European Standing Committee C |
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Stephen Hesford (Wirral, West) (Lab): May I raise with my hon. Friend something that I know will be of particular interest to Opposition Members? I understand that Commissioner Mandelson recently made a speech on trade development. Has the Minister any comment on that speech? Mr. Alexander: I had the opportunity to share a platform with the new Trade Commissioner, Peter Mandelson, at a recent seminar hosted by the Commonwealth secretariat in London. Its purpose was to bring together a number of Commonwealth countries to discuss progress on trade issues in general and the Doha development round in particular. I was greatly encouraged both by the words that were spoken on that occasion by the new Trade Commissioner and by those in a couple of articles that appeared in British newspapers at the turn of the year—one in The Guardian and one, I believe, in The Independent. The Trade Commissioner’s approach was pro-growth for Europe and pro-poor for the world. Surely that sentiment would find favour in all parts of the House. He has recognised how significant is the opportunity presented by 2005 and by the coming Hong Kong meeting. Column Number: 12 I do not envy the Trade Commissioner some of the challenges that he faces in trying to reconcile the interests of 25 countries in the European Union. However, that is why the tone that he has set is so important. I have been very encouraged to observe that—whether in discussions with developing countries or in representations to the British Government and in public print in Britain—he recognises the strength of the ambition of the British Government and, increasingly, of the British people, to see a trade round that is genuinely beneficial to the developing countries. If we consider the amount of money that is lost through unfair trade, and compare it with the aid budget, we should all pause for thought. One of the greatest single contributions that we can make to the Make Poverty History campaign will be to ensure that we have a successful development round this year. Mr. Brazier: Those last words from the Minister are echoed from the Opposition Benches. We have long argued that free trade is the basis of prosperity. May I bring the Minister back to the extremely long list that the non-poorest 50 countries—some of them very poor—face with GSP+? How many of the treaties do they have to have signed up to in order to benefit from GSP+? He must be aware of the fact that the Financial Times alleged in October that if this were implemented in full it could amount to “veiled protectionism”—its words not mine. Mr. Alexander: It might help the Committee if I give a sense of priority in respect of the conventions that we are asking people to sign. It is necessary for seven of them to be signed by any of the participating countries, although the list is much longer. Let me, however, give the Committee a brief flavour of the conventions on core human and labour rights under discussion: the international covenant on civil and political rights; the international covenant on economic, social and cultural rights; the international covenant on the elimination of all forms of racial discrimination; the convention on the rights of the child; the international convention on the prevention and punishment of the crime of genocide; the abolition of forced labour convention; the forced or compulsory labour convention; the equal remuneration for men and women workers for work of equal value convention; the discrimination in respect of employment and occupation convention; and the international convention on the suppression and punishment of the crime of apartheid. The proposal has not met with significant opposition from many of the countries that we have discussed the matter with because there is scope for flexibility depending on the circumstances. There is a list of 16 core conventions, but seven additional ones have to be agreed, as I understand it, by 2008. Tony Cunningham: The Minister mentioned the Make Poverty History campaign, which is gathering huge momentum. One issue being campaigned for is no forced liberalisation—perhaps he can comment on that. The campaign also promotes fair trade. The
Mr. Alexander: I am grateful to my hon. Friend for raising both questions. To deal with forced liberalisation first, the principal concerns of many of the NGOs have focused not on the GSP arrangements per se, but on the economic partnership agreements being discussed with ACP Governments. The White Paper published by the Government last year covered the whole area of trade policy and was in many ways our calling card to the incoming Trade Commissioner—at that stage, we were not sure who it would be. It emphasised the importance of what is known in the trade as asymmetric reciprocity. That would mean that we were under an obligation under the WTO to ensure that, if there is market opening in one country, there is market opening in the other. That said, speeds of opening can be very different. The phraseology used by the White Paper was “same destination, different speeds.” We discussed the approach with the NGOs when discussing the economic partnership agreements. There could be market opening in Europe years earlier than in the developing countries. Again, I am glad that I have had the opportunity to discuss the subject with the Trade Commissioner. The other important point of principle is to recognise that we want to see trade that is sensitive to the poverty-reduction strategies of developing countries. There is no point in saying that we will open