Examination of Witnesses (Questions 51-59)
RT HON
PETER MANDELSON,
MR ROGER
LIDDLE AND
MR CLAUDE
MAERTEN
7 FEBRUARY 2005
Q51 Chairman: Commissioner,
thank you very much for agreeing to come and give evidence before
the Committee this afternoon. That is very much appreciated. As
this Committee knows from the work that we did on Cancún—and
I mean this seriously—you are an incredibly powerful person,
because, as we know, you single-handedly negotiate on trade imports
for the whole of the European Union. Our fundamental concerns
about all of this are that, at the same time that Least Developed
Countries (LDCs) are having to negotiate on the WTO, they are
also having to negotiate on Economic Partnership Agreements (EPAs)
and on Doha Development Round agenda, which was a clear statement
evinced by international community that they would seek to help
the development of the Least Developed Countries in the WTO. What
are you able to say about the help that you are going to give
to the Least Developed Countries under the reforms to the Cotonou
Agreement, and its Economic Partnership Agreements? The real concern
is that the bottom line seems to be that, if Least Developed Countries
want to have any access to European Union markets, they are going
to have to open up their markets in a way which could well undermine
their trade, their capacity. How are you going to ensure that
these agreements reflect the weakness of many Least Developed
Countries and ensure that this also enhances their development
and does not undermine their development?
Mr Mandelson: Principally,
by not making unfair and unreasonable demands which they are unable
to meet. These are not classical, conventional, hard-nosed trade
agreements that we are pursuing, of the kind that you would attempt
to negotiate between developed countries. In that sense, the very
term "trade agreement" is a misnomer. If we wanted simply
to rely on classical instruments, we would rely on our Generalised
System of Preferences, which offers pure market access arrangements;
it is a unilateral instrument—we decide what is in it and
others have to take it. The EPAs are entirely opposite; they are
properly negotiated, nothing is imposed, nothing is unilaterally
declared and then passed down like a tablet of stone. Secondly,
and I think more importantly, they are genuine development instruments,
in that they are designed not simply to arrange market access.
They are designed to enable ACP countries to acquire, to expand
the capacity that they have in terms of their governance, their
infrastructure, their productive supply side, to enable them to
participate in the trade opportunities that are being created.
Lastly, they will, once they are negotiated, once they are agreed—and
that is some time off. They are described by some as if they already
exist. A member of the Government recently described them—I
cannot remember the minister's name, unfortunately—as some
sort of squalid waste, as if they already exist. The BBC referred
to them today—incidentally, not as Economic Partnership
Agreements but as European partnership agreements—and said
that Kofi Annan had already condemned their impact on developing
countries. The amount of misinformation and misrepresentation,
I am afraid, is rather extensive, but the key point is that they
will be negotiated not unilaterally but bilaterally. Any market
opening will be entirely asymmetrical and thirdly, any market
opening will be progressively introduced over a considerable amount
of time, as befits the needs and the rate and pattern of development
of the ACP countries themselves in their particular regions. So
you will see, Chairman, how different they are from the sort of
trade agreements that people might instinctively rebel against
in the case of countries which are amongst the weakest and most
vulnerable of developing countries with whom the EU deals.
Q52 Mr Bercow: In your
recent speech to the ACP Civil Society Dialogue Group[1]
you stated that there is no fixed timetable for liberalisation—a
very important statement—and furthermore, that there will
be what you call a high level of asymmetry between the European
Union and the ACP. Can you tell us at the outset how that approach
can be reconciled with what I think is the common interpretation
of Article XXIV, which assumes both a ten-year transition period
and, I think, the inclusion of 90 % of trade? In other words,
who will decide the timetable, where does the buck stop, and indeed,
who, for that matter, determines the level of asymmetry?
Mr Mandelson: That
is a matter for negotiation. It is not something decided by us
and unilaterally passed down for others to take or leave. It is
a matter of negotiation. Each of these partnership agreements
has to be properly analysed, prepared, negotiated, between the
EU and ACP countries, and all the issues that you have identified,
quite rightly, are amongst those which are central to that negotiation.
