Examination of Witnesses (Questions 40-59)
LORD JONES
OF BIRMINGHAM
AND MR
GARETH THOMAS
MP
8 JANUARY 2008
Q40 Mr Weir: There is a huge difference
between continuing negotiations and agreeing a deal. Given you
are talking about a deadline at the end of this year, the American
presidential elections are going on until the early part of November.
Is the reality that you are not going to get a deal until a new
president is sworn in in the early part of next year and they
take a decision on whatever the negotiating position taken in
the Doha Round is?
Mr Thomas: I am not going to accept
that scenario because the temptation that your scenario presents
is that we can all sit back and wait for the next 12 months, that
I can concentrate on consumer affairs and perhaps just come in
in the mornings.
Q41 Mr Weir: I am trying to get the
reality of the situation. I am not suggesting you do that at all.
Everyone supports the Doha agreement providing it is a clean agreement,
but given that four years have passed, you have talked a lot about
negotiations and possibilities and ifs and buts if this is agreed,
but it does not seem to me there is a road map to reach an agreement
by the end of this year. The International Development Committee
suggested it will be completed and put out of its misery. Do you
agree with that situation?
Mr Thomas: No, I do not agree
with that at all. I think you have to look at how previous trade
rounds have gone, and previous trade rounds have been very lengthy.
The Uruguay Round, for example, was very lengthy. There have been
some regional trade agreement discussion that have taken a considerable
period of time to conclude as well. Trade negotiations are, by
definition, highly complex and do take a considerable length of
time to resolve, and with something of the complexity of the Doha
deal we should not have been surprised, and I suspect members
of the Committee are not surprised, that the deal has taken longer
than perhaps some pundits initially suggested it might. I come
back to my opening comment in response to your question. We are
seeing progress, we believe, in the talks in Geneva and that is
why we think it is important that we continue to give strong support
to Peter Mandelson, who is obviously negotiating for the European
Union, but also why it is important that we continue to have discussions
at Prime Ministerial level with Prime Minister's counterparts
in the US, in Brazil, India and across the European Union to try
to unlock that last flexibility that is necessary to close a deal
on the headlines.
Q42 Mr Weir: Do you believe it will
be concluded by the end of this year?
Mr Thomas: I hope so.
Q43 Anne Moffat: On India and the
EU, will the new trade negotiations between the EU and India distract
them from a multi-lateral deal?
Mr Thomas: I do not think so,
is my view. The Indians are engaging very heavily in the discussions
in Geneva. Equally, they were very keen that we kicked off negotiations
on a regional trade agreement back in June. There have been, I
think, now two or three rounds of discussions between the EU and
India. India is very keen for an ambitious regional trade agreement.
They have said the agreement will be concluded by the end of 2008.
We are very much up for a very ambitious agreement between the
EU, and India and if it takes a bit more time than the next 12
months to conclude such an ambitious agreement, then we think
we should take that time, but our sense is that Kamal Nath, who
is the Indian Trade Minister, and his officials, and even government
more generally, are up both for completing the Doha Round and
completing the RTA discussions with the EU.
Q44 Anne Moffat: Do you think it
might encourage other countries to do the same thing?
Mr Thomas: Again, I hope so. The
EU has got a series of regional trade agreement discussions under
way. The one that looks most promising at the moment is with South
Korea, but also there are negotiations that being kicked off with
the ASEAN block of countries. I suspect we may need to see the
EU negotiating individually with specific ASEAN countries rather
than with the whole block, for all sorts of reasons, but I think
you are right in saying that other countries see the benefit of
the EU's market and want to open up their own markets to the expertise
that the EU can offer through our businesses and will want to
get involved in all sorts of discussions. I wonder if I can add
one more thing, Mr Luff. I think, beyond just direct discussions
on regional trade agreements, there are also discussions that
you can have about some of the non-regulatory barriers that you
see in-countrysanitary and phytosanitary standards, differences
in understanding about how particular products should be allowed
to happen or notand one of the things that we have welcomed
is the Commission's willingness to try to focus on some of those
issues alongside wanting to open up new regional trade agreement
discussions.
Q45 Chairman: Is there not a risk
that what will happen is, as other countries see the EU entering
into bilateral and regional deals, those other countries will
decide to enter into their own bilateral and regional deals with
third countries' areas, so reducing their capacity to negotiate
with the WTO for a multi-lateral deal. So, as the EU drives towards
its own regional bilateral agenda, it actually undermines the
whole Doha process? I think that was your question, Anne, but
I do not think it is the answer you got. You asked a question
about the EU's relationship with other countries. I think that
was what you wanted to ask.
