Would the formation
of these groups enhance the campaign for better rights for developing
countries, or would it make it more complicated with the resistance
in the European Union and America and the most powerful countries?
The position that the United Kingdom has taken under your leadership
and now the Secretary of State for International Development—I
hope you will be able to negotiate better terms so that no time
is wasted and it does not continue for years and years as it has
in the past. That actually causes more harm to the economies of
the developing countries as well as the poor countries.
Ms Hewitt: I completely agree
with that. As I said in Cancu«n and subsequently, I very
strongly welcome the emergence of these new groupings. I endorse
what Hilary was saying on this earlier. I hope that nobody will
ever again say that the WTO is an organisation in which developing
countries are rolled over and do not have a voice. They have a
very strong voice, and they are the majority of the membership.
More of them are joining—we welcomed Nepal and Cambodia
into membership at Cancu«n. Clearly, there are real differences
in the interests—indeed within the G20+ and between those
larger developing countries and the poorer countries, those dependent
on preferences, and so on. I think the emergence of these groupings
and the very strong leadership now of the developing countries,
have transformed the dynamics of the WTO, just as the emergence
of countries like Brazil, China and India, is transforming the
dynamics of world trade and the world economy. The way I would
put this is that what we heard at Cancu«n was a very powerful
"no" from countries that previously have felt disempowered
in much of the trade negotiations, and that has great force. However,
a strong "no" does not of itself get you to the necessary
"yes", and that is why the focus now has to be on this
task of getting back into the negotiations and discussion, everybody
being willing to make compromises—as indeed the African
countries were indicating at the informal WTO meeting on Tuesday—everybody
being willing to make the necessary adjustments in order to arrive
at a deal that will be a good deal for developing countries that
everybody can sign up to, because everybody has to sign up to
it in order for it to happen.
Chairman: Tony Colman represented this
Committee throughout the whole of the Cancu«n conference,
and he may have some questions of detail.
Q12 Mr Colman: Secretary of State,
thank you for the welcome you gave, not just to me but the other
three parliamentarians who were there in that time. I am sure
that one of the bases of setting the mood at Cancu«n of potential
success was the parliamentary assembly which took place on the
Tuesday and again on the Friday, which very much allowed parliamentarians
from a number of delegations—and ours was one of the smallest
national delegations, might I say—to come forward with their
views and be heard, and to be able to debate that. Of course,
the involvement of the European Parliament was important there
too. I hope that that can be repeated as the process goes forward
in December, and potentially in Hong Kong next March and towards
the end of the round. You mentioned Margaret Beckett, and I also
pay tribute to the work of Michael O'Brien, Minister of State,
who did a lot of work on bilaterals in setting the scene, and
listening to and providing input into the European position for
many developing countries. My question, however, is this. I was
astonished that the negotiations halted when they did. There was
a real possibility of agreement on NAMA; there was agreement on
Special and Differential Treatment. We had the possibility of
a deal on agriculture. Why on earth did Singapore issues come
up first, knowing it was potentially a deal-breaker, which it
was? Why, in the process that took place on the Saturday night/Sunday
morning, did it come to the top of the pile?
Ms Hewitt: That was the choice
of the Chairman, as far as I understand it, advised by the WTO
secretariat. Like you, and particularly looking back on it, I
think that was a pity because if countries, particularly developing
countries, had been able to see real progress, particularly on
agriculture but also on non-agriculture market access, where the
majority of their exports lie, then everything else could well
have fallen into place. It was deeply frustrating that the discussion
on the Singapore issues took time on Saturday evening, and then
five hours or more on Sunday morning. Given that the Chairman
was not working to a timetable of taking another 12/24 hours,
actually it came up virtually to the end of the allotted time
of the conference. That was indeed very frustrating. The point
I would want to make about the Singapore issues is that quite
rightly Commissioner Lamy, in those Green Room discussions, said,
in the context of an overall discussion, that investment and competition
would be dropped from the agenda, and there were different ways
we could proceed on trade facilitation and transparency in government
procurement, neither of which have been at all controversial,
or particularly controversial during the last two years' discussions.