You rightly highlight a broader point about the WTO. The specific
point that you are picking up concerns Article XXIV, concerning
regional trade agreements, and the ten-year time limit which that
Article suggests or imposes as the period for transition. What
you are saying to me is supposing our transition arrangements
want to stretch longer, and that is something that concerns me
and, as I said when I was being questioned in the European Parliament
last week, one of the rule changes that I want to promote in the
WTO is a more flexible interpretation and application of Article
XXIV in order to accommodate the sort of progressive, step-by-step
market opening that is envisaged in these agreements, but the
broader point, if I may, that your question illustrates is this:
that the WTO in my view, is seeking to support and underpin a
rules-based international trading system, something which I certainly
support, which I believe is in the interests of developing countries,
because I think that rules, as long as they are drawn up properly,
interpreted well and applied flexibly, tend to help the weak against
the strong. If you did not have rules, you would have the law
of the jungle, in which circumstances the strong would prevail
almost always against the weak. So I am a great supporter of rules
in the international trade system but those rules have to become
more sophisticated. They have to reflect, for example, our desire
within the Doha development agenda to develop a concept of special
and differential treatment between developing countries. There
is not one stock, standard category of developing countries. They
have different states of development, different priorities, different
interests, different needs, a point I often make, sometimes in
an unwelcome way, to some more advanced developing countries for
whom I do not think many of the benefits and privileges of what
we are negotiating in the Doha Round should be extended to in
the way that they should be concentrated and targeted at the Least
Developed Countries. At the moment, the WTO, as I say, does not
have that flexibility and does not have that sophistication that
we need to accommodate that concept of special and differential
treatment, even though that treatment is central to the fulfilment
of the development goals of the Doha Round. So your narrow point
illustrates a wider point, where we need to bring change to the
WTO, and that is one of the areas which I am exploring and which
I will seek to develop in the context of the Doha Round.
Q53 Mr Bercow: I think
it is quite important to have a sense of what level of political
pressure, or indeed, executive initiative on your part is needed,
simply because a lot of people's fate hangs in the balance on
this very important question. Interestingly, Commissioner, you
said in relation to the Article—and I noted it carefully—what
the Article "suggests or imposes", and that in a sense
is the nub of the matter. Can I take it that, if it is merely
a suggestion contained within the Article, as you have interpreted
it, you will, frankly, think better of that rather unwise suggestion
but that if it is an imposition that is involved, then frankly,
you will seek formally a revision of the Article?
Mr Mandelson: Yes.
Q54 Mr Bercow: You will
seek a revision of the Article if necessary. That is very helpful.
Finally, if I may, you talked about the asymmetry of the arrangement.
I think it is fairly common ground amongst people concerned with,
for want of a better term, what one could call trade injustice
that the objective in pursuing a Doha Development Round and successful
EPAs must be to maximise access for poor countries' products to
EU markets and, so far as possible, or at least for an appreciable
period, to minimise access for unfairly subsidised European produce
into developing countries' markets because of all the damage that
does to local farmers and all the rest of it. Can you therefore
tell me, if we take as a broad yardstick this figure of 90 % of
all trade, what are the exceptions to the principle of ACP access
to EU markets? Are those exceptions based on genuine health and
safety concerns or do you share the cynicism of some of us, probably
greying prematurely, ageing before our time, who think that really,
it is just a protectionist racket to stop cheaper, efficiently
produced and potentially popular products getting into our markets
because our vested interests will shout rather loudly?
Mr Mandelson: I think it is important
that proper protection of European citizens does not slip into
protectionism against developing country products, and I of course
have no evidence whatsoever that that line has been crossed, nor
do I assume that it has. However, I do think that there are concerns
in this area which we have to take seriously. We are talking,
Chairman, about the sanitary and phytosanitary standards that
the European Union operates in order to maintain the health and
the wellbeing of all of us in Europe. I know some argue that these
standards, in their stringency and their desire to minimise any
amount of risk to the European citizen, even down to the possible
threat to the wellbeing of one in a billion citizens, perhaps
go a bit far and that perhaps they are having unforeseen side
effects which are acting to the detriment of developing country
producers, and that if we were to look again at these standards
and these regulations, they could perhaps operate in a fairer
and more just way, without any undue or unreasonable harm or risk
being posed to the European citizen. I know some make that argument,
and I have heard the argument, and I think it is a debate that
the European Union should join. I hope you appreciate the care
with which I have answered that question.
Q55 Mr Bercow: I have
noted it, and I feel sure it will be recorded for posterity.
Mr Mandelson: Can I just say as
a postscript that, when I made my last public utterance on this
subject, I attracted considerable criticism from those who thought
that my aim was to put the health of Europe's citizens in grave
danger and jeopardy and a metaphoric tonne of bricks was emptied
over my head. I am sure that will not be the case now, given the
care with which I have answered you, but you do need to be aware—we
all need to be aware—that this is a very sensitive subject
indeed, and there are strong European interests who think that,
beyond all else, the health and wellbeing of Europe's citizens
should come first. We have to bear that in mind as well.
Mr Bercow: Indeed. Thank you.
Q56 Mr Battle: Commissioner,
could I add a word of welcome to the Committee? You are the first
Commissioner (of the new Commission) to give evidence, and a special
welcome as a Trade Commissioner because, if we focus on aid, and
we need more aid, and we focus on debt and cancelling debt, I
suspect that fair trade will be the key in the 21st century to
tackling poverty; it will be the key agenda. I just want to press
you a bit further, because there have been efforts in the past
to liberalise and open up the markets vis-a"-vis the
north and the south. The structural adjustment policies, for example,
that affected Ghana. The Committee visited Ghana, and we visited
a tomato farm where they had just managed to get a water system
to irrigate their tomatoes, and as we drove away, we passed a
closed down tomato processing factory. Why had that factory been
closed down? The answer was that Italian tomato paste was flooding
the Ghanaian market as a result of the structural adjustment liberalisation
policies. So I am very nervous to ensure that we have fair trade:
that the opening up of markets is not one way and kills off efforts
locally. I would just like to ask you, how would the Commission
ensure that the opening up of trade under the EPAs, the Economic
Partnership Agreements, does not lead to EU products actually
flooding ACP markets and undermining their agricultural sectors?
