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Westminster Hall
Wednesday 16 November 2005
[Mrs. Janet Dean in the Chair]
Trade (Developing Countries)
Motion made, and Question proposed, That the sitting be now adjourned.—[Mr. Roy.]
9.30 am
Jo Swinson (East Dunbartonshire) (LD): I am pleased to introduce the debate on this important topic. It is particularly timely, given the World Trade Organisation ministerial meeting scheduled for next month in Hong Kong.
I am sure hon. Members will agree that the international issues of poverty, aid, debt relief and trade justice captured the public's imagination in 2005. The high-profile Make Poverty History campaign has rightly been successful in catapulting the issues up the political agenda. In February, 22,000 people flocked to Trafalgar square to hear Nelson Mandela give an inspiring address, urging world leaders to use 2005 to make poverty history. The campaign focused on three objectives: more and better aid, debt relief and trade justice.
In July, I marched in Edinburgh with almost 250,000 people, including some hon. Members in the Chamber. Just days before, the G8 leaders met at Gleneagles. That summit brought positive news on the first two objectives. On debt relief, the deal agreed means that every year $1 billion will be saved by the 18 countries eligible for debt relief. Many non-governmental organisations and campaigners have complained that that does not go far enough, as it represents only 10 per cent. of the debt that needs to be cancelled. I agree with that, but it is a welcome start and should be applauded.
The additional $50 billion in aid a year is also a great achievement, and I am glad to hear the Prime Minister talk of moving towards spending 0.7 per cent. of gross national income on aid. The United Kingdom should be proud of leading the way among Organisation for Economic Co-operation and Development countries on the percentage of GNI that it spends on aid, but we must remember that the commitment is 35 years old. Call me impatient, but I think that that is too slow. I was interested to hear the Prime Minister, in his speech on Monday, pledge to treble aid for trade. I hope that the Minister will clarify the effect of that on the UK reaching the 0.7 per cent. target.
The third objective of the Make Poverty History campaign was trade justice. More than 250 Members of Parliament have signed up to early-day motion 679 on making poverty history through trade justice. More than 8,000 members of the public lobbied more than 300 MPs at the trade justice lobby on 2 November. I am sure that many hon. Members were lobbied by constituents. Two days ago, in his speech on global trade, the Prime Minister set out his support for cutting trade barriers while implementing measures to help developing countries benefit from trade at their own pace. It is clear that the subject is regarded as highly important.
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It is also worth noting the particular interest of young people in these issues. Whether it was at the July march, the April vigils or the lobby a couple of weeks ago, one thing that struck me was the number of young faces in the crowd. That is just as well. One of my constituents, Sahir Hamid, was lucky enough to attend the World Youth Congress, which was held in Scotland in the summer. A statistic that came out of that is quite shocking. It emerged that 51 per cent. of the world's population is under 25. Given that statistic, it is just as well that young people are interested in the issues because we shall certainly not solve them without the active engagement of young people around the world.
I want to focus my comments and questions on the difficulties faced by developing countries with the current trade system, including trade barriers and the prospect of forced market liberalisation. I also want to highlight the problems with the trade-related aspects of intellectual property rights. I shall then turn to some possible solutions, with reference to steps at the local and global level, including the forthcoming WTO talks in Hong Kong and beyond.
On the problems with trade barriers, production support and export subsidies by the developed world can have a devastating effect on developing countries. This is particularly apparent in the agriculture industry. When EU production is subsidised and there are additional subsidies on exports, farmers in developing countries cannot compete. Rich countries spend $279 billion a year on farm support, which is three times more than they spend on aid. It is well acknowledged that a key sticking point, which makes it difficult to envisage a positive outcome to next month's WTO negotiations, is the EU's intransigence on protectionist agricultural policies. We know that France, in particular, is opposed to any concessions on that. What discussions have the Minister, the Prime Minister and others in government had with President Chirac on the reform of the common agricultural policy? What tangible outcomes came from the discussions?
This is not just about agriculture. Tariffs on other industries, such as textiles, also harm developing countries. For example, in 2001, Bangladesh's exports generated $331 million in tariff revenue for the US Treasury. In that year, the net US aid to Bangladesh was just $87 million. The EU spends €4 million each year subsidising milk powder to Jamaica. The impact of dumping our excess milk powder on Jamaica has been a sharp drop in Jamaican milk production of 35 per cent. in the past two years. That makes it difficult for countries to continue to run their own agriculture industries and to produce their own food, which would obviously be a more sustainable way forward.
In the EU, the average cow now receives $2.2 a day in support, which is more than the daily income of the half the world's population. It is absolutely crazy. The EU is exporting sugar and beef at respectively 44 and 47 per cent. of their internal cost of production. No wonder sugar producers and cattle farmers in developing countries are losing out.
Global trade has the potential to lift millions of people out of poverty, but liberalising markets too soon can stifle fledgling industries in developing countries. Christian Aid estimates that trade liberalisation has cost sub-Saharan Africa $272 billion over the past 20 years, which would be enough to pay off the region's debt and
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pay to vaccinate and educate every child in the region. Developing countries must be allowed the space to set their own timetable for liberalisation.
Let us consider the example of rice. In 1995, the International Monetary Fund forced the Haitian Government to cut their rice tariffs from 35 per cent. to 3 per cent. As a result, imports increased by 150 per cent. in nine years, and today three out of every four plates of rice in Haiti are produced in the US. The impact of that is that local farmers' livelihoods have been devastated and rice-growing areas now have the highest levels of malnutrition and poverty. At the same time, profits for Riceland Foods Inc. of Arkansas, the world's biggest rice mill, rose by $123 million from 2002 to 2003, thanks in large part to a 50 per cent. increase in its exports, many of them to Haiti. We can see the inequality of the system.
Annette Brooke (Mid-Dorset and North Poole) (LD): I congratulate my hon. Friend on securing the debate at such an appropriate time. That is important. She has made many valuable points, but will she comment on economic partnership agreements? Does she share my worry that in their current form they are causing a great deal of concern? Most people would like the UK Government to take strong action, using their presidency of the EU to encourage other member states to rethink their approach on those agreements.