The closing statement of the conference said that we should move
forward in Geneva, on the basis of where we had left off in Cancu«n,
to put it slightly inelegantly; but it is crucial that we should
do that. In other words, there should be no attempt by us in Europe
to put investment and competition back on the agenda. That, obviously,
is a point that I have discussed with Commissioner Lamy and with
other European colleagues. We have shown considerable flexibility,
including on that issue, and what we now need to see is a willingness
from other key countries to show similar flexibility. But it is
very important that the European Union takes the lead in this
because the danger is, if none of the leading players in the WTO
take a lead—and we discussed earlier the position of the
United States—then although everyone will want this to happen,
nobody will actually make it happen. Europe as one of the largest
and leading players in the WTO does need to take a lead and put
a great deal of effort into helping get the talks back on track
in Geneva.
Q13 Mr Colman: Again focussing on
that Sunday morning/lunchtime, who actually took the decision
to end the ministerial, and on what basis? Are we talking about
one individual, the Mexican trade minister, and that was it, and
nobody could discuss it or overturn it? There was a very real
chance of moving on for a further three days.
Ms Hewitt: As I understand it,
the Chairman, Minister Derbez, obviously consulted with a few
people, including of course Dr Supachai, but it was his judgment,
and it had to be his judgment, as chair of the conference, that
the disagreements not only on the Singapore issues but on other
issues were so great that they simply could not be bridged in
the time available. That was his judgment and his decision.
Q14 Mr Walter: No-one wants to dwell
on a post mortem of the process for too long, but I wanted
to follow up a little bit on the points Tony Colman has just made.
It seems there is a clear absence of rules governing how the ministerials
work, and that the chairmen of working groups and ministerials
seem to have a great deal of influence over exactly what is discussed
and the proceedings. Without pointing the finger too much, it
does seem on the Singapore issues that the Chairman of the working
group, Mr Pettigrew from Canada, had maybe a vested interest in
getting that to the forefront of the agenda. What do you think
should be done to improve the WTO's ways of working and the decision-making
process, and how do you think the executive of the WTO could improve
its effectiveness?
Ms Hewitt: Thank you very much,
Mr Walter. This is an issue on which we are all currently reflecting.
The first thing I would say is that after the first several days
of the Cancu«n conference, we were very struck by the number
of developing country ministers who said how much better the process
was than it had been even in Doha, never mind Seattle, which was
a disaster. They did feel it was much more transparent. They were
getting much better communication about what was happening; the
Chairman was reporting back regularly. In some cases, there were
in effect elections for the representative countries whose ministers
were going into the Green Room. All of that was an improvement,
but we need to build on that, clearly. I think there are questions
about how we use and how we work at ministerial conferences: 148
ministers and delegations is a heck of a lot to be dealing with.
We need to reflect on whether we can find more effective ways
of working and perhaps make greater use of the mini-ministerials,
which were quite a key feature in working up to Doha. What I would
not want us to get distracted by is a couple of years of navel-gazing
at the rules, because I think if we did that—frankly, the
chances of getting agreement on formal rule changes, is remote—it
would just distract us from the real issues of substance. I think
that it is by working on those substantive issues, initially in
the informal ways that Perez del Castillo is proposing, that we
can then also reflect on how we work in the more formal sessions
and make any necessary adjustments. Frankly, if there is more
trust and a better understanding of our positions then we will
overcome some of those obstacles and formal rule changes will
be less necessary anyway.
Q15 Mr Walter: Do you think it should
be done informally?
Ms Hewitt: At this stage, the
informal process is going to be crucial in order to get formal
negotiations resumed, possibly by 15 December—I certainly
hope so. But those informal talks are very important. One of the
problems at Cancu«n was that there simply was not the time,
particularly as we got into the Green Room on Singapore, to explain
positions. It is a tiny example if you like, but Pascal Lamy had
made the concession within the Green Room on the Singapore issues;
the Chairman then adjourned so that people could think about it.
India made it clear—and indeed I discussed this with Minister
Jaitley—that he was very happy with the EU's concession,
but India's position was never communicated to particularly the
African countries within the G90 grouping; and so they stuck to
what had been the initial G20 and G90 position that all four issues
should be off the table. That sort of thing, given the number
of people there, just takes time to make sure that everybody understands
what happens within the smaller Green Room. Clearly, the more
that is done before you get to the really big ministerial conference,
and the more that can be done in the mini-ministerials, the better
the chance of success when you get to the big ministerial conference
itself.
Q16 Alistair Burt: I have two questions,
one relating to the debris of Cancu«n, and one looking forward.
