Examination of Witness (Questions 120-139)
RT HON.
BARONESS ASHTON
OF UPHOLLAND
11 MARCH 2009
Q120 Sir John Stanley: I expected
you to come up with the car industry and the issue of car components
in reply to my question. I am glad, however, that you did not
refer to the issue of Kaesong in the north. Some members of the
Committee, in the course of our inquiry last year into Japan,
the Republic of Korea and the Korean peninsula, were able to go
to the north and visit the Kaesong industrial complex to see it
in operation, which was extremely illuminating. We are aware that
there are some who take issue with the levels of pay in the Kaesong
industrial zone—a point to which we referred in our report—but
those members of the Committee who went there are mindful of the
fact that by north Korean standards that is an amazing insight
and that eventually hundreds of thousands of North Koreans will
get into the real world, south of the 38th parallel, and see the
type of goods that are in demand in the real world. They will
get some inkling of what modern free enterprise and commercial
management are all about, which is totally alien to anything they
have experienced hitherto in their own country. I hope that you
will be able to assure us that the issue of employment rates in
Kaesong will in no way jeopardise the agreement, and that the
EU will take a long-term view of the benefit of just a small part
of the North Korean people having that growing exposure to the
real, free world as we know it in our own county and more generally
around the world.
Baroness Ashton: I can confirm
that, but I was in Korea recently and I went to the demilitarised
zone where the train facilities—the goods that would be
moving—were available for viewing. I was troubled by the
fact that there seemed to be very little activity. As you will
know, Sir John, relations with the new Government are not very
good, so I have concerns as to how the long term will look and
whether we will see the opportunities that you aspire to coming
to fruition. That is outside the specific question, but having
been there quite recently I wanted to say that I am concerned
about that. The investment from business and industry from the
south up into Kaesong is not moving in a way that would suggest
that the future yet has the potential. I hope that that will be
resolved, for the reasons that you quite rightly state, and that
it can develop, but I did not see any evidence of that when I
was there.[1]
Q121 Mr Hamilton: I was on that visit
to Kaesong and I endorse everything that Sir John says. It is
important that those North Korean workers are exposed to at least
something of the real world, or the rest of the world, having
been so isolated up until then. My concern was about something
that was said to us on our way in about the extraordinary rates
of cheap labour and that being the reason why we should support
that sort of enterprise. Obviously we understand that the rates
that those workers are paid are considerably higher than in the
rest of North Korea. However, notwithstanding what you just said
about the low levels of activity that you saw, do you have any
thoughts about this kind of enterprise, or activity, using those
workers as a source of extremely cheap labour for increased profits
for western companies?
Baroness Ashton: One of the ways
in which I try to describe trade is as a piece of a jigsaw puzzle.
When you put the jigsaw together, you get the view of the European
Union to, and from, the outside world. It is a picture, of which
trade has an important, but not exclusive, part to play. One thing
that is also being discussed is the political agreement for which
my colleague, Benita Ferrero-Waldner, is responsible, in which
some of these issues also come into play. We are very clear that
labour standards and environmental issues are increasingly playing
their part and we are not forgetting that, by any means. There
is a difficult set of circumstances at the moment, in terms of
the relationship with Kaesong and to levels of activity, and we
are mindful of that. But that is a much bigger issue that is part
and parcel of that bigger jigsaw puzzle. We clearly have an interest
in that, but we are trying to work collaboratively across the
Commission to deal with it. What struck me more than anything
was that I was not seeing the levels of activity that I suspect
you would have seen when you were there, Mr. Hamilton. I may be
wrong, but it was quite obvious.
Q122 Mr Moss: Staying on free trade
agreements, why do the EU's negotiations on such agreements with
the extra-European partners, as outlined in the 2006 paper "Global
Europe", appear to be making very little progress? I have
in mind particularly the negotiations with India and the Gulf
Co-operation Council.
