Examination of Witnesses (Questions 120
- 135)
THURSDAY 1 DECEMBER 2005
RT HON
HILARY BENN
MP, IAN PEARSON
MP, MR CARLTON
EVANS AND
MISS AMANDA
BROOKS
Q120 John Bercow: I personally could
not care less about that. This is supposed to be a development
round. Forgive me, Mr Pearson, I interrupted your answer.
Ian Pearson: I was just saying
that there has not been a ministerial discussion about this. Again,
this is a level of detail that we will have to come back to as
part of the negotiations.
Q121 John Bercow: I am sure you will,
not least in expectation of the next appearance before the International
Development Select Committee when we will be literally waiting
with bated breath and beads of sweat upon our brows to question
you upon this very matter. I wonder if I could just ask the Secretary
of State before I am cut off, how likely it is that the 2010 end
date for EU agricultural subsidies will be achieved?
Hilary Benn: I do not know is
the straight answer. It is the position the UK has been arguing
for. It was in the framework agreement reached on 31 July 2004,
and it was historic in the European context, that all Member States
agreed that an end date should be set. In one sense that is the
easy bit but it still took some doing. It remains to be seen where
other EU countries will come out and finally reach an agreement
on when that end date should be, but the UK position is extremely
clear indeed.
Q122 John Bercow: Is the United States
likely to agree to a similar date to that of the European Union
and, if so, do you believe that will be subject to conditions
and, if so, what?
Hilary Benn: My understanding
is that that is the proposal which they have put forward.
Ian Pearson: The United States
put forward 2010 as an end date for export subsidies as part of
their offer. It is probably relatively easy for them to do so
because they do not do much in the way of export subsidies. I
think getting agreement with the United States on an end date
will not be a problem.
Q123 John Bercow: That is conditional
on EU agreement, presumably.
Ian Pearson: The US offer was
conditional on a number of other things. It was asking for 60%
agricultural market access rate.
Q124 Joan Ruddock: I was going to
ask ministers about NAMA, but it has been touched on as we have
heard in other answers. As Mr Pearson said, it is only a paragraph,
but can the Minister just confirm that it is nonetheless very
important to the EU? You spoke earlier about the balanced outcome
and I believe in one of your answers you may have included India.
I wonder if India is there in respect of services rather than
NAMA and if you could indicate whether there is any place at all
for any kind of selective protectionism for infant industries
in any of the non-LDC countries.
Ian Pearson: Firstly, NAMA is
an important part of the negotiations and we do want to see progress
in the form of tariff reductions. We believe that as part of the
negotiations we should agree less than full reciprocity and therefore
developing countries should not be required to do so much. Certainly
the Least Developed Countries should not be required to do anything
in terms of their position. You mentioned India; India has some
of the highest tariffs to be found anywhere in the world. It has
enormous tariffs on things like Scotch whisky which we do not
think it is unreasonable to ask India to do something about. You
are right to point out that it has very strong offensive interests
in areas like services. It has great strength in the service industries.
What we want to do is to encourage India to make progress on NAMA
as indeed we want to see Brazil and others do so, but also we
want to see progress on services. That is the balanced outcome
that we all hope we can achieve from the Round.
Q125 Joan Ruddock: So on NAMA, as
distinct from services, is the EU saying there is one position
and that all tariffs have to be dealt with equally? Take LDCs
out of the picture; is it middle-income countries? It is not clear
from your answer which countries.
Ian Pearson: My understanding
of what we want to see is that we want to see all tariffs reduced,
but we do not expect all countries to reduce them by the same
amount. That is what we mean when we talk about less than full
reciprocity. In the proposals that the Commission has put forward
we want to see substantial tariff reductions from the United States,
but there is a different situation when it comes to developing
countries.
Q126 Joan Ruddock: Can it be different
goods in different countries? You give a good example with the
whisky, but I am not sure that that is entirely the norm.
