Cotonou Agreement

The Committee consisted of the following Members:

Chair: Mr Charles Walker 

† Ali, Rushanara (Bethnal Green and Bow) (Lab) 

Dodds, Mr Nigel (Belfast North) (DUP) 

† Hendrick, Mark (Preston) (Lab/Co-op) 

† Hopkins, Kelvin (Luton North) (Lab) 

† Lefroy, Jeremy (Stafford) (Con) 

† McGovern, Alison (Wirral South) (Lab) 

† Morris, David (Morecambe and Lunesdale) (Con) 

† O'Brien, Mr Stephen (Parliamentary Under-Secretary of State for International Development)  

Sheerman, Mr Barry (Huddersfield) (Lab/Co-op) 

† Smith, Miss Chloe (Norwich North) (Con) 

† Smith, Henry (Crawley) (Con) 

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

† Williams, Roger (Brecon and Radnorshire) (LD) 

Alison Groves, Committee Clerk

† attended the Committee

European Committee B 

Monday 24 January 2011  

[Mr Charles Walker in the Chair] 

Cotonou Agreement 

[Relevant documents: European Union Documents Nos. 9014/10, 12664/10 and 15954/10.]  

4.30 pm 

The Chair:  Does a member of the European Scrutiny Committee wish to make a brief explanatory statement about the decision to refer the relevant documents to the Committee? I shall take that as a no, so I call the Minister to make his opening statement. 

The Parliamentary Under-Secretary of State for International Development (Mr Stephen O'Brien):  Thank you, Mr Walker; I am delighted to be here today. 

The European Scrutiny Committee has requested that we examine the outcome of the second revision of the Cotonou agreement, which was agreed in 2010. In addition, the Committee has noted interest in the use of article 96 procedures that have resulted in the suspension of aid to Niger and Madagascar, and the accession of Equatorial Guinea to the Cotonou agreement. 

The Cotonou agreement is a guiding framework for the European Union’s engagement with some 79 African, Caribbean and Pacific states, which are usually known as the ACP. It has evolved to reflect changing relationships between the EU and ACP countries, but has always continued to focus on sustainable development, poverty reduction and genuine partnership. Contonou provides the parameters for programming the European development fund and the important channelling of money to some of the poorest countries in the world, including countries where the United Kingdom bilateral programmes are not present and the Department for International Development therefore does not have a presence on the ground. 

As part of my Department’s ongoing and thorough review of all our multilateral aid, which will be made public in the next few months, the EDF is coming out as one of the most effective, flexible and poverty-focused of all our multilateral aid instruments. It is also closely aligned to United Kingdom priorities and supports both Commonwealth countries and the UK’s overseas territories. 

Negotiations on the second revision of the Cotonou agreement were completed in June 2010 in Burkina Faso, and parties on both sides have now signed it. The next step will be the ratification phase during which both Houses will have the opportunity to discuss that important agreement and the changes that were made during its second revision. When Cotonou was first revised, it was updated to include references to the International Criminal Court and strong messages on the importance of the millennium development goals. Those changes were discussed by the House during the ratification process, and the second revision builds on them. For example, it will change the Cotonou agreement’s trade provisions to bring them into line with the introduction

of economic partnership agreements—EPAs—supporting deeper trade relations between the ACP and the EU, and to bring those into line with the rules of the World Trade Organisation. 

There are also some important new references to key challenges such as climate change and HIV/AIDS, as well as a recognition of the 2008 food crisis, which is reflected in stronger provisions on food security and agriculture. The second revision also attempts to set out a clearer process for invoking the final imposition of article 96 measures, which apply when fundamental principles of human rights, democracy and rule of laws are breached. Work is under way in Brussels to improve the process further. We strongly support a clearer process that will bring about a consistent and fairer approach for all concerned parties. 

Let me refer briefly to the explanatory memorandum on Madagascar submitted by my right hon. Friend the Minister for Europe, which the European Scrutiny Committee has tagged to the debate. Following a coup in March 2009, and subsequent lack of progress in reaching a consensual solution, the EU closed article 96 consultations with Madagascar in June 2010. That formally suspended all development funding, although humanitarian aid remains unaffected. 

