Draft European Communities (Definition of Treaties) (Central Africa Interim Economic Partnership Agreement)
Order 2010
Draft European Communities (Definition of Treaties) (Côte D'ivoire Economic Partnership Agreement)
Order 2010

The Committee consisted of the following Members:

Chair: †Annette Brooke 

† Banks, Gordon (Ochil and South Perthshire) (Lab) 

Chapman, Mrs Jenny (Darlington) (Lab) 

† Davey, Mr Edward (Parliamentary Under-Secretary of State for Business, Innovation and Skills)  

Dodds, Mr Nigel (Belfast North) (DUP) 

† Esterson, Bill (Sefton Central) (Lab) 

† Gapes, Mike (Ilford South) (Lab/Co-op) 

† Greenwood, Lilian (Nottingham South) (Lab) 

† Mitchell, Austin (Great Grimsby) (Lab) 

† Morgan, Nicky (Loughborough) (Con) 

† Newmark, Mr Brooks (Lord Commissioner of Her Majesty's Treasury)  

† Pugh, Dr John (Southport) (LD) 

† Smith, Julian (Skipton and Ripon) (Con) 

† Uppal, Paul (Wolverhampton South West) (Con) 

† Vickers, Martin (Cleethorpes) (Con) 

† Weatherley, Mike (Hove) (Con) 

† Wharton, James (Stockton South) (Con) 

Wood, Mike (Batley and Spen) (Lab) 

† Zahawi, Nadhim (Stratford-on-Avon) (Con) 

Mark Oxborough, Committee Clerk

† attended the Committee

Seventh Delegated Legislation Committee 

Thursday 4 November 2010  

[Annette Brooke in the Chair] 

Draft European Communities (Definition of Treaties) (Central Africa Interim Economic Partnership Agreement) Order 2010 

8.55 am 

The Chair:  Given the temperature of the Room, I have given permission for hon. Gentlemen to remove their jackets if they so wish. 

The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Mr Edward Davey):  I beg to move, 

That the Committee has considered the draft European Communities (Definition of Treaties) (Central Africa Interim Economic Partnership Agreement) Order 2010. 

The Chair:  With this it will be convenient to consider the draft European Communities (Definition of Treaties) (Côte d’Ivoire Economic Partnership Agreement) Order 2010. 

Mr Davey:  It is a great pleasure to operate under your chairmanship, Mrs Brooke, and to move that the Committee has considered these orders to ratify the agreements with Cameroon and Côte d’Ivoire. The economic partnership agreements with Cameroon and Côte d’Ivoire set in place a secure trading arrangement between those countries and the European Union to promote development-friendly trade, and to be compatible with World Trade Organisation provisions. The agreements mean that Cameroon and Côte d’Ivoire will continue to receive duty-free, quota-free access to EU markets. Without them, those countries would face tariffs on up to 25% of their exports, including on industries critical to their economies such as bananas and cocoa. The EPAs allow Cameroon and Côte d’Ivoire to remove their own tariffs gradually, over a period of 15 years, and each contains safeguards enabling them to protect infant industries and prevent import surges. However, in accordance with the wishes of Cameroon and Côte d’Ivoire, the EPAs do not include provisions on services, investment, procurement, intellectual property or other “deeper integration issues”. 

Each agreement also contains a chapter on development. That will ensure that Cameroon and Côte d’Ivoire receive the development assistance that they need to make the most of the opportunities created by the EPAs. As a first step, in September 2009 the EU signed off a €97 million package for Cameroon, to accompany its EPA and to help to boost its economy and trading activities. The UK is committed to monitoring that money closely to ensure that it is spent wisely and achieves the maximum impact on poverty reduction. 

The benefits generated by duty-free, quota-free access to the European market and from improved rules of origin are the areas where the EPAs will most quickly bring benefits. For example, without them, the tariff on banana imports from Cameroon and Côte d’Ivoire would be €148 per tonne. However, in the longer term, the biggest benefits will come from the increased trade and investment that will flow from Cameroon and Côte d’Ivoire removing their own tariffs and moving towards more open economies. 

