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8 Jun 2006 : Column 153WH—continued

Mr. Thomas: Let me be clear about why we believe that there has not yet been progress on the rules of origin. It has been because there is an impact assessment being made of the rules of origin in the
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review process which the European Commission has rightly put in place. Frankly, that has taken longer than we would have liked. We believe that we need to move forward with other member states and with all the different bits of the Commission to reach agreement on the negotiating position for the Commission on the issue. I hope that that additional clarity is helpful.

Mark Simmonds: As always, the Minister is helpful and constructive in his intervention. He will be aware of the urgent need for us to find a resolution to the issue. It is hindering both development from within the developing nations and inward investment by the developed nations that wish to invest in those countries that they deem suitable.

I was interested in the Minister’s choice of words when he mentioned the Doha development round. There seems little doubt that it is faltering—to put it politely. Many in the trade world believe that there is little chance of reaching a comprehensive agreement, even within the new time scale, which keeps being pushed back. I think that our deadline is now either the beginning or end of July. Indeed, some countries have begun negotiating bilateral trade agreements outside the mechanism of the Doha trade round. The Asian countries are doing that, as is the United States. The Minister and his colleagues in the Department of Trade and Industry seem to be confident that they will reach a solution, so why is the EU Trade Commissioner announcing that he has ambitions to start negotiations for agreements with the countries in the Association of South East Asian Nations, which I understand is conditional on Burma’s rightly being excluded?

What does the Minister think are the chances of success for the Doha development round, given the EU’s reluctance to lower its steep barriers against trade in farm products? I know that the Minister does not agree with those; nor do the UK Government. There is still an enormous amount of resistance from other European countries on that matter.

One of the drivers for reform of the Lomé and Cotonou conventions was to ensure that EU-ACP trade agreements were compatible with the WTO. However, as I said, it looks like the Doha round will fail in some areas, if not in totality. Is it possible that the EU-ACP agreement may exceed, in terms of liberalisation, what was agreed by the WTO? That would cause problems elsewhere in multilateral trade agreements.

Two sets of negotiations are taking place simultaneously, despite the fact that it has been generally agreed that it would be desirable to complete the Doha round before beginning the EPA negotiations and discussions. If the WTO round fails, would it be possible to build on where we have got to on Doha—even if there has not been a total agreement—rather than try to pre-empt and second-guess the conclusions? Does the Minister think that there is a potential conflict between the Doha WTO round and the EPA negotiations, and to which one do the Government give priority?

The Minister will hopefully be aware that there has been concern that the Cancun WTO negotiations broke down because of the so-called Singapore issues: competition policy; transparency in Government
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procedure; trade and investment; and trade facilitation. The EU has rightly been criticised for trying to include those issues in EPAs. Will the Minister assure us that they will not be included in any form and that they will be removed from the EPA negotiations?

Mr. Thomas: We have made clear our view that unless the six negotiating blocs want the Singapore issues to be part of the negotiations, they should not be part of them. It is clear that all the negotiating blocs are keen to discuss trade facilitation, which is one of the Singapore issues, and that at least one bloc—the Caribbean—wants a discussion about investment. It must be for the negotiating teams of the six blocs to decide whether they want to discuss the so-called Singapore issues. If they do not, we are clear that they should not be forced to have those discussions. That is the position that, increasingly, other member states are taking. However, when negotiating teams are up for those discussions—and given the benefits that agreement on those issues could bring to their economies—they should be supported in their negotiations. It is for the negotiating teams to make that call.

Mark Simmonds: I am grateful for the Minister’s clarification, but it is interesting that not all EU countries in the new structure that must be brought on board are in agreement with what the Minister said about the Government’s position. We agree with the Government’s position and hope that the Minister and his colleagues will continue to try to persuade those in the EU who require persuading to follow the Government’s position rather than their own agendas.

The Trade Commissioner said that there will be a new monitoring mechanism to oversee capacity-building, technical expertise and logistics projects that are part of the EPAs. Again, it would be helpful if the Minister could say when those monitoring mechanisms will be established, what sort of bodies will have an input, and whether they will be independent. Hopefully, the monitoring bodies will have significant input from the developing nations. How will the Government ensure that they identify areas where eradication of poverty has been hindered rather than helped by the issues that I mentioned earlier and about which the Trade Commissioner talked?

The Trade Commissioner also said that EPAs will include significant development aid and technical assistance both from the EU budget and individual member states. It would be helpful to know whether that is the case and, if so, what funds DFID intends to put into the EPA system for the development aid proposals. Will it be an increasing programme over a number of years—the thought process may still be going on—and what will be the time scale? Will it begin in 2008 and will it happen prior to the agreements being reached, if they are reached?

I want to explore one or two other areas and the first is asymmetric liberalisation. The EU has stated that the opening of ACP markets to EU goods and services will be on an asymmetric basis, which means that ACP countries will be able to open their markets to the EU at a slower rate than the EU will open their markets to ACP countries. How will that rate be decided and on what time scale will the markets be opened up? Does
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the Minister have a view on how that should be done? Will it be industry by industry, region by region or country by country?