The closure of article 96 consultations enabled the EU to press the relevant parties in Madagascar to find a solution and demonstrated that Europe does not support unconstitutional transfers of power in Africa. The EU will not resume development funding until a solution has been reached. In the meantime, we support efforts led by the African Union and SADC—the Southern African Development Community—to resolve the current situation. That is a demonstration of article 96 procedures working effectively. However, more needs to be done to ensure that they are applied properly and fairly, and we will continue to work with our partners in Europe to achieve precisely that. 

With reference to the second explanatory memorandum tagged to the debate, following the coup d’état of last February, Niger is on a delicate course to political recovery. Independent bodies to oversee the electoral mechanism have been established, and a new constitution reflecting democratic principles was adopted in November 2010. Parliamentary and presidential elections are at least scheduled to take place shortly—on 31 January. The transition is expected to culminate in the appointment of a civilian President in April 2011. We are monitoring the process carefully and will keep the European Scrutiny Committee updated. 

Finally, I am aware that some concerns have been expressed in the other place about the observer status afforded to Equatorial Guinea ahead of its ratification of the Cotonou agreement. This is a procedural issue with a clear legal basis in the rules of procedure. The European Commission has received assurances that Equatorial Guinea will ratify the treaty. If granted, the country’s observer status will expire on 30 April and will not be extended. 

I hope I have addressed some of the matters that might concern hon. Members. We will continue to press for accountability and transparency in EU aid, including through a robust approach to tackling corruption and addressing human rights abuses. I look forward to hearing the views of the Committee and further discussion of the issues. 

The Chair:  We now have until 5.30 pm for questions to the Minister. I remind Members that questions should be brief. Subject to my discretion, it is open to Members to ask related supplementary questions. 

Rushanara Ali (Bethnal Green and Bow) (Lab):  It is a pleasure to have the opportunity to take part in these proceedings, not least because this is my first such Committee sitting. I welcome you to the Chair, Mr Walker, and I thank the Minister for his contribution. 

When the Cotonou agreement was introduced under the previous Government, it marked an important step towards strengthening multilateral partnerships between the EU and ACP countries in the pursuit of reducing and eventually eradicating global poverty. I shall ask a few questions, starting with the subject of climate change. 

As the Minister said, the agreement places more emphasis and importance on climate change for the first time by putting it at the centre of the partnership. He is aware of deep concern about the vulnerability of many Pacific island states to climate change. Will he update us on the role of climate finance in meeting the new obligations to support ACP countries’ efforts in mitigating and adapting to the effects of climate change? 

Mr O'Brien:  I thank the hon. Lady for her kind remarks and welcome her to her first such sitting. These Committees always take on a somewhat interesting character compared with some of the processes we are used to. 

The hon. Lady is right that the Cotonou agreement was first promulgated under the previous Administration. It was a successor to the Lomé convention, which came into being in the ’60s and served well in post-colonial times. Cotonou was a welcome update to reflect modern circumstances. It has been the subject of one revision, and now there is a second one. 

On the hon. Lady’s particular concerns about climate change, she is right that we must recognise that tackling climate change is crucial for development, not least for African, Caribbean and Pacific countries. Climate change will have a disproportionate effect on the poorest peoples of the world. It affects not only islands in the Pacific, but those in oceans such as the Indian ocean—the Maldives comes to mind—so there are serious challenges. 

The hon. Lady welcomed the stronger statement on the global challenge of climate change in the revised Cotonou agreement, but she asked about climate finance in particular. I assure her that the UK has provided £511.7 million of fast-start climate finance to multilateral funds in 2010-11. We will consider funding for the adaptation fund in due course on the basis of the outcome of DFID’s bilateral and multilateral aid reviews—as the hon. Lady is aware, those reviews are well under way, and we will report on them as soon as they conclude later in the year—and the wider spending decisions of the international climate fund. 

In addition, the recent Cancun conference agreed to establish a green climate fund to support policies and activities in developing countries. The UK will support the fund’s development and will make decisions on its funding on the basis of its capacity to deliver. As the hon. Lady will recall from International Development questions not long ago, those decisions are not yet made, but there has certainly been progress towards

specifics. The European Commission recently signed a memorandum of understanding with the Pacific Islands Forum, which will fund further climate adaptation initiatives, particularly in the Pacific. 