I was pleased to hear what the Secretary of State for International
Development said about the coming together of the new groupings,
and your assurance that in the major matters that affected them
they knew perfectly well what they were about—and that was
certainly the case. Would you then be given to clear up the suspicion
from some of the NGOs, and particularly forcibly stated by CAFOD
in their submission to us, that WTO and British Government officials
and ministers claimed that the NGOs had to some extent hoodwinked
the developing countries? It is obviously very unfortunate that
that is going around. It would be useful if you were able to state
very clearly that a false impression is being gained, and perhaps
it is a good opportunity to put that to bed.
Ms Hewitt: Can I make it very
clear that we have never attacked the NGOs in the terms that have
been quoted, or any others; and, indeed, building on something
that Stephen Byers did before and during Seattle, I and Michael
O'Brien and his predecessor and now other colleagues have been
working very closely indeed with the NGOs. I value that contact,
and I value the contribution they made at Cancu«n and in
the run-up to it. Indeed, one of the things that we did at Doha,
and again at Cancu«n, and it was very warmly welcomed, was
a daily briefing for the NGOs. Unlike most other governments,
we also had an NGO representative on our official delegation;
and he played a superb role. CAFOD have never made that accusation
to me, and they did not as far as I am aware make it at Cancu«n;
so I am surprised and disappointed that they have made it in their
briefing to you. I can assure you that it is not true.
Hilary Benn: In concurring with
that, can I just say that in my previous capacity I met a group
of NGOs in the run-up to Cancu«n, as part of the consultation
process within the Department, and indeed we intend to have further
meetings, as together we can reflect on what has happened and
decide how we can best work together to take this forward. Those
are not words that we have ever used.
Q17 Alistair Burt: That is fine.
Perhaps by raising it, it enables you to deal with that, because
we all value the contributions that are made and the close relationships
are clearly key. My last point is simply looking ahead. The fear
perhaps that the United States in particular might disengage from
multilateral relationships might have been an immediate fear post
Cancu«n, but hopefully that will not be the case, and there
are some encouraging signs. However, what signposts should we
be looking for to make sure that we are doing the very best we
can to make sure that bilateral negotiations are not being used
to abuse positions of power? There is a concern perhaps that the
EU might be attempting to do this. Traidcraft have warned us.
They say: "Note that the EU as well as the United States
is using bilateral negotiations to aggressively pursue its interests[3]."
I think they are looking particularly there at the situation with
the EPAs, with the African and Caribbean and Pacific countries.
Can you give us some guidance as to how we can make sure that
the EU will not do this, and what the Committee should be looking
at to make sure that that is being respected by the EU to make
sure we stay on track with ensuring the absolute importance and
priority of multilateral negotiations?
Ms Hewitt: Thank you very much
for that question. The European Union does have large numbers
of bilateral relationships and agreements with other countries,
and indeed there are many other countries that are asking the
European Union at the moment and have been pressing for bilateral
negotiations to take place. I am very glad to say that we have
resisted that, and for the last couple of years our priority and
all our efforts have gone into Doha and the development round,
and not into bilateral negotiations. Now, the Commission of course
is reflecting on the position following Cancu«n, but I very
much hope, and would expect, that Member States as a whole will
want to keep that primacy for multilateral negotiations. There
is a very real fear, and we both share it, that developing countries
negotiating bilaterally with the United States have none of the
power and influence as the majority within the WTO; and that is
a very real concern, and one of the many reasons why bilateral
agreements should not take the place of moving forward multilaterally.
In terms of how we are going to move forward and the signals and
the leadership that Europe itself can provide, I very much hope
that the European Council, which of course started today, will
be discussing this amongst other issues. I hope that they will
send a clear signal of Europe's commitment to WTO and to multilateral
negotiations, and the Doha Development Round in particular. I,
in particular, will be continuing, with other colleagues, to talk
to other trade ministers across the European Union and indeed
more broadly. Indeed, Michael O'Brien is in Berlin today, meeting
his opposite number. I shall be seeing Alec Irwin from South Africa
next week. In the next few weeks we will be making a very intensive
effort to help get these negotiations back on track, and we will
also have the opportunity of an informal European Union trade
ministers' meeting, which I believe is now going to take place
on 2 December—we have just heard that date. That will be
a very important opportunity for European trade ministers to ensure
that Europe gives the political leadership that we now need within
the WTO.
