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The Committee consisted of the following Members:

Chairman: Mr. Eric Martlew
Bacon, Mr. Richard (South Norfolk) (Con)
Beckett, Margaret (Derby, South) (Lab)
Blears, Hazel (Salford) (Lab)
Boswell, Mr. Tim (Daventry) (Con)
Clifton-Brown, Mr. Geoffrey (Cotswold) (Con)
Davey, Mr. Edward (Kingston and Surbiton) (LD)
Heppell, Mr. John (Nottingham, East) (Lab)
Hoey, Kate (Vauxhall) (Lab)
Prosser, Gwyn (Dover) (Lab)
Purchase, Mr. Ken (Wolverhampton, North-East) (Lab/Co-op)
Simpson, Alan (Nottingham, South) (Lab)
Steen, Mr. Anthony (Totnes) (Con)
Stringer, Graham (Manchester, Blackley) (Lab)
Swinson, Jo (East Dunbartonshire) (LD)
Thomas, Mr. Gareth (Minister of State, Department for International Development)
Wright, Mr. Anthony (Great Yarmouth) (Lab)
Glenn McKee, Committee Clerk
† attended the Committee

Third Delegated Legislation Committee

Tuesday 30 June 2009

[Mr. Eric Martlew in the Chair]

Draft European Communities (Definition of Treaties) (Cariforum Economic Partnership Agreement) Order 2009