As the hon. Lady has focused on finance, I should, with your indulgence, Mr Walker—I assume that your indication that there should be short questions also applies to short answers, although this is not one of them—give a complete answer. In negotiations over the next EU financial perspective, we will press for a greater proportion of the EU’s contribution to climate finance for developing countries to be delivered via the EU budget. That would increase the certainty of financial flows to recipients, effectively pool resources across Europe, utilise economies of scale and improve the average quality of EU climate spending. 

Roger Williams (Brecon and Radnorshire) (LD):  The Foresight report on the global food production challenge, which affects many of the countries involved in the agreement, was published today. The Minister and officials in his Department will probably not yet have been able to read and respond to the report, although the theme will be familiar to them. What priority will be given under the agreement and in the work of the Department to providing agricultural advice for those countries? 

Mr O'Brien:  The hon. Gentleman raises a very important point. He is quite right to cite the Foresight report, which was jointly commissioned by my Department and the Department for Environment, Food and Rural Affairs. At its launch event tomorrow, I dare say that I will be even better briefed on it than I am now. I have been involved in a number of the report’s meetings, however, so I am well sighted, as it were. 

It is pretty well assured that population growth is projected to rise towards 9.5 billion by 2050, so the question is whether the world will be able to feed itself in a sustainable way. The broad answer is that that is possible, provided that the right foods are grown in the right places at the right time with the right distribution, the right cost base and the right predictability. However, those ifs and conditionalities spell out the scale of the problem, which was well reported on the radio this morning, as the hon. Gentleman no doubt heard. 

I assure the hon. Gentleman that negotiations for this revision in the Cotonou agreement reflected the fact that the primary focus for participation in it is not only good development through the EDF, but private sector development that is focused on agriculture, which involves the largest number of poorest people in economic activity. That is fundamental to ensuring that those people have access to the necessary assistance and support in a sustainable way. 

Kelvin Hopkins (Luton North) (Lab):  It is a pleasure to serve under your chairmanship for the first time, Mr Walker, and I look forward to many more such occasions. I congratulate my hon. Friend the Member for Bethnal Green and Bow on her first appearance on the Front Bench in such a Committee. 

The agreement refers to human rights, democratic principles and the rule of law. To what extent are those principles being pressed strongly by the European Union, and how strongly has Britain been pressing the European Union on that? 

Mr O'Brien:  I know that the hon. Gentleman takes a continuing and very keen interest in these matters. The issue of human rights has been fundamental to the operation of article 96, and was very much the subject of discussions that took place on the second revision. 

Political dialogue overarches the issues on which the hon. Gentleman focuses, and the way in which article 8 operates on political dialogue is obviously subject to change through the revised version of the Cotonou agreement. The provisions have been strengthened to ensure that dialogue can be more productive. There is explicit provision for a role for regional bodies including the African Union. We hope that that will be a key influence in resolving the current Côte d’Ivoire situation, along with ECOWAS, the regional economic body. Article 8 also makes explicit reference to aid effectiveness, climate change and regional integration, as well as including a more explicit reference to dialogue on human rights. 

Pressure for such references was fundamental to the EU’s red lines, as the hon. Gentleman will see from the explanatory memorandums that have been tagged on to this debate. One of the issues was the acceptable—or unacceptable—position reached on the progress of human rights in relation to countries that are either excluded through article 96, or that might be brought back in through article 96. There is no doubt that significant pressure on human rights issues continues. When there have been difficulties in the negotiations, the wording and phraseology in other international agreements that apply to all countries have been used to overcome any particular difficulties in the Cotonou agreement. 

Kelvin Hopkins:  I thank the Minister for his answer. On human rights, I understand there was a special reference to sexual orientation, which is a sensitive matter in many countries where it is not common to take the appropriate attitude to such matters that we now have in Britain. It appears that a compromise was found on the basis of language in the universal declaration of human rights. How—if at all—are we pressing the matter with countries that perhaps do not behave well towards people of minority sexual orientation? 

Mr O'Brien:  The hon. Gentleman quite rightly picked up my allusion to the compromise that took place during the discussions on article 8 to which I referred. He therefore highlights the particular issue that was at stake. He is quite right that there was strong resistance from the ACP to an explicit reference to discrimination on the grounds of sexual preference. However, we were able to ensure the inclusion of a reference to “discrimination of any kind”, which in practice will have the same impact. Of course, we argued strongly for the inclusion of language on sexual preferences, but that was patently a red line for the ACP states. As the hon. Gentleman rightly indicates, the language reflects a compromise. It is not as strong or as explicit as we would have liked, but it none the less gives the right overall protection, albeit not with the explicit reference that he mentioned. 

