Select Committee on Foreign Affairs Minutes of Evidence

Examination of Witnesses (Questions 232-239)


13 JUNE 2006

  Q232 Chairman: Secretary of State, can I welcome you to your first appearance before the Foreign Affairs Committee, the first of many, and you will be here again next week.

  Margaret Beckett: I hope that is a promise, Chairman, not a threat!

  Q233 Chairman: Yes, and we look forward to having a constructive relationship with you in your new post. Perhaps you could introduce your colleagues before we begin and then we can move into these questions on this inquiry on East Asia?

  Margaret Beckett: Sebastian Wood and Denis Keefe. I am afraid you will have to forgive me for not at this moment being completely familiar with their titles.

  Mr Wood: I am the Director for Asia Pacific.

  Mr Keefe: I am the Head of the Far Eastern Group, which means China, Japan and Korea.

  Q234  Chairman: Thank you very much. Can I begin by just asking a general question about the impact of the phenomenal economic growth in the People's Republic of China and what that means for our own country, for the rest of the European Union, and for the shift of global power towards China and Asia as a whole?

  Margaret Beckett: For our own country, for the EU, and what was your third category?

  Q235  Chairman: For the rest of the world.

  Margaret Beckett: Globally, generally. It is a phenomenal growth rate, a phenomenal impact, you are right about that, and it is being made visible in such a variety of ways, the sheer impact, for example, on resource consumption, and the recognition of the fact that however great that impact may be today, it is going to be so much greater in the future. I think that is the thing with which perhaps people are coming to terms more gradually than with the recognition of China's initial impact as people see it today. For us, in many ways of course it has benefitted our economy and it has benefitted our consumers insofar as China is a source of perhaps sometimes rather cheaper goods and products. I would say, and my understanding is that the Chinese would say, although no doubt you will tell me if they said something different to you, that we have a very, very good working relationship with China, possibly better than we have ever had and that we are seen as people with whom China can work to our mutual benefit—I stress to our mutual benefit, to China's benefit and also to the benefit of the people of the United Kingdom—and as people who have skills and ideas to offer which can be of use to China. I think that is also seen to be true of the EU more widely. I also believe that there is a recognition within the EU that although as individual Member States we have our own engagement with China, that the EU and China on the world stage can also be quite major players. In fact, last year during our EU Presidency one of the things we worked at was both to foster an EU/China relationship and also to get across to all our colleagues how beneficial that could be. In terms of their global impact, of course, as I say, they are already massive players, they will become more so, and possibly in ways that we cannot yet wholly foresee.

  Chairman: Thank you. Can I bring David Heathcoat-Amory in on Europe.

  Q236  Mr Heathcoat-Amory: Trade is a huge issue now and you have a trade minister in your Department of course, but trade is not without its disputes. We see a lack of respect by China for intellectual property, for instance, and also in manufacturing last year we had the issue of textile quotas, the so-called "Bra Wars", and this year a dispute over footwear anti-dumping cases. Members of the EU divide loosely between protectionists and free traders. How do you see your Department acting in future as between those two stances?

  Margaret Beckett: My Department, as with the rest of the British Government, is very much a department that recognises the benefits and the advantages of free trade. With all of the shorter term difficulties that that can sometimes create, we still believe that it is in the long term beneficial. You said that trade is huge now but actually it has been an enormous issue for quite a considerable length of time, and you probably will not recall, and there is no particular reason why you should, but some years ago I was the Secretary of State for Trade and Industry, and in fact I was the first minister to go to China in the Labour Government in that capacity after the 1997 Election, and then trade was a huge issue. One of the things that concerned me then, and I am pleased to see is now improved, but I think there is still further to go, was that we were a massive investor in China but others who were not such large investors had a greater share of the trade. That is something that we thought then and I believe now is a balance we need to redress and I think we are beginning to do so. However, as you say, there is also the issue of trade disputes. I take your point entirely about intellectual property. My perception and my understanding is that this is improving. It is not perfect, no doubt there is further to go, but I understand that China is showing every sign of recognising their WTO responsibilities, recognising the advantages of the good governance/rule of law perception and what that means for things like intellectual property. Of course, as I think we all appreciate, not least because it is such a vast place and there is so much local disparity, what is accepted at central government level is not always so easy to deliver at local level, which is why one gets all these arguments about piracy and so on, but in general I think on IPR things are going in the right direction. I think there is a responsibility on us, particularly as we do, as I think we should continue, believe in the advantages of free trade, to try to show China on issues like the textile issue and shoe issue, and so on, that the multi-lateral trade regime works, and it works fairly.

  Q237  Mr Heathcoat-Amory: On those two manufacturing trade disputes that I mentioned, on textiles and shoes, the outcome was really a victory for the protectionists in the European Union. Quotas were reimposed in the case of textiles, which caused great resentment in China. Are you happy that British trade policy should be decided by bargaining between broadly the south Europeans, led by the French, and the Scandinavians and north Europeans trying to keep trade open? It seems to me a very capricious way of conducting British trade policy.

  Margaret Beckett: There are nuances of different approaches within the European Union but in a sense the essence of the question you are asking me is do we try to pursue our own policy or do we pursue it also within the European Union. There are so many advantages—and I speak by the way, for the record, as somebody who campaigned for a No vote in the referendum in 1975, which is not true I know of everybody who takes a different point of view now!

  Q238  Mr Heathcoat-Amory: I campaigned for a Yes vote!

  Margaret Beckett: I was not aware of that but I am not surprised. I remember having exactly that conversation with Eric Forth on the floor of the House on many occasions. However, I am a convert in that direction as you are a convert in the other. I simply say to you that I do think it is very much in our long-term interests to operate as an EU bloc. Of course, there will always be different national interests and different nuances of approach, but I think that there is a recognition within the EU of the advantages of a proper multi-lateral regime and of free trade. Insofar as there are growing protectionist concerns in the EU, that is a global phenomenon. That is not specific to the EU or to the EU's relationship with China, but there is also perhaps a global phenomenon of some nervousness about the impact of China, which goes back to the question the Chairman asked me, and that is why again it is in everybody's interests to see a proper rule of law, if I can put it like that, within trade issues.

  Q239  Mr Keetch: For the record I was too young to campaign in the referendum but would have campaigned. One specific point, Foreign Secretary, on exports, if I may. You know as a former Trade and Industry Secretary how important Expo is. Shanghai is hosting Expo in 2010. We saw the plans that have been drawn up and the pavilion layout in that fantastic city is going to be astonishing. Lot of cities have got their towels on the beach; Britain has not. Can you give this afternoon a commitment that Britain will take part in Expo 2010 in Shanghai? If you cannot give that commitment, could you please ensure that commitment will be given, frankly, one way or the other very soon because a lot of British businesses are very disappointed that we are not already signed up?

  Margaret Beckett: This is an issue that has to go to the Prime Minister but what I can certainly tell the Committee is that I do intend to recommend to the Prime Minister that we should in principle accept that we should be participants in Expo. Like you, I recognise what a fantastic city Shanghai is and what a record it has and I have little doubt that it will be a tremendous event.

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