Baroness Ashton: We have done
six rounds of negotiations with India thus far. It has been quite
slow, largely because the Indian Government have been slower to
respond to our timetable, as we would want it. To be honest, Mr
Moss, we are now awaiting the Indian elections because Mr Kamal
Nath, the Trade Minister, who was busy campaigning in the previous
set of elections, will be busy again. As soon as the Indian elections
are over, I plan to go to India to try to boost the free trade
agreement, not least because it is a substantial market for European
cars and the car industry wants me to spend some time there. We
have two remaining issues with the Gulf Co-operation Council—one
on export taxes and the other on what is called the political
clause, which will be familiar. I would like to make progress
on those, and made it clear in my conversations with ambassadors
from the Gulf states whom I met recently in Brussels, and in correspondence,
that if we can find a way through those, we would like to move
forward. I believe that it is 17 years since those negotiations
began—it is probably time that we ended them.
Q123 Mr Moss: Turning to Russia,
what is the relationship between Russia's accession to the WTO
and the prospects for free trade agreements with the EU?
Baroness Ashton: I was in Russia
about four weeks ago, where I had a meeting with Elvira Nabiullina,
the Trade Minister, and Prime Minister Putin, on trade as part
of a delegation from the Commission. We have made it very clear
that having Russia within the WTO is an important precursor to
being able to make significant progress on a free trade agreement.
I am told by Elvira Nabiullina that they are very keen to get
into the World Trade Organisation and she talks of months, not
years, as a possibility. Having discussed that issue with Prime
Minister Putin, I am not sure that he is as convinced of the speed,
but I have no doubt that from her perspective, the Trade Minister
is keen to pursue that. I have passed all that on to Pascal Lamy
and we are helping to facilitate that. The European Union has
not put any further conditions since 2004; it is now for Russia
to move forward and complete what needs to be done. With the political
will, it could be done within months, and as soon as that happens
we will start our negotiations. In the meantime, we strenuously
make the point about some of the tariff-raising measures that
have been taken in Russia—which have been unhelpful for
European trade—and our desire to solve the issue of Siberian
flyover, which still remains, despite the agreement being signed.
Q124 Mr Moss: Is Russia's desire
for freer access to the EU market sufficiently strong to give
the EU some sort of leverage over Moscow on other issues?
Baroness Ashton: There is no doubt
in my mind, having visited the Minister in Moscow and having met
her during the French presidency, that there is a strong recognition
of the importance of the relationship with the European Union
in terms of trade, and that Russia, like the rest of the world,
is struggling with what to do best to get its industry ready for
the future and knows that trade is important. I think it is a
strong relationship. I think that the Trade Minister understands
that getting into the World Trade Organisation and having an agreement
with us is very important. I cannot speak for whether that is
shared across the Russian Government. I suppose my concern would
be that we need to see signs of movement. Indeed, I said that
it is not, in my view, the best approach to wait till the very
end and do everything. It is much better to keep the signals moving
that you are making the changes that need to be made, progressively,
not least to demonstrate to the WTO that you are serious about
it.
Q125 Mr Moss: Finally, on the free
trade agreement issue, what progress can you report in negotiating
free trade agreements with the Union for the Mediterranean and
the Eastern Partnership countries?
Baroness Ashton: Negotiations
continue. In terms of the area around the Mediterranean, of course,
there are issues where the conflict that has just finished has
had some impact, and we await stability, if I may describe it
like that, before we resume. On the Eastern Partnership, again,
discussions continue. Benita Ferrero-Waldner is very clear that
this is an important region that we need to develop links with.
We have some negotiations going on. They move steadily. But, for
all those countries, there are real issues of the present economic
downturn that hamper to some extent their ability to negotiate
with us, and equally, that sharpen the mind in terms of thinking
of what kind of relationship they want to have. So they progress.
I will not say to you for a moment that they are at the top of
my agenda, because for me they are not at the stage when I personally
take over the negotiations.
Q126 Mr Illsley: Following on from
Malcolm's question about Russia, the UK has particular issues
with Russia in relation to what has happened with the British
Council and the diplomatic situation with the Litvinenko case.
The EU, as a whole, has issues with Russia in terms of gas supplies
into Ukraine and worries over future energy policy. Does the idea
of using trade issues as a lever come into negotiations at this
particular point with Russia, or is trade going to be completely
separate from any other political issues? Can we use a trade issue
to lever some concessions out of Russia—for want of a better
phrase—or is it simply a question of negotiating trade agreements
in a vacuum, away from the politics?
