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12 Oct 2006 : Column 169WH—continued
4.13 pm
Mark Simmonds (Boston and Skegness) (Con):
I congratulate the right hon. Member for Gordon (Malcolm Bruce) and his Committee on all the hard work that has gone into its excellent and detailed report. There have also been some passionate and knowledgeable contributions to this debate, which he began in his typically disarming manner. He highlighted some of the key issues—the expansion of the private sector and the hypocrisy of the European Union and the United States, which is a theme to which I shall return. The report rightly highlights
the failure of the Government to use their presidency effectively for the purposes that we all want to come to fruition in the WTO talks.
Hugh Bayley: I hope that the hon. Gentleman will at least recognise that, on the aid and debt fronts, the UK presidency of the G8 and the EU moved things on enormously. I agree with him that we failed to move things on enormously on the trade front, but on the other two fronts we did well.
Mark Simmonds: The hon. Gentleman is right—significant progress was made on aid and debt, and I understand that detailed conversations were taking place at the G8 in an attempt to move the trade agenda forward when the terrible atrocities in London interrupted them. Who knows what might have been achieved had they not happened? But more still could have been done. The Prime Minister in particular could have done more to influence other leaders in Europe. The right hon. Member for Gordon was right that the lack of progress is to the detriment of free trade as a whole, which is the main driver for wealth creation, creating jobs and alleviating poverty.
We then heard from the hon. Member for City of York (Hugh Bayley), whose remarks, unusually for him, were permeated by an atmosphere of pessimism, although he was right to be pessimistic in this instance. He made some thought-provoking suggestions about reordering the WTO negotiation strategy and not having either everything or nothing, but picking out the beneficial agreements that could be made, on a unilateral basis or otherwise.
My hon. Friend the Member for Buckingham (John Bercow) made a typically polished and passionate speech, in which he highlighted the moral case for assisting the poorer and developing nations. He was right to raise the issue of farmers in his constituency. I have discussed the matter with farmers in my constituency, which is very rural. They would like to have a no-subsidy system. They believe that they could compete globally, because of the quality of their products and their expertise. I acknowledge that the quality of the land in Lincolnshire is high, but farmers there would like to move in that direction. I agree with my hon. Friend and shall return to one or two other things that he said later.
The right hon. Member for Leeds, West (John Battle) was absolutely right to highlight rising food prices. He will also be aware of the reason for it—some crops have collapsed or not come to fruition, not only in Australia, but in Russia and Ukraine, which has affected wheat prices particularly. However, there is another side to the issue. He was right to highlight the impact that such rises will have on the poor, but they also have a beneficial effect for the farmers in the United Kingdom. Farmers in my constituency are delighted that at last there is an increase in food prices and that for the first time in many years they may actually make a profit; so, there are two sides to that complex coin.
John Battle: Would the farmers in the hon. Gentleman’s constituency trade off the increase in prices against the subsidies, so that we could achieve a level playing field? If that conversation was a goer, we would be in a context that we were not in last week.
Mark Simmonds: What the right hon. Gentleman may not be aware of—there is no reason why he should be—is that most of the crops that the farmers in my constituency grow are vegetables and are non-subsidised anyway. However, engaging with some of those subsidies would involve reform of the common agricultural policy and putting a greater emphasis on environmental sustainability—that is where we get into the complexities of the discussion between the hon. Member for Islington, North (Jeremy Corbyn) and my hon. Friend the Member for Buckingham. There is some defence for subsidies in certain cases, whether for hill farmers or for environmental purposes, which might negate the impact that the right hon. Member for Leeds, West discussed.
The right hon. Gentleman was also right to highlight the conflicts between the United States and the European Union and, in my view, the loss of sight of the initial purpose of the whole round, which was to help developing nations and the poor around the world.
The hon. Member for Glasgow, North (Ann McKechin), in a typically knowledgeable contribution on this issue, was concerned about the clock being turned back and highlighted the danger of protectionism. I agree with her that there is an increasingly prevalent view about the necessity for greater protectionism. I think that that is a function of a view that has become ingrained in many developing countries, according to which the developed world cannot trusted to follow through the development round. That comes out of the Uruguay round, which was detrimental to developing countries. Developing countries no longer believe that the developed world is genuinely interested in helping them to facilitate and grow their trade. She also quite rightly mentioned the importance of China in the discussions.
The hon. Member for Islington, North highlighted the necessity of talking to the poor, and he is absolutely right. All too often we can become engaged in ministerial meetings and discussions at a high level, while forgetting about the need to listen to people on the ground, whether in the Congo, Malawi, Mozambique or elsewhere. He also quite rightly highlighted tariff escalation, the best example of which is the export of Chilean tomatoes to the United States. If Chile exports raw tomatoes, the tariff is 4 per cent. If it adds value and converts them into tomato ketchup, the tariff is 28 per cent. It cannot afford to do that, so the adding of value must take place in the United States. That is a total disgrace, and the World Trade Organisation needs to focus on such issues.
