Examination of Witnesses (Questions 60-79)
CONFEDERATION OF
BRITISH INDUSTRY
22 NOVEMBER 2005
Q60 Mr Bone: 7%.
Mr MacVay: 7%.
Q61 Mr Bone: So what we have got
here, Chairman, is a suggestion that we as developed nations have
already achieved 15% or less. This is all going to be lumbered
on developing countries. Is that right?
Mr Campkin: No.
Q62 Mr Bone: That is almost what
you have just said?
Mr Campkin: No, what we are saying
is that against the backdrop of support for trade liberalisation,
against the backdrop of the fact that lowering tariffs actually
brings significant economic growth gains, global gains from which
developing countries will benefit, that negotiations in NAMA will
benefit developed and developing country businesses. We focused
in some of our earlier comments in south-south trade, where, of
course, tariff levels between southern countries tend to be higher
anyway. It is not just developed versus developing, and I think
we need to get away from a debate which is couched in terms of
developed and developing in some of these areas, because some
of the greatest gains, as we have said, are actually to be made
through cuts in tariffs between developing countries' south-south
trade.
Q63 Mr Bone: I understand absolutely
the advantages of cutting tariffs, but what we seem to have before
us, Chairman, is something that is going to be all on developing
counties and nothing on developed. Would not a formula of saying
that all tariffs be reduced by 50% be a fairer approach?
Mr Campkin: The nature of the
negotiations on NAMA means that you will have to develop a formula.
The formula will have a coefficient, or maybe more than one coefficient,
and certainly it does look as though, and the CBI would generally
be supportive depending on the exact outcome of the agreement
on the coefficients, a differential coefficient for developed
and developing countries. In other words developed countries would
cut their tariffs more than developing countries. That would be
negotiated through the figures in the formula and the coefficients.
In addition to that, there are flexibilities for developing countries
to exclude some of their tariff lines. Again, this is all up for
negotiation. So there are the sorts of flexibilities for least
developed and developing countries. The other point that I would
make is, of course, the negotiations are not just about NAMA.
The single undertaking is about a negotiation which concludes
in all of the key areas of the negotiating mandate on agriculture,
on NAMA, on services, and on trade facilitation.
Mr MacVay: It is important to
see this is as a goal, and I was encouraged, again, to see this
15% figure against the tariff peaks not against the typical. You
asked earlier what the typical tariff would be, okay, but the
point of having the maximum to deal with some of the tariff peaks
which can be quite a problem, and if you have this as a goal,
the timing of getting to that goal for different countries is
also a question.
Q64 Roger Berry: Would I be right
in saying, given that the CBI is committed to free trade, that
your first-base position would be that the European Union should
have no external tariffs at all?
Mr Campkin: In an ideal world
it would be tariff free, but we do not live in an ideal world.
Q65 Roger Berry: That is what you
are arguing for because you believe in free trade?
Mr Campkin: Absolutely, but trade
Rounds have progressively cut tariffs. That is what trade Rounds
have had to do. There are obvious arguments, particularly on the
development side, for the flexibilities that I have just mentioned
on NAMA, which allow for developing countries to sequence their
own tariff reductions and, again, other elements of flexibility
within the mandate.
Q66 Roger Berry: Your members who
are currently protected by tariffs, you say to them, "This
is wrong. Free trade is the best of all possible worlds and we
are trying to get rid of these tariffs that currently protect
your industries." Is that what you are saying?
Mr Campkin: Philosophically the
CBI would support moves towards free trade, of course. It is not
always possible to do that quickly, but, of course, what we do
is to support a balanced outcome from this particular Round.
Q67 Roger Berry: But as a free trader
you would not argue, would you, that the true position is that
you only get rid of your tariffs if other people get rid of theirs?
You would not argue that, would you, because that is not a free
trade position, is it?
Mr MacVay: Sometimes you unilaterally
get rid of your tariffs, in fact. That has been done. For example
. . .
Q68 Roger Berry: Let me be clear.
As free traders you believe that your members who currently shelter
behind tariffs should be told in words of one syllable, "The
CBI is totally opposed to that. We believe in free trade. Therefore
all tariffs should go." Yes, there is an issue about the
practicalities of how you do it, but you would argue solidly for
free trade, no tariffs?
Mr MacVay: And some businesses
have done that.
Q69 Roger Berry: Quite. I want to
be quite clear. Your commitment to the principle is not qualified,
it is absolute?
Mr Campkin: I do not tell my members
anything. My members tell me what to do. That is the nature of
the CBI as a membership organisation.
Q70 Roger Berry: So your members
support this view. Good.
Mr Campkin: My members support
a broad free trade philosophy. As Iain has said, in some sectors
they are moving towards zero for zero. We also support the concept
of zero for zero within some sectors of the current negotiations.