Jo Swinson : I share many of my hon. Friend's concerns about the economic partnership agreements. Trade with developing countries is obviously not governed only by multilateral agreements. The free-trade deals that are negotiated between the EU and the African, Caribbean and Pacific countries often require countries to liberalise their markets substantially to benefit from trading with the EU. The Government recently said that they have supported the request by the ACP countries to have more time to proceed with liberalisation. However, I agree that the conditionality should be removed from the agreements. Developing countries should be free to choose if, and when, to liberalise. Will the Minister remark on that, in particular the UK's position on economic partnership agreements? Will he also supply a list of the active partnerships?
After the introduction of TRIPS—trade-related aspects of intellectual property rights—in 1995, patent rights had to be guaranteed protection by WTO member countries. Many of those countries wanted to use the formulae from patented drugs to treat their citizens who were suffering from a variety of diseases, from HIV/AIDS to malaria and tuberculosis. However, many pharmaceutical companies were seen to be putting profits before people. The WTO, after much discussion, agreed that TRIPS
The reality is different, however, because the only way for many countries to get around TRIPS is to manufacture the drugs in their own country so that they can provide for their population. That does not always run smoothly and not all countries are able to do it. The pharmaceuticals do not always agree that generic drug producers are complying with TRIPS.
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I am sure hon. Members remember that in 2001 39 major pharmaceutical companies tried to prosecute the South African Government for passing a law that allowed easy production and importation of generic drugs. There was immense pressure against that from the South African Government, the European Parliament and 300,000 people throughout the world from more than 130 countries who signed a petition. That public international pressure forced the pharmaceuticals to back down.
One company, GlaxoSmithKline, even granted a voluntary licence to a South African generics producer, allowing it to share the rights to GlaxoSmithKline's drugs, as long as 30 per cent. of the net sales went to a non-governmental organisation fighting HIV and AIDS in South Africa. That continues to this day, and in many ways it was a positive result. However, let us remember that globally only 15 per cent. of the estimated 6.5 million people who need such treatment were receiving it this year.
Given the public health challenges facing many developing countries, from not just HIV and AIDS but malaria, TB, and—most likely at some point—a bird flu pandemic, it is clear that a review of TRIPS is urgently required. Protection must be in place to exempt things that have an impact on the millennium development goals and global disease control. The example of TRIPS demonstrates how the current provisions have proved inadequate.
Global issues require global solutions, but individuals can and do change their behaviour, doing their bit to make trade fairer with developing countries. The Fairtrade Foundation, in accrediting products that are fairly traded, has played a role in enabling consumers to make informed choices. The fact that sales of Fairtrade products have almost doubled during the past two years to more than £140 million shows the rising demand from consumers who take those issues into account when making their buying decisions.
In my constituency, many keen campaigners have got together to take action at a local level. Setting up a steering group, they are working with local businesses and employers to try to become to first fair trade zone in Scotland. I should be delighted if the Minister would agree to meet me and a group of my constituents who are working hard to promote fairer trade with developing countries, so that we can discuss those issues. Perhaps during his remarks he will say whether he is willing to do that.
I should like to share a story from my constituency which sums up many of the problems. There is a local gift and tea shop called the Coach House, which is run on a not-for-profit basis to fund charitable projects at home and abroad. Some 20 years ago, a lady called Angela Gomes came from Bangladesh to the Coach House. She represented 4,000 destitute women who made beautiful embroidery. When she was offered a grant for her organisation, she said, "I don't want handouts. I want you to sell our women's products. That's what gives them their dignity."
Angela Gomes was spot on. The women she represented did not have much and they were destitute, but being able to ply their trade and have it sold abroad helped to lift them out of poverty and they had dignity. That is why, of the three aims of the Make Poverty
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History campaign, trade justice is the most important. Trade really can help to lift people out of poverty, and it presents a great opportunity for developing countries. However, the balance needs to be evened up between the rich and powerful developed world and the developing countries.
The talks next month in Hong Kong are vital, as are the discussions that follow in 2006 to secure the details for the Doha round in time to take advantage of the US fast-track agreement. We have all read reports of the recent difficulties with the pre-negotiations. Will the Minister say a little about the Government's view of the procedures of the WTO, its institutional set-up and how effective it is in producing outcomes from talks that favour poorer countries, given the experience of previous rounds in Cancun and Seattle?
In conclusion, the UK should be in a strong position to influence events with its presidency of the EU and when the Trade Commissioner is not only a UK nominee to the Commission but, as is well documented, a close personal friend of the Prime Minister. We should be able to use that influence to get a good outcome from Hong Kong. What discussions have the Minister, the Prime Minister and others in government had with Commissioner Mandelson regarding the Doha round in Hong Kong next month? How does he view the potential outcomes and what does he believe can realistically be achieved at those talks?
A fantastic opportunity to make progress on poverty and trade justice has been presented in 2005. I hope that it will not be remembered as a missed opportunity. This week the Prime Minister encouraged many with his comments on trade in developing countries. I hope that he, the Minister and all those involved in the WTO negotiations will remember the words of Nelson Mandela earlier this year when he called on world leaders to recognise that the world is hungry for action, not words.
9.47 am
Mr. Philip Hollobone (Kettering) (Con): I congratulate the hon. Member for East Dunbartonshire (Jo Swinson) on securing the debate and on her excellent introduction to it.
My first interest in international development started 21 years ago when I had the privilege to be, in a very minor capacity, a voluntary aid worker in Honduras in central America, which was then and still is the second poorest country in the western hemisphere. My concern about trade and development has burned brightly ever since.
Trade justice campaigners are right to call on the EU to reduce its trade barriers against developing countries—they remain far too high—but the EU should still encourage poor countries to open their markets as it will also bring those countries gains. There is a wonderful opportunity, as the hon. Lady said, for this country to play a major role at the forthcoming WTO talks in encouraging the EU to lead the world in improving trade relations with developing countries.
However, it is important to remember that reducing trade barriers across the board will do more for poor countries than granting them trade preferences, which, in many respects, might do more harm than good. That is the subject of my humble contribution. I take as a
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large part of my text the excellent work by Open Europe, which is a think tank specialising in, and encouraging, reform in the EU and in its trading relationships with the rest of the world.
An idea advocated by many in the trade justice lobby is that the developed world should introduce more trade preferences. However, there may be huge dangers in going down that route rather than encouraging a general reduction in trade barriers. The goods that are the most heavily taxed by the EU tend to be goods that developed countries have a comparative advantage in producing, not least agricultural produce and textiles.
