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There is also a real problem with the way that the EC is pushing for an interpretation of substantially all trade within the EPAs that goes far beyond what ACP
countries want, and which is, indeed, beyond what the UN calculates is necessary to foster regional trade. Similarly, even at this very late stage the EC is inconsistent about the percentages of product lines that it says it is willing to accept for liberalisation on the part of the ACP. Eighty per cent. is a figure that has often been quoted by senior EC representatives, but recent reports from negotiations in the Economic and Monetary Community of Central Africa, the East and Southern Africa grouping and the Caribbean regions indicate that the EC has been insisting on liberalisation commitments of up to 90 per cent. in some cases. I should appreciate the Ministers comments on those points, particularly given that UN research calculates that eventual liberalisation towards the EU would have to be at a level of no more than 60 per cent. of trade; otherwise, regional trade would be undermined, rather than enhanced.
The key point is that the Commissions approach to regional trade and integration in Africa seems to have no concern for development as a goal itself. The lack of any reliable impact assessments of the introduction of the current EPAs means that we cannot expect ACP states to sign up to them. I seek reassurance from the Minister that under no circumstances will signing up to an EPA ever become a precondition for aid recipients, whose European trading partners are often also their largest donors. It would be fair to say, therefore, that many ACP countries are caught between a rock and a hard place.
Mr. Thomas: We have pursued that with the Commission, which denies that it has ever sought to link signing an economic partnership agreement to offers of aid. Resources might be available for aid for trade in order to help implement the provisions of EPAs, but that is very different from the concern that the hon. Gentleman has raised about conditionality.
It ought to be clear that we need urgent reform of EPAs and a radical rethink of how we approach this matter. I appreciate the concessions and changes secured by the Government and I commend DFID for making this a key issue within the EU. I fear that otherwise, it might not have even registered on many peoples political radar. However, if the EUs claim to be development-orientated is to have any credibility, it has a long way to go. We ought to remember why we are having trade talks in the first place. Is there not supposed to be a development thread at the heart of these changes? I am struggling to see one. The Prime Minister has said that Africa is one of his great passions. I do not doubt him, but the coming month will be a real test of his commitment.
Mr. Geoffrey Clifton-Brown (Cotswold) (Con): This is a timely debate because the negotiations are at a critical stage. I pay tribute, therefore, to my hon. Friend the Member for Banbury (Tony Baldry) for securing this debate, and through you, Mr. Cook, to the Speaker for allowing time for it to take place.
Much of the ground that I wish to cover has been touched on already. My hon. Friend covered the subject comprehensively. As he said, although it might be a dry subject, it is incredibly important to the 76 countries
involved and to hundreds of millions of some of the worlds poorest people. If we get this wrong, we risk putting them into even greater poverty. I hope, therefore, that the Minister can reassure us some morehe has already begun to do so. Unlike in many debates, in this one we are largely uncritical of the Government. We are having this debate because we fear the consequences of getting it wrong.
I welcome the opportunity to put forward concerns expressed not only by trade negotiators whom I have met in Africa and the Caribbean, but by civil societies, by non-governmental organisations and particularly by Trade Justice Movement, which has supplied me with much useful information and kept me up to date with the state of negotiations. It is a fast-moving situation, and no doubt the Minister can update us further. As my hon. Friend said, we have another chance to address the problem on Monday in the European Scrutiny Committee debate.
Like my hon. Friend, I would like to ask the Minister what steps have been taken to ensure that Parliament will have an opportunity to scrutinise the EPAs, if they are agreed, before they are ratified by the EU, and before the British Government sanction them.
After a complaint from Brazil, which wanted increased access to the EU sugar regime, the World Trade Organisation met and declared that, by 31 December 2007, the preferential trade agreements with the 76 ACP countries must be replaced by EPAs, which should be WTO-compliant. Unfortunately, instead of celebrating a new era of global trade, we are here discussing the potentially harmful consequences. The Minister is obviously aware of the criticisms levelled by NGOs, the World Bank, the International Monetary Fund and by many hon. Members. Through the good offices of my hon. Friend, we are ramping up opposition in Parliament. It is only right that we should do so. It is becoming clear that rather than introducing a new system that will strengthen development within those countries, the EU is aggressively pushing a policy that largely benefits the EU while potentially damaging some of the worlds poorest people and nations.
Tariff protectionism has been a key tool employed by many developed nations, including our own, with reductions coming only when the vital industries affected were strong enough to thrive in a highly-competitive global market. However, it is worth noting the high levels of agricultural protectionism that the EU still employs. Under EPAs, ACP nations will find many fledgling industries forced to close as they face threats from the rest of the world against which they cannot compete.
The hon. Member for Loughborough (Mr. Reed) invites me to use the example of the Seychelles again, where the tuna fishing industry faces closure and the loss of many hundreds of jobs among a population of only 88,000. That industry will go to Thailand or other low-cost producing countries, so the process poses huge dangers. There is another danger: if we are not careful, countries that against all odds are protected by such agreements, might be protected in such a way that they cannot add value to and develop their primary industries because they would have to compete with countries that can add value at a lower cost.