Mr Thomas: I think we have to
be very clear and are very clear in our discussions within Europe
in trying to shape the mandate for Commissioner Mandelson that
any regional trade agreement negotiations that we get involved
in must supplement and
Q46 Chairman: I think again you are
avoiding the question.
Mr Thomas: I am not, I am going
to come to your specific question. ----must supplement and support
the Doha process. Do I think individual countries are going to
stop negotiating Doha in the round because of all these RTAs?
No, I do not think they are. I think all the key countries, all
the key players and the key blocks of countries within the WTO
process are very clear that they want to see a completion for
the Doha Round, a completion of these talks, but it would be,
I think, a huge mistake for the EU to stop trying to negotiate
regional trade agreements because all sorts of other of our competitors
are already negotiating regional trade agreements. We have got
to absolutely make sure that RTAs that we negotiate can support
and supplement and do not undermine the Doha Round, and that is
what we seek to make sure happens.
Q47 Anne Moffat: Thank you Gareth.
Unfortunately my next question is a negative one. If Doha fails
what can we do to mitigate the fallout? Do we have a Plan B?
Mr Thomas: I do not think Doha
is going to fail. I do think we are going to get a completion
to the round. I cannot give the Committee a specific timescale,
much as I would like to do so, but, as I have said, we are seeing
the progress, and I do not get a sense
Q48 Chairman: I thought it was 2008.
I thought we had a timescale.
Mr Thomas: I would like it to
be completed by the end of the year. I cannot tell you when it
is going to be completed within this year. The sooner the better,
I am sure, for everybody's benefit, but all the key players within
the negotiations have been clear that they want to the Doha Round
to be concluded, so I think to focus on a Plan B at this stage
would be an admission of defeat and I see no reason why we should
admit defeat.
Q49 Mr Bailey: Can we continue the
theme of the EU trade policy on the Global Europe Trade Strategy
which seems to have remarkably little information on the BERR
website. How do you think it has developed since it was launched
in 2006?
Mr Thomas: I will obviously have
to look at the BERR website, but I think there will be a series
of different ways in which the EU has progressed its trade strategy
since 2006. The first is by, as we were just discussing, launching
a series of new regional trade agreement negotiationsSouth
Korea, India, ASEANtrying to inject new life into some
of those regional trade agreement negotiations that have been
ongoing for sometime, such as with the Mercosur block of countries
the Euro-Med block of countries and, indeed, also with the Gulf
Co-operation Council. The second element I should perhaps flag
up, Mr Bailey, is there has been a renewed attempt by the Commission
and Member States to co-ordinate much more closely our work on
looking at some of the barriers to trade in particular countries.
Just as we always face a challenge in making sure that Whitehall
departments are working closely together, so the Commission has
acknowledged that Member States need to work much more closely
with each other and with the Commission to look at what the barriers
are in key countries. A series of working groups have been set
up in Brussels looking at key focused countries (and they are
the obvious onesthe Chinas, the Indias the Russias the
Brazils, et cetera) looking at what are the key concerns for European
Union businesses within those countries and what are the key blockages
to trade that they are facing. For example, Mr Bailey, working
groups have been set up to look at issues around vaccines in Japan
and textiles and clothing in various Asian markets, sanitary and
phytosanitary issues in China, looking at some of the detail behind
those blockages to trade, looking at what we can do in country
with the regulatory authorities in those countries to unblock
some of those barriers. They are not always deliberately in place,
sometimes it is a lack of understanding as to what is required.
Sometimes they are deliberate, and then you obviously need to
confront those directly in face-to-face negotiations. The third
element in terms of the EU strategy is there has been a Green
Paper published on trade defence instruments, what we do about
anti-dumping. Those discussions have been underway for some time.
We are expecting the College of Commissioners to give their response
to the different submissions that Member States have put in. So
there have been a series of ways in which the EU Trade Strategy
has been taken forward.
Q50 Mr Bailey: I can see the benefits
of some of the measures that you have outlined. What would your
response be to the point made by War on Want which says
the EU's trade strategy explicitly favours the interests of European
exporters over the development means of the global south? Obviously
I have no problem with, shall we say, meeting the needs of EU
business exporters; it is the second issue. If in the long-term
these needs were prejudicial to the development of other countries,
how do you see the policy developing? Is that a fair accusation?