The hon. Gentleman will not be surprised to hear that I did not agree with what was almost a promotion of protectionism on his part. His argument that the developed world had started behind protectionist barriers is somewhat disingenuous. I am sure that he knows his economic history; the developed world really started to accelerate in wealth creation and economic growth when protectionist barriers were removed and it started to trade freely throughout the world.
John Bercow:
I do not wish to lower the tone of what has been a very up-market debate, but is my hon. Friend not tempted to recall that the person ultimately responsible for, and bravest in securing, the repeal of
the corn laws was Sir Robert Peel, a great man indeed? I do not think that he would have been a member of the same party as that of the hon. Member for Islington, North (Jeremy Corbyn).
Mark Simmonds: My hon. Friend is absolutely right. He may not be aware that as a liberal Conservative, the leader of the Conservative party, my right hon. Friend the Member for Witney (Mr. Cameron), has been compared to Peel. I hope that that will be a precursor of what is to come; we shall wait and see.
Jeremy Corbyn: So that the hon. Gentleman does not go overboard on his Robert Peel tendency, I should ask whether he does not concede that the Japanese example is apposite. After the second world war, Japan operated very tough trade protection barriers, built up a huge infrastructure and industrial capacity as a result and then happily lectured the rest of the world about the need for free trade, which it then joined in on.
Mark Simmonds: Tempted though I am, I do not want to get drawn into Japanese economic history, except to say that we Conservatives recognise the necessity for a transition period and sequencing to allow developing nations to grow their industrial bases. That is the key to their ultimately joining the international trading system and alleviating poverty far faster than they would by exporting agricultural produce alone.
The hon. Member for Richmond Park (Susan Kramer) was right to mention economic partnership agreements. As the hon. Member for Glasgow, North said, yesterday she and I were at a meeting with African representatives who are very concerned about EPAs and the damage that they may cause their growing economies and prospects for job creation. The hon. Member for Richmond Park will be pleased to hear that her conversation with a representative of the Windward Islands was the same as the one that the hon. Member for Glasgow, North and I had with a representative from Barbados. Consideration has to be given to small island states and landlocked countries, which have problems generating international trade and getting their produce to markets.
We Conservatives recognise that trade is the best way to lift people out of poverty. We agree with the World Bank that current trade restrictions are the biggest impediment to economic advancement and poverty reduction in the developing world. We support the Doha round and its specific development agenda, and, like other Members, we are extremely disappointed that it seems to have run into the ground.
We also acknowledge that the benefits of trade are numerous and varied; it contributes to faster growth, cheaper imports and new technologies and it enables Governments of developing nations to generate revenues and reinvest in infrastructure and essential public services.
The British agenda is a cross-party one; collectively, we all want poverty in the developing world to be alleviated and the developing world to join the international trading community. As the hon. Member for City of York rightly pointed out, progress has been made on aid and debt, but there is an enormous way to go on trade.
The Doha ministerial declaration clearly stated:
“International trade can play a major role in the promotion of economic development and the alleviation of poverty.”
It promised to put the needs and interests of citizens of developing nations at its heart, but, as hon. Members have said, that seems to have been lost in the detail of the conversation and the negotiations that have taken place. It is now widely accepted that the millennium development goals will not be met in anything like the time scale envisaged without a successful and development-focused round of trade talks.
We all know that things have stalled due to the intransigence of the European Union and the United States, which both need to bear responsibility for the failures. I should like to highlight one or two of their highly cynical moves.
The US offered to end export subsidies by 2010, and that may appear very generous. However, it does not amount to much. The US provides very little by way of export subsidies; instead, it relies on export credits and food aid in kind. As I hope the Minister will be aware, food aid in kind has exactly the same impact as export subsidies, as it helps farmers find a market for their excess production.
I have another example. The EU offered to cut payments to farmers by 70 per cent., contingent on other reductions from other major countries. That offer includes a 50 to 60 per cent. cut in the highest import tariffs and smaller cuts in lower tariffs, giving an average of 25 per cent. The EU also offered to end export subsidies, but did not offer a date. Again, on the surface that appears extremely generous, but if we look at the detail, we see that the EU will not have to reduce the amount of money that it pays to farmers by a single euro. The EU offered to end export subsidies, which comprise only 3.6 per cent. of the common agricultural policy. Such highly cynical moves need to be exposed for what they are—a disgrace.
I do not want to repeat the very good point made by my hon. Friend the Member for Buckingham when he highlighted the importance of duty-free and quota-free agreements, but I should like to make two additional points to build on what he said. First, as I am sure he is aware, the 3 per cent. that he mentioned is supposed to apply only for a transitional period. However, that transitional period is indefinite and will go on into perpetuity unless it is specifically stopped. What really strikes me is that 98 per cent. of Bangladeshi exports are in textile manufacturing. If the 3 per cent. figure were agreed to, that would have a significant detrimental impact on the Bangladeshi economy.
As other Members have mentioned, steps must be taken on the special and sensitive product exemptions. The right hon. Member for Gordon cited the World Bank analysis that even if 2 per cent. of products from developed and 4 per cent. of products from developing countries came into that special or sensitive category, that would virtually eliminate the impact on poverty of the Doha agreement.