Jeremy Lefroy (Stafford) (Con):  It is a pleasure to serve under you, Mr Walker. Will the Minister kindly explain the Government’s position on the pressure, which has come from some quarters, to move the European development fund into the main EU budget? I would

strongly resist that, as the EDF gives contributors like us a much greater say over where it goes, particularly in relation to the relief of poverty. 

Mr O’ Brien:   I am most grateful to my hon. Friend, who does nothing other than to reinforce the steel with which we wish to remain determined to seek to resist the budgetisation of the European development fund. The UK, as a matter of policy, remains opposed to budgetisation of the EDF, as it considers the fund to be the most effective, flexible and poverty-focused of the EU’s external instruments. Within the UK’s share of EDF, which is now close to the UK’s share of the EU general budget, it is unlikely that the UK would stand to save money as a result of EDF budgetisation. So, even on rather clinical accountancy or audit grounds, that justification appears to be thin. 

It is worth noting that a higher proportion of EDF resources go to low-income countries—85% compared with 43% of the overall EU budget—which has always struck me as a compelling position. With their increasing developmental impact, it is clear how strong the EDF projects are, because they have been scored as good performers in 2009 compared with 2007. If my hon. Friend is interested, I have the precise figures. 

As I pointed out earlier in response to the hon. Member for Bethnal Green and Bow, the report on our evaluation of the multilateral aid review will come out a little later in the year. It is worth saying, however, that, in the way that we have scored it, EDF has faired relatively well so far. That in itself is also a good reason as to why we should not seek to dilute that effectiveness when it has clearly outpaced what would appear to be the broader EU budget element of development spend, let alone non-development spend. 

Kelvin Hopkins:  Pursuing that matter of budgets and aid, I have raised many times in such Committees, as others have done before me, that the problem is that we consider European aid as being delivered less efficiently and targeted less well than aid provided directly by our Government. Will the Minister comment on whether things have improved in that respect and on whether we are happier with the way that aid is delivered through the European Union? 

Mr O’ Brien:   We need to draw a distinction between the EDF and the non-EDF development spend that goes from the EU, in which the UK, and the UK taxpayer in particular, is a significant contributor. The EDF, as I was explaining, scores relatively well. Although we call it flexible in relation to other instruments, we, of course, have some residual concerns about a degree of inflexibility, which we want to examine. Most importantly, the comparison has to be with our bilateral spend and whether we would be better off simply holding on to all the money and spending it bilaterally in accordance with our decisions. 

The sheer size and strong poverty focus of the EDF make it critical in helping us to deliver on the MDGs, which was reinforced by the MDG summit that took place last September, and on poverty reduction. It shares many of the UK’s development-strategic priorities, and it brings member states together to pool efforts and

to promote a better EU division of labour, which is not to be underestimated when one is looking at transactions and establishment costs. 

Having had the opportunity to travel in a number of the African countries in which DFID has programmes and, therefore, offices, I have noted that there are some areas where the EU’s established presence is the one that we should link in behind, rather than in front of. That is a clear demonstration of a sensible EU division of labour, which is also sensible for the recipient countries, which must have relations with each of those that have a presence. The EU and DFID already operate several joint programmes. 

As I said earlier, we are in the final stages of the comprehensive multilateral aid review, but I must say that the EDF fits well with our objectives. It is poverty-focused and is a good model of partnership. Other EU development instruments are somewhat less focused—not least on MDGs—and the demonstration of delivery is not as clear. 

I will, of course, update the Committee and the hon. Gentleman once we have further reports of our evaluation under the multilateral aid review. At this stage, however, I hope that that is a pretty clear summary of where the relative merits, on a comparator basis, are beginning to come out. 

Rushanara Ali:  May I turn to the subject of trade? Part 3, articles 35 and 36 of the agreement recognise the importance of aid for trade. That is the capacity building of ACP countries to make the transition from preferential trade to 

“World Trade Organisation (WTO) compatible ‘Economic Partnership Agreements’”. 

The agreement also states that those countries should adapt their industries and markets and increase 

“regional integration and South-South trade.” 

