Examination of Witnesses (Questions 80
- 99)
THURSDAY 1 DECEMBER 2005
RT HON
HILARY BENN
MP, IAN PEARSON
MP, MR CARLTON
EVANS AND
MISS AMANDA
BROOKS
Q80 John Bercow: When the choice
has to be made, Minister, which is more important: observing the
constitutional propriety that this country, holding the Presidency,
should reflect the general view of the European Union or the moral
imperative of making an offer on agriculture which is unconditional?
Ian Pearson: I think it is a false
choice you are trying to get me to make. Let me just try to explain
what I think the situation is. We are, as you rightly hint at,
as Presidency, in a particular position where we are asked to
deal with consensus and it is right that we should do so. The
other thing is that the Commission operates within a negotiation
mandate and there are some Member States who have concerns about
the mandate and whether the Commission has gone beyond it already.
There are other Member States—I do not think it is any secret
to say who—like the UK, who would like to see the Commission
go further than the existing mandate. In the end the Commission
has to stick within its mandate or has to secure a fresh mandate
to which all 25 Member States have to agree to. That is the position
we are in at the moment.
Q81 Hugh Bayley: When we were talking
to the US Trade Representatives Department in Washington they
took a line very similar to the UK which was that there would
be no deal until there was a deal on everything. My knowledge
of negotiations is that you do not reach agreements if you try
to go for Utopia; you reach agreement by taking incremental steps
forward. My view is that if the G8 countries—the EU, the
United States, Japan and so on—go for everything they want,
then nothing will be agreed unless there is agreement right the
way across the agenda and I do not think there will be an agreement.
I think the Doha Development Round will flounder because I do
not think Congress will extend its negotiating mandate and that
is a very real danger. When you say, Minister, that we want to
deal with US protectionism of steel for instance, yes, we do,
but that is our northern agenda; that is not a development agenda.
The priority of this Round for very clear geo-political reasons
after the 9/11 attack was pledged to be a development round. If
we make progress on agriculture dependent on us getting the market
access we want into the US market, we will be betraying that commitment
that we and the rest of the developed world made and the Round
will be destroyed as a result of it. I do not particularly ask
for an answer, but I just ask our team to reflect on that and
to argue as hard as you possibly can to ensure that the development
priorities are settled in Hong Kong.
Ian Pearson: I hope you are wrong
in terms of your assessment of the prospects of the Round. The
Round has always been billed as a single undertaking; nothing
is agreed until everything is agreed. That is a feature of the
Round that all participants in it clearly understand. I can assure
you that we are pushing very strongly indeed for a pro-development
outcome. It has been a key feature of our Presidency and our work
with the Commission and we will do everything we can to ensure
a pro-poor outcome to the Doha negotiations.
Hilary Benn: We certainly agree
with that. We talk about "we" here, the truth is what
we are grappling with is that we have the UK view and negotiations
on behalf of 25 Member States being undertaken by the Commission.
I think it would be hard to find, in all honesty, a Member State
that had pushed and continues to push harder on the development
case for this Round and agreements which would benefit developing
countries than the UK. However, we are also—as Mr Bercow's
question drew attention to—talking about 25 Member States
who have differences of views; there are internal debates and
arguments. That is what we are grappling with here. In the end,
you have to find a deal which everybody is capable of signing
up to. You are absolutely right, Mr Bayley, that the test will
be: does the outcome benefit developing countries or not? That
is why people signed up in the first place to make this a development
round. The challenge we face now is to turn that commitment and
the fine speeches into numbers, deals, agreements and changes
in policy which deliver that. You are right about time because
eventually the fast track procedure in the United States may well
run out and then we will be in a much more difficult position
than I think we are in already.
Hugh Bayley: I think it is clear to most
people in this country that the UK has been the most progressive
on agriculture reform within the European Union and has exerted
the greatest pressure to keep the focus on development for EU
states. What we are saying as a Committee is that we see EU policy
slipping away from that and we would want the UK Government
to continue to advocate the development essentials for the Round
and to make it clear that that is what they are doing.
Q82 Richard Burden: You just drew
three positions: one is the UK view, the second is the EU position
and the third is the negotiation mandate of the Commission. Would
it be fair to say that you still see the UK view as entirely compatible
with the EU negotiating mandate?