Baroness Ashton: Trade negotiations
do not operate in a vacuum and we link them very closely with
political agreements, for example on human rights issues, so they
are interlinked. Clearly, trade negotiators are experts in trade
negotiation. They are not experts in discussion on other issues
and so will always work in partnership with other parts of the
Commission. President Barroso did raise those other issues, in
discussions where Russia was present, as part and parcel of the
overall relationship that he would wish to see us have with the
EU, so they are in there.
Q127 Chairman: On the issue of conditionality
in trade agreements, the EU does not regard, and has never regarded,
trade as politically neutral. It has always seen trade policy
as having a political aspect. Can I ask you a few questions relating
to how countries are granted privileged arrangements under the
so-called GSP+ status, and how they are withdrawn? As I understand
it, a new system has come on from 1 January; that covers a number
of countries. Can you clarify where we are on that, particularly
with the operation of the new system since it has come into force?
Baroness Ashton: Would you help
me a little bit with the question? Do you want to know where I
am in my discussions with particular countries?
Chairman: Let me be clearer. There are
a number of countries, with issues of one kind or another, where
there are existing arrangements. One example is Sri Lanka, where
there are large-scale concerns about the current crisis: human
rights abuses, displacement of hundreds of thousands of people
by the Sri Lankan Government's military action and so on. A number
of people have raised concerns about that. Then there is the question
about those countries where there could be future agreements,
but I am interested in both, and how the new system will work.
Baroness Ashton: Thank you, Chairman.
It is easier if we focus our discussion more; I could talk in
generalities, but I am not sure that you would be happy with the
answers because they would be too general. As regards Sri Lanka,
we are now looking at what we need to do to investigate and look
at the situation. For my part, I have met with the Sri Lankan
Government to discuss that. There are some issues for them about
how we might set that up, but, to go back to the previous point
about linkage, we are very clear that those involved in trade
need to have expertise available to them when they are looking
beyond specific trade objectives, particularly on human rights
questions. That is now being looked into. Regarding other countries
with whom we have agreements, there have been occasions when we
have received requests to consider reviewing or revoking GSP+
status. When that happens, we invite them to provide evidence
that we can use in order to substantiate that. GSP+ status is
a mechanism that enables us to work with countries on political—and
other—issues of concern that are not direct trade arrangements.
Where a country is not pursuing those, they are not entitled to
GSP+ and I am clear about that. We must be certain of the evidence,
before we act to remove it.
Q128 Chairman: What is the process
for removing it? Does the Commission make a recommendation to
the Council or does the Commission have the power to do it itself?
Baroness Ashton: Forgive me if
I am not certain about that. We have not actually got to the point
at which I am being invited to remove anything. Although I understand
a great deal about my portfolio, I am not entirely sure how it
works. We certainly do an investigation after which recommendations
come forward. Whether they go to the Council or are an internal
to the Commission, I can certainly let you know, but forgive me
because I shall almost inevitably give you the wrong answer whichever
way I decide to go. The Council will be involved in some form,
whether as a decision-making body or not. It will have a huge
interest in such matters.[2]
Q129 Chairman: Clearly, you will
not easily reach a consensus among 27 states, particularly when
there is perhaps an existing argument that we have trade interests
and economic interests. How do you get the balance between the
arguments on economic criteria and those on the human rights criteria?
Baroness Ashton: For me, it is
reasonably straightforward. We have rules, which say what we have
to comply with. If I have evidence of a failure to comply and
that is backed up by our independent investigative work, the presentation
to the Council or the Commission would be, "I have the evidence
on which to proceed." If member states want to change the
rules, that is a different discussion, but if the rules in place
have not been kept to, it should be a straightforward decision.
Q130 Chairman: Is there consistency
with regard to different countries? You say that there are rules
but, clearly, some countries have a relationship already, other
countries are outside and there are some that you said you would
investigate, such as in the case of Sri Lanka. There may be other
countries about which concerns might equally be expressed from
time to time, whereby there would be a different attitude. How
do you balance those different demands?
Baroness Ashton: If I am being
asked to investigate or to look at a country that already is in
receipt of GSP+ where there is a concern, I will invite those
who have raised the concerns to provide me with the evidence.