The loss of revenue from existing tariffs is of equal concern. Although there is an option to introduce VAT or other local taxes, I do not believe that that would
cover the losses. Most significantly it would shift the burden of aggressive local taxation on to some of the poorest people in those countries. The IMF estimates that for every $1 lost from the harmonisation of tariffs, only 30 cents will be recovered through VAT or local taxes. In some cases, Governments will face a severe loss of revenue, and there are few mechanisms for replacing that. Inevitably that would mean cuts in public services in some of those countries.
Another concern relates to the effects on regional integration, which was also mentioned by my hon. Friend, and which might be more important than trade with distant global partners. If individual blocs increase trade among themselves, they will be likely to compete on the same basis, which will benefit them hugely. Having said that, some well-established tariffs ought to be abolished. For example, I discovered that the local brewery in Barbados is protected by a 15 per cent. levy imposed by the Government on beer from other Caribbean countries. It just so happens that that brewery belongs to Diageo. Sometimes, therefore, those tariffs protect not the poorest people, but the large, international players.
The behaviour of the EU has been the most disturbing part of the process. The negotiations are about to set in motion the first free trade agreements in which less developed nations have ever entered. However, they do not wish to do so. They have been forced to negotiate with one of the biggest global trading blocs and with, in most cases, the ACP countries largest international aid donors. Given the EUs commitment to development, the keen awareness of other potential problems and the acknowledged and entirely understandable weakness of the ACP trade negotiators, one would have thought that the EU would have offered as much help as possible.
To my consternation, that has not been the case. The 31 December deadline looms and has been used as a battering ram to corral those very small nations into signing a deal out of which the EU appears to be the only winner. I shall give an example of how difficult that process is for some of the smaller countries. In Ghana, just one man is responsible for negotiating EPAs, for negotiating with the WTO, and for negotiating bilateral trade agreements between Ghana and other African countries. The EU will probably have a team of people just dealing with Ghana. That shows the inequality of negotiating power.
The hon. Member for Loughborough said that, in many cases, the Department for International Development has tried to provide the resources and expertise to bolster the negotiating procedure of those countries. I have met representatives from the Caribbean negotiating machinery, and very expert they are too. However, it is still quite difficult to see the parity of those countries negotiating positions when compared with the huge teams available in the Commission.
Many of these nations find themselves in negotiations that cover many hundreds of pages of close legal texts. Again, the ability of one man in Ghanahowever good he may beto deal with those negotiations puts such countries in a very difficult position. How are they supposed to assess fully the implications of signing an economic partnership agreement? That responsibility should have been addressed by the EU. In particular,
the EU should ensure that proper impact assessments are carried out once the EPAs have been signed, so that their effect in future years can be fully understood and proper measures taken, either through international development assistance or other assistance, to cushion some of the worst effects. The hon. Gentleman clearly illustrated some of those effects through his quotation from the trade unions.
The fear has been raised with me on several occasions that not enough has been done to examine the impact assessments. There is also a need for transitional aid to help some of those industries that will be put out of business. All that has left some of the African, Caribbean and Pacific nations in something of a bind: uncertain of the consequences of not signing the agreements and ill-informed of any alternatives. As my hon. Friend the Member for Banbury and other hon. Members have said, the 31 December deadline is not absolute; there are alternatives, such as GSP+ and extending the waiver. I would be interested to know from the Minister whether he still believes that that deadline is absolute.
I would also like to know from the Minister what he thinks about the ongoing negotiations, for example, whether they need to include the Singapore terms or whether a goods-only agreement would be satisfactory. I ask that because the agreement initialled last Friday in Botswana, Mozambique, Swaziland and Lesotho was, I understand, a deal only for goods. If that agreement is going to be acceptable, what is all the fuss about? Why cannot all those six groupings simply sign goods-only deals, with an agreement to include the Singapore terms at a later date?
I would also like to ask the Minister what provisions there will be in the agreements to review them subsequently, especially if there are dire consequences. Let us face the fact that the EU is not possessed of all the knowledge in this area and there may well be elements of each individual agreement that will need modifying. I would like to ask him what the process for that review will be.
I must comment on what I see as a difference in stance by the EU; others have commented on that issue, although perhaps not as directly as I would like to. Much of the argument about the agreements stems from the percentage of the ACP markets that must be opened; the term substantially open is obviously open to interpretation. It used to be thought that the figure was 80 per cent., with 100 per cent. of the EU market being opened, leading to an average of 90 per cent. However, in many cases now the EU seems to be moving towards a 90 per cent. opening.
There also seems to be a difference as to what baskets of special industries can be protected. It was thought that the figure should be 20 per cent., but it is now argued that it should be below 8 per cent. That 8 per cent. figure is very interesting, because it is the figure that the EU was arguing for, in reverse, during the World Trade Organisation negotiations, to try to safeguard its own highly protected agricultural industries. That was one of the key reasons why the Doha round of the WTO negotiations failed. It seems that the EU is using double standards in that respect.