Mr Bickham: We really need to
move towards progressive disarmament. If we suddenly just give
away all our tariffs for nothing in return, we would be in an
unfortunate position and lose our leverage.
Q71 Roger Berry: I am sorry. The
economics does not stack up on that one. If we are talking about
weaponry I can see the logic. I am afraid the free trade argument
is very clear. Free trade is the best of all possible worlds.
You get rid of your tariffs, whatever other people do, because
your citizens benefit, and that is why I was pleased that this
is the view of the CBI, because . . .
Mr MacVay: But there are some
groups who take the view that they need to, as a negotiating position,
keep that open. On the economics, you are absolutely right in
principle, but it is a world of negotiation.
Chairman: So we are being public spirited.
We are keeping tariffs in place and doing damage to our industries
to encourage the less developing countries to remove their tariffs
and help themselves?
Mr Bone: Absolutely.
Q72 Chairman: Is that is right?
Mr Campkin: I am not sure whether
the CBI would quite agree to that particular summary.
Q73 Chairman: In your memorandum,
paragraph 23, you say, "Agreement on a formula should not
preclude making deeper cuts in specific sectors." Are there
specific sectors, do you think, that particularly need deeper
cuts?
Mr Campkin: Paragraph?
Q74 Chairman: Twenty-three. Which
specific sectors did you have in mind?
Mr Campkin: The sorts of sectors
that are looking at zero for zero include the chemicals industry.
It is one of the main ones, where there is quite a lot of talk
at the moment, and I think the pharmaceutical industry.
Mr MacVay: Spirits has already
done it. Spirits did it in the previous Round.
Q75 Chairman: In fact, I think we
have heard evidence from the chemicals sector that they are worried
about the European Commission's approach on sectoral negotiation;
so we need to start talking about allocations, but an overall
formula has been agreed. Do you have concerns about the Commission's
tactics?
Mr Campkin: I think it is right,
and it is our preference, for decisions to be made about the overall
effectiveness of the formula in cutting into tariffs, with the
flexibilities agreed, before it is clear whether the sectoral
negotiations can go further for sectors that wish to do so. Clearly
these are issues for the sectors themselves, but the ideal would
be to have a good overall tariff reduction formula and then if
the sectors want to go further they are allowed to do so. This
enhances the overall nature of the package.
Q76 Chairman: So people who are gung-ho
for liberalisation in their sector are obliged to wait for everyone
else to catch up?
Mr Campkin: No, because discussions
are currently going on within the sector in terms of preparing
for the time when they can go that bit further.
Mr MacVay: It is also a matter
of what businesses can persuade negotiators to do, because the
businesses do not negotiate themselves, of course.
Q77 Chairman: Are you broadly happy
with the way the European Commission has conducted this negotiations
Round so far?
Mr Campkin: It is obviously a
trade negotiation. It is a very complex negotiation. We believe
that the Commission's second offer at least kept the door open
to the negotiations. That offer was conditional. We believe that
one of the ways forward is for more WTO members, and particularly
the leading WTO members, to make conditional offers to see whether
we can get some traction and some movement before or, more likely,
at Hong Kong in order to set up a successful conclusion by the
end of 2006.
Q78 Rob Marris: You have talked about
zero for zero, staying with the non-agricultural market access
stuff. I understand from the same paragraph of your memorandum,
paragraph 23, I think it is, that you accept the possibility of
less than full reciprocity and a kind of zero-for-x, it is sometimes
called, that kind of approach. Partly, if I may hark back to what
my colleague, Peter Bone, was talking about, when it was zero-for-x,
as I understand it, we would go to zero and another country or
series of countries would go to x%, say, in the tariff and that
might be done sector by sector. What would x be in your mind?
Would it be 15%, or whatever that we have talked about?
Mr Campkin: I cannot, with all
honesty, give you any figures on that.
Mr MacVay: Sometimes it is just
zero. This is what happened in the spirits: zero for zero. The
main four countriesthe US, Canada, Japan and the EUwent
to zero in the hope essentially that others would follow, and
that is exactly along that principled line. It has not completely
worked, I should add.
Q79 Rob Marris: If you cannot say
what the per cent should be, frankly, can you suggest any sectors
where we might not go for zero for zero, such as in spirits and
those four trading blocks, but . . .
Mr Campkin: Again, it is conceivable.
Let us take, for example, chemicals. The chemicals industry hopes
very much it can get zero for zero, but if it cannot, it may well
be able to settle for zero-for-x, whatever the negotiations are
able to get. I cannot, I am afraid, in all honesty, tell you what
is in negotiators' heads on this and I am even less able to say
what the actual outcome might be.
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