Ian Pearson: It is probably one
of the UK's few offensive interests. It is also important to bear
in mind the special and differential treatment provisions because
that should be part of the NAMA negotiations and, therefore, we
should be expecting a lot less of developing countries. We believe
we should take full account of those special and differential
treatment provisions and, again, there needs to be more discussion
and work on the nature of those as part of the negotiations. We
hope that that will be one of the things we will look at at Hong
Kong.
Q127 Joan Ruddock: So there could
be selective protectionism for some fledgling industries in some
middle-income countries?
Ian Pearson: In all developing
countries, yes.
Q128 Mr Davies: Mr Pearson, you have
just said that the United States does not go in very much for
agricultural export subsidies but, as I am sure you are aware,
they have regularly offered Ex-Im[9]
Bank credits to their grain exporters. I do hope that the Government
and the Commission will be very robust in looking at and analysing
the effective element of subsidy in those credits. By definition,
any credit lasting more than a year is a subsidy because it would
not be available on a commercial basis. My question to you is
this: if we increase market access to developing countries in
agricultural products in the EU either as a result of unilateral
concession, as you would like, or as a result of balanced negotiation
and agreement, is it the intention that those developing country
exporters and producers of agricultural products will be subject
to the same regime of health and safety, of animal welfare, of
environmental regulations which EU-based producers have to bear?
Let me give you an example. If we have regulations, as we do in
the EU, about how you can keep pigs and you allow people to sell
pigs, whether in China or sub-Saharan Africa, which were not subject
to those regulations, you will not only undermine the business
that exists in the EU in pig production but you will do a very
bad day's work for pig welfare because you will find the business
shifts from a regime where pigs are protected here to a regime
where pigs are not so protected. It is an important point. The
same thing applies, of course, to other areas where we have compliance
costs which would not be borne by producers outside the EU unless
we insist on that.
Ian Pearson: On the first point
of your question which related to Ex-Im Bank, we are very aware
of the situation. The UK and other Member States have concerns
that there should be a level playing field when it comes to export
support. That applies to other export credit agencies equally
as it applies to Ex-Im Bank. As regards the second part of your
question, the best way I can answer is to point out the importance
of sanitary and phyto-sanitary standards to the EU when it comes
to products, but also to say that there are very real difficulties
with some developing countries when we start to talk about animal
welfare and environment considerations whose response is that
we are trying to put up barriers to trade. I think we have to
continue the dialogue with developing countries about this because
at the moment a lot of them just say to us, "This is you
and the European Union trying to keep us out".
Mr Davies: Of course there must be a
dialogue; the question is what line the British Government—or
in this case the EU Commission—is going to take in that
dialogue. Are we going to insist on them bearing the same compliance
costs as our own producers or at least being subject to the same
rules?
Chairman: I think, to be honest, the
Minister has answered your question. I am conscious of the time.
Q129 Hugh Bayley: What is the Government's
position on benchmarking within the GATS? What representations
is our Government making to the EU about their position on benchmarking?
Ian Pearson: The UK, along with
all the other EU Member States, had a long discussion about benchmarking
and 24 Member States wanted to proceed with benchmarking and for
that to be part of the EU's negotiating position. One Member State
that has not been keen on benchmarking has been the United Kingdom.
As Presidency we have gone along with benchmarking, but we believe
that the current request and offer process when it comes to services
should be allowed to continue.
Q130 Hugh Bayley: I congratulate
the Government for flying this flag. Can I press a little bit
further about whether there is scope for movement? The capacity
of the poorest countries to develop realistic offers and to identify
what request offer packages would benefit poor people in their
countries simply is not there to enable them to put forward serious
offers. Is there any prospect that we could get the EU at least
to exempt the Least Developed Countries from having to put in
a certain offer, and what support would we give other low income
countries to participate with clear sight about what they are
doing and whether it is in their interest to participate in this
type of negotiation?