Given the continuing downturn in the international economy, what specific steps is the UK taking to ensure that that is happening? 

Mr O’ Brien:   I could give rather a long answer to that question. I shall try very hard to adhere to your strictures, Mr Walker, but I welcome the timely and important question. 

On trade, over time there needs to be access to world markets. The most significant thing that could happen in trade terms is that we successfully conclude the Doha round and get a new world trade agreement. The economic partnership agreements, to which the hon. Lady referred, are instruments that the EU can use to help open up not only African markets, but their access to EU markets. There is a certain time by which access to European markets is made available, but ACP states do not have to comply with equal terms of trade until a later time. She will be aware of that without my going into the detail and taking up too much of the Committee’s time. 

We are clear that ensuring that lower-income countries are able to play their full part in international trade has to be central to our policy, and, equally, the EU’s policy, of driving growth and, therefore, reducing poverty. The greatest deliverers of people out of poverty over time are private sector development, the growth of economic activity and internal, regional and international trade.

So we must provide appropriate levels of assistance to overcome the supply-side constraints of trade, including improvements to the customs procedures, infrastructure and logistics challenges that poor countries face when trading. The EPAs have been instrumental in helping us along that path. A lot more work is being done, but, clearly, that is the framework in which we operate. 

Rushanara Ali:  I thank the Minister for that answer. My final question is on tax. Part 2, article 33 of the agreement focuses on 

“enhancing capacities for domestic revenue management, including building of effective, efficient and sustainable tax systems”. 

It also focuses on 

“supporting implementation of international best practices in tax matters, including the principle of transparency and exchange of information”. 

What steps are the Government taking to honour the coalition agreement commitment to making every effort to tackle tax avoidance? Could the Minister confirm whether that is being done through the multilateral and automatic exchange of tax information between tax jurisdictions, thereby tackling the secrecy of offshore tax havens, and through the development of a new international accounting standard that requires companies to report on profits they have made in every country in which they operate? 

Mr O’ Brien:   I am interested in the hon. Lady’s question. The conditionality of my answer has to be that, as a development Minister, I feel that I have the requisite information to give an answer only on those countries that would be in receipt of development assistance; I cannot speak for any other countries that might be termed offshore but are not in receipt of development assistance. I would have to defer to Ministers in other Departments for an answer on such countries that would satisfy her. 

I start by absolutely assuring the hon. Lady that it is not only the UK Government’s priority, as stated in the coalition agreement, to build capacity for local revenues to be able to raise the taxes. She is well aware that a number of influential non-governmental organisations have been pressing on that particular aspect to ensure that there is no flight capital or leakage and that there is further encouragement of remittances, which help developing countries to start complementing aid, so that such countries are on a genuine path to graduation from aid over time, rather than in a rhetorical narrative. 

On the plus side, it is vital that we do our best. There are certain countries where the EU is in the lead and is able to do it more effectively than we are. I can certainly give two examples where DFID has in recent times helped the building of capacity and revenue systems. One is Rwanda, where I have seen it for myself. That is supported on the ground by other complementary programmes, such as building land tenure. In a country of 1,000 hills with terraces, at long last there is the security of knowing that—thanks to a piece of paper, aerial mapping, the ability to register it and go through a complaints procedure—one can show title to land. 

Therefore, people have the ability to grow more of better quality, to be part of the demand drive and to have access to markets. Nine times out of 10, it is women who will benefit more. It helps us to be women

and girls-centric in terms of policy, as we have often repeated. That tenure can be potential collateral, giving people the chance to have an enterprise that can yield tax and help the Exchequer of a country. That is part of the graduation from aid. The same is true in Burundi, where they have had even greater challenges. The EU has very much been able to help in areas where it has taken a lead. It has been in partnership in Tanzania and equally—and importantly at the moment—in Somaliland, which is why an integral part of Somalia has recently been able to undergo a constitutional change of its president, and look at some of the tax-raising effects there. 

In looking at international best practice and transparency, none of these projects is designed in a way that is anything other than fully transparent. That is in the interests of the confidence the international community can have, both through the EU and bilaterally in supporting development assistance, and through the use of our taxpayers’ money in the programmes that we are focused on. It is equally important as part of the transparency we have talked about, in ensuring that we can grow demand in the countries in which we are partners. Particularly through the growth of short message service technology, there is an increasing amount of transparency in the money that has been received. Therefore, the local people make demands on their governments to be accountable for the way that money is spent and the way it is raised through taxation. 