In a well meaning attempt to offset that disparity, the EU maintains a system of trade preferences, but the system has not been effective. In fact, the net effect is that the EU's applied tariff rate remains higher for exports from poor countries than for those from rich ones. To give some statistics, countries with a gross domestic product per capita of under £5,000 a year face, on average, an EU tariff of 5 per cent. Countries with a GDP per capita of between £5,000 and £15,000 a year face an average tariff of just under 3 per cent. Countries with a GDP per capita of more than £15,000 a year face a tariff of just over 1.5 per cent. Some of the developing nations that are the poorest in the world face the steepest applied tariffs from the EU. For example, Bolivia and Ecuador face an applied tariff of more than 26 per cent. and Lesotho, Namibia and Swaziland face a tariff of 21 per cent.
Another problem is that the trade preference arrangements in place are extremely patchy. Full tariff-free access is supposedly granted to 49 countries on the UN's list of less developed countries. However, that list does not cover some of the world's poorest countries and excludes large poor countries, such as Kenya, India, Pakistan and Nigeria.
Much of the benefit of the system for developing countries is lost because of complex rules of origin. Although in theory a country might be able to export its products to the EU duty-free, such preferential access is available only to goods that contain no parts, materials or ingredients from other countries. One study found that although 84 per cent. of goods from Albania are supposed to be able to enter the EU duty-free, in practice only 2 per cent. do. It is worth remembering that Albania is a country on the continent of Europe and is still, sadly, a developing nation.
A study undertaken by the World Bank in 2005 found that the overall value of EU preferences to sub-Saharan African countries amounted to just 4 per cent. of the value of those countries' exports to the EU. It also noted that the majority of supposed beneficiaries of US, EU and Japanese preferences have experienced little or no impact.
The complex system of trade preferences discourages developing countries from reducing trade barriers that might help their development in the round. Without preferences, exporters in developing countries have an incentive to counteract the protectionist tendencies of domestic producers. Preferences are particularly damaging when they are specific to certain industries. For example, the EU's preferential access arrangements for bananas and sugar from Caribbean producers encourages those countries to invest heavily in volatile,
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primary industries, which narrows their production base. That leaves those countries more vulnerable to economic shocks in those sectors.
That system of trade preferences distorts the correct investment decisions that those countries should be making because they act as an artificial incentive to invest in industries in which the recipient countries, with the best will in the world, are not internationally competitive. That is now having a very damaging effect as preferences are gradually eroded as global tariffs fall, albeit too slowly, as part of the WTO process. For example, the effect on Guyana in south America of the first round of reductions in the EU sugar preferences is likely to be the equivalent the UK losing its entire financial services industry overnight. Some research suggests that preferences may have had a negative effect, for many of the reasons that I have mentioned.
All of us want to encourage developing countries to prosper. We have huge sympathy with our constituents who support the Trade Justice Movement. Many of us are extremely sympathetic to those who lobbied us recently, as the hon. Lady said. However, with a cool head, it is important to say that while there is a wonderful opportunity in the next WTO round for the EU to play a leading role to encourage the world to continue to reduce trade barriers, the EU should concentrate on reducing its trade barriers across the board because that will do far more good for poor countries around the world than granting them imperial trade preferences that may do more harm than good in the long run.
9.56 am
Jeremy Corbyn (Islington, North) (Lab): I congratulate the hon. Member for East Dunbartonshire (Jo Swinson) on securing the debate, which is obviously a product of the fair trade lobbying event that took place recently. It is good that lobbyists who come here determined to achieve something can have some influence. The Minister also gets an opportunity to set out the Government's stall before the WTO round. The debate is important in that context.
I profoundly disagree with the last point made by the hon. Member for Kettering (Mr. Hollobone). He talked about doing more harm than good. He should look at the recent United Nations human development report for 2005, which indicates just how horrific the disparity of wealth and power is in the world and how the living standards of the poorest in the poorest countries in the world are steadily falling. Those countries that have been exposed to free markets for the first time have also suffered losses in public services and falling life expectancy. We must think seriously about what we are doing to this planet.
Like other Members, I have substantial numbers of people in my constituency who are involved with development and world trade issues, mainly surrounding the churches, the mosque and various faith communities. However, since I have the privilege of representing a constituency that is very multicultural, there are also people from all parts of the world. So, when we have WTO-type discussions, they are very real. People who have been farmers in Africa, Asia or Latin America talk about their own experience. That makes the debate lively and interesting.
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When the lobby group from my area arrived at Parliament recently, I said, "Look, you don't need to convince me of the arguments. We all know each other quite well. But if I was the Secretary of State for Trade and Industry, what would you say to me?" This interesting debate took place in the rain on the south bank so it was quite brief, but several points were made and it is my duty to put them to the House. First, people were alarmed at the levels of poverty that exist around the world. Secondly, they were alarmed at the degree of power politics involved in the world trade debate and in world trade negotiations. Thirdly, they wanted the European Union—because it is the European Union that leads the negotiations—to recognise that Europe and north America must give up a great deal in order to do something about world poverty.
It is not good enough for the world's leaders to embrace Nelson Mandela in Trafalgar square or anywhere else or to go round wearing wristbands, saying 'Eliminate poverty now', if at the same time they are not prepared to make the tough trade and aid decisions that are required if we are to do something about eliminating poverty in the poorest parts of the world. Strong political action is required.
In common with other hon. Members, I have had the opportunity of visiting and, a long time ago, working in poorer countries of the world. One quickly sees what the whole problem is. There is little industrial development happening in most of sub-Saharan Africa, simply because there is not a local market that can purchase the goods on sale; exporting goods is virtually impossible, because the trade barriers of western Europe and north America make that completely hopeless. At the same time, the countries concerned are encouraged to invest in local industry and agriculture, if they can. I remember well visiting some new agricultural enterprises in Angola, although planting the goods in the first place was hardly worth the prices they were receiving. Producing maize anywhere in southern Africa is frankly a total waste of time while the American Administration are paying their friends in the mid-west to produce vast quantities of maize that are then given away in order to destroy local economies all over sub-Saharan Africa. The same is repeated with milk powder and around the world, as the hon. Members for Kettering and for East Dunbartonshire pointed out.
We have to be realistic. There has to be an end to the food dumping strategy. That is really what brought about the fate of the Cancun talks, because Europe and north America were not prepared, in sufficient strength, to give up their food dumping policies and, because of that, the talks broke down. I was not particularly sorry, because the alternative was worse. I guess that most of the poorest countries felt the same.