the door to international trade if the countries are so poor that they do not have the strength to walk through. In that sense, there is an opportunity to make progress in the coming year and to build the capacity of countries to benefit not only from the GSP schemes that we are discussing but, ideally, from a successful conclusion of the Doha development round. One of the principal ways to achieve such progress would be significantly to increase the aid assistance provided to developing countries, and to allow for investment in infrastructure, systems of governance and other necessary areas to permit countries to benefit fully from the opportunities of a more open globalised trading system. It is a matter of pride that the British Government, through their proposal for the international finance facility, have the principal proposal to see a significant uplift in aid budgets by the developing world to the underdeveloped world. That will be one of the main subjects under discussion at Gleneagles, and although we are gaining support from European countries such as France, Germany and Italy, a great deal of work needs to be done to secure additional support. There is a happy and convenient alignment between the ongoing work on the trade round this year, with a drive to deliver greater aid to developing countries, and the British Government’s proposal to see a write-off of multilateral debt for some of the highly indebted countries, matching the steps that we have taken on bilateral debt owed to the United Kingdom
Rev. Martin Smyth: Following on from the question of the hon. Member for Workington (Tony Cunningham), if my memory is correct, one of the earliest conventions was the Lomé convention, which was signed in Togo, one of the poorest countries in Africa. The Minister talks about liberalisation, but I do not think that he was talking about the liberalisation of democracy there. What are Europe and the other countries in the world doing through those agreements to ensure that the people of Togo have freedom of choice? As the Minister will know, the election there went against the president. He took over anyway, and then died. Afterwards, his son succeeded. Although Europe has objected to that, aid is going to Togo from other places. Is that aid helping the people there, and can anything be done in international relations to try to effect a positive change that will develop Togo not only democratically but economically? Mr. Alexander: I am grateful to the hon. Gentleman for raising that important question to which I would like to offer a number of responses. First, the GSP+ scheme reflects a desire on the part of the European Union to incentivise exactly the sort of standards of governance on human rights that he identifies; and it is a requirement of the GSP+ scheme that there is adherence to those standards, so it is a positive incentive. Secondly, in relation to debt reduction and the work that I was speaking about earlier, and because many of those countries are afflicted by considerable debt, one of the requirements written in to the British approach to writing off bilateral debt is that the money would not be spent on the production of military hardware, on presidential jets or on other things that would not be regarded as socially advantageous. In that sense, the model of what can be achieved in debt reduction offers a way to deal with multilateral debt reduction—that is, ensuring that the money is spent on things with which I am sure the hon. Gentleman would agree, such as basic primary education, inoculations and a range of other initiatives. The context for much of that discussion was the millennium development goals set by world leaders in 2000. In essence, world leaders were looking ahead to 2015 and those goals represented three undertakings: first, the halving of world poverty by 2015; secondly, the ending of preventable infant mortality—principally a major programme of inoculations—and, thirdly, the provision of universal primary education for young girls and boys around the world. It is a sad fact that the international community is very far adrift from the achievement of those millennium development goals. However, if we were to see a successful conclusion to the trade round, if we were to see the writing off of multilateral debt as proposed by the Government, and if we were to see the effective doubling of aid from $50 billion to
With your permission, Mr. Caton, I would add a point of clarification. I hope that the Committee forgives me for being less than clear in my answer to the hon. Member for Canterbury (Mr. Brazier). Of the conventions that countries applying for GSP+ are obliged to uphold, 16 are compulsory, seven of the other 11 require to be adhered to by 31 May, but all 27 need to be adhered to by 2008. There is a transitional period during which those countries can ensure that they achieve those convention standards. Jim Dobbin: It is possible that I missed the point earlier; it may have been mentioned in one of the Minister’s more detailed responses. Will the new GSP scheme help those countries affected by the tsunami? Mr. Alexander: Yes, I give my hon. Friend the confirmation that he seeks. It is a matter that I hope to discuss personally next week when I visit Indonesia and see for myself the work that British aid organisations and the Government are doing to support the efforts to bring relief to those people affected by the tsunami. The implementation of the GSP scheme is being brought forward with the needs of those countries specifically in mind. It is being brought forward from 1 July to 1 April, to enable the countries affected by the tsunami to benefit as quickly as possible. Many of those countries stand to benefit from the new scheme. Sri Lanka, in particular, will benefit from the GSP+ additional preferences. Thailand will see preferences restored on its key fishery sector as well as on foodstuff, footwear, ceramics, electronics and plastics. Indonesia will regain preference for the European market on footwear. Mr. Brazier: Has the Minister seen Oxfam’s letter to the national trade committee of the European Parliament, in which the EU is urged to follow Canada’s example and