No nation can achieve prosperity by closing its borders to trade. Indeed, the World Bank’s 2008 “Global Monitoring Report” calculated that removing all trade tariffs could reduce the headcount poverty index by 5 to 6.5 percentage points over a 10-year period. A 1% increase in Africa’s share of world trade would generate about $70 billion of additional income annually. That is about three times the total aid that Africa currently receives. Therefore, by removing tariffs and promoting free trade, the EPAs will deliver lasting benefits to Cameroon and Côte d’Ivoire, and indeed to Britain. 

To secure those gains for Côte d’Ivoire and Cameroon, we need to ratify these two EPAs. By agreeing to the orders today, the Committee will allow us to proceed without delay. I thank hon. Members for the contributions that they will make. I hope that we can pass these orders. 

Austin Mitchell (Great Grimsby) (Lab):  The Minister is a great enthusiast for Europe and all its fiddles, and these being former French colonies, there is bound to be some kind of fiddle involved, so can I ask him this? What will the effects of this treaty be on us—on our trade and on our commitment to finance European aid? The Minister said that aid would be reduced, so I presume that we shall have a lighter burden in that respect. Also, what is the constitutional position of these two former French colonies? I thought that Côte d’Ivoire was part of the French Union and therefore sent delegates to the National Assembly. Indeed, I thought that it was part of the glorious voting fiddle in the French referendum over the Maastricht treaty, where the votes of France Outre-Mer outweighed those from— 

The Chair:  Order. I think that that is enough, Mr Mitchell. 

Austin Mitchell:  Will the Minister also tell us about the constitutional position of these two colonies? 

Mr Davey:  I am grateful to the hon. Gentleman, because he has engendered a certain je ne sais quoi in our debate this morning. I am sure that he has friends from France, but the sorts of accusations that he has made are extremely ill placed when the French Government have worked very hard to help other EU member states, including ourselves, to bring about these agreements. Far from this being a French fiddle involving some colonial pals that have dodgy constitutional arrangements, the hon. Gentleman ought to know that Côte d’Ivoire and Cameroon are proud independent states, which are making real progress in promoting economic prosperity and reducing poverty in their countries. I hope that he does not have too many friends from Côte d’Ivoire and Cameroon, because they will not appreciate his comments either. 

Mike Gapes (Ilford South) (Lab/Co-op)  rose—  

Mr Davey:  The hon. Member for Great Grimsby did ask one question that deserves an answer, and when I have answered it, I will give way to the hon. Member for Ilford South. The hon. Member for Great Grimsby asked what effects the treaty will have on us. There will be no change. As I said in my opening remarks, Cameroon and Côte d’Ivoire, because of the initial agreement, already benefit from duty-free, quota-free access to EU and British markets, and it will be British consumers who benefit. 

The hon. Gentleman has been a long-standing campaigner against the common agricultural policy, and he may be interested to learn that I share his concerns about that aspect of the European Union. He will know that one of the problems with the CAP is that it has negative effects for consumers. Bringing down tariffs and establishing free trade brings benefits for consumers, but there is something more important, and in this regard the present Government have followed the example of the previous Government. We have tried to ensure, and have succeeded in ensuring, that these agreements are development friendly and are in the interests of the people of Cameroon and the people of Côte d’Ivoire. 

Mike Gapes:  I am grateful to the Minister for giving way and I apologise for being one minute late into the Committee. I welcome the fact that Cameroon, which is a Commonwealth country, having been a former French, German and British colony in parts, is part of the agreement, but concerns have been raised about the human rights situation in both Cameroon and Côte d’Ivoire. What consideration has been given to calling for improved human rights, particularly in Côte d’Ivoire, while bringing in the agreements? Also, there is a potential implication for Caribbean producers of bananas. I would be grateful if the Minister could say what consideration has been given to the impact that the measures might have on those small monoculture economies in the Caribbean. 

Mr Davey:  I am grateful to the hon. Gentleman for his intervention. As a former Chair of the Select Committee on Foreign Affairs, he brings a wealth of experience and knowledge to debates such as this. I can reassure him on his last point, which was about bananas. He will know that EPAs have either been signed or are under negotiation with countries in the African, Caribbean and Pacific regions. A number of nations that produce bananas, be they in the Caribbean or in Africa, stand to benefit from some of these agreements, not least because they are coupled with extra development assistance and support to ensure that we can reduce poverty and help with economic prosperity in those countries. 