As we move towards the talks that are going to take place in Hong Kong, there is interesting power-play politics going on. The European Union is attempting to get a united position and the United States, having set its face completely against ending any farm subsidies, then announces that it might be prepared to consider some reduction at some point in the future. Everyone starts running around and jumping for joy, as though there has been a complete change of heart. I do not believe that there has been any change of heart in the US Administration whatever. An awful lot more than an
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undertaking that at some point in the future some degree of farm subsidies will be reduced in the United States is required.
I hope that when we go to the talks in Hong Kong we are prepared to recognise that the current situation cannot go on if we are serious about conquering poverty in the poorest countries in the world. An end to the food dumping policy is required, but also an opening up of markets to the poorest countries and producers in the world. To some extent that flows against the received wisdom, which the International Monetary Fund and others have been lecturing poor countries about for a long time. Whole lectures have been about the need for free trade. We are not quite sure what they mean by free trade, because they never get to the definition.
I look at things this way: every industrial country in the world, bar none—ours included, obviously—has developed industries, agriculture or whatever the main product behind some degree of tariff wall. That is how every single country has developed. They have been successful. For example, most of India's post-independence industrial development was behind a tariff wall; pre-independence, protection was from the colonial tariff wall.
However, for the poorest countries in the world, we say, "Sorry, no tariffs for you." They must, in return for being allowed to export some agricultural—unfinished or unprocessed—goods to the west, open their markets up to western goods and policies. That is not just in the manufacturing and sales field, but, crucially—something I was pleased that the hon. Member for East Dunbartonshire mentioned—with regard to the agreement on trade and services. The way such trade deals are worked out effectively forces the privatisation of public services in many of the poorest countries, which then provide a huge market for western water companies, telecom companies and so on to take over and run those services. We must be serious in what we are trying to achieve. I hope that we come out of the Hong Kong agreement with an end to dumping policies, an end to the pressure for the privatisation of services and an acceptance that if the poorest countries are to lift themselves out of poverty they must be given some protection.
There is a negotiating issue in that the world is too simply lumped into groups of developing and developed countries. The matter is not as simple as that. Some developing counties are very poor, principally in sub-Saharan Africa and central America, but others are not as poor and may seek to benefit greatly. There must be a better definition of the situation in those countries.
The Minister needs time to reply and I know that other hon. Members want to speak. My final general point concerns working conditions and the conditions of women in the world's poorest countries. The International Labour Organisation is worthy and deserves greater attention, greater support and greater power in the world. The working conditions experienced by garment workers in Bangladesh and most industrial workers in China, Indonesia and many other countries are appalling. The goods they produce, particularly in China, are sold on the high streets of this country, Europe and north America at prices at which we could not even produce them, let alone make a profit. The working conditions in those countries and particularly child labour—it is still rife in many parts of the world
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and a blot on the world's conscience—should be dealt with and included in trade rounds. It is unlikely that any of the Governments of the poorest countries in the world will raise issues of working conditions or child labour because they either benefit from them or feel embarrassed by them. It is also unlikely that many of the richest countries will do so because international companies that invest in the garment industry in Bangladesh, China and other places benefit from those appalling working conditions. We must look towards minimum working conditions and labour standards and, above all, the right to join and to organise trade unions. The treatment of women and their lack of education in those countries is serious.
I know that the Department for International Development shares most of those views and in its development models seeks poverty-reduction programmes and improvement in the status of women and the education of children in those countries. However, we have a long way to go. The UN human development report for 2005 came out a couple of months ago and referred to child mortality rates and changing life expectancy. In the highest income countries between 1980 and 2003—a little under 25 years—life expectancy rose from around 73 to 80. In sub-Saharan Africa it rose a little after 1980 but has now dropped to around 45. That is the average for sub-Saharan Africa, but in many countries it is much lower and falling fast. The only other area of the world where life expectancy has not risen is Russia and eastern Europe, the countries that were formerly part of the COMECON—the Council for Mutual Economic Co-operation. There, the imposition of free-market economics, privatisation and, frankly, robbery of the public sector has damaged health and education services beyond all recognition. One hopes that the next time a human development report comes round that situation will be reversed.
Above all, one hopes that the situation will be reversed in sub-Saharan Africa. However, it will not be reversed, and the millennium development goals will not be met, unless there is real change in the attitude of the richest countries in the world. That means a preparedness to stop food-dumping policies and to allow developing countries to export goods freely to western Europe and north America, if that is what they wish to do. Also, we need to allow poorer countries to maintain a degree of tariff protection so that they are not dumped on in terms of manufactured or farm goods; that way, they could develop their own economies in exactly the way that western Europe and north America have done in the past. These are crucial issues. It is not enough to say, "We wish to eliminate poverty and make poverty history"; we have to be prepared to do something about it.
10.11 am
Annette Brooke (Mid-Dorset and North Poole) (LD): I want to take this opportunity to make direct representations. The Make Poverty History campaign has been inspiring, but we have to ask ourselves whether it will be any different from previous campaigns. Will we achieve anything? Will people look back and say, "That was a turning point."?
In my constituency, I find it particularly inspiring to see how schoolchildren now have a real understanding of the unfairness in international trading. That is hope
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for the future; it shows that we will continue making progress and that people will not forget. There is a real understanding of why some countries are still poor, why people are suffering so greatly, and of the fact that we have the opportunity to change things.
We have a great duty to deliver something in the next round of talks. I shall refer to representations that we may have all received in different forms. The first is from the mass lobby. It was encouraging to see so many people here, some of whom had travelled so far, and so many young people. We were all asked to write and ask what changes to the EU's negotiation position the Government were calling for at the World Trade Organisation meeting. We would like to hear some answers on that.
I have received more particular representations asking what we, as a nation, will do during our presidency of the EU to come to an early agreement on a date by which rich countries will have ceased to give export subsidies, to dump products on the developing world and to distort world trade in such a bizarre and almost obscene way.
At the WTO conference, attention will be turned to the manufacturing and industrial sectors. Christian Aid submits that concessions on the export subsidies of rich countries are likely to be used as a carrot to induce poor countries to agree to further harmful trade agreements on manufacturing. We have to be clear on that type of thing. We have to give without demanding quite so much in return; we will all benefit as world trade grows. We have to make what might be seen as short-term sacrifices for the greater good. I understand that the EU wants to debate issues such as rules on investment, whereas the poorest countries feel that they have already achieved the exclusion of some of those items from WTO negotiations. The very worst thing would be if we were perceived to take steps backwards at the talks.