10.30 am
The Minister of State, Department for International Development (Mr. Gareth Thomas): I beg to move,
That the Committee has considered the draft European Communities (Definition of Treaties) (Cariforum Economic Partnership Agreement) Order 2009.
It is a pleasure to serve under your chairmanship, Mr. Martlew.
The CARIFORUM economic partnership agreement will bring together 14—soon, we hope, 15—Caribbean nations with the European Union to promote development-friendly trade. This means that Caribbean countries will receive duty-free, quota-free access to European Union markets. Without it some countries would have faced tariffs on up to 25 per cent. of their exports, including critical exports such as bananas. The EPA allows the Caribbean countries to remove their own tariffs gradually over 25 years and contains safeguards to protect infant industries and prevent import surges.
At the request of CARIFORUM, the agreement includes provisions on services. These represent key opportunities for growth in the Caribbean, particularly in tourism, leisure and the creative industries. No nation can achieve prosperity by closing its borders to trade. Bruce Golding, the Prime Minister of Jamaica, has said that the Caribbean’s hopes for growth are inextricably tied to trade and its ability to penetrate and maintain a position in markets where demand is greater than it could ever create itself.
The duty-free, quota-free access and improved rules of origin provisions of the EPA will most quickly benefit the Caribbean economies. The Dominican Republic, for example, is already moving to exploit enhanced market access for cocoa, bananas and textiles. In the longer term, the biggest benefits will come from the regional integration that will flow from all countries in the region signing the EPA.
In this financial year, the Department for International Development has invested £5 million into a new trust fund—the Caribbean Aid for Trade and Regional Integration Trust Fund, or CARTFUND—to increase growth and deepen economic integration.
This EPA was signed on 15 October last year by all CARIFORUM states except Guyana and Haiti. Guyana subsequently signed on 20 October. Haiti has not yet signed the agreement; it has, however, indicated that it intends to sign, although it has yet to commit to a specific date for doing so. The current text includes references to Haiti as a country that is party to the agreement. If it becomes clear that Haiti will not sign, we would have to amend this statutory instrument. However, such have been the indications to date that I believe Haiti wants to sign the EPA. Therefore, I commend the order to the Committee.
10.32 am
Mr. Geoffrey Clifton-Brown (Cotswold) (Con): I am grateful to serve under your chairmanship, Mr. Martlew. I am also grateful to see the Minister; we go back a long way on this subject. I note that when we were debating economic partnerships in the European Scrutiny Committee on 3 December 2007, I said that we were there further to discuss the signing of an agreement whose end was to enable the African, Caribbean and Pacific nations to become key players in international trade and to provide for long-term development, but that if poorly applied, there was a risk of crippling fledgling industries and taking away tariff protectionism, robbing these nations of an important tool of trade development. We Conservatives welcome the adoption of this agreement—there are six others still to go—but the proof of the pudding will be in the eating. At that stage little was known about the impact of EPAs and the future for those who were taking them on. It seems that only small changes have been made in the 18 months since the deadline for agreement passed, on 31 December 2007. Today we are discussing implementation of the first regional EPA.
Perhaps the Minister will take the opportunity—if not now then in correspondence, or via documents placed in the Library—to detail the progress of not only this EPA but the other six being negotiated concurrently. The CARIFORUM EPA was initialled, as the Minister said, on 16 December 2007, and the agreement was signed on 15 October 2008—apart from Guyana, which signed on 20 October. I am still not sure whether Guyana signed on a trade only basis, or for the full range of goods and services; perhaps the Minister could clarify that point.
Mr. Thomas: Guyana has signed up to the whole of the EPA.
Mr. Clifton-Brown: I am grateful to the Minister for that clarification. He also said that Haiti has yet to sign up. I have been to that nation and it is one of the poorest on earth. I should be grateful if the Minister gave us a little more information on the negotiations with Haiti, and particularly on why he is so confident that it will sign; it would be a waste of time, having brought the order before the Committee, if we had to introduce an amendment because it does not sign. That is a critical point. The Minister said that Guyana has signed up to the full range of goods and services. Will he explain what steps were taken to get its agreement? Also, what factors were behind Haiti’s feet-dragging?
The Minister said that the order and the explanatory memorandum state that no impact assessment has been carried out. Surely an impact assessment was carried out by the EU itself or by the CARIFORUM nations; I cannot believe such a far-reaching agreement would be signed without one. The agreement is to be reviewed in five years’ time. What form will that review take and how it will be measured?
Paragraph 4.5 of the explanatory memorandum states:
“The Decision will only be adopted by the Council and the Representatives of Governments of the Member States once all Member States’ parliamentary procedures for ratification of the Agreement are complete”.
Are we in another Lisbon treaty situation, in that the agreement does not come into effect until all nation states have ratified? How long does the Minister expect the ratification of all nation states to take?
Section 4 of the order states:
“The Agreement is to be regarded as a Community Treaty as defined in section 1(2) of the European Communities Act 1972.”
Is this setting a precedent, in that the UK Parliament is creating a treaty through a mere statutory instrument considered by both Houses of Parliament?
The SI’s purpose is said to be World Trade Organisation-compatible. Indeed, the history of this agreement, which has emerged from the Cotonou agreement, is that one of the mid-American states claimed that the Cotonou agreement was not WTO-compatible, particularly with regard to bananas. However, my understanding is that from the EPA’s inception, there will be full duty-free and quota-free access to the EU market regarding bananas. So in effect, the recent ruling of the WTO dispute panel against the EU preferences granted to ACP banana exporters will become null and void as far as CARIFORUM banana exporters are concerned. Since the duty-free preferences will now be protected under the WTO rules, it seems that the agreements have somehow got round the WTO ruling against the previous Cotonou agreement. Perhaps the Minister will explain how that is being done, whether he is certain that the new EPAs are WTO-compatible and, if so, what discussions have taken place with the WTO about that compatibility.
One of the big sticking-points in many other EPAs is the insistence on inserting “most favoured nation” status. I think the Minister will say that this is causing a problem in some African EPAs. I would be grateful if he said what discussions have taken place about MFN, because there are concerns among some Caribbean countries that—in the light of trade agreements that are beginning to be negotiated with Canada, for example—the insertion of an MFN agreement could hamper north-south negotiations. Having MFN status with the European Union does not mean that the Caribbean nations are free to negotiate better terms with anybody else, because under that provision, they are not allowed to do so.
Will the Minister explain why the UK did not seem to be in the group of nations—Denmark, Germany, the Netherlands and Ireland—that called for maximum flexibility? Indeed, Denmark and the Netherlands insisted that it was for the ACP countries themselves to reach a decision about all the add-ons over and above what was required by WTO compatibility, such as services, intellectual property, public procurement and the environment.
Finally, I turn to an issue that the Minister commented on, but on which I would be grateful if he expanded. Two years ago, these Caribbean countries were desperately short of skilled people to negotiate the agreements. Jamaica was taking the lead, and the civil servant having to deal with it all said, “I am one person having to deal with all these EPAs and Doha, and I simply do not know which way to turn.” What help have the ACP countries been given in terms of advocacy? This is important because when these EPAs were being negotiated, some non-governmental organisations were concerned that small, vulnerable nations were being bullied by the EU into signing these agreements.
10.42 am
Mr. Edward Davey (Kingston and Surbiton) (LD): It is a pleasure to serve on the Committee under your guidance, Mr. Martlew.
I welcome this agreement; it takes free trade between the European Union and the CARIFORUM countries a step further. Given that the previous free trade agreements were not really working and that exports had not been increasing from those Caribbean countries into the EU, clearly something needed to be done. This seems a good way forward.
I particularly welcome the fact that the tariffs that are being lowered in the CARIFORUM countries are decreasing over a period of time. It is a very progressive period, with 25 years to remove some of the worst tariffs. I also welcome that that is being done asymmetrically, so that those countries get access to EU markets with no quotas or tariffs much more quickly than EU companies do to CARIFORUM markets. I therefore think that that is very good. There are also other measures of protection—not just industry protection measures, but others, too. Overall, I am happy to give the order a broad welcome, but there are some concerns, and I hope the Minister will address them in the same way that he will answer those expressed by the hon. Member for Cotswold, many of which I agree with.
First, I should like to take up the hon. Gentleman’s point about impact assessments. I wonder whether the Minister and his officials have defined impact assessments rather too narrowly. On SIs, we talk about regulatory impact assessments—the impact that an SI will have on business, the extra costs and so on. It seems as though the Department said, “Well, this isn’t a regulatory measure, and therefore we don’t need to have an impact assessment.” If so, I really regret that, because we are talking about the impact not only on those developing countries and their economies, but on the EU economy. So it is not necessarily a normal regulatory impact assessment of a kind that we are used to with such SIs: it is a broader one that focuses on the actual impact of the policy. Therefore, it is a great shame that the Committee does not have such an assessment before it. I am absolutely sure that one has been done, and I do not see why it has not been tabled for the Committee. I hope that the Minister—even after we have given our consent to the order—can ensure that copies are made available to Members, placed in the Library and properly publicised. Perhaps the impact assessment is available on a website and my attention has not been drawn to it, but I hope that the Minister can assure us that it has been done and give us some of its highlights. I am sure that he has had access to it.
I am not clear about the UK Government’s financial contribution, let alone about contributions from the EU and other member states. What help has been set aside and ring-fenced? It is important that we hear more detail, so that the countries that have signed up to the agreement—we have mentioned Haiti—can have on the record some guarantees that they will be helped in the adjustment period.
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Prepared 1 July 2009