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Mr. Hopkins: I am interested in what the hon. Gentleman is saying. Is he aware that Joseph Stiglitz, formerly of the World Trade Organisation and a Nobel prize winner, has expressed severe doubts about trade liberalisation and WTO policies?

Alistair Burt: I think that we are in the same general area of discussion, and I am happy to develop this point for a couple more minutes.

I raise this point because it is a matter of concern for the world's poor, and for those of us who seek to understand their position and to intervene and speak for them—that there appear to be strong differences of opinion among international financial institutions such as the World Bank and the International Monetary Fund, organisations such as the WTO, individual Governments and, by contrast, the voices of certain development agencies.

As an example, Focus on the Global South, a regional organisation for policy research, analysis and action, which works in conjunction with the United Nations in Asia and the Pacific, produced a report in October 2003, entitled "Anti poverty or anti poor? The millennium development goals and the eradication of extreme poverty and hunger". It was critical of the World Bank, and quoted a study on structural adjustment programmes and their effects on countries across Latin America, Africa and Asia. That study found, among other things, that indiscriminate trade and financial sector liberalisation devastated local industry, especially the small and medium-sized enterprises that provided the bulk of national employment; that such trade and liberalisation undermined the viability of small farms and agricultural producers, which weakened food security and damaged the national environment; and that macro-level problems have accompanied those local-level failures, which means that the promised gains of efficiency, competition savings and revenues have not materialised.

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World Vision, in a paper that it prepared for me for this debate, says that

"there are significant dangers for developing countries in having their policy options foreclosed by IMF and World Bank loans, conditionalities and inappropriate, restrictive WTO rules."

It might be reasonable to assume that some who work for development agencies are not by nature well disposed toward liberal, free market economics, and they sometimes show a touching faith in state production and institutions of whose effectiveness and success there is scant evidence. However, I find that there are too many well researched, well written papers coming from people on the ground, who ought to know what is happening in practice and what the effects of various measures are, for them to be too easily dismissed.

I ask my own Front Bench, the Secretary of State and the Minister for Small Business and Enterprise, who is replying to the debate, how we stand on that. Do the Government feel that the conflicts between the agencies and some financial institutions on the extension of free trade can be easily overcome? Is synthesis possible? Do the Government come down on one side of the line or the other?

The very nature of the debate troubles our constituents, who want to believe what politicians tell them on this matter, but sometimes find politicians' views diametrically opposed by the churches and voluntary agencies that they wish to support, and to which they give their money and time. To put the question simply, is there a way through? Is there a synthesis of opinion, and can the difficulties that the agencies have raised, and the conflict over some free trade issues, be reconciled? I hope that I am not alone in being puzzled by that, on behalf of those who are interested in the matter. In the spirit of debate, I should genuinely be interested to find an answer.

In conclusion, I think our constituents will be well pleased to find that on occasion, we speak collectively—with one voice—on an issue. On this issue, the day for which our constituents are waiting is the day on which, collectively, we can deliver.

3.15 pm

Mr. Robert Walter (North Dorset) (Con): I should like to join other colleagues in congratulating my hon. Friend the Member for Buckingham (Mr. Bercow) on introducing this debate on fair trade. Following what the hon. Member for Ogmore (Huw Irranca-Davies) said, I can tell the House that my hon. Friend the Member for Buckingham will be joining me for a Fairtrade tea in my constituency in a week or so.

I had the honour to serve on the Select Committee on International Development for two years, under the chairmanship of my hon. Friend the Member for Banbury (Tony Baldry). Some former colleagues are present today. I served on that Committee until just before Christmas, and we produced two reports on trade and the issues surrounding the World Trade Organisation and the abortive Cancun summit. I found that preparing those reports was fascinating, if sometimes depressing. During our year of inquiry, we visited the WTO, the European Commission and the European Parliament. We took evidence in Washington

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from trade representatives and representatives of the Department of Agriculture, and we heard evidence from many developing countries, as well as countless NGOs.

One point that has become clear to me from those deliberations is that Europe and the United States hold the key to the solution of this issue. Europe and the United States appear to pay lip service to that solution, but neither is prepared to undertake the reforms necessary to bring it about. The trade and agricultural policies on either side of the Atlantic ocean are blocking real progress. We heard numerous examples of that, highlighted in the report to which my hon. Friend the Member for Banbury referred: the inability of Indian dairy farmers to compete with subsidised European skimmed milk exports to the Middle East; the damage caused to the Jamaican dairy sector by the dumping of skimmed milk powder by the European Union; and the problems in the sugar industry and the cotton sector, to which my hon. Friend the Member for Buckingham and others have referred.