I have already mentioned economic partnership agreements, an issue that causes me great concern. A strand of that—the issue of bilateral agreements—has been reflected in everybody's contributions. The concern is raised because although the Government are saying the right things, we are not at all clear that our Commissioner in Europe is taking forward our view. There are comments in the press that Commissioner Peter Mandelson openly dismisses the huge opposition to EPAs, which is a great concern. I should be grateful if the Minister addressed that in a little more detail.
There are so many reasons why we should be concerned about economic partnership agreements. Are we making grossly unfair demands? There is a lot of evidence that we are seeing EU goods flooding markets and, in return, putting so much pressure on the local economy. Are we forcing new issues through the back door through such agreements? Are we undermining regional integration? That is a serious point, because there is a balance between the very poor countries that already have some agreements with the EU and a certain amount of openness, and they could suffer. There is a conflict with some ACP countries: is their priority trade with Europe, or trade within a regional area? That is difficult to work through. The underlying point is that it
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is unfair. It is, as many people say, like playing football on a steep slope, and we know who is unfortunate enough to have the uphill struggle.
I should like to round off my remarks with some of the facts with which we were all presented, but which need to be put on the record. We all know that African people cannot afford delay, and we cannot afford not to get it right. If Africa increased its share of world trade by just 1 per cent., it would get $90 billion, which is three times more than it gets today in aid and debt relief combined. Hon. Members have already said that that is why trade is so important in our way forward. Unless we get the deal at the WTO, the scandal of unfair trade will continue unabated. Rich countries spend $279 billion on farm support, which is three times more than they spend on aid. The figures are alarming, but we have it at our fingertips to speak and take action.
How can we live with our conscience when we think about the EU dumping sugar and beef at less than half the production cost and how that is affecting the developing world? I hope that the Minister is reassuring about the robust stance that will be taken in the EU and at future trade talks.
10.18 am
Andrew George (St. Ives) (LD): I strongly congratulate my hon. Friend the Member for East Dunbartonshire (Jo Swinson) on not only securing this important, timely debate, but setting out clearly and strongly a case for the United Kingdom, with its European partners and in the wider world, to take a lead in the vital negotiations in Hong Kong from 13 December.
Like my hon. Friend, I was in Edinburgh in early July, marching with hundreds of thousands of others in support of the Make Poverty History campaign. It was telling that not only were many hundreds of thousands of people marching there and elsewhere, but people were attending concerts in various parts of the country and around the world. There were also all those who wished to be at those events but could not attend, and those who wore the wristbands, all of which demonstrated mass popular support for a campaign that reached a crescendo at that time. There were significant expectations of the Government, with their presidency of the G8, to push for a strong, clear outcome in the G8 negotiations.
Clearly, a crucial cornerstone of the announcement—the communiqué—that came out of the Gleneagles summit was the expectation of a positive outcome for the World Trade Organisation negotiations at the end of the year. My hon. Friend rightly emphasised and welcomed the announcements and promises made on the aid and debt relief packages, although I am sure that they were slower and more modest than a lot of us would have wanted. However, as she demonstrated, they represent only a cup of help in comparison with the tidal wave of impact that trade has on developing countries.
Trade is clearly the cornerstone. Until we get the trading relationship right, we need to do all we can, through aid programmes and support, to enable developing countries to build up their infrastructures and develop health, education and other programmes—literally, to save lives now—so that those countries have the capacity to develop economically. Economic
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development will provide the sustainable economic background against which those countries can establish a future that will genuinely make poverty history.
Emphasis on such issues goes back to the beginning of the Doha round in 2001, when there was a recognition among western countries that the Uruguay round, which finished in 1993, resulted in a deal that was clearly pro-western in outcome. It is worth reminding ourselves that the primary purpose underlying the Doha development round—this is understood among the 148 countries engaged in the negotiations—is to achieve a deal that will make a major contribution to the development of underdeveloped countries, in particular the G33—the poorest countries.
In a thoughtful contribution, the hon. Member for Kettering (Mr. Hollobone) set out an argument that mentioned research from Open Europe, which I have not had the benefit of seeing. I look forward to doing so. It lobs a challenging device into what are sometimes easy, intellectually non-challenging campaigns on trade justice. I should be interested to hear what the Minister knows of the evidence that argues that the best way to develop developing countries is to liberalise at a much more accelerated rate than is proposed either by the campaigners or even by many countries engaged in the negotiations. That is a challenging proposal and, frankly, those who want sustainable development of developing countries and genuinely to make poverty history should not close their eyes to those who take a more libertarian view.
Westminster Hall is a debating Chamber in which we can consider ideas that we may not be able to consider in the usual cut and thrust and party political point scoring of the main Chamber. There may be some merit in elements of the points raised by the hon. Member for Kettering, and it is important that we do not close our eyes to that. In an ideal world, if all things were equal, there would be no tariff barriers but complete liberalisation of markets, and economies would prosper in those circumstances.
However, as the hon. Member for Islington, North (Jeremy Corbyn) made clear—his contribution stood in contrast to the contribution of the hon. Member for Kettering—we live in an unequal world. That is the reality. Many of the agreements that are being negotiated or reviewed, such as the general agreement on tariffs and trade, are not always favourable to developing countries. There is a great deal of evidence that liberalising services and opening up opportunities to privatise basic service markets, such as water provision, in developing countries have not always resulted in a satisfactory or happy outcome.
I have raised the privatisation of water services in Tanzania and Sierra Leone with the Minister, and lessons need to be learned.
The Parliamentary Under-Secretary of State for International Development (Mr. Gareth Thomas) : The hon. Gentleman rightly refers to occasions when liberalisation has not delivered the benefits that some suggested it would. However, does he acknowledge that there are many cases in many developing countries where liberalisation has had a positive impact? The key is to help the developing country to make judgments for itself about opening barriers and opening up sectors, so
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that it can do so in ways that serve its own interests. Liberalisation per se has not led to the end of the world as we know it. It has brought many benefits, but we need to learn the lessons from the times when it has not worked.
