Select Committee on Trade and Industry Minutes of Evidence


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 countries—the US, Canada, Japan and the EU—went 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.


 
previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2006
Prepared 11 July 2006