Mr Mandelson: I do not think there
is any possibility of this happening. I am now becoming increasingly
aware of the tomato situation in Ghana because I was questioned
about it on "Newsnight" on Friday, much to my amazement.
I was questioned about it again on another BBC politics programme
on Sunday, by which time my answer had still not fully recovered
from the shock of being asked it in the first place, and this
is the third time I have been asked to address this issue. I can
assure you that the moment I get back to Brussels tomorrow I shall
be making inquiries about the circumstances in which Italian tomato
paste came to be dumped, as you put it, on Ghanaian markets. Unfortunately,
over the weekend I have been unable to acquaint myself with the
details, but I will do when I get to Brussels. I think the serious
point as well, if I may, is to understand that market access in
the partnership agreements that we are talking about comes well
towards the end of this process of economic and trade capacity
building, after regional integration has kick-started growth,
because, of course, as you know, one of the main features of the
agreements that we are seeking to create with our ACP partners
is a regionalisation of markets so as to create trading opportunities
in the first place for protected regional markets which it would
be much easier to gain access to and where regional comparative
advantage will be easier to develop, and where regional markets
will be easier to grow for the benefit of the ACP countries themselves
in the first instance, long before any consideration comes on
to the horizon of access to those markets by European producers,
and after, it is important to say, Europe has invested aid and
support in these LDCs' capacity to trade. That is the important
point, Chairman, and transitional periods need to be—just
going back to Mr Bercow's original question—long enough
for that investment, for that use and application of that aid,
for the use of that trade-related assistance to kick in, for that
regional integration that we are seeking to occur, for regional
markets to grow, for comparative advantage to be exploited, long
before we get to the question of market access for European producers,
and that flexible timetable depends on each region's progress.
There is no blueprint; there is no one model that is devised centrally
and rolled out to every ACP region. We are really about strengthening
the ability of ACP countries to tap into market opening and that
means that extending their capacity has to come first and that
is again, what makes these partnership agreements so different
from any other concept that we have ever tried to develop.
Q57 Mr Battle: Just to
be clear—and I welcome that answer—are you saying
then that ACPs will themselves be able to decide on the extent
and the timetable for liberalisation, for example?
Mr Mandelson: What is agreed must
be acceptable to the ACP countries themselves.
Q58 Mr Battle: So if we
went then through to the process, you very helpfully suggested
you would build in a review to see how it was going after the
process, the agreements are signed up, as it were. In that review,
could it possibly be that, if they are not going well, the process
could be held up, and will the review just be linked to disbursement
of support, as you suggested, or could it also be about the scope,
the pace and the impact of trade liberalisation? In other words,
will you keep the whole conversation as open after the signed
agreement in the review as you are suggesting you may do now?
Mr Mandelson: The approach is
comprehensive. The package we are trying to devise is comprehensive,
and therefore the conversation that we keep having has to be comprehensive.
What we are therefore monitoring and keeping under review is the
effectiveness of what we are doing, the effectiveness of the agreement
that we are seeking to operate. If it is not effective, by which
I mean the development assistance, the aid, the capacity building,
the regional integration, the market growth is not taking place
in the way that was originally envisaged, and therefore the market
opening has to be correspondingly slowed down, that is something
that we will look at and keep under review in the round but, as
you also know, because I have been concerned that the EU's development
assistance should properly, genuinely, be rolled out in the way
that was originally envisaged so that the two things do not get
out of synch, I have decided that a new monitoring mechanism will
be introduced, and I have agreed this with my colleague, Commissioner
Louis Michel, and that machinery is currently under design to
make sure that we know that is happening, that we do not simply
create a nice canvas, agree that it is all hunky-dory, press the
button, retreat and do not bother to look again at how it is actually
operating in practice. That is not going to be our approach.
Q59 Mr Battle: Can I finally
suggest that one of the things that the ACP countries in negotiations
now have been asking to have considered is what is called technically
GATS mode 4, about the mobility of labour and the temporary movement
of labour. I would just like to ask you what plans, if any, the
Commission has to explore the possibility of including GATS mode
4 in the Economic Partnership Agreements. Are you open to that
or have you really said, "Keep it out for now. We have got
too much on our plate"?
Mr Mandelson: I am open to that,
because it has a basis in the WTO, it has a basis in the negotiations,
the talks that are currently under way in the Doha context, so
I see no inconsistency or no incompatibility between our Doha
agenda approach and our EPA approach in respect of mode 4.
1 Economic Partnership Agreements: putting a rigorous
priority on development. Speech by Peter Manadelson to the
Civil Society Dialogue Group, Brussels, 20 January 2005. Copy
placed in the Library. Back
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