Andrew George : I am glad that the Minister expresses that point in that way. There are problems to do with access to services in developing countries, and people have not always benefited in the way that they expected. However, that does not mean that we should not recognise that there are opportunities for investment which will genuinely improve services in developing countries. The key question is whether inward investment to such countries improves services or whether, as some have argued, it results in exploitation and a dysfunctional outcome.
There are clear examples of that. The non-agricultural market access negotiations—NAMAN—is a case in point. The hon. Member for Kettering offered some interesting statistics—for example, on comparative tariff barriers as a proportion of per capita gross domestic product. If the figures can be proven to be robust and the Government accept them, they will challenge the assumption that developing countries should have preferential access to western markets. Also, implicit in the Minister's intervention were questions to do with whether protection of markets in developing countries attracts new investors. Will such protected markets encourage investors because they know that it gives them some advantage, or discourage them?
My hon. Friend the Member for Mid-Dorset and North Poole (Annette Brooke) mentioned bilateral agreements, and in particular economic partnership agreements, which are currently being reviewed in the European Union. The issues that she raises and the concerns about what one assumes are unintended and detrimental consequences of the economic partnership agreements highlight the potential dangers of failed WTO talks in Hong Kong.
It is clear from the Prime Minister's speech on Monday night that he sees the west, particularly Europe, as the major stumbling block to a successful WTO outcome. As the Government hold the presidency, one must question whether they will achieve the satisfactory outcome on the talks which we all want. The UK Government and the Prime Minister, who said that he will throw everything he has got at it, have apparent passion for the issue. What things in particular will he throw? What negotiations has he had to unblock the current European Union position?
If the talks fail, we will return to bilateral agreements between rich western nations and developing countries, as the capacity and the authority of the rules-based trading system, which is what the WTO represents, will be undermined because of the failure of the talks. Many people are rightly arguing that an agreement on agriculture would have a domino effect with regard to achieving a favourable outcome on the WTO talks.
I was interested to hear that following discussions with the President of the European Commission, Mr. Barroso, the World Bank president, Paul Wolfowitz, said that the sticking point is that the developing countries must make concessions. That statement was
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made after a meeting on Monday. Does the Minister believe that the primary area of focus, where the biggest move needs to be made, is on an agreement on agriculture and the common agricultural policy in the EU? Alternatively, does he agree that the apparent intransigence of developing countries and the question of their preparedness to open up their own markets and to reduce tariff barriers by up to 75 per cent. on industrial markets need addressing to break the logjam with regard to the future of the talks?
It is clear that there is significant uncertainty about the outcome of the Hong Kong ministerial meeting. Many people are predicting that it will collapse in failure. What plan B are the Government preparing? Do they recognise that if the preparations are, as they appear to be, insufficient, the further extension of the Hong Kong talks to Geneva in March will be required? The expectation is that the Hong Kong discussions will be seen merely as pre-negotiations.
I should like to know the answer to something my hon. Friend the Member for East Dunbartonshire asked. What representations have been made? What discussions have the Minister's Department and other Departments had with the European Commissioner? What change is required from the EU to break the logjam and get the talks in Hong Kong back to a position from which we can expect a favourable outcome?
This is a serious time. There is only a month to complete what needs to be done for the talks in Hong Kong. In fact, there is a further guillotine on the talks, as the fast-track capacity of the President of the United States, George Bush, to further some of the agreements that he might achieve in those talks ends in the middle of 2007. If we fail in Hong Kong, the timer will still be running on the negotiators and the negotiations. I would appreciate hearing the Minister's comments on what is likely to happen after the Hong Kong talks in December, which people widely expect to fail.
10.36 am
Mark Simmonds (Boston and Skegness) (Con): I, too, congratulate the hon. Member for East Dunbartonshire (Jo Swinson) on securing this important debate at this time, and also on the articulate and polished way in which she set out the case during her initial remarks. She made several good points, including the one contrasting the US tariff versus aid regime with Bangladesh. She could have used many other examples, but that was an extreme one.
I do not accept all that the hon. Lady said. I do not accept that further significant protectionism is the answer, which she seemed to be suggesting. I shall say a little more about that later, if there is time. Indeed, it is interesting to note that those NGOs that are at the forefront of the lobbying have switched their terminology from infant industry protection to infant industry promotion, which is much more in line with what the Minister would accept and with what I would agree is probably the way forward.
The hon. Lady rightly highlighted intellectual property rights. She will be aware that some progress was made in 2003. The Conservative party believes that
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there is a need for further weakening of intellectual property rights, particularly in the field of health to facilitate easing the HIV/AIDS problem.
My hon. Friend the Member for Kettering (Mr. Hollobone) made a powerful speech in which he brought his experience to bear. He made just one factual error. I believe that Honduras is, in fact, the third poorest country in the western hemisphere, after Haiti and Nicaragua, which has now overtaken it. Having said that, I thought that he gave an excellent analysis, particularly of the current system of preferences and the problems that it raises for developing countries. He supported that with some interesting and illuminating statistics.
My hon. Friend was absolutely right to highlight the problems that the rules of origin are creating. If there is one thing on which I agree with the European Trade Commissioner, it is his description of the rules of origin as being like a Russian doll: one layer of complexity is removed to reveal another layer underneath. That summarises well some of the problems of the current international trade negotiations.
The hon. Member for Islington, North (Jeremy Corbyn) is a regular contributor to these debates, and I always enjoy his contributions. If nothing else, he is consistent in his arguments and extremely lucid, but I strongly disagree with some of his perspectives. For instance, I do not agree that free trade has damaged the population. In fact, that flies in the face of what has happened during the past 20 years in south-east Asia, where 500 million people have been lifted out of poverty.
However, the hon. Gentleman was right to highlight that we are all, irrespective of our party political persuasion, alarmed at the levels of poverty around the world, and that we all want to alleviate poverty to the greatest extent possible. This debate and others in other places at other times are about the policies that we must put in place to ensure that we succeed in facilitating the alleviation of poverty.
Jeremy Corbyn : The south Asia example is an interesting one. The countries that developed quickly from the 1970s onwards mostly did so with agricultural tariff protection, which meant that they maintained their own food supply and were not forced to accept cheap food dumped from elsewhere.
Mark Simmonds : I accept that. The Conservative party certainly does not believe that we can flick a switch and, overnight, go to international free trade without any recognition of the role that tariffs, and, indeed, subsidies in a small way, can play.
