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Delegated Legislation Committee Debates

Draft European Communities (Definition of Treaties) (Agreement on Trade, Development and Co-Operation Between the European Community and its Member States and the Republic of South Africa) Order 2002

Eighth Standing Committee on Delegated Legislation

Wednesday 27 November 2002

[Mr. James Cran in the Chair]

Draft European Communities (Definition of Treaties) (Agreement on Trade, Development and Co-operation Between the European Community and its Member States and the Republic of South Africa) Order 2002

4.30 pm

The Minister for Europe (Mr. Denis MacShane): I beg to move,

    That the Committee has considered the draft European Communities (Definition of Treaties) (Agreement on Trade, Development and Co-operation Between the European Community and its Member States and the Republic of South Africa) Order 2002.

Africa is the poorest region of the world; in human terms, that means that half of Africans live on less than $1 a day. Their average life expectancy is 30 years shorter than that in the United Kingdom. On present trends, Africa will not meet the internationally agreed millennium development goals and halve poverty by 2015. That is why the Prime Minister has insisted on making Africa a priority.

African leaders have launched the new partnership for African development—NEPAD—to address the key development challenges for Africa. We want to work with NEPAD to end Africa's acute economic marginalisation. In order to make real progress towards the 2015 target, Africa's actions must be supported by the international community. Better trading relations are essential for Africa's economic growth. Africa has 12 per cent. of the world's population but only 2 per cent. of the trade. We must fully integrate Africa into the international trade system so that its people can start sharing in the benefits of globalisation.

The first aspect of the trade, development and co-operation agreement relates to trading arrangements, and its key element is the establishment of a free trade area—an FTA—between the European Union and South Africa. The UK believes that trade access and integration into world markets is vital to sustainable development. The EU is already South Africa's main trading and investment partner, and the agreement will strengthen the relationship, giving South Africa better access to Community markets. It will also give the EU better access to South Africa. The agreement covers about 90 per cent. of current trade between the EU and South Africa.

The FTA established under the agreement involves measures to protect South Africa; it also has advantages over other similar agreements. The South African economy is being restructured, so the EU will open up its markets more quickly and more extensively. The EU will liberalise around 95 per

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cent. of imports from South Africa over 10 years, while South Africa is expected to liberalise about 86 per cent. of imports over 12 years.

The trade, development and co-operation agreement is fully compatible with World Trade Organisation rules. Certain products and sectors have been excluded because of their sensitive nature to either the EU or South Africa. On the EU side, they are mainly agricultural products; South Africa was concerned about the export of European industrial items. Those products account for a low percentage of trade between the two, and some sectors have been liberalised to some extent. Nevertheless, the UK realises the importance to the developing world of access to EU markets for agricultural products, and that is especially true for Africa. We are committed to working towards further reform of the common agricultural policy, and towards the opening up of the EU market.

Rules of origin are necessary to ensure that products that benefit from the trade, development and co-operation agreement are from the European Union or South Africa. Nevertheless, the rules of origin are flexible and more generous than arrangements in other countries. Within certain criteria, products that contain elements from third countries or are partly manufactured there can be considered South African. That cumulation will occur in different circumstances between South Africa and the EU, other members of the South African Customs Union—SACU—and other African, Caribbean and Pacific countries. That is an important way of increasing regional trade and co-operation and, with it, regional development and stability.

The TDCA provides for co-operation in a wide range of fields linked to trade, including customs services, free movement of capital and technical obstacles such as certification. The agreement makes provision to avoid abuse by firms that have a dominant market position. It also provides safeguarding measures that may be implemented if imports threaten to do serious harm to national industries. The agreement also allows South Africa to adopt transitional safeguarding measures.

The EU provides most of its development funding to South Africa through a bilateral programme: the European programme for reconstruction and development. The first multi-annual allocation covered the period 1995–99 and had an annual budget of about €125 million. It was targeted at improving the living conditions of the poorest sectors of the South African population and at combating poverty.

As a result of negotiations, new priorities have been agreed to come into effect from 2000. They include the fight against poverty—including gender equality and protection of the environment—support for democracy, protection of human rights, regional co-operation and integration, and co-operation between the European Union and South Africa.

For all those reasons, the United Kingdom supports fully the trade, development and co-operation agreement between the EU and the

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Republic of South Africa. We believe that it will play a vital role in South Africa's continued development and its further integration into the world economy.

4.36 pm

Mr. Richard Spring (West Suffolk): What a pleasure it is to see you in the Chair this afternoon, Mr. Cran. I thank the Minister for setting forth the order. It is non-controversial and I welcome its contents.

I do not know whether the Minister was in the Chamber this afternoon, but if he were he would have heard some important and useful information about the millennium goal of substantially increasing the amount of development aid to third world countries. We welcome that goal, and I am sure that the Minister will mention it in his winding-up comments.

