Mr.
Clifton-Brown: An important point has not been mentioned:
EPAs are not just between individual Caribbean states and the EU; they
will be implemented on a regional basis, so the Caribbean states have
to eliminate tariffs between themselves. That is another reason why
development assistance needs to be provided. Countries such as St.
Lucia, for example, will have to abolish its banana protection, which
will have a severe effect on its
economy.
Mr.
Davey: The hon. Gentleman is absolutely right. We
need to ensure that the poorest of the poor will not be adversely
affected, and the funds must be in place for that adjustment.
I want to
focus on the banana trade. In many ways, bananas are some the most
sensitive products that we are talking about. Concerns have been
expressed to me that the adjustments and support provided for some
nations that are completely dependent on the banana trade may not be of
the size needed and have not been absolutely confirmed. That relates to
my initial point about the impact assessment. So that we can make a
judgment, we need to know what the economic impact will be and what is
being done to help those countries adjust. Of course, in practice, that
has been done before, but we need more information than has been
provided either in the paperwork or the Minister’s
presentation.
I should also
like to understand how the order relates to the region as a
whole—a point touched on by the hon. Member for Cotswold. A
number of countries, islands and communities in the region—in
particular, British overseas territories—will be outside the
agreement, and I want to understand how it will impact on them.
Will they be effectively locked out of the regional agreement of those
countries that sign the EPA with the EU? Will we be disadvantaging
British overseas territories? How will they be brought into this
expansion of free trade? I particularly think of the Turks and Caicos
Islands, which, as the Minister will know, are currently under direct
British rule—a very controversial issue, particularly with the
leaders of the Turks and Caicos Islands. I am not suggesting that the
corruption that we have seen there did not need tackling, but clearly,
with the British Government taking direct rule over that small
group of islands, such issues will directly affect how that
is carried
out. I
should like to understand a little more—this might show my lack
of reading for the Committee—about how the agreement will affect
tax havens. The British Government and the EU are now signed up to
ensuring that tax havens are reduced, their impact on the global
economy is reduced and they do not become ways of undermining
democratic, open debate and decision making in countries such as our
own. I want to understand how such agreements impact on that, and if
they do not, what are the Government and the doing to close down those
tax havens that clearly exist in that part of the world? I think of
Belize, but there may be other countries as
well. I
understand that there are banking provisions in the agreement. They
were not required by the WTO, but the EU, probably quite rightly, has
brought banking within the auspices of the agreement. How are we to
ensure that, as we liberalise banking relationships, we have proper
regulation and do not see a repeat of some of the appalling malpractice
that has so destabilised things in the past year or
two? Finally,
will the Minister comment on reports that the tactics of the former
European Trade Commissioner, when he was negotiating these agreements,
created some tensions with Caribbean countries? Now, of course, he is
First Secretary of everything that goes on in this Government, but in a
previous life, he was in charge of the negotiations that led to this
very treaty, and people who were much closer to them than I was tell us
that he ruffled a few feathers and upset a number of people. We want to
know from the Minister whether those relationships have been improved,
so that the implementation of the treaty is rather smoother. Perhaps
the Baroness Ashton is a rather more emollient influence than her
predecessor. 10.53
am
Mr.
Thomas: Let me start with the last question, as it is one
that will interest every member of the Committee. Let me be clear that
the agreement with the Caribbean was signed while my noble Friend, Lord
Mandelson, was still Trade Commissioner. Indeed, when I, in what was
undoubtedly a hardship visit, went to the Caribbean to witness the
signing of the agreement between the EU and the Caribbean, there was
considerable praise for the noble Lord’s endeavours for the
Caribbean, as part of the Caribbean-EU negotiations. Inevitably, in any
negotiations, one has to take particular positions, and I pay tribute
to the noble Lord for his advocacy of regional integration as part of
the EPA process. It undoubtedly put the issue on the agenda of every
ACP country in a way that simply had not happened before. I
have no doubt that some people felt their feathers were ruffled, but we
are seeing the benefits in all sorts of
ways, not least the commitment from 26 African countries to sign up to a
customs union and to have ambitions to go further than that. His
championing of the benefits of regional integration has been of
considerable benefit, and his role is very much appreciated by
Caribbean countries—notwithstanding the fact that there were
some tough negotiations between the lead Caribbean negotiator, Billie
Miller, and Peter
Mandelson. I
will try to answer the series of questions asked by the hon. Member for
Cotswold, starting with where we have got to in the other five regions.
