Examination of Witnesses (Questions 127-139)
CHRISTIAN AID,
OXFAM AND
WDM
6 DECEMBER 2005
Q127 Chairman: Thank you for coming this
morning. Can I begin, as I always do, by asking you to introduce
yourselves for the record, starting with you Dr Melamed?
Dr Melamed: My name is Claire
Melamed. I am the Trade Policy Manager at Christian Aid.
Ms Stuart: My name is Liz Stuart.
I am the Trade Policy Adviser to Oxfam.
Mr Hardstaff: My name is Peter
Hardstaff. I am Head of Policy at the World Development Movement.
Q128 Chairman: I understand you have
agreed amongst yourselves what sorts of questions you are likely
to concentrate on in response to our questions. Excellent. Obviously,
most of the questioning you are going to get from us this morning
relates specifically to developing countries, but I would like
to begin by asking some questions about developed countries, if
I may, just to put it in context. Starting with the UK first of
all, do you think this country has a right to expect to gain anything
from the current Round of world trade talks?
Dr Melamed: I think it depends
on who in this country you are talking about. I think if there
is considerable evidence, for example, that consumers and taxpayers
in this country would gain considerably from reforms of the Common
Agricultural Policy, which we all hope would be an outcome of
this Round, I think that if trade barriers between rich countries,
say between Europe and the US, come down, then there may well
be new opportunities for British companies, which hopefully would
also help the employees of those companies, and so on, so I think
there may be, but I think we would be very concerned at any argument
that this country should gain at the expense of poorer countries.
Q129 Chairman: That leads me on to
the next question I want to ask you. Do you think that we should
look, and developed countries in general should look, to get any
enhanced trading opportunities in the developing world?
Ms Stuart: I think that all countries
enter a trade Round wanting to get something out of it, and that
is why they are members of the WTO. However, there were explicit
commitments made in the Doha mandate that this is a development
Round and therefore this needs to be negotiated on a completely
different basis from a trade Round. Of course, all countries can
make gains from this trade Round, but, as Claire said, it must
not be at the expense of developing countries and it must also
be with prioritising the needs and the interests of developing
countries. But we all know the enlightened self-interest arguments
here as well. If developing countries start growing economically,
people in their country become consumers, very slowly they can
start participating in world trade, they stop needing to be dependent
on aid, for instance. Everybody gains by this increase in global
welfare, but this increase in global welfare only happens under
very tightly controlled and managed conditions.
Mr Hardstaff: Just to add to that,
I think the analysis of the development of NGOs in the UK would
be looking at the long-term benefits, long-term gains, for development
and developing countries and analysing trade policy in that sense
rather than what may be perceived as the short-term wins for the
European manufacturing industry and European service companies.
Q130 Chairman: Leaving on one side,
and you are right to say it in my view, that there are obviously
`developed to developed' trade issues which are of some importance
to the UK, particularly the USA, for example, the real incentive
on developed countries to conclude this Round is not just a moral
one but also enlightened self-interest?
Dr Melamed: Yes, but I think we
would argue, as Pete was just saying, that it is essential that
they take a long-term view of that self-interest rather than a
short-term view of the immediate gains they might make tomorrow.
Q131 Chairman: Before I bring in
Judy Mallaber with a question, can I ask particularly Dr Melamed
whether Christian Aid has any regrets at all about its advertising
campaign recently?
Dr Melamed: Are you referring
to the advertising campaign where we compared free trade with
slavery?
Q132 Chairman: I am, indeed.
Dr Melamed: I thought you might
be. I think that advertising campaign has generated an enormous
amount of debate and some very interesting debate on the nature
of free trade, whether in fact it exists or whether it is a mythical
beast of the nature of unicorns or similar. We certainly very
much welcome that debate—some of it has been conducted in
the press, some of it privately with people like yourself—and
so, on that basis, I think it has been successful. We have had
some good feedback from some of our supporters. I understand that
there are people who find that imagery difficult to accept, but
I think that in terms of trying to draw dramatic comparisons to
illustrate the damage that free trade has done and continues to
do—or trade liberalisation, inappropriately done and often
enforced, has done and continues to do—I think it is essential
that we do paint vivid pictures to draw the public's attention
to what can be a fairly dull subject.
Chairman: That is one of the oldest issues
in issue advertising, and for my money they were economically
illiterate as advertisements and damaged the cause that so much
goodwill had been built up in by the churches and by Christian
Aid over many years. That is a personal view. I expect we would
agree to differ on that, but I think your answer probably leads
me on to Judy Mallaber.
Q133 Judy Mallaber: It does. I would
like to know what you understand by the phrase `trade justice'?
Dr Melamed: There are two different
components of trade justice. There is a political component, which
is about each developing country being free to chose its own trade
policies, whether they be policies which in some cases might imply
liberalisation—
Chairman: There is probably no fire,
but I have no alternative when the alarm sounds but to suspend
the session I am afraid.
The Committee suspended from 11.15 a.m. to
11.29 a.m.
Chairman: I do apologise for that disruption
and I repeat on the record my admiration for enterprisingly getting
back so quickly. Where were we?