I was particularly struck by the remarks of the Prime Minister of Ethiopia, in his evidence to the Committee, about the inability of Ethiopian producers to compete with subsidised US corn exports to Yemen, which is the Ethiopians' traditional market. He was cautious, although I tried to prompt him, about calling that "dumping", but we all knew what he meant. European leaders seem to have been rather pleased with themselves during the past year over their agreement to the reform of the common agricultural policy. However, that will not tackle directly the problems related to export subsidies, and it will fall far short of stopping the dumping of European Union surpluses.

Agriculture is the key to fairer trade in both the developed and the developing world. Although it is by far and away the most distorted sector, agriculture is the most important issue for developing countries. As I hinted in my intervention on the Secretary of State, I take issue with the element of generosity and common purpose in the opening remarks of my hon. Friend the Member for Buckingham to the Secretary of State. In the motion, my party urges the Government

"both to press for the talks to restart and to publish its proposals for the reform of agricultural subsidies",

whereas the Prime Minister's amendment refers only to urging

"the European Union to make further progress on reforming the Common Agriculture Policy regimes for cotton, sugar, tobacco and olive oil".

We have to go much further than that.

In the Committee's report, we pointed out that three quarters of the world's poor live in rural areas, that 27 per cent. of developing countries' gross domestic product and export earnings comes from agriculture, and that agriculture provides 50 per cent. of employment in those countries. Its importance in the poorest countries is even greater, because it provides employment for more than 60 per cent. of the labour force and represents some 70 per cent. of their exports. The World Bank estimates that up to 70 per cent. of the gains from trade liberalisation would come from the agricultural sector, which could increase developing countries' exports by anything from $30 billion to $100 billion a year. Our report suggests that that could add an extra 1 per cent. to the GDP of Africa.

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So, removing subsidies, ending dumping and reducing barriers to trade will put an end to what one of the witnesses before the Select Committee described as a

"catalogue of scandalous destruction of livelihoods or missed trade opportunities for developing countries".

Chris Bryant: It has been clear throughout this debate that everyone shares the hon. Gentleman's desire for change in the common agricultural policy. However, elections are coming up in Spain and Greece in the next few weeks, and both those countries are likely to return Governments with a renewed mandate for keeping—and, indeed, enhancing—the common agricultural policy. How are we to set about the political process of achieving further reform?

Mr. Walter: I agree, to some extent, with the frustration that underlies the hon. Gentleman's question. This is one of the reasons why we must be firm in our united resolve, on both sides of the House, to get the point across to all our European partners that this situation cannot go on. I shall develop that argument just a little more, if I may.

This is not just about export subsidies. The United States and the European Union have to deliver wholesale cuts on domestic subsidies as well. I do not believe that the CAP reform that has been negotiated will deliver any such change in this subsidy-dependent culture. I have been a farmer, and I have enjoyed the subsidy regime. It distorts every business decision. People used to ask me what I farmed, and I would reply, rather light-heartedly, that I farmed subsidies and kept sheep to justify them.

I take issue slightly with my right hon. Friend the Member for Suffolk, Coastal (Mr. Gummer), in that I believe that British farmers would love to see the back of the subsidy-dependent culture that exists right across Europe. However, it is not the British farmers in my constituency who are defending the indefensible. Many of my constituents would not be prepared to give up their subsidies until their European and American cousins had done the same thing, and if I were still farming, I would feel the same. However, we have to work in a concerted way to achieve that. Any British farmer will tell us that the current system of land-use subsidies, production subsidies, export subsidies, dumping and barriers leads to us all here in the north producing far more than the market demands.

I should like to say a few words about the reform of the common agricultural policy, because Commissioner Fischler has been referred to briefly. I shall quote from a report by the US Department of Agriculture economic research service, which concluded that US subsidies increase the level of output, even though they are meant to be production-neutral. The report states:

"Transfers that are not commodity specific can increase the overall level of agricultural production by increasing the wealth (financial well-being) of farmers, thereby expanding agricultural investment and boosting the use of land and other inputs."

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