Hilary Benn: You mentioned the
EPAs; obviously, there is a process that is starting as far as
the negotiation of those are concerned. Only the Caribbean grouping
has really got a negotiating structure in place. The Commission
has made it very clear that these are simply a development tool,
and it is important that they are held to that, and they have
to be negotiated; so in a sense the same issues arise as far as
reaching agreement, which people think is a benefit to them. The
second thing I want to say, which your question gives me the opportunity
to raise, is that even though Cancu«n did not succeed, there
are other things that can be done in the meantime to help prepare
the ground. One of the other good things that came out of what
was in the end a failure, was the announcement by the World Bank
and the IMF of their trade-related initiative, which is about
aiming to help poor countries with the adjustment costs of transition
to liberalisation, as we succeed in taking forward a development
round. That is helping them to have a better understanding of
the adjustments that are needed, and developing policies to help
them cope with that—institutional reform and a lot of things
we are doing in the Department on a regular basis in our bilateral
relationships with developing countries, and also tailored financial
assistance. We are organising a conference for December on trying
to make sure that trade issues are better integrated into poverty
reduction strategy papers. That work needs to continue because
it is part of preparing the ground in helping countries to cope
with the world that is changing as we get these agreements in
place.
Q18 Tony Worthington: Can I go back
to TRIPS, which was dealt with before and has therefore tended
to slip away from people's attention; and yet it is of immense
importance in terms of the access of the developing world to cheaper
drugs in particular areas like HIV, malaria and TB. Is the deal
going to stick? Will it be honoured? Will it work? There is the
tendency to say, "That is that done" and yet the inequalities
in health are absolutely immense, so what is the next step?
Ms Hewitt: If I can say something
about TRIPS and then perhaps Hilary can move on to the much broader
health issues. The agreement which was reached on TRIPS was not
in any way contingent on making progress on Cancu«n; it has
been adopted by the WTO General Council, it stands. I have no
reason to believe that governments or pharmaceutical companies
will not do anything other than honour it, and it is hugely important
but of course it is only part of the picture. In the poorest developing
countries plagued with these epidemics, even if all the drugs
were available free, there would still be other problems on which
of course we are working. Over to you, Hilary, for that part of
it.
Hilary Benn: It was a hugely important
break-through because before it happened people had said, "We
are not sure we are going to make progress at Cancu«n on
agriculture and the TRIPS agreement has stalled", and in
the end America moved for the reasons Patricia alluded to earlier.
It is an important further step. It was honouring a mandate from
Doha originally, I think it is going to make a difference but
it is only part of the solution. It is coming at a time, if one
thinks of HIV/AIDS, when the price of anti-retrovirals are coming
down, there are announcements being made by companies all the
time they are bringing the price down. If I were to be slightly
critical, I would say in the past, as a Department, we have been
a bit behind on the issue of treatment, if I may speak frankly
to the Committee. You are absolutely right to say that unless
you have a health infrastructure which is going to enable you
to administer medicines, then you have a problem. But if you look
at some of the countries in sub-Saharan Africa, the extent to
which their capacity and their population is being devastated,
treatment is really important. It means with anti-retrovirals,
as they become available, and new treatment regimes are developed.
It is a way of keeping people alive, to enable the country to
survive because of the economic impact if you have a whole generation
taken out—grandparents having to look after their grandchildren
and work, grow food or whatever, because their own children's
generation has been destroyed. We are not going to reach the Millennium
Development Goal of getting children in school if you have a country,
and there are some, where teachers are dying of HIV/AIDS faster
than they can actually be trained. Therefore treatment has to
be part of the solution. I think one of the really big challenges
for the world over the next few months and years is to scale-up
our effort on HIV/AIDS because in Africa in particular this is
really the biggest threat. I welcome the TRIPS agreement because
it is a way of the international community demonstrating we are
serious. Here is a means, we have to assist people in making use
of the agreements, it is not just something which sits on a shelf,
to allow those countries to address what is in some cases the
biggest threat they face.
Q19 Mr Worthington: Any plans to
expand the scope of the agreement itself in terms of availability
of drugs?
Ms Hewitt: The agreement stands.
Part of the fear on the part of some of the American pharmaceutical
companies was that it would be used for compulsory licensing and
manufacture of Viagra or heart disease drugs, that sort of thing,
and not to deal with the kind of massive problems that were discussed
and agreed at Doha. Actually sorting out that issue and clarifying
that nobody was intending to use it for that purpose was part
of the way in which we secured the final agreement.
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