We do not want to do anything that would reduce capacity building and ensuring compliance with the multilateral and automatic exchange of information, as well as international accounting standards. Article 33 has been revised to include a strong focus on support for domestic revenue-raising through enhanced tax administration. That article promotes the participation in international tax co-operation processes and compliance, as I was just saying, with international standards. If the hon. Lady feels that I have not quite tackled the full range of her question—I admitted at the beginning that I could not—I am happy to commission a cross-departmental letter to fill her in on those bits I have not been able to help her with. 

David Morris (Morecambe and Lunesdale) (Con):  Part 4, article 72a—objective—on page 38, states: 

“c) carry out short term rehabilitation and reconstruction to enable the victims to benefit from a minimum of socio-economic integration and, as soon as possible, create the conditions for a resumption of development on the basis of long term objectives set by the AGP countries and regions concerned;”. 

Yes, that is a short-term minimum. What would happen if there were an unprecedented natural disaster, such as the tsunami? Would there be a further fund available, and would the cost to the UK be great? 

Mr O ’ Brien:   The process by which the EDF focuses attention is very much through the rounds. We are currently in round 10—EDF 10—focusing on submissions from candidate countries for the financing of various projects. Therefore, the sort of circumstances rightly highlighted by my hon. Friend need to be disaggregated between those subject to more predictable project funding and those funding humanitarian emergency relief. On

the humanitarian side, for emergency relief, even under article 96 a country can be suspended. The humanitarian aid continues, however, because we want to ensure that we give the greatest relief to the greatest number of the most needy and poorest people. 

Frequently, however, we are not addressing poverty, but the often short-term circumstances. Other issues must complement that, not least where money is raised, for example, in this country, where trust law itself must be part of the protection. Through the Charities Aid Foundation, people made tremendous contributions to help after the tsunami, but there was a much longer period before that money was released. There are rightly questions concerning accountability and about how well that money has been managed, released and targeted. 

I assure my hon. Friend that provisions have been introduced regarding the Cotonou agreement. It puts programming obligations and expectations upon ACP national Governments to introduce greater flexibility to respond to what are known as unforeseen needs at regional level, in what are known as B envelopes within the European development fund. They must also have the flexibility to increase allocations in response to crisis situations. I am getting horribly close to using jargon, which I have done my utmost to avoid, but my hon. Friend is obviously so well briefed that he will understand what I mean by A and B envelopes. I indicated that the greater emphasis on humanitarian emergency and post-emergency assistance financing, under the multilateral annual financial framework, is addressed in article 72. 

To be clear, in a current example, Haiti would be in a B envelope. How is the EU helping to address the challenges that Haiti unquestionably continues to face? The European Commission has pledged €522 million towards its reconstruction. It was the largest provider of general budget support to that country in the fiscal year 2009-10, committing €322 million and disbursing €61 million so far. That allowed the Haitian Government to maintain critical expenditure in education, health, security and other areas. I can provide more detail for my hon. Friend if necessary, but I hope that that gives him a flavour. 

Jeremy Lefroy:  Does my hon. Friend think that, through the Lomé convention, the European Union is sufficiently serious about pressing developing ACP members on two things that he and the hon. Member for Bethnal Green and Bow have raised? First, on increased tax revenue collection, from my experience some countries, such as Rwanda, are making good progress. Others, however, are pushing in some directions but may be reluctant to squeeze their own citizens—particularly the wealthy and well connected ones. 

Secondly, does the Minister believe that, through the Cotonou agreement, the EU will give sufficient impetus to breaking down south-south trade barriers? Often it is far easier to export from a developing country to a developed one than from a developing one to its next door neighbour. 

Mr O’ Brien:   I shall take the second aspect of that question first, if I may. Only last week, I visited Zambia and crossed the land border to Malawi, for two days each. Both countries—particularly Zambia—have strong

commodity opportunities, as well as products and volumes. One of the most striking things that I noticed was how often the trade of such commodities is well beyond their contiguous neighbours and the south-south trade, as my hon. Friend rightly said. 