It must be evidence that is more than anecdotal hearsay and backed
up by reputable and independent sources, wherever possible. On
that basis, we will then move forward to complete our own investigations
and make a recommendation. For my part and where I have been involved—I
am sure that it is true of my predecessor—we have a process
that we must stick to, not least because when we enter into such
agreements with countries, there must be clarity about what happens
in the event that the status must be removed. They must be clear
about that as well, because in some circumstances it is possible
that countries could have, for other reasons, allegations made
about them that are not true. They have to know that there is
certainty in the process.
Q131 Chairman: The problem is that
you are the Trade Commissioner. There is a separate External Relations
and Development Commissioner. You then have the High Representative
who works for the Council. That is why the Lisbon treaty wanted
to clarify and simplify matters. How does that balance get struck
within the Commission? You could be pushing in one direction and
another commissioner could be pushing in a completely different
direction. How is that resolved in such issues?
Baroness Ashton: As for the other
commissioners, we work together. If investigations are to be made
or if an issue is raised with us, we work together. That happens
both through our officials and, if need be, through the commissioners
themselves. I have no difficulty in collaborating with that. If
Javier Solana, whom I know well, wishes to be involved, he would
find an open door and be able to come in and discuss the issues.
There has not, as yet, been an issue for me.
Q132 Mr. Hamilton: Baroness Ashton,
can I ask you about using trade for achieving other purposes within
countries outside the EC that we want to pressurise? I am thinking
of environmental standards or issues of proliferation or arms
exports. How can we use trade as a lever to ensure that those
standards that we would expect from our own members are observed
outside, or do we purely look at economic interests? I accept
human rights, of course, and realise that they are something that
we insist upon, but are you and the EU prepared to lever all the
other issues, which are standards that we want to see adhered
to, and use trade as a bargaining tool?
Baroness Ashton: We have issues
within our agreements with other countries to do with collaboration
on, for example, counter-terrorism matters, weapons of mass destruction
and anti-proliferation. Such issues are all part and parcel of
what goes beyond, if you like, the trade agenda. Simply, for my
part, I do not directly negotiate that specific part of it, because
I do not have the competence in every sense of the word. You raise
the exact and important issue—or one of the most important
issues of the future—which is the environment, about which
I feel very strongly. Indeed, due to the opportunities for trade
in terms of green products, services and so on, as well as the
more general link between climate change and trade, I have started
to look at how we can collaborate more effectively within the
Commission and beyond to see how those issues fit together. You
are right to raise the matter, because we need to think about
the issues that fit together in my jigsaw puzzle for the future.
In the end, everything has to fit together, and you cannot shave
bits off the edge of one piece; it has to be a complete picture
of the values we espouse, as well as the agreements we wish to
have.
Q133 Mr Hamilton: May I come back
to the issue that I had put to one side—human rights, which,
I hope, is pretty central to any trade agreement? Can you point
to any specific examples of how the EU, using trade agreements,
has improved human rights or ended human rights abuses in any
third country that we trade with?
Baroness Ashton: I do not know
how far the EU alone has added value. What I can be sure about
is that what we are searching for in our work within the directorate-general
for trade, particularly on GSP+, are the incentives that help
countries that are looking to move forward to be able to do that.
We do not do that on our own; the EU is a big and important factor,
but actually, as you recognise, internal factors often play a
part as well. I do not think of it as the EU determining the future
of human rights in a country, but as a question of being able
to support countries moving forward on human rights. Again, that
is because, in my jigsaw puzzle, the values that we hold and espouse
have to be part of our relationship with the rest of the world.
Q134 Mr Hamilton: Presumably, you
would like to think that what we do in relation to trade agreements
has some impact on human rights abuses. There are many countries
where the population suffer dreadful human rights abuses at the
hands of their own Governments. Does EU trade not have a policy
aim on the issue?
Baroness Ashton: It is certainly
a policy within the EU, never mind the directorate-general for
trade. I believe that supporting countries to develop their economic
bases, which is what trade is about for them, and enabling us
to gain benefits, too, in trade terms—as those countries'
economies grow, they will, it is hoped, buy our products—are,
from an historical perspective, an important element in helping
to develop the right kind of relationship with a country's citizens.
That is part and parcel of it. I hesitate to say that trade does
that on its own; trade is part and parcel of it, but I think that
it is about the bigger relationship, of which trade is one part,
that the EU has with countries. But trade very rarely operates
in isolation, and we certainly expect our negotiators to do good
trade deals, and to work collaboratively with other parts of the
Commission that are dealing with other issues, too.