Finally, I would like to issue a plea to the Minister to look very carefully at where the negotiations are going. There is potential for good in them, including potential for trade development, and no doubt some countries will thrive by having their barriers taken down. That is
fantastic, it should be the aim, and it should be the aim also to lift these countries out of poverty through trade. My hon. Friend the Member for Banbury cited the fact that a 1 per cent. increase in trade could lift hundreds of millions of people out of poverty. Certainly, in the case of the Caribbean countries and other medium-income countries, it should be perfectly possible, with a little forethought, to lift them out of being medium-income countries and into being fully advanced countries, which are not in need of aid at all. It should be our aim to bolster the poorest of these countries, so that they are able to stand better on their own two feet.
The Minister has heard our concerns today. Those concerns will continue to be expressed, and I ask that, in the negotiations, he deals fairly with those countries, with many of which Britain has strong historic links.
The Parliamentary Under-Secretary of State for International Development (Mr. Gareth Thomas): I, too, congratulate the hon. Member for Banbury (Tony Baldry) on securing the debate. Along with my hon. Friend the Member for Loughborough (Mr. Reed), and the hon. Members for Edinburgh, West (John Barrett) and for Cotswold (Mr. Clifton-Brown), he has, with great rigour, raised in the House the concerns of many people in this country about these economic partnership agreements. I will endeavour to respond in the same way in order to address hon. Members concerns.
At the beginning, however, I should add a note of caution, in that this is a very dynamic phase of the negotiations. Things are changing very fast and negotiations are still taking place in a number of regions, so I hope that the House will recognise that I will be unable to give complete clarity in response to every point that has been made.
Nevertheless, let me start with the opening comments by the hon. Member for Banbury. I agree completely that a mercantilist approach to trade will not be enough to deliver the development benefits for the 1 billion people who still live on one dollar a day. We must intervene to ensure that development concerns are prioritised. That has been and will continue to be the Governments approach, both to these agreements and to the Doha round of discussions.
The hon. Gentleman was absolutely right to say that, although this debate will appear to be very technical to those who read our deliberations, this issue is nevertheless of enormous importance to the citizens of the 76 ACP countries, where there are millions of very poor people whose routes out of poverty depend in no small part on establishing better trade, both between their countries and with the European Union.
If the hon. Gentleman will forgive me, I profoundly disagree with his comment that Doha is dead. I was in Geneva only last week talking to negotiators from many of the countries that will be key to progress. In particular, I met the chair of the agriculture negotiating group, who is very clear that progress is taking place in those negotiations. Agreement there will be key to progress in other parts of the Doha dossier. Progress is taking much longer than we and, I am sure, all parts of the House would like. However, we believe that progress is
being made. Despite the political difficulties that the chair of the group described, given the approach of the American primary season, we believe that a deal can still be done, even though we are at a critical point.
By way of providing context, the hon. Gentleman made the very good pointit was also made by other hon. Membersthat no amount of aid will halve the proportion of people living in poverty, which is the key headline millennium development goal, without there being progress in other parts of the aid-trade debt relief agenda. For example, it is clear from statistics incorporated into the Commission for Africa report that more and fairer trade will be worth up to three times more to Africa than all the aid that it receives.
I am sure that most Members will agree that open societies that learn from and trade with other societies are enriched materially and culturally, and that trade creates jobs, generates income, gives consumers more choice and greater access to cheaper goods, gives access to cheaper inputs for producers, helps to stimulate competitiveness in an economy, allows technology transfer to take place, and stimulates co-operation and closer ties between countries.
The hon. Member for Cotswold said that it is true that no country has made progress without tariff protection. It is also true to say that no country has developed in the last 40 years in the absence of international trade and without bringing down tariffs at key points. It is for all those reasons that the UK has taken, and will continue to take, a keen interest in the EPAs.
I reassure the House that I have already been active in talking to Commissioner Mandelson, other EU member states and, crucially, many ACP Government Ministers and the lead negotiators from many of the six regions. Interestingly, none of the ACP Ministers to whom I have spoken has not wanted to sign an EPA. They have recognised the huge potential benefits that the agreements could bring their countries. If we can put in place duty and quota-free access to the European Union supported by simple, predictable rules of origin, ensure that the ACPs own market opening is properly phased, and provide support for enhanced regional integration, economic partnership agreements can offer substantial development benefits to the 76 countries that the hon. Member for Cotswold mentioned.
I have mentioned the fundamental parts of the UK position, which we set out back in March 2005 and for which we have sought to secure the support of other member states and the Commission. In the past two years, we have had a number of robust exchanges about EPAs with other member states and the Commission.
It would be fair to say that the UK Government have not always seen eye to eye with the Commission on its negotiating tactics. For example, we made it clear in the position paper that we published back in March 2005 that we wanted an offer of duty and quota-free access to be put on the table up front at that point. It materialised in March and April this year, although two products were in transition periods. Simpler rules of origin were put on the table, although not until this September. We have made progress on securing the development benefits that we have agitated for in the past two years, but we would have liked the Commission to have gone further and more quickly.
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