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28 Nov 2007 : Column 104WH—continued
The Minister will have heard many of the concerns. However, it is worth re-emphasising some of them. Instead of being pro-development and using the opportunity
to push Europe forward as an area that prioritises development, we seem to be producing an open free market economy through the EPAs. Instead of offering a protective environment, in which those countries can develop in the short term, they are being opened up to the rigors of free trade. The policy sets developed against developing and opens markets up to competition before they are ready.
Those who were present at the meeting of the all-party group a couple of weeks ago were fascinated to hear some of the evidence about whether free trade and liberalisation is a good thing. We tend to have a mantra that says that we are all in favour of free trade and liberalisation, but some economists are producing a lot of work that demonstrates that there is not an automatic link between the two. Many other parts of liberalisation, including some tariff protection, are an important part of the mix.
We need to look more deeply at some of the work that is available on how unreliable free trade and liberalisation can be. We need to be critical of merely joining a train that is headed in a particular direction and we must question some of the fundamentals. I hope that we can consider that today and see what benefits people believe will come out of the headlong rush into free trade.
I am concerned that the agreements will not help local produce to develop in its own country. We have heard examples of companies that will be pushed out and products that may flood in from EU countries—subsidised products that will damage the development of value-added goods that offer a way for a developing country to make more money from its resources through sectors such as agroprocessing, clothing and textiles. I am sure that the hon. Member for Cotswold (Mr. Clifton-Brown) will talk about his experience in the Seychelles. Those producers and others who know the potential impact of the EPAs have genuine concerns. I am sure that he will want to talk about that in more detail.
The hon. Member for Banbury rightly mentioned that regional trading between countries would be reduced because of the blocs, and other countries could or would lose out to increased goods coming in from the EU. The blocs cut across the regional groups, which should not be broken up. In fact, we should be helping to strengthen those groups, so that we set up the African free trade equivalent of the European Union. Allowing that flood could damage many of those fledgling industries, which need support, rather than total exposure.
The danger is that social spending could be cut as Government tax revenues are impacted and Governments lose valuable money. The figure of $15 million has been quoted, and it is equivalent to the expenditure on Malawi’s HIV programme. It does not sound a lot to us, but $15.8 million has a significant impact on the work that Governments do in such countries. Furthermore, such black holes in Government revenue must be filled with—guess what—EU aid and aid commitments. That is contradictory, and it needs to be sorted out, because it is ridiculous for us to rush headlong into agreeing EPAs, only to end up picking up the bill for their impact. We therefore need to do a little more joined-up thinking about the impact of EPAs.
We have been promised that any opening up of markets that results in the Governments that will be particularly affected losing revenue would be dealt with through aid,
but I do not think that we should be giving that reassurance. I would much prefer us to go back to first base and reassure countries that they will not need our aid because we will sort out the tariff problems in the first place.
Mr. Clifton-Brown: Does the hon. Gentleman not agree that the difficulty for many ACP countries in these negotiations is that the EU is not only their largest trading partner, but their largest development assistance donor? They are therefore between a rock and a hard place if they do not sign these agreements.
Mr. Reed: I accept that, and the term “bullying” has been used on numerous occasions in various articles and briefings. There is a real difficulty for such countries, and although we often hear reassuring words at Government level—we would, would we not?—individual Members of Parliament in some countries feel a little less secure about the direction that is being taken. The hon. Gentleman is right that the EU is the biggest donor and that there is pressure to be seen to be of some assistance in trying to hit the deadline, but there is a contradiction there.
The hon. Gentleman’s remarks also raise the issue of capacity—the number of people with the expertise to negotiate on behalf of such countries. Again, we need to take the issue seriously. It was taken up seriously in the Doha round, and capacity building was a welcome part of what the UK Government did; indeed, I am sure that the Minister will tell us of other examples of where we have tried to assist with capacity building. However, it is still difficult for small countries to face negotiating teams from the EU or individual Governments in bilateral discussions. We therefore need to ensure that there is a level playing field in the negotiations.
We must accept that the Government have come a long way, and that is particularly true of 2005, when the Prime Minister and the documents that this country produced put us in the right place—all the words were there and the intentions were good. To return to the first comments by the hon. Member for Banbury, the debate is about giving the Minister extra grist to his mill, so that he can go to Brussels and say, “Look, we are cognisant of the problems that will arise.” We know that the Government want to get the best deal for the poor and the development agenda, but we need to ensure that that is delivered at EU level.
Producers in ACP countries are voicing concerns, and industrialists are worried—this is not only about NGOs and civil society, but about a large group of people across society. As the hon. Gentleman knows, parliamentarians recently held a couple of events to raise such issues, and a Ugandan MP, the hon. Joseph Mugambe, expressed concerns about the way in which EPAs were being forced on his country, with Parliament given no time to scrutinise and vote on them. He was worried for his country and lamented the lack of responses and understanding from the European Commission. He felt that EPAs were a bad deal for his country, but he was resigned to the fact that Uganda would sign up because the pressure applied to senior Government figures was so heavy, which goes back to the hon. Gentleman’s point.
