Examination of Witnesses (Questions 20-38)
MS DIANNA
MELROSE AND
MS AMANDA
BROOKS
30 NOVEMBER 2004
Q20 Tony Worthington: Surely we can have
a situation where we are not bound by what we did a year ago?
Ms Melrose: Trade facilitation
is not in EPAs and yet that is actually considered to be one of
the most useful. I think the issue here is that you are quite
right and our Secretaries of State are sayingcertainly
Hilary Benn has saidwe want to see the evidence for how
these could be developmentally useful and in what way could investment
and competition be usefully included in the EPAs negotiations.
So it is basically a question of looking at what is useful. The
other very important thing is that there is absolutely no need
for each regional EPA to be the same. For example, ECOWAS[5]
and COMESA could say we want an investment agreement, whereas
SADC can say no way, we are not interested. So there is some flexibility.
The problem around inclusion of these new issues in the WTOas
your Committee were the first to flag upis that this was
just complete overload. They were nowhere on developing countries'
priorities when so little progress had been made on agriculture.
EPAs are different because some of the ACP members have expressed
an interest in them; however, some were very hostile, so basically
we need the ACP to say what they want, rather than the UK Government
or indeed the NGOs.
Q21 Tony Worthington: I am still puzzled
by this. There came to be a recognition at Doha that the new issues,
the Singapore issues, were in the way, that this was not a development
round, that this was in there because of our interests or someone's
interest, it was not the developing countries' interests. Then
we move to another forum where we say that development has to
be at the centre of what we are doing here and these new issues
are back in there.
Ms Melrose: I think part of the
answer is that these are not, of course, multilateral negotiations.
The point of Cotonou is to promote regional integration; let us
say you are Tanzania within SADC and you want to promote regional
integration, you are extremely interested in Foreign Direct Investment
(FDI) from South Africa, and you may be more interested in that
than from the EU, in which casethis is theoretical because
I cannot recall what Tanzania's position on the investment agreement
isbut that they are interested in South African FDI is
definitely the case. They may within the region see that it is
hugely to their advantage to have common rules for investment,
competition and the other areas, but what you are concerned about
is extending it towards the EU.
Q22 Tony Worthington: It seems to me
that you are saying that there is no policy basically. You are
negotiating something regionally and we are seeking some kind
of regional agreement, but recognising that some of the developing
countries will not put these issues on the table. At the end of
it, it does not really mean anything, does it?
Ms Brooks: The issues are already
on the table because they are part of the Cotonou Agreement, albeit
that the Government has put them slightly to one side, given the
concerns that Dianna has already raised. Therefore, in the Cotonou
Agreementwhich was negotiated before the Doha development
round was commenced, different ACP groupings will have different
approaches to the new issues. This will be part of the negotiations
between the EU and the regional groupings. How it differs to the
multilateral round is that that would push much more the "one
size fits all" approach, whereas in taking it by regional
groupings the individual wishes can be tailored much more to the
development needs of those regional groupings.
Q23 Chairman: I think what you are saying
is that we are now into sort of three-dimensional chess. You have
got the WTO negotiations from which the new issues were dropped,
you have got the Cotonou Agreement where the new issues are still
in place, everyone is having to negotiate these two completely
parallel sets of negotiations simultaneously, under different
rules.
Ms Brooks: Yes.
Q24 Chairman: If it is confusing for
us it must be a complete and utter nightmare for developing and
poorer countries, I imagine.
Ms Melrose: Absolutely. St Kitts
and St Nevis's trade minister said that he had four officials
in his department and they were negotiating in the WTO, on EPAs,
the Free Trade Area of the Americas and within CARICOM[6].
Yes, the capacity issues are real and it could be the capacity
constraints that make different ACP regions a lot less interested
in these issues. The point is that they are in Cotonou. But the
regions do not have to agree them. One of the things that the
EU is doing now is providing support for independent country level
assessments where the ACP can look at their transitional needs.
The ACP countries have also set up national development and training
policy forums where they can bring together all the stakeholdersthe
private sector, NGOsand that is just the sort of place
where the ACP can identify what is in their interests. Our whole
role is to support them in that, not to tell them what they need;
at the same time it really is down to the regions now. We could
ask why did not the Commission not take on board more of the ACP
concerns in Phase 1 but the decision was to let EPA negotiations
proceed.
Q25 Tony Worthington: Who is it within
the EU who is pushing the new issues?
Ms Brooks: It is the Commission.
Q26 Tony Worthington: What is Mr Mandelson's
view on this? Is he pushing the new issues?
Ms Brooks: He as yet has not given
any indication on this. He is meeting ACP ministers this week
where, no doubt, EPAs in general and perhaps these issues will
be discussed, but we are not party to those discussions at this
end.
Ms Melrose: We have had some very
good sessions with him where we have flagged up all these development
concerns and he was certainly very receptive. It is a good question:
when we asked industry who is really wanting investment and competition
agreement, it was certainly not our industry.
Q27 Tony Worthington: So Lamy was out
of control was he?