Q135 Mr Hamilton: What attitude do
you take when there is a hint of corruption or corrupt practices
in countries that the EU is trying to trade with? Does that stop
any negotiations dead, or do you try to bypass it in some way?
How do you deal with corruption?
Baroness Ashton: If you are going
to persuade businesses from the EU to trade with other countries—this
is from my experience not only as a commissioner, but as a civil
justice Minister—you must have justice systems that work
effectively, otherwise businesses will not invest. If businesses'
contracts cannot be sustained, they will not provide the investment
that countries need. For many countries, including those close
to the European Union, that is a factor at play in how business
works and how we work with them. An important aspect of getting
trade to function effectively is having systems in place judicially
that work. It all fits together.
Q136 Mr Purchase: This problem of
using trade as a lever, even on human rights, is extremely difficult
and problematic because of the question of consistency. Something
might be applied to one place and not to another. We all know
of groups around the world who will cry, "You are doing it
here, why aren't you doing it there or somewhere else?" Why
is it beyond our ability to create a matrix of indicators? First
and foremost there should be a secular state combined with the
freedom to worship without being harassed, freedom to join a trade
union, universal suffrage, free and fair elections and the absence
of the death penalty. I am not saying that those are exhaustive
or definitive requirements, but they are the type of thing that
I am looking at. Most people would regard either the imposition
or the denial of those things as a lessening of our human rights.
Why can we not put some rules down?
Baroness Ashton: That is beyond
my competence as a Trade Commissioner for these purposes.
Mr. Purchase: But you are part of a team.
Baroness Ashton: Indeed I am part
of a team, but I hesitate to try and define that as well as I
might, because I do not have the ability to do it in the way that
you want. I cannot speak on what the issues would be in trying
to compile your list versus somebody else's list. I go back to
what I was saying earlier about the value of trade as a lever
that provides an opportunity to collaborate with countries that
are looking for ways through this. In the end, nation states have
the ability under the Vienna convention to suspend agreements
if they so wish, for violations that they consider to be of great
importance.
Q137 Mr Purchase: So all we can do
is look at the most extreme examples and decide, "This regime
is so despicable that we ought not to trade with it", whereas
for so many other things we will say, "Well, we'll just have
to live with it." Is that the way?
Baroness Ashton: No, I do not
think that that is what I was saying at all.
Q138 Mr Purchase: It is not what
you were saying, but I read the implication of suggesting that
we cannot have rules.
Baroness Ashton: I am afraid that
the implication was not within the words. The series of relationships
that the European Union has with other countries is important
in the broadest sense. Countries that have joined the European
Union have had to deal with issues right across their modus operandi—as
a Government, on their economy, and so on—to fit with European
Union rules. Those countries that want to enter into agreements
with the European Union must consider issues across the spectrum.
That is where we get into the links between my part of the jigsaw
puzzle and the other parts. It has been clear to me in discussions
with member states that there are different lists that different
people would draw up about what matters most to them.
Q139 Mr Purchase: We would probably
not disagree about what we want to do. However, to put it into
a position that is not consistent leaves us open to claims of
unfairness and hypocrisy. Without actual procedures in place for
assessing whom we might deal with, it becomes difficult to have
a rational approach to using these trade levers in order to gain
what we see as wider and more desirable objectives.
Baroness Ashton: The difficulty
is that if we in the European Union look at those countries with
which we wish to have strong trade relations, and those with which
we already do, our first and foremost trading partner is the United
States. In parts of the United States they have the death penalty.
You or I may not approve of that, but it exists. We could move
down the list of trading partners with whom we already operate.
One cannot begin by saying, "Here is a list of things that
we do not like. If you have any of these, we will not make an
agreement with you." What matters are the opportunities that
those agreements provide for the opening up of dialogue. You used
the word "inconsistency" a number of times. I was not
sure whether you were suggesting that we have an inconsistent
strategy in trade or whether you think, as I have just described,
that because different countries have different systems and are
led in different ways, we need to make a judgment about them that
we may agree on but other people may not. The main thing is that
trade is important, primarily because we need to keep trade moving
to get the economic downturn sorted, and the ethos and values
of the European Union are a factor in how we develop those relationships,
both with those who wish to join the European Union and with those
who wish to trade with it.
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