I welcome the agreement on trade, development and co-operation between the European Union and South Africa. Trade liberalisation is a positive force and the opportunity of it is badly needed by South Africa. Nothing can provide a greater chance of progress for developing countries than the breaking down of barriers to trade. So often, such barriers have disadvantaged developing countries—I have just returned from a brief visit to Kenya where I saw that for myself. We also need a dialogue on development with South Africa. It has enormous mineral riches but great environmental and public health challenges. A wider dialogue and co-operation is therefore most welcome.

I have, however, some questions about the agreement. What specific areas are most likely to be subject to co-operation between the two parties? Article 4(1) refers to political dialogue. The agreement is with the European Union's first pillar. What co-ordination will there be between first-pillar dialogue, the second pillar and, indeed, our national dialogue with South Africa?

Article 24 deals with a safeguard clause. What goods or services are likely to induce its deployment by either party? Have there been any moves to invoke that article by either party?

Article 25 deals with transitional safeguarding measures and paragraph 2 refers to infant industries. What particular infant industries in South Africa does the Minister have in mind, and have there been any moves to invoke that article?

Article 27 deals with exceptions. Will the Minister set out in more detail the apparent concern about the

    ''industrial and commercial property or rules relating to gold and silver'',

as specifically mentioned in the article?

Given the pressure that South Africa is under to supply food aid to the starving people north of the border in Zimbabwe, has there been any discussion on the difficulties related to giving aid based on genetically modified food?

I am delighted that the agreement provides for a large degree of trade liberalisation for agricultural products. Does the Minister agree that that is fundamentally important? Europe's agriculture protectionism has been shameful. There are some

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exceptions to liberalisation in the annexe. Does the Minister hold out any hope for their liberalisation?

The agreement makes provision for the effect of EU enlargement. What is the South African Government's position—if they have one—on the effect of enlargement on the agreement? Given the regrettable difficulties in the relationship between the EU and the African, Caribbean and Pacific countries and the present horrors in Zimbabwe, the framework for political dialogue between the two parties that the agreement establishes is particularly valuable right now. In view of what has been said about regional discussions, has the Minister anything to add about discussions between the two parties under the framework with respect to Zimbabwe?

In the meantime, I welcome this beneficial agreement, which I hope will bring greater prosperity to the countries of the European Community and to South Africa, which has a pivotal part to play, stretching as it does between a first world and a third world economy. It is the powerhouse of the whole of sub-Saharan Africa. The relationship needs to be enhanced and encouraged, and I welcome the measure before us today.

4.40 pm

Mr. Michael Moore (Tweeddale, Ettrick and Lauderdale): Like the hon. Member for West Suffolk (Mr. Spring), I was glad to hear the Minister's explanation and I welcome the order. The Minister said that the Prime Minister has made Africa the centrepiece of his personal interest in foreign policy. In the past year, the events of 11 September and the tension over Iraq have dominated worldwide attention, but it is important that in that context, Africa, which suffers so much from conflict and poverty, should not disappear from the Government's foreign policy radar screen. For that reason I welcome what the Minister has said.

Like many right hon. and hon. Members, I have had the opportunity to visit South Africa and see for myself the stark contrast between parts of affluent cities such as Capetown and the neighbouring townships such as Kylecia where people live in difficult conditions. As the Minister pointed out, too many are required to live on less than a dollar a day. That makes the type of arrangement that we are considering, and the opportunity it presents for creating additional wealth, very important.

Progress has been pretty slow in the past few years, and anything that we can do in Europe to speed it up in a sustainable way must be welcomed. As the hon. Member for West Suffolk said, South Africa is important not just for its own sake, but because it is the powerhouse of the regional economy. If it does not progress, none of the other countries can hope to do so. Equally, South Africa has taken an important role in the development of the new Partnership for Africa's Development, and in that context we need to do what we can to provide support.

A crushing blow to the economy of South Africa, and indeed southern Africa, has been the devastating impact of HIV-AIDS. Does the Minister envisage the new arrangement between the European Union and

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South Africa having any impact on the delivery and availability of drugs that might tackle the problem? Clearly, there have been difficulties in the South African Government over this issue for some time, although encouraging recent developments have begun to reverse the previous approach of ignoring the problem—or at least not allowing any link to be discussed.

Will the Minister be a little more expansive about how the agricultural aspect of the agreement is to be developed, and relate that to the ongoing WTO round at Doha? Perhaps he could set out his own ambitions for development. Perhaps, finally, he would explain how the arrangement will work in the wider G8 framework, which obviously would have the aim of supporting South Africa to help itself through the Partnership for Africa's Development.

4.44 pm


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