Many hon. Members have rightly mentioned the importance of aid for trade. The commitments on that are welcome. Will the Minister will say whether aid for trade will be within the umbrella of the already existing budgets, or in addition to them? It is essential to get over the supply-side constraints—whether they be in
respect of electrification or water supply—to enable developing countries to generate the industrial base and wealth creation that they require. There is concern in the developing world that the international donor community’s focus on the public services of health and education, worthy and important though they are, is distracting from the vital issue of putting more money into infrastructure projects.
Other hon. Members have talked about NAMA—non-agricultural market access—on which an enormous amount more needs to be done. I have a quick question for the Minister. The ability to decide sequencing and transition on a case-by-case basis may be limited by existing WTO agreements. Will the Minister explain whether that is the case or whether there is sufficient flexibility to ensure appropriate transition phases and sequencing in market liberalisation?
Members have rightly mentioned benchmarking. There seems to be a contradiction, which is highlighted in the report, in what UK Ministers are saying about the importance of and necessity for benchmarking. It would be helpful if the Minister clarified the Government’s view on that.
There are significant other barriers that need to be overcome in respect of the infrastructure, roads and railways and financial conditions. Furthermore, Governments often follow short-sighted policies such as controlling interest rates below exchange rates, granting subsidised credits and keeping exchange rates artificially low. There is also the regulatory environment; there are serious barriers within African regions that I hope the Minister is trying to address.
For example, the average tariff for importing agricultural produce from one African nation to another within sub-Saharan Africa is 34 per cent. It is 21 per cent. on other products. Those tariffs must be reduced, but in the context of ensuring that sufficient revenue goes into particular sub-Saharan African Governments’ coffers to enable them to provide the public services and all the other enhancements that we want them to provide.
Limited technological transfer needs to occur. Part of that comes out of the agreement on trade-related aspects of intellectual property rights. That needs to be more flexible, and there is a need for greater capacity on the ground.
I shall conclude, as I want to give the Minister plenty of time to wind up. It has been said that the United States and Europe have perfected the art of arguing for free trade while simultaneously working for trade agreements that protect them against imports from developing countries. As they have in the past in other areas, the British Government must take the lead in urging the EU and the rest of the world to do more to reach an agreement.
The Minister may have gathered that there is some pessimism in the Chamber today, across political parties. As the agreement is an urgent priority, I ask for three things to be done. First, the Prime Minister should be persuaded during his last few months in office to become re-engaged in trying to drive an agreement through. Secondly, the UK should urge the EU to reform the common agricultural policy further and faster by abolishing all production-linked
subsidies, by scrapping import tariffs and by removing all export subsidies. The Minister should consider the suggestion made by the hon. Member for City of York that that will happen with or without WTO agreement.
Thirdly, pressure must be put on the EU Trade Commissioner and member states to enable movement in the agricultural offer from the EU. That would enable other key players to make offers in manufacturing trade and services, thereby unlocking the Doha round. Failure successfully to conclude the round would be detrimental to the developing world, to free trade, to wealth creation and, ultimately and most importantly, to poverty alleviation.
4.31 pm
The Parliamentary Under-Secretary of State for International Development (Mr. Gareth Thomas): I join the hon. Member for Boston and Skegness (Mark Simmonds) in congratulating the International Development Committee on its report and on securing this debate. I pay particular tribute to the right hon. Member for Gordon (Malcolm Bruce) for the way in which he chairs the Committee and for the way in which he introduced the debate. As he said, it is timely, and I shall add a second reason why that is the case.
On Monday, the European Union’s General Affairs and External Relations Council meets for the first time, I believe, since the World Trade Organisation talks were suspended. The Finns, who currently hold the presidency of the European Union, have decided to bring Trade Ministers and Development Ministers together for the first time. It will be a unique setting, bringing together Ministers who normally operate separately, and providing an opportunity for them to speak with different voices. Trade Ministers and Development Ministers will be in the same room.
Those talks will take place on Monday, and the WTO talks will be very much on the agenda in those discussions, which represent the first opportunity for Europe to come together and begin to think through what needs to happen if we are to get the talks back on the road. Therefore, in that context, this debate is particularly timely.
Malcolm Bruce: Obviously, that initiative from the Finns is useful. If the Minister or the Minister for Trade will be present at that meeting, perhaps it would reinforce the idea that parliamentarians across the EU are looking to EU Ministers to give a lead in breaking the deadlock. The Finnish presidency also organised a meeting in Helsinki of the Chairmen of development committees of the EU national Parliaments, and there was overwhelming support for the EU to take a strong initiative in breaking the deadlock.
Mr. Thomas: I will be attending the Council with my right hon. Friend the Minister for Trade, who represents the trade arm of the UK Government. Obviously, it is comforting to know that we have the support of parliamentarians here on the need to make progress, but also that other Trade Ministers and Development Ministers are getting similar messages of encouragement from their Parliaments.
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