Ms Melrose: I think that is somewhat
overstating it. He did have a mandate from the member states and
Council and in Cancún the mandate was changed. There was
certainly some controversy about what was agreed, but his mandate
was changed so that he could take the new issues off the table.
Mr Bercow: I think we ought to get Mr
Mandelson to appear before us[7].
Chairman: We are hoping to find time
when the Committee will go to Brussels and meet with the Commissioners
at some stage, both on this and other issues. John.
Q28 John Barrett: If I could turn to
the Everything But Arms Agreements, can you say why there has
been a relatively poor uptake to this very generous access to
market, and also what is the Government doing about it? Are there
any proposals to increase the uptake of these by LDCs?
Ms Brooks: There is no single
answer to that question. There are certainly some issues around
Rules of Origin within the scheme which are quite restrictive.
Many of the ACP countries, for example, choose to use the Cotonou
preferences as their Rules of Origin are less restrictive and
also they are familiar with them, they have been available to
them for longer. But there are also supply side and capacity constraints
within the countries to take these preferences up, so it is a
whole host of factors and there is no single solution.
Ms Melrose: If I could just add
to that, Rules of Origin are certainly a key area and one that
we are very much hoping the UK can take up during its G8 presidency,
because at the Evian summit one of the areas on trade where there
was clear agreement was that Rules of Origin should not be allowed
to get in the way of the take-up of preferences. As Amanda has
said, the Rules of Origin are much worse under EBA, so what could
the model be? Under the US Africa Growth and Opportunity Act they
have got very relaxed Rules of Origin so that, for example, Lesotho
is able to buy its cotton from very competitive suppliers in China
and India, which means that their garments are very competitive
and, as a result, their exports to the US have trebled within
three years, and the garment sector is now the single largest
employer and very important for women.
Q29 John Barrett: You could not do that
under EBA?
Ms Melrose: It should be like
that, but this is why we would really like to tackle Rules of
Origin, not just to make them less restrictive but also to encourage
export competitiveness in the long term and, built into Cotonou,
is agreement that Rules of Origin will be revised. There is one
other issue in terms of take-up and that is the growing problem
of standards. Because of the ratcheting up of standards all the
time, both by standard setting bodies within the EU but also within
the supermarket sector, it becomes harder and harder for some
of the poorer countries to meet the standards or at the very least
to demonstrate that they do. This is an area where we are giving
assistance and there is now a Standards Trade and Development
Facility that DFID is funding, but there is a lot more to be done
on that, and perhaps more engagement with the private sector in
this country could be helpful.
Q30 John Barrett: Is it an issue that
these are non-contractual or temporary agreements?
Ms Melrose: The Rules of Origin?
Q31 John Barrett: No, the Everything-But-Arms
Agreements.
Ms Brooks: I do not think that
is the problem, it is really more to do with a combination of
supply side capacity plus, to some extent, Rules of Origin. The
Commission have run a consultation process over liberalising preferential
Rules of Origin and that is currently under consultation at the
moment.
Q32 John Barrett: And is the DTI pushing
on that as well?
Ms Brooks: Yes, we recently submitted
a full response to that[8].
Ms Melrose: We are hoping that
the more collegiate Commission will mean that the joining up is
not just DG Development, DG Trade and DG Agriculture, but DG TAXUD
and other DGs, particularly say on Mode 4. I forget which DGs,
but there are a lot that impinge on trade and development.
Q33 Mr Battle: Just a final word on sugar
really, there is a lot of pressure to reshape the Sugar Protocol.
There was a phrase in it saying it would be of indefinite duration,
but I think that has been translated to mean that it is of infinite
duration. I worry about two things: one, a lot of focus is on
the Caribbean and price, but many African countries were encouraged
to move into sugar cane as a way of extending their reach in agricultural
products and now they cannot get them in. What is the Government
recommending for the protocol countries to help them either diversify
or restructure, or compensate if they lose access to the market?
Who will be giving them compensation as the Common Agricultural
Policy already does to farmers in East Anglia, for example, and
will that money come out of the development budget, if that is
the arrangement?
Ms Brooks: The Commission have
committed to producing an action plan to support those countries
that are outside the EU and are affected by reform of the sugar
regime. They have said that they anticipate that they will produce
a first draft of that by the end of this year, but as yet we have
received no detail of that. On the funding, we understand that
that is due to come from the development budget, at the moment.
Ms Melrose: On sugar the UK wants
to see significant reform because it will benefit some ACP countries
that have lost out if they are non Sugar Protocol countries. However,
the concern obviously is that some will be hit very hardfor
example Guyana is going to be hit on sugar and rice, as will Jamaica.
In terms of the action plan that Amanda mentioned, Margaret Beckett
only last week was saying that while the Commission works up its
proposals on sugar in the light of the WTO dispute settlement
ruling, we must fast track work on the action plan. DFID has commissioned
research on what is the best way to design transitional assistance
so that it is timely, it is significant, it is meaningful and
targeted. The Commission are saying "We are waiting on your
research" so the UK actually has quite a major input. On
the funding side, what has been discussed from 2007 is not EDF.