Hilary Benn: The Least Developed
Countries are being excluded anyway from the proposal. Pascal
Lamy has made clear in the document that has just been produced
that there is "a divergence of view". He is not talking
about Europe; he is talking about the others who have looked at
this proposal. I would be very surprised if he got anywhere because
other countries are not going to want to make that part of the
deal. I think it is really important that putting effort into
benchmarking of services should not become a kind of investment
in competition obstacle to all of the other things that need to
be negotiated. Our view is very clear. In the end it is for countries
themselves to determine whether they want to open up their services
or not. A lot of developing countries have looked at the requests
that have been made and said, "No thanks" and some have
agreed them. They are the ones who should take this. That is why
we were not in favour of an artificial process of trying to up
the numbers; I do not think it is appropriate. Will you please
excuse me now? I need to catch a plane.
Chairman: I quite understand; you gave
us notice of that.
Q131 Hugh Bayley: Could I just ask
the Minister whether he has anything to add about trade facilitation
support which middle income states need if they were burdened
with a benchmark? What capacity building help would they need
to get more out of the services side of the negotiations?
Ian Pearson: It is my understanding
that the UK Government, through the Department for International
Development, has been providing some support to some developing
countries to help them to develop services offers under the request
offer process. We have not done anything so far as benchmarking
is concerned.
Q132 Chairman: I think both John
Bercow and John Battle indicated the difficulties of achieving
a development round, within the context of what we are debating
and the need for some raising of a little bit more than just commercial
bargaining to idealism plus security. Those were the issues. We
had evidence on Tuesday which was suggesting that the WTO even
in promising a delivery round has put something onto the architecture
which it does not look as if it is going to be able to sustain.
You said earlier on, "I know that is what is agreed; nothing's
agreed until everything is agreed" and then we start talking
about animal welfare or whisky tariffs or agricultural subsidies,
none of which are anything to do with a development round. Is
it possible to deliver a development round against the background
of saying that it has to be agreed in a liberalising trade organisation
where nothing is agreed until everything is agreed? Have we been
misled? Have we been deceived by the concept that it is possible
to have a development round?
Ian Pearson: No, I do not think
people have been misled about this. We have very much led the
way when it comes to wanting to see a pro-development outcome
and we will continue to do this. You probably know about Commissioner
Mandelson's six-point package to help the Least Developed Countries.
We think we can make real progress on that at Hong Kong, but it
should be seen as a down payment not as a final deal. We hope,
therefore, that we can demonstrate at Hong Kong that the concerns
of developing countries are being taken into account and that
there will be a tangible outcome for them. We believe that is
very important. I think it is also important to be real about
this and say, "Well, it always was a trade round and countries
will have mercantilist interests". The UK is probably the
only country that would sign up to a one sided deal that focused
purely on development and opening up agricultural markets. I do
not think other countries would have that similar position.
Q133 John Battle: I do not look all
that confidently to the negotiations, if I am honest, and the
more I hear the less confident I am of a successful outcome. I
suspect there will be blame thrown around afterwards whether it
is Britain, Europe or America in this trade round. I worry that
what will really happen—it is already happening—that
people will say the WTO itself is a waste of time. Where will
we go if we rubbish the WTO? Bilateral agreements that will really
finish off the lot; it really will be dog eat dog. I am in favour
of idealism, but I was told the other day that it was totally
romantic; we live in post-idealistic techno-managerial world.
Is there any chance, aside from the Round, that you, as Trade
Minister, can re-inject some vision of why we need a WTO and the
reason we need it is to have a fairer and more just world? Is
there any space to do that? Is it even on the agenda? Who is asking
what is the point of the WTO and can we take it further in a more
constructive way?
Ian Pearson: The first thing I
would want to say is that I do not think we should be under any
misapprehension about this being a development round. It is a
development round, but equally we need to be clear that developing
countries stand to gain from agriculture, from non-agricultural
market access and improvements there, and from services as well
and, indeed, the work on trade facilitation and removing trade
barriers. When we talk about the development agenda, I think it
is important to recognise that there is something in it for developing
countries in all the different parts of the dossier; it is not
just about agriculture. I think it is important that we recognise
that. You were asking me about WTO and its standing, and I could
not agree with you more in the sense that I think there are real
dangers to our world trading system if this Round is to fail.