Ghana is also under pressure to sign agreements, with British officials using their influence to ensure that countries sign. In a way, that is quite welcome, but the
question is whether the negotiations have been fair all the way through, and I would like to hear whether the Minister is confident that that has been the case.
NGOs and the trade justice movement have rightly been upfront on the issue. As the hon. Gentleman said, just a small increase in trade would lift hundreds of millions of people out of poverty—far more than increases in aid spending or some of the work that we have done on debt cancellation would achieve. Trade is the real key, and if we get things wrong this time, we could increase poverty, rather than reduce it, which would be a terrible step backwards when so much progress has been made recently.
Last week saw the draft East African Community-EC EPA—unfortunately, as the hon. Gentleman said, this is one of those issues that uses a lot of acronyms. Although the term “draft EAC-EC EPA” rolls easily of the tongue, it is in direct contradiction with the UK’s policy on EPAs because it will undermine regional integration and impose rapid liberalisation, with the EAC opening up 63 per cent. of its trade by 2010, while access to the EU might be reduced because of stricter EU safeguards. The 10-year timing on the 63 per cent. is important, given that most countries understood that there would be a longer lead-in time of 25 years.
Mr. Thomas: As the comments by my hon. Friend and the hon. Member for Banbury about the EAC negotiations show, there has been considerable concern about the issue. On the 63 per cent., let me reassure my hon. Friend that 63 per cent. of goods in the EAC already have no tariffs in respect of the EU. What has happened so far is that that has been written into the agreement. There is no fundamental change as regards the 63 per cent. I hope that that gives him, the hon. Gentleman and civil society groups that have followed the issue closely some reassurance.
Mr. Reed: I am grateful for that intervention because the shifting sands of this process mean that things are changing almost from day to day even though the deadline is tight. As regards the 10-year or 25-year period, I hope that the Minister will bear in mind the progress that is being made on the remaining 37 per cent. of goods and continue to bring pressure to bear. We hold debates such as this precisely to tease out some of the more detailed points, which are fundamental to the overall way in which the policy is developing.
As I was saying, such issues have been raised not by a minority of commentators, but by a wide range of people in civil society. At last week’s meeting, my colleagues and I met Aissata from the Agency for Co-operation and Research Development, a Kenya-based charity. To return to a point that I made earlier, she talked about the effects on individual farmers of the issues that we are discussing—her charity is one of those that looks after individual farmers in parts of Kenya. So often, discussions about development issues deal with numbers, facts, figures and legal arguments, and we forget that it is the people on the ground whom we are trying to help.
Aissata spoke very movingly about the small-scale subsistence farmers—usually women—who grow tea and flowers. They have had really poor experiences with previous programmes and have lost out in any new agreements, so they are worried about what will happen this time around. They have heard of EPAs because
they know that the negotiations are going on. They are genuinely worried about the impact on their livelihoods and about whether they will, literally, be able to feed their families if changes suddenly take place over the next year or so.
The Commission is proposing a two-step approach, with countries signing interim EPAs by the end of this year and full EPAs by the end of next year. As we have heard, however, there are alternatives, and I urge the Minister to look at them to see whether there are other ways to deal with the process. I know that such negotiations always go to the wire and that time pressure usually means that we get a deal, but the pressure to introduce legislation quickly in the House often means that it is poor legislation. Although there is pressure to negotiate—without it, the negotiations could go on for ever—I urge the Minister to find a middle way and a timetable that allows us to have full negotiations and capacity building in the meantime.
To quote a recent statement from the Network of African Trade Unions:
“the deal that has now been presented to a number of regions, which has been dubbed ‘EPAs light’, will still have dire consequences for our economies and jobs. The fact that the liberalisation of tariffs on goods, including agriculture, will happen at such a level and rate as to threaten our small farmers and infant industries could spell disaster for some of the most fragile economies in the world. On top of this, the rapid loss of government revenue will paralyse our governments’ abilities to invest in education, health and decent jobs, all of which are crucial to sustainable development.”
This is how people on the ground, rather than those engaged in the highfalutin discussions that are a part of the process, rightly see the EPAs and negotiations.
Given the fact that the agreements are felt to threaten and undermine regional integration and could lead to extensive loss of jobs, livelihoods, revenue and policy space, is it possible that the Government should be doing more to ensure at EU level that more time is available for truly pro-development agreements to be reached? I look forward to hearing what the Minister has to say. I know that he has made great progress in many of the matters that we have discussed. We all, however, need to be convinced that the EPAs can be made to work for the poorest in the world, and deliver a development agenda that we all want.
Frank Cook (in the Chair): Order. There are 40 minutes remaining in the allocated time for the debate. I hope that the next hon. Member to speak will take no more than one third of that time.
3.21 pm
John Barrett (Edinburgh, West) (LD): When more than 200,000 people marched through my Edinburgh constituency in 2005 at the time of the Gleneagles summit, as part of the “make poverty history” protest, one of the key demands was for a fairer trading regime with developing countries. It is now almost universally accepted that fair trade, more than anything else, is the key that will ultimately unlock the poorest countries from the chains of mass poverty. I, too, congratulate the hon. Member for Banbury (Tony Baldry) on securing today’s debate at what is certainly an opportune time. As he said, the debate is in part necessarily a dry one, but what is at stake is a matter of life and death for many people.