Ian Pearson: The UK view is the
UK view. The negotiation mandate that the Commission has is based
on a series of European Council conclusions. That is the collective
view of the 25 Member States. Of course the UK has fed into and
led the debate in successive European Council meetings on the
DDA[3].
We pushed incredibly strongly on Common Agricultural Policy (CAP)
reform a couple of years ago precisely because we wanted a change
in agriculture and to have a high level ambition for the Doha
Round to help the world's poorest.
Q83 Richard Burden: I entirely understand
and I think none of the questions so far have been suggesting
anything other than that the UK has been in the lead in pushing
that agenda. The issue is, as we are now almost into Hong Kong,
hypothetically, if the other EU countries said, "You've actually
got a point and we've all moved a bit further" is that constrained
by the mandate? If it is constrained by the mandate, there is
nothing more to talk about.
Ian Pearson: I do not like to
get into hypothetical situations. It is an interesting point of
debate about whether the mandate is sufficient to secure the level
of ambition that we want to see for the Round as a whole. Certainly
the view of Commissioner Mandelson, as far as agriculture is concerned,
is that he is pretty much at the edge of his negotiating mandate
and he needs to see progress in other areas such as NAMA and services.
It is clear if you talk to Brazil, India, Australia or the United
States they think that the Commission should go further on agricultural
reform and should break its mandate. This is a very difficult
decision indeed and it is something that future discussions will
probably be held on. What you have to do is to ask yourself the
question: is there an appetite in Europe to go further on agriculture?
This is the big debate that I think we are having at the moment.
Q84 Richard Burden: If the UK is
successful in what is left of the run-up to the handover to Hong
Kong in shifting the agenda of the EU a bit more towards our view,
do you recognise there is a problem of changes being made at the
last minute and getting to a kind of Cancún situation?
Ian Pearson: As the Presidency,
Britain is in a fairly pivotal position about how that is handled.
We have said consistently all the way through this that we did
not want to get to Hong Kong leaving too much to do. We would
have liked to have seen far more progress than has actually been
achieved to date. It is disappointing. We have seen the Round
move forward. The American offer, and the EU offer represented
progress but not nearly as much as we would have liked. There
is a very real danger that too much gets left to be done, not
just in Hong Kong but in 2006. As you rightly pointed out, Chairman,
there is an end point to this; we do need to close out the Round
in 2006. While the Commission is at the edge of its negotiating
mandate when it comes to its market access offer on agriculture,
there is still room for negotiation, particularly on special
and differential treatment. The draft Ministerial declaration
on special and differential treatment has in it: "We reaffirm
that provisions for special and differential treatment are an
integral part of the WTO agreements. We renew our determination
to fulfil the mandate contained in paragraph 44 of the Doha Ministerial
Declaration.[4]"
What we need to do is to build on that and to put some specific
bones on it which deliver for the developing world. That is one
of the things that I am sure will be an important focus at Hong
Kong.
Hilary Benn: As one has watched
the Round develop, it has been pretty slow to get down to the
specifics and here we are a very short time away. I suppose one
of the ways of looking at the question that you have asked, Mr
Burden, is that if you find people are in a room and, doing X
would unlock Y and results in a deal being made, then you can
ask people if they are prepared to do that in those circumstances.
When you get to the final stage of any negotiation, then the dynamics
are rather different from those in the run-up to the negotiation
itself. Who is to say what would happen in those circumstances?
In the end you have got to get everybody to sign up and you have
to get an EU view.
Q85 Chairman: My concern is that
the EU would seem to be the architect of failure at Cancún;
we do not want to see that being what we are landed with again.
Hilary Benn: I could not agree
more.
Richard Burden: The developing countries
also need time to react to the negotiations.
Q86 Mr Davies: You are going to get
two different steers this afternoon from the Committee because
I think the Commission's mandate is right and what is described
as the UK position is wrong. Apart from there not being a moral
imperative to make unilateral, unconditional concessions, it seems
to me to be morally irresponsible to do so because you then lose
all your leverage and influence in the future and your chance
of moving towards a genuinely more free trade world. Irrespective
of my view or your view—we could argue about it all afternoon—the
fact is there are two completely different positions. You cannot
at the same time adopt both. You have said to us this afternoon,
Mr Pearson, that, as the UK Presidency, you are trying to build
a consensus around the mandate. That was your phrase just now.