What I think you are likely to see is a continuation of the trend
that we are already seeing to some extent at the moment of bilateral
trade arrangements and who loses out most in that? It is the poorest
countries. Without talking out of turn, the United States, for
example, is an 800lb gorilla; it is easier for it to take on and
do a deal with a smaller creature. Having a multilateral deal,
I think, offers the best prospects for developing countries and
that is why we are so keen in the UK to see a successful outcome
and we will do all we can at Hong Kong to make sure that we continue
to make progress.
Q134 Ann McKechin: I have had some
discussions with WTO officials about the problem of the Least
Developed Countries and they indicated to me that they would like
to take the G90 group, roughly speaking, out of the negotiations
and offer them a separate deal so that we could at least keep
the issue of development alive. They advise that the main blockage
to this was the United States of America. We are about to start,
I believe, the inter-blame game about who is going to be at fault
if Hong Kong does not work. Is there any possibility that to break
the logjam rather than a proposal by Commissioner Mandelson which
states, "Here is what we want America to do but not very
much of it is what we want to do", we could try and suggest
that we have one deal at the very minimum that involves the G90
group and gives their priorities and preferences and then try
to sort out some kind of deal amongst the other countries about
issues such as NAMA, tariffs and the rest of it. If we do not
agree that then our prospects of having a multilateral treaty
in the next decade are virtually impossible.
Ian Pearson: I actually think
that `Everything but the Arms' initiative, which is about giving
quota and duty free access to the Least Developed Counties, is
something that is very much along the same lines as the comments
that you have made. Certainly the six-point offer that Commissioner
Mandelson has made as well is seeking to benefit the poorest countries
in the world. I think we all need to remember that in July 2004
in the framework agreement there was an agreement that LDCs would
benefit, would have duty and quota free access; everybody signed
up to that agreement in July 2004. The fact that some countries
now seem to be resiling from it, I find unacceptable and I think
we need to point out to those countries that they are not helping
the world's poorest by not moving forward on that agenda. The
agreement in July 2004 said that all developed countries and the
most advanced developing countries should sign up to having duty
and quota free access to LDCs. We have countries like China saying
they are quite prepared to do this; we have countries like Chile
that I understand are quite prepared to make similar offers. Europe
has said it is going to do so. It really should be the case that
the United States should have no problems with it.
Q135 Joan Ruddock: I think Ann McKechin
has really made the points that I would want to make because I
am left now with the lasting impression that if we do not get
a deal and help the very poorest countries in terms of the African
countries in their agriculture, it will be because we could not
get India to lower its tariff on Scotch whisky. I am afraid that
is utterly, utterly unacceptable. That is the impression we are
going to be left with and I really wonder how we will all be able
to explain this to our constituents.
Ian Pearson: I do not want you
to be left with that impression and I certainly do not think that
Scotch whisky, much as I enjoy it myself, is going to be the deal-breaker
when it comes to Hong Kong. I do believe it is possible to have
negotiations that will see the Least Developed Countries benefit
from this. We will also see developing countries secure significant
gains. Brazil perhaps has the most to gain from a successful Round
and most to lose if the Round does not proceed. China and India
will benefit enormously and other developing countries as well
if we have a successful Round. It is not just because of agricultural
market access; it will be because of progress in other areas.
I do not want to see a squabble between developed countries get
in the way of a deal that is going to help the world's poorest.
As I say, kicking open the door so that the poorest countries
can trade with us is vitally important and it is something that
I think we can do through the WTO. Of course, there are things
that we cannot do through the WTO that we can do through Aid for
Trade and through the investment in supporting the infrastructure
of these countries so that they can go from the field to our table.
Chairman: Thank you, Minister. I think
you get the mood of the Committee. We do not want to see the WTO
collapse, but we do want to see a development deal struck. We
would hate to think that the legitimate trade issues got in the
way of such a deal. I made a comment about Scotch whisky, but
I do not want that deal to be at the expense of poor countries
or a development round and I am happy to say so in my own constituency
on that basis. Three members of this Committee will be Hong Kong
with you. You have expressed your hope that you will be able to
come back with a development agreement. We genuinely wish you
success and we will be right beside you trying to ensure your
success. Thank you very much indeed.
9 Export-Import. Back
| 