Breaking down barriers between the economic regional entities is one of the biggest issues, which concerns SADC, and to some degree the east African community, in particular. It is also vital to recognise that one of the greatest economic opportunities is private sector development, which we are seeking to achieve. My hon. Friend will be aware that my Department is particularly focused on that, in addition to bearing down on avoidable and treatable disease, focusing on women and children’s health, and avoiding the most off-track MDGs on maternal mortality. Foreign direct investment is a particular type of confidence that is required in order for private sector development to take place, which is all part of the dialogue. 

One of the biggest wins is in ensuring economic regional integration. A great example would be Rwanda, which could be at the very heart of something that will stretch from Mombasa to Durban, through the north-south corridor. Increasingly, those regional economic groupings are focusing on that, and I am very pleased to say that the EU, through the European Commission—with its expertise in cross-border discussion and negotiation—is also recognising and focusing on that. Clearly, the regional integration efforts in Africa will help the south-south trade. 

On my hon. Friend’s first point, on taxation, he will have heard my answer to the hon. Member for Bethnal Green and Bow. On tax revenue collection, he referred to Lomé, which has been succeeded by Cotonou in its various guises. A good example of that issue would be my recent discussions in Ghana, where for the first time they have landed oil at Cape Three Points. The question will be how they structure their law and regulation such that, rather than necessarily wanting to simply extract the oil themselves—history would indicate that it will always be more effective to buy in that skill—the leverage of that revenue stream, whether it is a sovereign fund or some other form of funding mechanism, can be used in the wider economy, to penetrate the north and to deepen activities, not least in agriculture. Tax revenue collection is absolutely vital. 

One of the problems is not so much flight capital, but whether there is sufficient confidence to encourage remittances and for people with skills to come back and take part. In Africa, Ghana may well be one of the best candidates for graduation from aid within our immediate political timeline. I hope that that demonstrates that we are committed to recognising that not only is tax revenue collection fundamental, but that it brings with it a whole host of governance, economic management and public financial management issues, which enable a culture of good governance, an absence of corruption and an absence of impunity to ensure that all citizens are helped, and that the most wealthy do not have a pass. 

The Chair:  If no more Members want to ask questions, we will proceed to the debate on the motion. 

Motion made, and Question proposed,  

That the Committee takes note of European Union Document Second Revision of the Cotonou Agreement – Agreement Consolidated Text March 2010 and supports this important revision of the key principles supporting implementation of the broader development agenda between the EU and the ACP countries.—(Mr O’Brien.)  

5.12 pm 

Rushanara Ali:  I thank hon. Members for their contributions to an extremely informative debate. I thank the Minister for his responses. I also thank the European Scrutiny Committee for referring the Cotonou agreement to this Committee for wider debate. It provides an important opportunity to make sure that the agreement remains relevant in a rapidly changing international and ACP-EU context. 

The agreement is focused on development co-operation, economic and trade co-operation and the political dimension. If we are to achieve the objective of reducing and eventually eradicating poverty in ACP countries, we must ensure that the implementation of the agreement is our focus and that the key areas of action are strengthened. While the agreement is not without shortcomings, it is a partnership contract and therefore unique in the current development and aid architecture. It marks a valuable and timely evolution in the relationship between the EU and the ACP, bringing together 105 states, which is no small achievement. We must ensure that it achieves what it sets out to do and that in years to come it is credited as being an important international agreement, which genuinely made a positive difference to development and the advancement of ACP countries. 

As was mentioned earlier, the UK has led the way in international development over the past decade, working towards tackling global poverty. The previous Labour Government placed development at the heart of its international agenda, through its bilateral and multilateral relations. As Labour Members of this Committee, we welcome the agreement as an achievement of the previous Government’s leadership in international development. We encourage this Government to engage actively in the EU to ensure that all member states can play a strong and positive leadership role in international development. 

The challenges to tackling global poverty could not be greater. Almost all developing countries have been affected by the global financial and economic crisis. The World Bank estimated that the financial and economic crisis had pushed about 64 million more people into extreme poverty by the end of last year. It is therefore crucial that revisions under the agreement add teeth and recognise the greater challenges that many ACP countries face. 