Every country will have different industries that they want to benefit from the proposal. It will be an enormously complex challenge to reach an agreement between countries in a region and for them to agree on their relationship with the EU. Clearly, that must be evidence-based, but the original time scale is challenging. Five years from 2002 is the end of 2007, although I understand that the Trade Commissioner has said, ambitiously, that he wants agreement prior to that date, so that means the summer of 2007. It will be extremely challenging to get that agreement by then.

We recognise that “Everything but Arms” is a non-reciprocal agreement, unlike EPAs, but the two agreements affect many of the same countries and the EBA agreements cut across the EPA regions, offering countries within EPA regions different deals. Where have the thought processes got to in unravelling that complexity? The best explanation that I heard was the Trade Commissioner’s describing the complexities as a Russian doll—when one layer is removed, another appears underneath. Does the Minister agree that EPAs and EBA agreements could cause conflict and confusion, or is there a strategy to try to unravel those two areas of trade negotiation and agreement?

The ACP countries must create the conditions in which a market economy can develop and thrive: the rule of law, stable Governments and the establishment of private property rights. In our view, EPAs hold great promise and could be extremely beneficial to the ACP countries involved. However, the success of EPAs depends on negotiating a fair deal that does not disadvantage developing nations and creates a system in which developing ACP nations have confidence. It is necessary to wrap up within the EPAs targeted aid aimed at building trade capacity and infrastructure, such as reliable energy sources, well maintained transport networks and increasing technical expertise. All are essential if the trade agreements are to work.

The Conservatives support the objectives of EPAs, but they must be used to help ACP countries access world markets while maintaining their individual developmental and economic priorities, especially facilitating and enabling inter-regional trade, which is one of the main areas that has not been focused on sufficiently to date.

Poverty around the world is at unacceptable levels. Nearly half the world's population live on less than a dollar a day, 1 billion people do not have access to clean water, 100 million children do not go to school, and 40 million people live with HIV/AIDS. All of us in the House have a moral duty to take action. Trade is the best means of alleviating poverty in a sustainable way in the developing world. If the Government lobby hard to ensure that the developing world gets the best deal from the proposed agreements, they will have our support.

3.7 pm

Mr. Jeremy Browne (Taunton) (LD): Thank you for calling me, Lady Winterton. It is great pleasure to participate in this important debate.

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I start by saying on behalf of the Liberal Democrats that there is a lot of consensus on this subject, and the Government, and perhaps the Opposition parties, deserve some credit for approaching it in that frame of mind. In many ways, Britain has taken a lead among developed countries in promoting the agenda. That is to our collective credit as a group of politicians here in Parliament.

The Liberal Democrats instinctively support free trade. We have done so for many decades and generations and do so today. It is the best means of lifting people out of poverty because it increases prosperity through increasing production.

Clarks shoe company, near my constituency in Somerset, has closed down its production facility, although it still has people in administrative positions there. All its production facilities have been exported to other parts of the world and, sadly in many ways, no Clarks shoes are produced here in Britain. Someone who supports more being done to alleviate poverty in the developing world said to me recently that that is terrible—that it is exploitation. I replied that I was not so sure, because it cannot be bad for Somerset that we have lost the jobs and bad for the countries where factories are opening. It must be good for someone, and I think that it is probably good for the countries to which the jobs have gone, because it has given people new opportunities and prospects for prosperity in relative terms to what they enjoyed before.

Globalisation is often given a bad press and many features of it cause discomfort, but the story is not uniformly bleak—far from it. Globalisation and free trade in goods and services has provided opportunities for people, most notably in big and expanding developing economies such as China and India, to gain access to income and prospects that are far better than those that their parents and grandparents enjoyed. My party starts from the assumption that free trade is a beneficial consequence of political activity, and we seek to promote it as far as that is possible.

In that regard, I have much sympathy with the position put forward jointly by the Department for International Development and the Department for Trade and Industry in their submission to the International Development Committee’s inquiry. The Government said:

That is a clear-cut position, reflecting a reasonable consensus in this House. The Departments continue:

The reason I mentioned the second part of that submission is that it brings us to the nub of the debate. We accept that free trade is beneficial and that it is a route to greater prosperity for people in the poorer
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parts of the world as well as those in more advanced countries. However, there are many caveats and qualifications to that, and I shall run through some of them.

The British Government and the European Union have a variety of objectives that can conflict, or at least do not always align. The EU, rightly, has a goal of trying to increase the prosperity and well-being of people who live in the European Union. The EU’s share of world prosperity, projecting decades ahead, is to fall dramatically. Within a few decades, the EU is likely to enjoy only half of its current percentage of the world’s overall wealth. That must be important, and even of concern, to Governments within the EU and to the EU collectively.

Part of the European Union’s business must be to ensure that we improve living standards in Europe. That is an EU objective. Another EU objective is, rightly, to try to foster and assist poverty alleviation in parts of the world where, relative to us, people live in desperate straits, and to be an outward-looking rather than an inward-looking organisation. Those two objectives do not always align.