The hon. Gentleman also referred to the concerns about human rights in Côte d’Ivoire and Cameroon and asked what consideration had been given to improving human rights. We believe that ensuring that the tariffs go down and there is more prosperity in Cameroon and Côte d’Ivoire will help the cause of economic and social progress. If we got rid of the current duty-free, quota-free arrangements, it would hurt some of the poorest people in Cameroon and Côte d’Ivoire. I do not know whether the hon. Gentleman wants to call them human rights,

but it would certainly undermine their chances of employment and prosperity in the future. We certainly have no intention of doing that. 

9.4 am 

Gordon Banks (Ochil and South Perthshire) (Lab):  It is a great privilege to serve under your stewardship, Mrs Brooke. I am grateful to the Minister for his opening remarks. Despite what he may have heard, the Opposition largely welcome the agreements and I therefore do not intend to give him too much grief. 

The trading agreements are designed to support parts of the African economy and should benefit workers in training. In turn, businesses and workplaces will be made safer and more efficient. As the Minister said, economic partnership agreements are intended to be broad agreements that help to build regional markets and to diversify economies in the African, Caribbean and Pacific regions, before opening up the international benefits of increased, balanced and sustainable trade between the regions. They will change our relationship from one that offers tariff preferences, to one that builds lasting and more efficient regional and international markets for the ACP regions. 

The ACP economies are too small to go it alone and regional integration has the potential to boost local trade and to create larger markets, which will attract trade and investment. Eliminating the barriers between neighbouring countries and creating real integration favours trade exchanges and boosts economic growth. It also creates bigger markets that are more attractive to investors and facilitates trade with landlocked countries. 

I have no criticisms of these agreements, but I would appreciate clarification from the Minister on a number of points. First, on the central Africa agreement, hon. Members will note that Cameroon is the only central African country to have signed the document. Cameroon’s strong links with the EU are well documented. It is estimated that 61% of its exports go to the EU and 56% of its imports come from the EU. We have heard, after the intervention of my hon. Friend the Member for Great Grimsby, that the impact on the UK will be minimal. Will the Minister confirm that the agreement will strengthen the quality of the Cameroon economy, which might benefit its trade dealings outside the EU? Does he expect the agreement to be superseded by one that includes the seven countries of the Economic and Monetary Community of Central Africa, and if so, when? Are there plans for the agreement, or any future agreement, to be extended to cover not only goods, but services? The Minister has spoken of the specific requests of Côte d’Ivoire and Cameroon that these be goods-only arrangements, but are there plans for wider arrangements that include services? 

Obviously there are gains to be had when the less developed members of such trading arrangements gain fairer access to larger markets such as the EU. However, that is not the only prize. There is an opportunity to improve access to the larger, more developed markets of fellow African continental members. Does the Minister agree that that in itself is a big prize in expanding the membership of the central Africa group? 

Finally on this agreement, is the Minister satisfied that the gradual reduction of tariffs on goods entering from the EU, such as vehicles, chemicals and power generation 

equipment that are not manufactured in Cameroon, will reduce production costs and product prices in the Cameroon economy quickly enough? 

I have a similar line of questioning on the Côte d’Ivoire agreement. Will it be a stepping stone to securing a larger agreement that encompasses more of western Africa? Whereas the EPA covering Cameroon has been established in preparation for a possible expansion under the central Africa banner, I am concerned that the Côte d’Ivoire EPA is restricted to just the one country. Will the Minister update hon. Members on the progress of the discussions on securing similar agreements with Côte d’Ivoire’s neighbours, in particular Nigeria and Ghana, but also other members of the Economic Community of West African States? When might we expect to see further developments towards a regional-based agreement for west Africa? 

Countries such as Côte d’Ivoire are using the agreements as a gateway to larger markets among their African neighbours, which will allow them to grow their national industries before looking to other international markets in a significant way. Does the Minister see such goals as significant in the domestic economy of Côte d’Ivoire? Are those goals hampered by this being a single agreement with Côte d’Ivoire, without any additional African benefit? As with the Cameroon agreement, will the Minister confirm whether he has ambitions for an ECOWAS agreement covering not just goods, but services? Likewise, does the Minister feel that the reduction in the tariffs over 15 years on certain manufactured products that could drive the Côte d’Ivoire economy is being done over an appropriate period? We have heard about the case of the central African EPA, and the Côte d’Ivoire agreement will be negligible in its impact on UK imports and investment. 