More generally, to what extent has the opinion of industry been actively sought, when looking at ways of calculating the rules of origin in a way that is more effective and helpful to the developing world? Mr. Alexander: I cannot claim to have had sight of the letter to which the hon. Gentleman refers. As for the European Union’s GSP scheme as distinct from Canada’s, I understand that the European scheme is the most extensive system of preferences in operation. I sought to reflect in my remarks at the outset that the regulations do not deal specifically with rules of origin, but it is a matter of record that the Government have concerns about them, and we discuss the matter not only with NGOs but with the business community. In many ways, the rules of origin have themselves become a barrier to trade, not only between the European Union and developing countries, but
Tony Cunningham: We have a good idea of the views of countries such as France and Germany about GSP policies, but has the Minister had discussions with the European Union’s new entrant countries on their views about those policies? Mr. Alexander: I have had the opportunity to meet the accession countries’ Trade Ministers only once, at an informal meeting of Trade Ministers from throughout Europe, but I welcomed that opportunity. With your indulgence, Mr. Caton, I must say that I was struck by how old I was in comparison. A whole number of Trade Ministers from the accession countries are in their late twenties or early thirties. Many were educated in the United States and are now in senior positions in their respective Governments. Their experience of significant economic restructuring since the unification of Europe means that they often support the British Government’s point of view on trade questions generally. At that meeting, Pascal Lamy, the outgoing Trade Commissioner, had an opportunity to set out what he saw as the challenges ahead, while Peter Mandelson, the incoming Trade Commissioner, had an opportunity to set out his agenda moving forward. There were extremely supportive words from not only the older European member states, but the new accession countries. As I understand it, there have also been considerable discussions within the working groups that are considering these issues, and those groups, of course, involve the new accession countries. Richard Younger-Ross: In his well-considered questions, the hon. Member for Workington has mentioned the G8 summit at Gleneagles a couple of times. The up-coming summit is obviously the right place to showcase the best of British produce and goods for visiting dignitaries, but there will also be imported goods. Will the Minister ensure that there is joined-up government thinking and that the imported goods are all fairly traded? Mr. Alexander: My understanding is that the subject is already under discussion. I cannot give the hon. Gentleman a guarantee that every product in the Gleneagles hotel, down to the golf balls, will have been fairly traded, but I understand that the Government are taking the discussions forward. On a more parochial level, the hon. Gentleman mentioned the opportunity to showcase British goods. It was a matter of some pride to me to accept a submission that came to me last week. It related to a G8 tartan, which will also be made available to visiting dignitaries at Gleneagles. So, the summit will be an
The Chairman: Can we keep the questions more closely related to the subject matter before the Committee? Mr. Brazier: In the Minister’s previous answer, he more or less acknowledged that it really is slightly anomalous to discuss this issue without including rules of origin. He referred to discussions with industry, but will he tell the Committee which parts of industry he consulted? A thorough consultation would, I believe, have suggested that it would be a great waste to proceed without sorting out the rules of origin. Mr. Alexander: I would be happy to write to the hon. Gentleman with details of the discussions that we have had with industry, but my instinct tells me that there is clear common ground between the Government and industry on the matter. We are keen to reduce the bureaucratic burden not only on British businesses but on others—specifically those in developing countries. The essence of the problem is that countries are seeking to source products elsewhere in the developing world, but too often rules of origin prohibit them from benefiting from preferential access. In that sense, the British Government have been one of the most active Governments on this issue. Given what the Commission for Africa report might say about the rules of origin when it is published tomorrow, I hope that firm statements about the importance of addressing this issue will emerge from Gleneagles in July. Tony Cunningham: This is my final question, to which I hope the Minister will give a very optimistic answer. Cancun was extremely disappointing for many people. Many NGOs have written to say how disappointed they were. What are the EU and the UK doing