It is also important for the EU to recognise that when it interacts and deals with other countries throughout the world, that is not a partnership of equals, because those countries are far less likely to be able to bring weight to bear on proceedings than member states, especially when we work collectively. In support of that, I shall quote a telling passage from the Committee’s report:

We are entering a process to find a good deal and a mutually beneficial deal, but we are not doing so as though we were negotiating with a partner that has equal presence in that debate. A balance needs to be struck, and it requires skill and political sensitivity.

I should like the Minister to touch on a few other areas when he winds up the debate. The transitional period was what the Conservative spokesman, the hon. Member for Boston and Skegness (Mark Simmonds), called the time between the current arrangements and absolute free trade. Most people, even the most enthusiastic exponents of free trade, would accept that if one opens the markets in one go, one potentially swamps the countries that, as part of one’s policy, one seeks to assist. The consequences might be the opposite of what one intended when one embarked on that policy.

Will the Minister provide us with an accurate timetable for the transition? As I understand it, some people have talked about 10 years, and others 20 years. We might not be able to be definitive, but it would be interesting to receive an indication of how long the process will run. Some people might be concerned that it will never end, and that we will end up with a
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halfway-house arrangement. In many ways that might be beneficial for a long period, but I should be interested to know the end point that the Minister seeks to reach, and how long he anticipates it will take to reach it. I should also be interested to know what progress the Government have made on the issue in discussions with other EU member states, and whether there is any consensus in the EU about how long the transitional arrangements will ideally exist.

On a separate point, it is also important that we in the developing world do not think of opening up free markets as a solution in itself. When I talk to people with considerable expertise in the field, I am always struck that countries with low GDP have difficulty developing their economy’s infrastructure, a proper banking system and proper accountancy methods. They all involve professions that countries such as Britain occasionally take for granted—in fact, we occasionally scorn those who undertake such jobs, considering them to be mundane. However, they are important for any economy to function effectively, and without those procedures, legal frameworks, and banking systems, and without people having property rights, it is difficult for them to borrow money and get companies up and running.

Too often, when we discuss developing countries, people’s first idea is farming and agriculture. In many countries farming is important, and for anybody with a low income, it is the most important industry of all; however, no country will prosper in the long term if it thinks of its economy in those terms. We must also try to develop a range of economic sectors—wealth-generating parts of their economy that require more than subsistence farming, but instead require people to invest and borrow money, employ staff, pay their taxes and administer themselves effectively, so that they are in a position to export and produce goods and services that we in more prosperous countries throughout the world wish to buy. Often, the benefits that the EU, the United States and elsewhere can bring to bear take the form of expertise rather than the other skills that we might seek to export instead.

I do not know whether the Minister would like to touch on this final point, but about a year ago there was much debate about the role of good governance in the increasing prosperity of countries with low GDP. In the past few weeks the inflation rate in Zimbabwe, to pick the most obvious example, has reached 1,000 per cent., and unemployment, by some estimates, is as much as 70 per cent. By any criteria, that is an economy that is in total and utter disarray.

I have a personal interest, because I lived in Zimbabwe for a year and a half when I was a child of 10 and 11, so I have an emotional attachment to the county. In every way, it ought to be a successful country. The arguments have been rehearsed in this Chamber many times, and I shall not rehearse them again, but my point is that there can be as much free trade, as much export of expertise and skills in the areas that I mentioned, such as banking and accountancy, and as much direct financial aid as possible, but if it is squandered, the likelihood is that people in that country will not benefit. In Zimbabwe, where, according to all indicators, people are living in wretched circumstances and abject poverty directly as a result of the actions of their own Government, we have
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a moral duty to intervene. In the case of Zimbabwe, I appreciate that that is easier said than done; it is difficult to bring pressure to bear on Zimbabwe in a meaningful way, as there are all kind of practical obstacles.

None the less, there is a wider point about encouraging good governance, not only in countries that are resistant, such as Zimbabwe, but in the many other countries that would actually like assistance with their infrastructure, administration and government. We in this country may be able to assist in making sure that the money that they raise through improving trade—or through aid, for that matter—is spent more effectively and is more likely to benefit the recipient. That would be a valuable aspect of Government policy.

I conclude with the thought that we in this country have a duty to provide aid for countries that need our assistance; everyone accepts that. The Government are to be congratulated on establishing a Department devoted purely to that task. The issue has been afforded much more attention than was the case five or 10 years ago. I have been a Member of Parliament only for just over a year, and I am struck by the amount of correspondence that I receive on the subject. I have also met a lot of delegations, made up of people who take a keen interest in this area of government, who have come to Parliament all the way from my constituency, 150 or so miles away. The Government deserve to be congratulated on having played a part in raising those levels of consciousness and stimulating them further, for being imaginative in their support for aid policy, and for trying to progress the debate on trade and growth.

I wish the Minister and the Government well in their dealings with the European Union. I hope that they will continue to take what it is reasonable to describe as a leadership role, but will also take some of the points raised in this debate, and use them to be still more effective in future.

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