Mr Thomas: I am not sure I would
characterise it in that way in just one sentence. There are, quite
clearly, a number of ways in which the world trading system does
need to be changed to help developing countries, and that is one
of the key reasons why this current round of trade talks was specifically
given a development dimension. Equally, we needed to make sure
that we are focusing on the needs of EU businesses, particularly
our own UK businesses, and we are, but I think you can open up
the EU's market to developing countries, and that is in the interests
of British consumers and European consumers and British consumers
and businesses just as it is in the interests of developing countries
to have their access into the EU's markets. I do not think it
is an either/or. I do not think if you are helping British business
you are damaging the interests of the south. I will give you one
example to illustrate that from my, I suppose, previous responsibilities.
In many African countries there is often a shortage of finance
to help businesses set up, to help existing businesses expand;
so if we can encourage our financial service industries to expand
more into African nations and developing nations, we in a sense
meet the needs of those industries for more finance for their
businesses to expand and lift people out of poverty through employment.
Equally, at the same time we are helping our own domestic businesses
generate more jobs here in the UK too potentially.
Q51 Mr Bailey: Can I quickly say:
do you think there is potential in the context of this strategy
for opening up the European market to developing countries?
Mr Thomas: I think absolutely
there is. That is a key element of the EU's position in the Doha
round of talks; it was a key part of the discussions during the
Economic Partnership Agreements too where we saw the EU putting
forward a willingness to offer full duty and quota-free access
to its markets for even those countries that are not the poorest
countries, the least developed countries, and for some countries
like Botswana they are very significant.
Chairman: We are moving into some
of the other areas someone else wants to ask about. Mike Weir
wants to ask some questions that directly relate to that in a
minute. Can I bring in Julie Kirkbride?
Q52 Miss Kirkbride: Minister, from
what you have said I assume you support the European Union's new
approach to free trade agreements. Can you highlight any that
the British Government is particularly interested in, what it
is that we want to get out of them and what you think the chances
of success are?
Mr Thomas: India and extensive
services liberalisation. We want better opportunities for British
legal businesses, retail businesses, financial services businesses.
That is one particularly important example.
Q53 Miss Kirkbride: Any others. Any
chances of getting that?
Mr Thomas: I think the chances
of getting that in India are quite high. India has said that it
wants an ambitious agreement, one that does allow its markets
to be opened up. In return it wants to see the EU's markets more
opened up to its products. I do not think that is a challenge
Q54 Miss Kirkbride: Which products?
Mr Thomas: Again, some of its
services, the market software industry, telecoms, again, some
of its legal firms want to be able to do business in a range of
EU countries where they cannot operate at the moment. As I say,
I do not think what India wants is a particular challenge for
the UK, I think it is going to be more of a challenge for some
of our EU partners, but I do think there is a significant chance
of opening up India's services markets on the basis of the comments
we have heard from Indian ministers and their officials to date.
Equally, I would not want to suggest to you that the negotiation
is going to be easy. Kamal Nath is a formidable negotiator. His
officials are very clear as to what they want and what they are
willing to concede on. Thus far the discussions are going okay,
they are proceeding. We want to concentrate on the quality of
what is agreed. That is why we have been careful to say it would
be great if we could conclude this agreement by the end of this
year, but we think we should focus on getting a good outcome to
those negotiations and if that means we roll over into 2009 a
little then we should be willing to do that.
Q55 Miss Kirkbride: If there was
a Doha settlement, would any of these individual deals have to
be reappraised or unpicked or is that something that has to be
specifically borne in mind in whatever is done in the meantime?
Mr Thomas: It has to be borne
in mind. The Commission has a very good idea of what the dynamic
is around particular parts of the Doha negotiations and they are
obviously able to factor that into the stance they take in particular
regional trade agreements. I think it is something we have to
keep abreast of and keep understanding the links between the two,
but I do not think it is a significant problem.
Q56 Mr Weir: We have received vocal
submissions criticising the recent rush to reach WTO-compatible
agreements by the end of last year and, in particular, that the
ACP countries have been put under a great deal of pressure to
sign up to EPAs to ensure their exports were not disrupted. Would
you agree it was a bit of a mess?
Mr Thomas: I think it was a less
smooth process than everybody would have liked, Mr Weir.