How can you build a consensus around something when you do not
want to support the consensus yourself? You are in a position
of fundamental contradiction with yourself as we go forward to
this trade round. Is that not the case?
Ian Pearson: Firstly, I do not
think it is necessarily the case of the Committee having two views
as much as the Conservative Party having two views on these issues.
Members of Parliament have different views on these issues. I
do not believe that there is an inevitable contradiction between
the development agenda and the trade agenda and the fact that
some EU Member States want to see movement in NAMA and services.
Both of those, I think, can be reconciled, but we have to recognise
that what we are trying to do here is to get a deal involving
149 member countries. I think it is perfectly possible to achieve
a deal with a high level of ambition that really delivers for
the poorest people in the world but also has something in it as
well for the developed countries by reducing barriers and stimulating
trade between the countries.
Q87 Mr Davies: You are answering
questions that I have not put to you. I put to you the question
of the contradiction of your own position. You cannot build a
consensus around something if you yourself do not approve of it
or go round saying you do not agree with the thing around which
that consensus is being built. Therefore, I am afraid you will
not have a very successful Presidency if you try to build consensus
around something which you say you yourself do not agree with.
That is the point I put to you. I think you had better perhaps
think about it if you have not already done so. Can I ask Mr Benn
something? You wrote a very interesting article in the Financial
Times the other day in which you said, and I quote: "Sub-Saharan
Africa stands to gain most from agricultural liberalisation, with
real income gains of 43% by 2015 according to World Bank analysis"[5].
On what assumptions would the sub-Saharan African countries gain
supplemental real income gains of 43% by 2015?
Hilary Benn: As your question
implies, that is in the World Bank research and I quoted in that
letter the figure that they had produced. I have in front of me
the "World Bank Linkage Model Simulations" which I would
be very happy to let you have[6].
Q88 Mr Davies: Am I not right? If
you look down, you will see they are based on the assumption of
full agricultural liberalisation.
Hilary Benn: Indeed, and they
are making the point that developing countries have a lot to gain.
Clearly, if we went for full liberalisation, then you would be
talking about a gain of the proportion that I described in the
letter.
Q89 Mr Davies: Yes but no-one is
talking about full liberalisation.
Hilary Benn: No, they are not
currently.
Q90 Mr Davies: Is it not a little
bit unfair of you to hold out the prospect of 43% real income
gains for these countries on an assumption which you have just
acknowledged to me is not realistic?
Hilary Benn: I do not think it
is unfair. It is based on the World Bank model. The World Bank
model was predicated on the simulations that it contained there
and it shows what you could achieve if you got to that point.
We are not currently looking as if we are going to get to that
point, but the underlying issue here is the gains the developing
countries themselves could make from greater access to our markets
for agricultural products.
Q91 Mr Davies: Would it not have
been fairer to have used the adjective I just used, "fairer",
in the sense of making it less likely that people would be disappointed,
would be misinformed and would have unrealistic expectations arise
if you had said, "If there were full agricultural liberalisation,
which nobody is talking about, it would theoretically be possible
to gain 43% on the World Bank's assumption". You say that
"sub-Saharan Africa stands to gain". Sub-Saharan Africa
does not stand to gain at the moment anything like 43% because
there is no prospect of full agricultural liberalisation. Is that
right?
Hilary Benn: That is a fair point.
Q92 Mr Davies: Thank you, Secretary
of State. If in fact the mandate were changed—as you and
Mr Pearson told us you would quite like to see—more towards
the British position, and if there were a much greater degree
of unilateral concession made in the agricultural field to less
developed countries on a non-conditional basis, would that involve
re-opening the agreement on farm support which the European Union
reached two years ago? Would that therefore invalidate the letters
that I understand have been sent out in this country to all registered
farmers promising them that the new individual payment scheme
will last until 2013? Would that invalidate the undertaking that
has been given by another branch of Her Majesty's Government,
DEFRA, to British farmers?
Ian Pearson: There are a lot of
"ifs" in that question.
Q93 Mr Davies: No, there is only
one "if". If, in fact, you got rid of the mandate and
you adopted the policy that you have advocated this afternoon
of unconditional agricultural liberalisation, would that involve
going back on the promise you have made to British farmers, the
promise, I take it, that other EU governments have made to their
farmers?