The hon. Member for Mid-Dorset and North Poole (Annette Brooke) made a good and sincere contribution, but she was perhaps a little over-simplistic in her description of the complex trade talks. I think that she said at one point—I am paraphrasing—that we should give a lot, but expect little in return. It is not as simple as that. If that were the case, Brazil, one of the G20 developing nations, would totally dominate the production of sugar and many agricultural products, primarily because it has two facets that do not exist in many other countries—an almost infinite supply of cheap lamb and very poor labour rules and regulations. That makes it impossible for other countries to compete.
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Sugar is the best example. If we allowed Brazil to swamp the market in sugar and other agricultural products, the most damaged countries would be the developing nations that are trying to obtain access for their products—sugar and others—in the developed world. Therefore, it is a complex set of negotiations.
The developing nations do not all have the same agenda: they have different roles, attributes and aims. There are not just the major blocs—the United States, the EU and Japan—but the Cairns group and the Caribbean group. Even the countries in the G20 group, which is led by India and Brazil, have different aims in terms of agricultural production and trying to limit competition in their industrial and service sectors.
Opposition Members welcome the work that was done at Gleneagles, particularly on aid and debt, but we were disappointed—I accept that the terrible tragedies in London got in the way—that the G8 meeting did not make the progress on trade that was expected and hoped for not just by hon. Members, but by outside organisations. I understand from anecdotal evidence that the journalists were briefed by senior Ministers at the summit that progress was nearly made on significant trade reform. The Minister may like to confirm or deny that if he has time; if he does not have time as usual, I shall follow it up with a letter, although I still have not had a response to my initial one.
Mr. Thomas : Today, I promise.
Mark Simmonds : That is excellent.
We agree with the Government's aspirations with regard to promoting free and fairer trade and we fully support the reduction of protectionist trade barriers and harmful subsidies, which other hon. Members have spoken about. However, and here I disagree fundamentally with the hon. Member for Islington, North, history is littered with protectionist folly. We do not have free trade in the world at present; we have protectionist blocs, and matching protectionist blocs with further protectionist blocs is not the answer. The evidence shows that, in every decade, countries that pursued a freer trade agenda grew faster than those that pursued protectionist agendas.
There are good examples in history of attempts at protectionism, where countries and regions have tried to hide infant industries behind significant tariff barriers. The best example is Latin America in the 1950s and 1960s and India in the 1970s. Those attempts did not work, because they protected inefficient industries that could gain access only to a domestic market and could not compete internationally. Particularly when those tariff barriers were removed, more efficient industries from outside came in and destroyed them. The Indian heavy steel industry is perhaps the most recent example.
We accept the necessity for a transition period and we must be careful about moving too fast to the total removal of tariff barriers. We understand the importance of tariffs to many developing countries: they not only enable them to facilitate infant industry promotion, but act as a revenue generator for their exchequers. The statistics show that if all sub-Saharan Africa's tariffs were removed, the income to the countries' exchequers would be reduced by 10 per cent.
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overnight, causing severe difficulties to their Governments and to the improved accountability that we all wish to see in African nations.
However, it is not just the poor and developing countries that are set to benefit from an ambitious conclusion to the Doha round. Non-agricultural access could generate €20 billion for Europe alone. Economic development, wealth creation, and pan-African as well as international trade, offer the best hope for long-term, sustainable solutions to poverty and suffering in Africa.
If I were asked to pick out one point from the remarks of the hon. Gentleman with which I wholeheartedly agree, it would be his assessment that what is required in African countries is an improvement in infrastructure to enable people to get their goods to market—not just to the ports, but to internal markets. I visited Mozambique earlier this year, and I had discussions with its lead trade negotiator. I asked her this question: if I could take one message back to the British Parliament, what would she want it to be? She waved away with her hand the importance of the WTO negotiations in Hong Kong, and said, "We need more assistance to develop our internal infrastructure so that Mozambicans can trade with Mozambicans. After we have got to that stage, we can start to worry about exporting our products." Not enough focus has been given to that point today.
I have a few questions to ask the Minister, before I sit down and allow him to respond. Some of them have been put before; I think the hon. Member for St. Ives (Andrew George) touched on one of them. It is clear—not just from reading the press, but from discussions with those who are in the know about the WTO negotiations, and from a recent edition of "Newsnight" that focused on the Trade Commissioner's negotiating skills, or lack of them—that it is by no means certain that an agreement will be reached. Some countries are manoeuvring into a position to start bilateral trade talks, on the basis that the WTO discussions in Hong Kong will fail. Will the Minister confirm whether the British Government are doing that, or are they still tirelessly working to ensure a successful EU presidency and a successful conclusion to the WTO talks in Hong Kong? Do the Government have a plan B, if, as looks likely, the WTO talks do not progress in the way we all hope?
Finally, will the Minister confirm whether the Prime Minister is prepared to sacrifice the EU budget rebate in order to persuade the French to back down on their trade—and, in particular, their agricultural—subsidies? They are continuing to hold out for them, and those subsidies are seen as one of the main blocking points of the Hong Kong negotiations.
I, along with all Members, hope that the WTO negotiations in Hong Kong are a success. However, I have doubts about whether they will be. The issues under discussion are extremely complex. The generalised system of preferences needs to be addressed, as do the rules of origin. The EPAs have not worked, and they need to be looked at. People prefer to use the Cotonou preferences, but under the Cotonou preferences trade between Africa and the EU over the past 30 years has decreased, not increased.
There needs to be a significant reappraisal of the whole international trading framework, but it is important that the WTO stays together, and that we
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have an international trading framework. We do not want to go back to the situation where countries make bilateral arrangements that are purely in their own selfish interests rather than in those of developing countries, and which do not alleviate poverty.
10.48 am
The Parliamentary Under-Secretary of State for International Development (Mr. Gareth Thomas) : It is a pleasure to have this opportunity to serve for the first time under your chairmanship in Westminster Hall, Mrs. Dean. May I begin by echoing the comments of other contributors by congratulating the hon. Member for East Dunbartonshire (Jo Swinson) on securing the debate and on the manner in which she made her case?
I agree that this has been good year for development. The hon. Lady was right to highlight the $55 billion debt relief deal that has been secured. It will initially benefit 18 countries and will potentially benefit as many as 38. She might also have wanted to highlight the almost $18 billion Paris Club debt relief deal that has been secured for Nigeria. That will free up an extra $1 billion a year in that country, specifically for poverty reduction.