Q57 Chairman: That is a yes!
Mr Thomas: I think mess is too
strong a description of what happened. There were very intensive
discussions amongst ourselves, (the EU Member States), as to what
we should offer up and they were not easy discussions. Equally,
many of the African, Caribbean and Pacific countries had to look
at what they wanted to get. For the Caribbean in particular, they
wanted to fully realise the benefits of regional integration that
the Economic Partnership Agreement offered and that involved some
very hard discussions between different countries in the Caribbean.
These were extremely complex agreements that have been being negotiated
for seven years. I think the suggestion that there was a sudden
rush is an unfair characterisation. There was a real deadline
because of the waiver in terms of the Cotonou Agreement which
had underpinned trade relations between the EU and the ACP up-to-date.
That waiver was coming to an end as of 31 December this year.
So we did need to get those countries that do not have access
to the `Everything but Arms' agreement onto a new agreement otherwise
there could have been substantial tariff rises for some of those
countries in terms of selling their goods into the European Union.
Q58 Mr Weir: It seems Doha has a
very moveable end date, but this other agreement you mentioned
did not. Is there any reason why negotiations could not have continued
on these? Christian Aid has been quite vociferous in saying the
UK Government has gone back on earlier support given in 2005 by
taking up the EU position. What do you say to that?
Mr Thomas: I think Christian Aid
is wrong. We have supported the European Commission in these negotiations,
but we have also been pressing the European Commission in a series
of ways to show additional flexibility. We have engaged very strongly
in support of trying to get substantial changes to the rules of
origin package and then sought to protect that from other Member
States who wanted to weaken what we were going to be offering
developing countries. A number of countries wanted to add further
exemptions to the full duty free and quota free offer that was
being made to non-LDCs and again we pushed very hard for the existing
offer to be maintained. I think to suggest that we simply rolled
over and just allowed discussions to carry on and did not engage
is a travesty of what actually happened. I believe in general
terms market opening is going to be good for all of these countries.
What is very clear is that the vast bulk of the trade negotiators
and ministers that I spoke to about how EPA discussions were proceeding
were very keen to conclude EPAs because they could see the benefits
to their own country never mind the need to comply with the WTO
deadline. You have said Doha is a moving feast. Could not the
EPA discussions have been a moving feast? One of the things we
were always pushing for was for the Commission's mandate for the
discussions to really change. When the Commission started off
they had a mandate that included discussions about goods, about
services and about the so-called Singapore issues. We were saying
by the end of this year concentrate on getting a goods agreement
that is WTO compatible. The Commission came round to our position
and stopped talking to the vast bulk of ACP countries about services
and the Singapore Issues because they recognised the stance that
we had taken was right, that you just needed to concentrate on
those issues which were key to providing huge tariff rises and
in recognition of the capacity constraints that many ACP countries
had.
Q59 Mr Weir: You mentioned that most
countries wanted an EPA and that is true, but there is a difference
between wanting an EPA at any cost and wanting an EPA on reasonable
terms. You have talked about the interim EPAs. What is the UK's
approach going to be for the more comprehensive EPAs that have
been promised to take the place of these interim ones?
Mr Thomas: The first thing we
have got to do is to look at the agreements that have been concluded,
see whether there are any problems with the interim agreements
and then work out how we are going to proceed with different groups
of countries and different individual countries on the range of
other issues. What is clear is that many countries do want to
have a negotiation with the EU on services, on investment, on
competition and on procurement and we should be willing to go
down that route. One of the reasons why the Department for International
Development has given funding to support different groups of countries
and negotiated with the European Union is because they asked for
our support financially. They recognised that it was in their
interests to conclude agreements in these areas because it will
help to make the conditions for business to develop in their countries
much better than they are at the moment and it might help to attract
foreign direct investment into their countries and attract jobs.
We need to review how these interim EPAs are going to fall. We
need to sit down with individual countries and work out what we
want to prioritise for discussions and agree a timescale to take
them forward. Some of the people who have engaged with me about
EPAs would have been against anything that could have been characterised
as an EPA. Economic Partnership Agreements took on a sort of mythology
which I do not think they deserved. I think they will offer significant
development benefits, particularly to the non-LDCs which you are
now going to see being able to supply into the EU market, if they
can get buyers, on unrestricted amount of goods. For some countries
there are huge opportunities as a result of these agreements.
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