Ian Pearson: I think you are misrepresenting
our position. Let me make our position very clear to you. What
we are continuing to question is whether it is right to spend
over 40% of the EU budget on 5% of its people and accounting for
only 2% of EU GNP.
Q94 Mr Davies: Maybe that is right,
maybe that is wrong, Mr Pearson. We are not arguing about that
this afternoon. We are arguing about whether or not the British
Government has sent out a whole lot of letters to farmers which
would be invalidated if, in fact, you then changed your policy
on agricultural liberalisation.
Ian Pearson: You are asking me
a direct question on CAP reform and what I am saying to you is
that I do not think it is forward facing to have a position that
says that we should continue to spend over 40% of the EU budget
on agriculture.
Q95 Mr Davies: The EU agreed that
you can spend that amount—it will be a falling amount, but
at the moment it is 40%—two years ago. If you change that
and the EU spend, it follows that farmers will get less, but farmers
have received letters promising a given set of payments, increasing
between the coming year and 2013. Will those promises be invalidated
and no longer be able to be delivered if, in fact, the UK Government
got its way and made unilateral agricultural concessions going
in advance of the mandate?
Ian Pearson: We are getting back
into using quite a lot of "ifs" again here and talking
about a highly speculative situation. I attended the CAP mid-
term review negotiations in Luxembourg and I understand how
difficult it was to achieve a deal there. I think it was a major
success and a lot of it was down to Margaret Beckett negotiating
on our behalf.
Mr Davies: You have not even begun to
answer my question.
Chairman: I think you have made your
point.
Q96 Mr Davies: I will put it one
final way. A lot of our constituents have received letters from
the Government promising a certain level of payments. Can they
count on receiving those payments irrespective of what happens
in the Round? Yes or no?
Ian Pearson: I cannot speak for
DEFRA and maybe you want to ask that in a written question to
them. What I can say is that nobody is talking at the moment about
that.
Q97 Mr Davies: I am.
Ian Pearson: I do not get the
sense that you have a lot of support elsewhere when it comes to
this issue. Let us be clear. The Government would like to see
further CAP reform, but we are under no illusions that this is
anything other than a hugely difficult task. If we are serious
about securing Britain's future prosperity, then our future has
to depend on Europe's future prosperity; it has to be based on
innovation, on good knowledge and science, and having over 40%
of your budget being spent on agriculture does not strike me as
being a sensible way forward.
Q98 Joan Ruddock: I was trying to
follow the first set of questions that my colleague raised which
I thought were more central to our agenda. That was on the 43%.
I would like to ask the Secretary of State whether there is any
estimate of what might be the real income gain if the Round came
out according to the EU mandate. If we were successful in getting
everything that we wanted, have we any idea what would be the
percentage of real income gains for sub-Saharan Africa?
Hilary Benn: I have not seen such
a figure, so I do not know.
Joan Ruddock: I think it would be most
useful if we could have some idea of what we might have achieved
if we had got the position that we hoped to. I say it in that
way because I sense we will not get all that we are asking for.
Q99 Chairman: On the very back of
that is this World Bank report[7].
Is it not the case, Secretary of State, that what the authors
are saying is that things could get worse before they get better
because of the point I made earlier on. What they have said is
that "the authors find that merely introducing these modest
exemptions for a maximum of 2% of the industrial tariff lines
in agriculture virtually eliminates the poverty impacts of a Doha
agreement." I am not suggesting you are misrepresenting.
What you are saying is that a full liberal outcome might achieve
that, but on the road to that things could get worse.
Hilary Benn: That is indeed what
the report says.
3 Doha Development Agenda. Back
4
WT/MIN(05)/DEC, 22 December 2005, Doha work programme, Ministerial
Declaraton, adopted on 18 December 2005: http://www.wto.org/english/thewto_e/minist_e/min05_e/final_text_e.htm Back
5
Op cit footnote 1. Letter, FT, November 2005. Back
6
Kym Anderson, Will Martin and Dominique van der Mensbrugghe,
Would Multilateral Trade Reform Benefit Sub-Saharan Africans?,
Centre for International Economic Studies Discussion Paper No
0518, August 2005. Back
7
Ibid Back
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