The Commission communication has a rather esoteric footnote which
talks about "mobilising the flexibility instrument",
or FLEX. This is the thing that replaced STABEXthe mechanism
to help out when export earnings collapse. So they see that as
coming into play up to the end of 2006, and following 2006 from
within the new Financial Perspective. What they are suggesting
is a thematic appropriation within the Development Co-operation
and Economic Co-operation instrument, i.e. the EU budget. Essentially
what has happened is that they have got about 60 different regulationssorry
this is all rather convolutedwhich they are collapsing
into a smaller number of thematic and geographical funding mechanisms.
It is work in progress. The key thing for us, learning from the
past, is to tackle slow disbursement, wherever the funds come
from. Our strong preference is not to raid the EDF. Indeed, in
an ideal world we would have liked to have seen the assistance
come from CAP savings; however, our DEFRA colleagues are pretty
convinced that there are not going to be any savings that can
be transferred to the ACP. They are going to be transferred to
EU farmers. So it is work in progress.
Q34 Chairman: I just have a couple of
final questions. This is all fairly Nurofen-inducing stuff and
there are eight of us who are looking at this. The idea that four
officials from St Kitts and St Nevis or other states can manage
all this and attend to other thingsI was in Sierra Leone
and there are only about three people running the countryI
mean top senior civil servants for competency-based reasonsbecause
of conflict a lot of people have left. I am interested in a couple
of things; firstly, is there a coherent piece of text by way of
speech or anything which sets out HMG's overarching objectives
on Cotonou?
Ms Melrose: Not a recent one,
but I can foresee there being one on EPAs.
Q35 Chairman: I can foresee the tabling
of a Parliamentary question on exactly that point, which I think
would be helpful. You have been brilliant on the detail and we
are very grateful to you but what I feel I have not got at the
end of this sessionand I do not know how my colleagues
feel, and this is no criticism of youis a sense of what
are our overarching objectives and how do they fit in? Maybe we
can assist that
Ms Brooks: Could I just clarify,
there is actually, it has been handily passed from behind me,
and it is in our White Paper. There is a very clear statement
there.
Q36 Chairman: Maybe you could share that
with the Committee, because it is always good in a collective
Government to share something with the other partners, so if you
could let us have that.
Ms Brooks: We will do that.[9]
Ms Melrose: There is no problem
with the overarching objectives because the Government will always
stress to you development, development, development. The question
is what does that mean in practice in EPAs? So I am afraid this
is where you do get into neuralgic detail.
Q37 Chairman: Maybe we will still table
a question to DFID and maybe then DFID can translate it into DFID-speak.
The second point is I think there was a lot of talk at the time
of the WTO discussions about HMG helping these countries with
capacity for the WTO talks. It seems to me that these discussions
are as complex as certainly the WTO negotiations, and I sense
that the WTO negotiations are organised around quite big groupings
and so people can hide in these groupings; here in the ACP it
seems that you have all sorts of groupings coming apart because
they have different interests, or they have not got the same interests
they had when they were originally set up 20 or 30 years ago.
Maybe we might also table a Parliamentary question to ask what
we are doing in terms of helping on capacity issues, capacity
assistance, for particularly the smaller countries that might
be affected by the Cotonou Agreement in terms of hard cash, in
terms of seconded officials and so forth, all those people we
are losing under the Gershon, there are some places they can be
sent off to. I mean that seriously
Ms Brooks: Volunteers.
Q38 Chairman: Yes, volunteers. It would
be fascinating to go to assist and would be very worthwhile, because
when ACP was first negotiated, a lot of the negotiation was done
by European Union countries seeking to deliver on what they believed
was the mandate to disengage, but that is not now the case. We
would welcome some thoughts on that. Is there anything that we
have missed out that you think in your wonderful briefingI
do not mean to be pejorativeyour very full briefing note
we should have asked you about? Is there anything you would like
to unburden yourself of?
Ms Melrose: I would like to add
to your last point. You will see in paragraphs 41 and 42 of our
evidence[10]
that we have given some details of what the UK is already doing,
including EPA-specific capacity building support for the ACP through
the European Centre for Development Policy Management. I would
just like to mention that we are also developing a programme of
research on how EPAs might work for the ACP. I cannot stress enough
that our Secretaries of State want to know what the ACP Governments
want rather than have anybody in this country tell them what they
want. So the Government is listening and responding to their needs.
Chairman: Thank you very much indeed.
5 The Economic Community Of West African States Back
6
The Caribbean Community (CARICOM) Back
7
Evidence session, Monday 7 February 2005 Back
8
Commission Green Paper on the Future of Roles of Origin in Preferential
Trade Agreements: UK Response. Copy placed in the Library. Back
9
See pages 96-100, DTI: Trade and Investments White Paper 2004:
Making globalisation a force for good. Available at http://www.dti.gov.uk/ewt/whitepaper.htm Back
10
Ev 37 Back
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