The hon. Lady rightly highlighted the progress that has been made on development assistance, and $50 billion extra in development assistance will be secured by 2010, half of which will be for Africa. That is hugely important in its own right. She could also have highlighted the threefold increase in UK aid since 1997, as well as the historic commitment to achieve the 0.7 per cent. goal by 2013. She and other hon. Members will know that if we can persuade other countries to launch the international finance facility, we hope to achieve that target earlier than 2013. Similarly, good progress has been made this year on securing further funding for the fight against HIV/AIDS and the other poverty diseases—TB and malaria, in particular. The commitment on universal access was just one of the highlights of the millennium review summit, as heralded by the G8 process.
The hon. Lady asked a range of questions, which I shall attempt to answer. However, let me first welcome her praise for the work of the Fairtrade Foundation and the many different organisations working up and down the UK to promote fair trade goods. In particular, I highlight the Co-op group, which has led the way in selling fairly traded goods in its stores. I would be happy to meet her and a delegation from her constituency to discuss fair trade issues in the way that she wants.
Looking ahead to the substance of the WTO meeting, the hon. Lady asked about the Government's view of the process to date. My hon. Friend the Member for Islington, North (Jeremy Corbyn), one of the House's long-term doughty campaigners on the issue, rightly highlighted the failure of the Cancun talks. However, I agree with his analysis that one of the positive outcomes of those talks was the way in which developing countries organised themselves for the first time as a strong bloc to make sure that their voice was heard, perhaps also for the first time, in a sustained way in the WTO process. Frustrating as it was that we did not get a good outcome at Cancun, the fact that the voice of developing countries was so strong was hugely significant.
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The fact that the WTO is a multilateral rules-based trading system is something to cherish. Regional and bilateral deals cannot, by definition, offer as much negotiating power to developing countries. Such countries, which continue to come together and organise in the various blocs around the various issues—they are doing so for the WTO talks—would not be seen in anything like the same way in regional and bilateral deals. Therefore the deadline, to which the hon. Members for East Dunbartonshire and for Boston and Skegness (Mark Simmonds) rightly alluded, on the waiver of the President of the United States is hugely important, and progress needs to be made before that waiver comes to an end.
We remain committed to the World Trade Organisation talks in Hong Kong. We will continue to seek an ambitious outcome for the round and recognise the importance of the Hong Kong ministerial talks in that process as a galvanising meeting to secure the progress that we want. We have been encouraged by the American and the subsequent European Union offers. Clearly, there is still a long way to go before we can be confident that agreement will be reached. However, as the Prime Minister made clear as recently as Monday, we remain determined to do all we can to continue to promote the securing of agreement.
A pro-development outcome from the Doha development round would result in improved participation by developing countries in the world trading system, particularly through substantially increased market access, the dismantling of trade distorting subsidies by industrialised countries and an end to export subsidies. The hon. Member for Mid-Dorset and North Poole (Annette Brooke) asked specifically about when we wanted export subsidies to come to an end. The UK has made clear our support for an end date of 2010 for EU export subsidies, and we continue to argue that line with our EU partners. Perhaps understandably, at one level, our EU partners want to see other developed nations committing to end their export subsidies and want the WTO negotiations to be the vehicle by which end dates are agreed. Nevertheless, we are clear that we want 2010 to be the end date and are continuing to push European and other countries to continue to move towards that.
A development-friendly result from the Doha development round would ensure that poor countries are given the flexibility to plan, decide and sequence trade reforms as part of wider poverty reduction and development strategies. Fundamental to our work to date has been the focus on the issues that matter most to developing countries. As the House is aware, and as the Tanzanian ambassador to Brussels made it clear to me when I met him recently, since developing countries rely so heavily on agriculture for their livelihoods, that any WTO deal that does not deliver on agriculture is simply not relevant.
As I said, we need to maintain our ambition, particularly in the face of the pessimism that is out there. The fact that some European member states have expressed concerns about how far Commissioner Mandelson has gone in the negotiations implies that there is a serious offer on the table from the European Union. We want further progress in the talks, particularly in relation to the concerns of poorer countries about, for example, special products in
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agriculture and a special safeguard mechanism. We want all developed countries to follow the European Union lead and offer immediate duty and quota-free access to their markets to the least developed countries. We want to agree on an approach to cutting tariffs on industrial products to allow developing countries the space—I return to the point alluded to by my hon. Friend the Member for Islington, North, in particular—to decide the pace and sequencing of their own reform.
The hon. Member for Kettering (Mr. Hollobone) rightly highlighted the problems relating to rules of origin and the need for further progress. He may be aware that the G8, both at Gleneagles and previously at Sea Island, made a commitment to continue a process of reform of the rules of origin. We are certainly arguing for the reform of rules of origin in the European Union, which has been consulting on the issues. We will continue to push for that, for all the reasons to which he rightly alluded.
The hon. Gentleman also touched on the important issue of sugar. It is hugely important not only that we push through sugar reform, but that we give real and sustained assistance to a number of key sugar-producing countries, particularly those in the Caribbean, with which we have a strong historical relationship. We have been working closely in the Caribbean with a number of those developing countries and have helped them to prepare action plans so that they can take advantage of the assistance that will be on offer from the European Union to move their industries forward in the way that they want.
I agree with the support that the hon. Member for Boston and Skegness (Mark Simmonds) gave to the point made by my hon. Friend the Member for Islington, North about infrastructure. A Minister from Zambia highlighted two key transport routes in and across Zambia that need development assistance. He rightly noted—other hon. Members alluded to this—the importance to the least developed countries of sorting out some of those problems first, although there are also other issues relating to making trade more effective and opening up opportunities. That relates to why my right hon. Friend the Prime Minister announced £100 million for aid for trade.
I recognise that I have not had the opportunity to answer every question that hon. Members put to me, not least the points made by the hon. Member for Mid-Dorset and North Poole about economic partnership agreements. I shall write to her on that subject and copy it to other hon. Members.
There has been a series of discussions across all levels of the Government with European partners, including discussions between my right hon. Friend the Prime Minister and the President of France. We continue to make the case for reform of the common agricultural policy. When something takes up 40 per cent. of the budget but helps the interests of only 5 per cent., further reform is clearly needed.
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