I doubt whether there is anyone who does not agree that we need to replace existing trade agreements between the EU and African, Caribbean and Pacific countries. Where I would challenge the EC is on whether the economic partnership agreements, as they currently stand, are the best way to do that, whether the timetable that the EC has outlined is realistic, and whether the process has been fair. It is also important to remember that the EPA talks are taking place in the context of the latest floundering World Trade Organisation talks. Indeed, the long shadow of the failure to reach substantive agreements in the Doha round hangs heavily over the current negotiations. The irony is that the EU is pressing ACP countries to agree a deal by the December deadline to comply with WTO rules that in all probability would no longer be in the WTO rule book had there been a successful outcome to the Doha development talks.
Before I move on, I want to stress that although I have several criticisms to make of the EC on a number of points, I genuinely commend the Department for International Development and the Under-Secretary, particularly for his work in this area and the successes that he has had in securing changes. I only wish that there had been more of them.
I, like many others, was hopeful that the latest trade negotiations between the EU and the ACP countries would aim to deliver an agreement that was development-focused. I had hoped, initially at least, that the talks would deal with the interests of the poorest countries, rather than being concerned just with protecting narrow domestic interests. Instead, today the European Commission is on the verge of becoming the first Commission in 50 years to impose a wide-ranging increase of European Union tariffs on some of the poorest countries in the world. Let us make no mistake: if that happens it will be by choice, and not by legal compulsion, as has been claimed by Trade Commissioner Mandelson, among others.
I am sure that we are all familiar with the argument: the EU claims that a deal must be done by December to ensure WTO compliance. It says that failure to agree the EPAs by then will give the EU no choice but to
“fall back on our default preferences scheme”—
meaning higher tariffs for ACP countries—as
“there is no credible alternative”.
The issue of the deadline is the first point that I want to raise. The December date, although useful in the past for focusing minds, must now be recognised as a major obstacle to the securing of an acceptable deal. It is not necessary for me to point out that trade agreements on such a scale are hugely complicated, and anyone who thinks that the agreements in question can realistically be concluded in the next month is mistaken.
The current Trade Commissioner has said:
“The EU is not threatening to raise tariffs for these countries, but is doing all it can to avoid this.”
However, it is not true to suggest that there are no legal alternatives or that the December deadline is non-negotiable. It is not options that are lacking, but the political will to exercise them. As hon. Members have said, the EU could seek to extend its WTO waiver or to fine-tune the enhanced general system of preferences—the GSP+ that has been mentioned already—to allow all ACP countries to retain market access equivalent to
what they have now. Forcing the pace of negotiations, as the EC appears content to do, can only disadvantage the weakest players, and makes a mockery of the EU’s development credentials. I ask the Minister again to take up the issue of the deadline with the EC, and to urge a rethink on what seems at present to be a red line issue for the Trade Commissioner.
There are those in the EU who have warned that failure to reach a deal on EPAs by December would be a public relations disaster. I am more concerned that by rushing into what as they stand would be unfair EPAs, we shall store up a humanitarian disaster for the future. Developing countries have much to lose from the EPAs, and precious little to gain. In May last year the Prime Minister—the then Chancellor of the Exchequer—said in Abuja, Nigeria, that
“we know even with fair access it will take time for poor countries to compete... instead of forced liberalisation, poor countries must be allowed the flexibility to decide, plan and sequence their own trade reforms.”
The then trade Minister, the right hon. Member for Makerfield (Mr. McCartney), said in June this year:
“We believe that it is the preserve of the ACP to determine their own trade policy.”
I agree entirely. The problem is that the flexibility to decide, plan and sequence their own trade reforms is exactly what developing countries will be denied if the EPAs go ahead. The danger is that the EPAs will unleash a surge of European imports that could wipe out fledgling industries in many countries. Kenya’s horticultural industry has already been mentioned. It is a sector worth $700 million in foreign exchange to Kenya. The danger is that tariff hikes on its exports to the EU could put at risk some of the most successful export companies. Those companies, lest we forget, have been carefully supported through aid programmes, including those of the Department for International Development.
Other hon. Members will, like me, have heard the Commissioner deny claims that EPAs will open up the ACP markets to EU trade at the expense of local businesses and growth. However, it is undeniable that the EU is demanding greater and faster liberalisation than regions are willing to offer. I know that EC representatives have stressed that the changes will be implemented over time, but I am sure that other hon. Members will be as concerned as I am about the seemingly contradictory noises that we hear about the issue. It seems that there is a clear distance between what Trade Commissioners tell the press and perhaps even the Government, and what the negotiators tell the ACP representatives. We need more leeway in the negotiations to allow ACP countries to liberalise in a phased manner and at a pace that does not decimate their industries at a stroke.
Perhaps the most worrying impact of the EPAs in their current form would be their effect on regional integration. In the long term there can be no doubt that building up trade within Africa is more important than exporting to the EU. The EPAs are supposed to encourage regional integration, but as they are drafted they would fatally undermine the long-term prospects for such essential internal trade between ACP countries.
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