On the Pacific, on which we focussed least as a Department, the final
text of an interim EPA has now been agreed, and I hope that the
different islands and countries of the Pacific will sign up to that
interim agreement soon. From what we hear from our conversations with
the Commission, I believe that the concerns of the Pacific have largely
been met in the negotiating process, and I welcome that.
The Southern
African Development Community represents the region where there has
been most discussion and concern, not least because of the existing
agreement that South Africa already has with the EU. They need to make
sure that what is agreed is compatible with those provisions and with
the broader customs union in southern Africa. Baroness Ashton,
the new Trade Commissioner, has negotiated some changes, and four
countries have already signed that agreement.
As the hon.
Gentleman knows, there has been a change of administration in South
Africa. There are ongoing conversations with the new Minister for
Trade, and I hope that that country’s concerns have largely been
met. Certainly, there is a very different attitude and feel within
South Africa as a result. Namibia and Angola—the two other
countries in the region that have not yet signed up—are quite
clearly in discussion with South African colleagues, and we hope that
they will sign
shortly. Turning
to east Africa, we are hopeful that an interim agreement will be signed
in July. Again, there have been discussions between the east African
community and Commissioner Ashton, and many of that community’s
concerns have now been resolved. As for west Africa, both the EU and
west African states wish to see a regional agreement signed. Both sides
are estimating that it will be October before we sign an interim
agreement, so there is quite a bit of work still to be done. As for
ESA—the eastern and southern Africa region—there is a
broadly similar, although perhaps slightly shorter, time scale for us
to make progress. So a great deal of work has been done.
As for
negotiating capacity, we are helping the countries of Africa as we
helped the Caribbean regional negotiating machinery to continue
discussions with the European Commission, so that is one way in which
we are, as a country, directly providing assistance to help move the
negotiations forward.
The hon.
Gentleman asked me about Haiti. He will recognise, as will the
Committee in general, that the capacity of government in Haiti is very
different from that in other countries. When the negotiations were at
their most intense, Haiti was dealing with the impact of four
hurricanes. One or two issues remain to be resolved about the
difference between its tariff schedule and the impact with its
neighbour, Dominica. But the mood music still remains very positive
among the people the
Commission is talking to in Haiti about signing up to EPA; they see, in
particular, the benefits of being part of the regional economic
bloc. Guyana
eventually signed up, once it had reassurances that there would be a
commitment to a five-year review of the EPA. The hon. Gentleman asked
me what the nature of that review will be. At this stage, I cannot
spell out the detail of how such a review will take place, but as I
fear that he will still be in opposition and I have no doubt he will be
shadow Trade Minister, I will be happy to give him an update in due
course. On
ratification, the hon. Gentleman is right that every member state has
to sign up. However, the principal advantage of the CARIFORUM EPA for
Caribbean countries—duty and quota-free access for goods into
the EU—is already being provided, so there is no immediate
urgency, but we nevertheless want to get it
through. On
whether the order is setting a precedent, no, it is not. On WTO
compatibility, yes, we have worked hard in discussions with the WTO to
make sure that the agreement is compatible. The hon. Gentleman may
remember that the very reason why we have to negotiate EPAs is that the
trade provisions of the Cotonou agreement were deemed not to be
WTO-compatible and the EU and ACP were given a two-year extension to
negotiate new trade agreements. These EPAs are those new
agreements. The
hon. Gentleman asked whether we support maximum flexibility. My right
hon. Friend the Member for Leicester, West, the then Secretary of State
for Trade and Industry, published a position paper in March 2005
setting out Britain’s position on EPAs that called for the APC
regional groups to have maximum flexibility over their markets’
opening. There has been a series of exchanges—some public, some
not so public—in which we have continued to press for maximum
flexibility. I
have dealt with the hon. Gentleman’s point about the capacity to
negotiate. As I said, we have made £5 million
available this year through the CARTFUND, and the EU is providing some
£165 million of development assistance under European
development fund 10. We contribute almost 15 per cent., which is our
nominal share of that
assistance. The
hon. Member for Kingston and Surbiton asked for our assessment of the
impact. He is right to say that it would not be appropriate to publish
the traditional impact assessment; but as he rightly says, we have
worked with Caribbean countries and with our partners in the Commission
and, indeed, with other EU countries to ensure that we assess the
impact of provisions concerning the organisation of EPAs. The
Commission has done its analysis, and the Caribbean countries have
produced an analysis in which they conclude that the EPA would boost
productivity and economic growth. They noted, as we did, that there
will be a period of adjustment, given that taxation revenues will fall
as tariffs come down, but the way that the liberalisation of those
tariffs is being phased in will give those countries time to adjust.