On the Caribbean issue, the Minister will be aware that my hon. Friend the Member for Harrow West (Mr Thomas) was involved in discussions on, and the implementation of, the Caribbean EPA. I believe that he got a nice trip to Barbados out of it, and I am sure that the Minister is a little jealous that he was not in government at the time. My hon. Friend told me that, during his visit to Barbados, he managed to get a lot of work done and was updated on how development aid was being spent to help support the Caribbean nations. The money was offered to ensure that Caribbean products met European safety standards and to support the development of infrastructure, so that businesses in the Caribbean could get their products to market. I note from the draft orders that financial support will be offered to both countries under discussion today. The Minister has already given a figure for Cameroon of somewhere in the region of €97 million. Does he have a figure for Côte d’Ivoire, how much support there will be and information about what the money will be spent on? Will it be for developing infrastructure to allow an expansion of trade, both within Africa and externally? 

It would also be useful to know when the Minister last met the relevant trade Ministers from each country to ascertain what assistance they need to make best use of these agreements. It is vital that the interests of Cameroon and Côte d’Ivoire are central to the legislation. I am keen to find out whether the Minister’s Department works closely with colleagues in DFID on such matters.

My right hon. Friend the Member for Kirkcaldy and Cowdenbeath (Mr Brown) set up a joint trade policy unit between the Minister’s Department and DFID. I would be grateful to hear what the current function of this unit is in relation to the agreements. 

The agreements have to take European interests into account. Will the Minister confirm whether the agreements were discussed at the previous meeting of EU trade Ministers? Moving on to the Caribbean as a comparison; we are now two years on from the implementation of the agreement on the Caribbean, an issue that my hon. Friend the Member for Ilford South has raised. Will the Minister update Members on how he and his European counterparts feel that agreement is going and whether there were any lessons that have assisted in drawing up the agreements? 

Finally, the agreements are the result of years of hard work by officials, whom I thank for their efforts. Will the Minister tell Members how we are going to be progressing the development of EPAs for other regions in Africa, and how they might impact on the agreements before us today? 

9.13 am 

Mr Davey:  I welcome the hon. Gentleman’s comments and his support for the ratification process. He was right to mention the hon. Member for Harrow West, who played a role in his time as trade Minister. I would like to put on record my thanks to the right hon. Member for Kirkcaldy and Cowdenbeath, who, as Chancellor and Prime Minister, played an important role in ensuring greater trade liberalisation for Africa as part of tackling poverty there. One good development in recent years is that those issues have had cross-party support, with all parties in the House working together and supporting each other. That has ensured that our voice, as a country, at the EU and in other forums has been stronger and therefore, we have had more influence. Politics often has a bad name, but on this British politics has given a global lead, and, without going over the top, we should pay tribute to people from both sides of the House. 

The hon. Member for Ochil and South Perthshire asked a large number of questions. I shall try to deal with them; I certainly have never had so many small pieces of paper in front of me before, but I think I can manage the questions. On Cameroon, he asked about regional progress on the central African grouping. The problem for the grouping is that it involves a large number of fragile states, such as the Democratic Republic of the Congo, and, not surprisingly, signing an EPA is not a priority for them when they have such pressing problems. The Cameroon EPA is an interim EPA and is likely to remain in place for several years, given the problems in the region, before there is a regional EPA. I assure the hon. Gentleman, however, that the UK Government, working with the European Commission, want to promote those negotiations so that a regional EPA can be concluded when the region indicates that it is ready. Let us be clear that it is the countries in the region that have other priorities, not the EU. 

The hon. Gentleman asked whether the liberalisation would help the Cameroon economy outside the EU. The answer is yes. If it is able to grow its exports to the EU, its companies and organisations will benefit and

greater experience of international trade and competition will make them stronger and enable them to export to other countries. 

The hon. Gentleman also asked whether the arrangement could be expanded to services, investment and so on. That would be a good thing, but we may have to wait for the full regional agreement. It is important to emphasise that the pace is being set by Cameroon, not the EU. Non-governmental organisations have, over the years, criticised EPAs, because they felt that the EU was imposing a liberalisation on developing countries, but the way in which the EU is going about things shows that that is not the case. Indeed, we are allowing, supporting and encouraging the ACP countries to decide the pace at which they wish to go. 