to ensure that there is no other failure similar to the one at Cancun? Mr. Alexander: This is an extremely important issue because, whether we are talking about the GSP schemes or more generally, it gives rise to the question of whether we want a more rules-based system of international trade. Some people did argue that the WTO was irretrievably weakened after the disappointment and break-up of the Cancun meeting and that there should be no interest in seeking a successful conclusion to the Doha development round. That is certainly not the view of the British Government, and we greatly welcomed the initiative that was taken in July to ensure further progress on the Doha development round. In essence, we continue to believe that a rules-based system of international trade offers the best prospects not only for growth and employment in the EU, but for development in the developing world. That is why we are working so hard with member state Governments in the EU to agree the position that will be advanced by the Trade Commissioner in the
One of the many lessons that many Governments have drawn from the failure of Cancun has been to ensure the earlier involvement of Ministers to secure political momentum behind the process, rather than finding that, when the Ministers arrive in Hong Kong, the disagreements between the developing world and the developed world are so large that they cannot be bridged during the summit. Richard Younger-Ross: May I take the Minister back to an answer that he gave about the effect of GSP+ on countries affected by the tsunami? He said that they would be able to trade additional things, which are probably covered by the weighty document before the Committee. I referred earlier to paragraph 10 of the revised partial regulatory impact assessment, and to paragraph 18, which states near the bottom of the page:
and it lists several countries, including India, Thailand, Indonesia and Bangladesh. Will the Minister explain more fully the impact of GSP+ on those countries? Mr. Alexander: It is important to differentiate between GSP+ and GSP. I understand that one reason for the difficulties with Indonesia was that the amount of footwear imported into the EU had increased beyond the point at which Indonesia was still eligible for the preferences under the GSP scheme. We were determined to do what we could after the tsunami in December, which is why there was an initial move to bring forward the start date of the GSP scheme. Having said that, the GSP scheme is related to, but different from, the GSP+ scheme, which identifies specific countries for which there will be additional benefits if they agree to those arrangements. Today, we are discussing the GSP arrangements whereby countries such as Indonesia will be able to benefit more quickly from what the provision would otherwise have been. I assure the hon. Gentleman that the preferences of the GSP scheme under discussion, which will benefit countries such as Indonesia or Thailand, will remain in place. The Chairman: If no more Members want to ask questions, we will proceed to the debate on the motion. Motion made, and Question proposed,
Column Number: 19 urges the EU to bring forward proposals for the simplification and liberalisation of the rules of origin for the GSP; and approves the proposed Regulation.—[Mr. Alexander.] 2.49 pmMr. Brazier: As well as yesterday being make poverty history day, we now find ourselves in the middle of fair trade fortnight. By happy accident, last Sunday, we had a fair trade stand at the Catholic church that I attend and I was pleased to be able to stock up on coffee. These things help to concentrate our minds on the issue. As my party’s number two spokesman on trade and international development, I am constantly struck by the fact that we can probably do more through this area of trade than we can do through the international development budget, vital as it is. Stephen Hesford: Will the hon. Gentleman give way? Mr. Brazier: Yes, but I am taking things quite wide, so care must be exercised not to provoke the occupant of the Chair. Stephen Hesford: Has the hon. Gentleman seen today’s issue of The Times in which, lamentably, it is reported that the Leader of the Opposition and the shadow aid Minister disputed the generosity of the Africa project led by my right hon. Friend the Prime Minister? It was a miserable and very ungenerous reaction to the Commission for Africa. Does the hon. Gentleman have a comment? Mr. Brazier: I have not seen the piece that the hon. Gentleman refers to, but our position on the Commission for Africa is that we supported its establishment and the concept. We are concerned about Africa, which is by far the poorest continent. However, we do not necessarily think that all the hints that are emerging from the commission are necessarily balanced. I must not provoke you much further, Mr. Caton, but, in a sentence, we believe that a balance must be struck between the duty that we in the rich part of the world owe to poorer countries—we are determined to match pound for pound what the Government are doing—and the duty of the people who run the poorer countries to clean up their act, in many instances, and to deliver for their people. We take Zimbabwe as an example of that. I must return, however, to the motion before us, or you will rightly call me to order, Mr. Caton. The best way to raise the standard of living in the world’s poorest countries is by encouraging and nurturing economic self-development. A key aspect of that, of course, is what we are discussing today. The nations of Europe absorb one fifth of developing countries’ exports and, indeed, a staggering 40 per cent. of the European Union’s imports originate in developing countries. We are the world’s largest importer of agricultural products from developing countries, absorbing more than the United States, Canada and Japan combined. Column Number: 20 The political dividend to economic development is often given lip service, but rarely fully understood. I can think of few examples in history of democratic and social change not coming about as a result of the demands of a population with rising living standards and rising expectations increasingly holding the Government to account to fulfil those expectations. The signing of international conventions, accords and treaties, often with the noblest of intentions—the Minister’s list of 27 encompassed some of the most important goals shared by members of this Committee—is not what makes countries better places to live in. That is achieved through the development of progressive, liberal, peaceful, democratic structures, underpinned by civic institutions, and brought about largely by economic change. I must take the Minister back to the exchanges that we had at the beginning of the sitting on the 27 requirements for the GSP+ arrangements. I know that they do not apply to the 50 poorest countries in the world, but there are some very poor countries that rank not far above those. All the treaties in question, or very nearly all, are completely uncontentious for hon. Members on both sides of the Committee. However, let us consider Kyoto as an example—it is on the list. Of course, every member of the Committee is extremely concerned about climate change and we all want Kyoto to succeed, but it is a quite expensive treaty for a poor, developing country to come to terms with. Will we really say that if such countries do not sign up for Kyoto on the dotted line within another 15 months or so—I think that Kyoto is in the middle category but perhaps the Minister will confirm that—they will not be able to take advantage of the tariffs? Is that really the way in which to encourage good governance? Of course, the basic minimum is to prevent things such as child labour and actions that would have a horrendous environmental impact, and to tackle drug production. Those issues have been around for a long time; they are not new. We would query the new additions to the list, some of which are very burdensome—those that led the Financial Times, not normally regarded as a particularly right-wing newspaper, to suggest that this could turn into a protectionist measure if we are not careful. Let me turn to the economic partnership agreements. I worry a bit that we are creating an impossible choice for the leaders of some of the developing countries. EPAs envisage reciprocal zero tariff arrangements, but some ACP countries depend on import duties for around one third of their national revenue. In Ivory Coast, Sierra Leone and Uganda, trade taxes represent 40 per cent., 49 per cent. and 48 per cent. respectively of total Government revenue. A report entitled “Six reasons to oppose EPAs in their current form” predicted that EPAs would cause major declines in Government incomes through lost tariff revenue. For example, Cape Verde and the Gambia stand to lose 20 per cent. and 22 per cent. respectively of their national incomes if they agree to zero tariff arrangements. Column Number: 21 If ACP countries refuse EPAs, they can get less preferential tariff rates via GSPs—again, if they are not among the 50 poorest countries. Their only option is likely to be the new special GSP+, and we have already rehearsed the problems involved in signing up to that. The Conservative party is clear. We support free trade in the old-fashioned sense, not in the way in which it is increasingly understood, in which subsidised dumping is sometimes presented as free trade. It is not. It is a gross abuse of trade. However, we also recognise the importance of allowing poorer countries with infant industries to protect those industries for a time. There is a danger that EPAs, although there are good motives behind them, could militate against that. We must not generate a philosopher’s wish list. We must consider what underlies international treaties, and recognise that they bring with them serious cost implications for many developing countries. Countries that are first rate economically can and, rightly, do, afford the costs of implementing treaties such as Kyoto. It is important that we should do so. After all, the problem lies mainly with developing countries, for which they can represent a terrible struggle. A large proportion of developing country exports to the EU fail to gain preferential access because they are deemed non-originating. The system of forward and backward linkage is not working at the moment. We had an exchange about that during questions. Thanks to Oxfam, I have seen the work of World Bank expert Paul Brenton, who released some extraordinary figures. For example, in 2003, Afghanistan, a least developed country eligible for duty free access under the EU’s “Everything but Arms” initiative, saw 95 per cent. of its exported products fail to achieve preferences because of routing, and almost three quarters of the products of the Maldives suffered similarly. It is clear that the system for determining rules of origin needs to be reconsidered. I referred in questions to the Canadian system. The Minister, who has been refreshingly candid and wants a broadly non-partisan debate, confessed that he had not seen the Canadian system. I urge him to look at it. |
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