The development assistance provided through EDF 10 and by member states
directly will help countries plan how they can raise taxation revenues
in other ways.
Mr.
Clifton-Brown: The explanatory memorandum says that the
CARFORUM countries have a low share of UK exports and
investment—listed as 0.19 and
0.5 per cent. respectively in 2007. Given that those
countries are pretty friendly with the UK, that seems a lamentably low
performance. When the Minister was looking at the impact assessment,
did he consider why those figures were so low? How does he expect EPAs
to help to increase those
figures?
Mr.
Thomas: We need to focus on boosting economic growth and
trade more generally within the Caribbean region. Whether goods and
services are sold into the UK, the EU or other parts of the world is a
moot point. The hon. Gentleman will know that the Caribbean has faced a
series of economic and, frankly, social challenges. Some of its
traditional industries—for example, bananas, sugar or
rum—have faced increased global competition. In the case of
bananas, competition has come, not least, from other developing
countries in the Andean regions of Latin and central America. Our
assistance—both direct and through the EU—is designed to
help the countries of the Caribbean think through where their future
economic growth might come from. Some of the provisions that they have
pushed for on services, competition and investment are deliberately
designed to make the Caribbean a more attractive place for direct
investment.
Mr.
Davey: A few minutes ago, the Minister seemed to link
assistance to a reduction in tax revenues that will come when customs
duties are reduced. My understanding is that development assistance is
also needed to help the industry and economy adjust. It is not simply
related to the Exchequer of those countries, but to development, growth
and structural adjustment. Can the Minister confirm whether that is the
case and that such assistance is not simply a financial transfer
exercise to compensate for reduced tax
revenue?
Mr.
Thomas: The hon. Gentleman is absolutely right. We need to
continue to assist the Caribbean in working out which countries have
competitive traditional industries—sugar, bananas, rum and so
on—as we have been doing for some time. In the future, some
parts of the Caribbean could undoubtedly continue with reform to
provide those products to the EU or on to the global stage. A number of
countries face considerable challenges if they continue to concentrate
their economic growth on those economies going forward. That is why we
have, as a Union, provided development assistance. So the premise of
his question is right.
The hon.
Gentleman also asked about tax havens, and there is no reason why this
EPA should have any impact on the effort to tackle them. He is
sufficiently long in the tooth to know that that issue is mainly being
dealt with by Treasury colleagues. Given that I think he is—or
was—a shadow Treasury spokesperson, I am sure that he will be
able to ask Treasury Ministers about what progress is being
made.
The hon.
Gentleman also mentioned the impact on overseas territories. For the
purpose of trade, overseas territories are part of the European Union.
I do not see the likes of Montserrat and other overseas territories in
the Caribbean benefiting from the increased regional integration that
the EPA will help to deliver.
Mr.
Davey: I hope the Minister is right. However, some of the
attractive parts of the agreement—the asymmetric aspect, the
fact that it will support the
Caribbean countries more than the EU and the progressive reduction in
tariffs over a 25-year period—could have an adverse effect on
British overseas territories. If they must have the trade relationship
of an EU country against other regional neighbours that have the
benefits of the asymmetric relationship and progressive unwinding of
tariffs, they could be
disadvantaged.
Mr.
Thomas: With respect to the hon. Gentleman, the bigger
picture is that a series of Caribbean islands would be very vulnerable
if they continued to specialise in particular traditional products
associated with the Caribbean. There is a need for diversification and
to try to come together as an economic bloc to protect their position.
The regional integration that the trade agreement delivers will help to
strengthen the whole region. Each nation or overseas territory within
the Caribbean still has a responsibility to organise and develop its
own economy in a way best suited to its needs, as do we in helping
them. For example, how can we continue to help Montserrat to grow its
economy to deal with the challenges that it faces? Such issues are as
important to Montserrat’s future as are greater regional
integration in the Caribbean and strengthening the Caribbean economy.
The latter will enable Montserrat to sell its various goods and
services to other Caribbean countries and ensure a larger and more
successful market for those overseas territories to sell
into.
| 