The hon. Gentleman talked about the issues in relation to Côte d’Ivoire and I can confirm that it is the intention of both Côte d’Ivoire and the EU that its EPA is a stepping stone towards a regional EPA. The negotiations for a regional goods-only EPA have been slow, but there has been some progress this year and they could be concluded next year, which is extremely good news. He is right to focus on the regional dimension, because the coalition Government’s ambitions for a pan-African free trade area are supported by regional EPAs. I am proud that the coalition has managed to achieve reforms to promote the strengthening of the regional EPAs, particularly in relation to the reform of the rules of origin, where a country that produces a finished product for export to the EU can import components for that product from neighbouring countries. We hope to secure the reform of the rules of origin in the next few weeks. That will enable and encourage more regional trade, because goods will be able to be exported duty-free and quota-free to the EU. That is a real step forward worth hundreds of millions of euros to those countries. 

The hon. Gentleman asked about the amounts of development assistance. The total pot set aside by the EU for the two regional areas—the central area and the west African grouping—is, I believe, more than €500 million. The eventual split between Côte d’Ivoire, Cameroon and other countries in the regional groupings has yet to be decided. We have announced the €97 million, to which the hon. Gentleman referred, but further decisions have yet to be taken. 

Gordon Banks:  On that point, is the Minister saying that the €500 million exists as a fund to cover the overarching, wider agreements we hope to reach in the future? The €97 million has been allocated as part of the Cameroon agreement, but how much will be allocated as part of the Ivory Coast agreement? 

Mr Davey:  I do not believe that the final decision has been taken. I undertake to write to the hon. Gentleman so that as soon as we have those figures he will have them. If there is anything else that I have not been able to cover in my remarks, through my lack of knowledge and expertise, I shall make sure, through my officials, that we will get the information to him. What I have said is my understanding of the current state of play on decisions about that money. 

The hon. Gentleman asked when I last met trade Ministers from Cameroon and Côte d’Ivoire. I have not yet had that pleasure. I hope that I shall do so in due

course. He mentioned the visit dutifully made to the Caribbean by the hon. Member for Harrow West, and I am sure that he would be the first to acknowledge that foreign trips are not all that they are cracked up to be. I have not been making many as a trade Minister, but I am very welcoming to trade Ministers and delegations from other countries. So if the trade Ministers of Côte d’Ivoire and Cameroon read this debate in due course, and want to come to visit me, I shall be keen to meet them. 

On the matter of working between the Department for International Development and the Department for Business, Innovation and Skills, I assure the hon. Gentleman that the relationship is very close, and is building on some of the developments that he mentioned which happened during the previous Government. We believe that development goals are central to trade policy. Again, I think that that is a shared agenda, because this country has a very open approach to globalisation and believes that it is a win-win for all parties—assuming that we can get the adjustment processes and transition arrangements right. 

The last Trade Council that I attended in Brussels did not discuss these specific EPAs, but discussed EPAs in general. In my short intervention in that debate I stressed that it is important that EPAs should be development-friendly. We are winning that debate, and I am delighted that the EU has shown a lead in such trade agreements, making sure that we take account of the needs and circumstances of some of the poorest countries. 

I think that I have covered all the points. I have not had a chance to study all the papers before me, but if the hon. Gentleman feels that there are points I have not touched on and wants further advice I will be happy to give it. 

Gordon Banks:  Before the Minister sits down: did the joint trade policy unit play a role in the discussions? 

Mr Davey:  I believe it did. The officials are working closely together. Officials from the Foreign Office have also played a role. We see trade as cross-Government, as I believe the previous Government did. The Prime Minister has made it clear that trade is foremost in our economic policy, in terms of generating growth. He has made it clear to all Ministers that he expects them, whatever their Department, to promote British exports and the cause of free trade. I assure the hon. Gentleman that the agreements are seen very much in that light. They build on some of the achievements of the previous Government and are good for Britain, Cameroon and Côte d’Ivoire. 

Question put and agreed to.  

Draft European Communities (Definition of Treaties) (Côte D'ivoire Economic Partnership Agreement) Order 2010

Resolved,  

That the Committee has considered the draft European Communities (Definition of Treaties) (Côte d’Ivoire Economic Partnership Agreement) Order 2010.—(Mr Davey.)  

9.24 am 

Committee rose.