Q134 Judy Mallaber: I was on what
do you understand by trade justice?
Dr Melamed: I had just started
to say that for us trade justice has two components. It has a
political component, which is about developing countries being
able to choose their own trade policies through their own internal
political processes and particularly not being forced to adopt
trade policies, as has happened in the past, as a condition of
loans or grants from the International Monetary Fund or the World
Bank. They have been key in forcing developing countries to adopt
particular trade policies irrespective of the political processes
within those countries. So there is a political component of trade
justice, which is simply about governments being able to set their
own policies; there is the economic aspect to trade justice, which
is about which trade policies are actually proven to be the most
effective in bringing about development and poverty reduction,
and there, I think, the evidence is fairly compelling that it
is not wholesale trade liberalisation which is correlated with
increases in poverty reductions. We know that the most dramatic
increases in poverty reduction over the last 50 years have happened
in Asia, in the countries of East Asia: South Korea, Vietnam and
also famously in India and China. None of those countries are
examples of countries which have developed through trade liberalisation;
they have all had very active governments actively promoting their
own industries, promoting exports, and so on, but not simply standing
back and letting the market do what it will.
Q135 Chairman: I am going to interrupt
for one second. The fastest growth in India has occurred in the
totally deregulated sectors.
Dr Melamed: Yes, but building
on many, many years of state investment.
Q136 Chairman: I am not saying it
is not an interpretation of what is happening in that country.
The information and technology revolution has happened in an area
where there are absolutely no state interventions whatsoever and
Indian politicians like to hold up the example of that as in some
way representative of the rest of their economy.
Dr Melamed: It is quite interesting
what is happening in India. Although very dramatic growth is happening
in the information and technology sector, where poverty reduction
is happening is less in information technology, which in terms
of the contribution to the economy is very dramatic, in terms
of the number of people it is employing and the contribution to
poverty reduction it is fairly marginal. Where poverty is being
significantly reduced in India is through development in agriculture
and other more labour intensive industries, and those have both
been beneficiaries of quite serious government intervention over
the period of independence really and continuing.
Q137 Judy Mallaber: How much sense
does it make to say that each developing country must be free
to choose their own trade policies? If you are saying that totally
free trade is not helpful and would not bring you trade justice,
you are obviously wanting there to be some kind of international
trading rules, and I am still a bit unclear as to what makes that
trade justice and how, within that context, you can say each developing
country should be free to chose their own trade policies.
Ms Stuart: It is about developing
countries having the policy space and the flexibility to be able
to look at their own domestic economy, look at their own developmental
priorities and see at a national level what kind of economic structure,
backed up with what kind of welfare systems, need to be in place
for development to happen, and that can only happen at national
government level because, as we all know, trade is such a complex
public policy issue, it depends so much on the national circumstances
in that country, and so we feel it is not something on which a
wholesale decision can be made at the level of the WTO. What the
WTO must do is leave enough space for developing countries to
make that right decision using a judgment and analysis of the
situation on the ground.
Chairman: We are all going to have to
be a bit disciplined, me included, in terms of the length of questions
and answers. We will run on for an extra ten minutes from what
we anticipated until about five to twelve, but we cannot go much
beyond that. We have quite a lot of ground to cover. It is frustrating
and I apologise for this.
Q138 Mr Wright: You mentioned the
question of policy space for the right for them to determine whether
or not to open their own markets. Some might interpret that to
mean that they should not necessarily open their markets up in
this WTO Round. Do you agree? Do you think that the development
companies should open up any of their manufacturing or services
markets during this Round?
Ms Stuart: I think again I would
refer you to my previous answer. It has got to be a decision taken
by that national government. We are neither pro blanket protectionism
nor pro free trade. As you can imagine, it is about each country
having the right to regulate its own import structures, and if
they chose to liberalise certain sectors and they have carried
out a full poverty and developmental analysis of that, that is
fine. If they choose to protect certain sectors because there
are very strong developmental reasons for them needing to do so,
they have also got to have the space to be able to do that.
Mr Hardstaff: I think the key
thing about the argument around trade justice is about managing
trade to produce broader public benefits, and so, yes, we do believe
in an international system of rules around trade. It is a question
of ensuring that those rules enshrine the kind of flexibility
for developing countries to use trade policy in the most effective
way, and sometimes that is going to be liberalisation and sometimes
that is going to be protection, in order to promote domestic businesses.
Q139 Mr Wright: If they decided they
were going to open up the markets, you would not advise them and
say, "You should not really be doing that"? What you
are saying is it should be determined by themselves on the basis
of what we term as a policy space?
Mr Hardstaff: Absolutely. We are
not in a position to advise developing country governments on
what they should or should not do. The key issue, and this is
something that many developing country governments have raised
in the whole trade Round, is about the degree of flexibility that
they have to pursue national development priorities using trade
policy, and we would support that right.
Ms Stuart: Can I come back on
that briefly just to add to that. Remember that we are not just
working in the context of northern civil society organisations;
there are also increasingly strong civil society associations
in those countries who will be holding their governments to account
to ensure that when they have that policy space they use it in
the correct way.
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