We welcome the emphasis under the revised agreement on the areas of climate change, human rights, democracy and good governance, trade and tax. We also welcome the emphasis on the strengthening of the important role of national Parliaments, local authorities, civil society and the private sector; the focus on regional integration by political dialogue, which has been reinforced through the African Union becoming a partner of the ACP-EU Joint Parliamentary Assembly; the emphasis on the increased flexibility to respond to crisis situations, which has focused on humanitarian emergency and post-emergency assistance financing, and the funding to

ACP countries from the European development fund, which still retains the explicit link to human rights and democracy as discussed earlier. 

I wish to thank the European Scrutiny Committee for referring the Madagascar and Niger decisions to the Committee. That illustrates the importance of human rights obligations and good governance under the agreement. However, we must recognise—as with all international agreements—that there remain some opportunities as well as challenges that require ongoing action. They include the increasing differentiation between the needs and expectations of the various regions within the ACP; the emerging and growing importance of the African Union as a partner for the EU; and ensuring that ACP countries that are particularly vulnerable to climate change receive the support they need—as and I and other members of the Committee have mentioned recently in relation to mitigating and adapting to the effects of climate change. 

The jury is still out as to whether some ACP countries have yet the capacity to respond to the new WTO-compatible economic partnerships. As we discussed earlier, some NGOs continue to have concerns about the dangers of reciprocal trade with powerful EU multinational companies. That said, we fully support the revisions of the agreement and, I hope—whatever the views of members of the Committee about European integration—we can all agree that effective multilateralism is vital to tackling global poverty. 

5.17 pm 

Kelvin Hopkins :   I have spoken on such matters before and I shall perhaps repeat some of what I have said. Many years ago, I was asked by a hostile questioner what I thought of the revised terms of the Lomé agreement in front of an audience that did not know what the Lomé agreement was. I did broadly know, but I did not know the revised terms. However, I managed to busk my way through by explaining what the Lomé agreement was mainly about. 

We have now moved on, but at the beginning the Lomé agreement was not very benign and what the European Union was clearly trying to do at the time was to keep out products that might compete with its own industries, particularly agriculture. High-value-added products were kept out of the European Union. We imported primary products rather than manufactured products. That was done deliberately to the advantage of the developed European Union and against the interests of those countries that were struggling to develop. It was very noticeable. 

I am certainly the oldest Member in the room. I remember all the formerly colonial countries becoming independent. Some of them had relatively low levels of development and some were very poor. However, some developed rapidly while others did not, and we are now seeing, particularly in Africa, countries that were perhaps comparable with Malaysia all those years ago, but which are now lagging way behind. It is not their fault that such things have happened and, had they pursued another economic ideology, they might have been more successful. 

In recent years, the developed world has been forcing a neo-liberal ideology on to the poorer countries of the world, saying that they must compete in markets while restricting access for their goods to our markets. If I was in one of those countries, I would feel resentful. 

I have said, as many other people have, that buying European Union sugar in Malawi, in a country that can easily produce its own sugar given the opportunity, was complete nonsense. EU sugar was clearly being dumped in poor countries, undermining their agriculture, and that was an iniquity. There are lots of other abuses as well. Forcing all those countries to accept trade, goods and services from the developed world while restricting access to our markets was wrong. 

Roger Williams:  The hon. Gentleman has picked a bad example by citing the old EU sugar regime. That involved buying sugar from ACP countries at more than the world price and selling it on the world market at less than the world price—it was an EU subsidy to aid underdeveloped countries. I follow what he is saying, but he has picked a bad example. 

Kelvin Hopkins:  They are past examples, and that does not happen now. Nevertheless, all poorer countries had a difficult time. There was one case of west African countries providing timber for the European furniture industry. They wanted to machine and part-manufacture in their own countries, but the European Union said that it just wanted the timber, which was the low added-value component of production. We therefore did not help those countries as we should have done. 

The focus is now on overcoming and eradicating poverty in poorer countries, which is absolutely right. I like to think that the European Union and other developed countries will now be much more open about what poorer countries need. If I was in one of those countries, I would like the opportunity to restrict the import of certain goods so that I could have a degree of protection while developing my own economy. However, “protection” is seen to be a bad word, even though almost all the great developed countries initially developed their economies by using protectionism. We should not restrict poorer countries from being able to do that, and we should not lecture them about free markets when they are struggling to develop. 

We should also avoid global corporations and countries exploiting minerals in poorer countries for their own benefit. We have seen enclave development, in which developed countries put in poorer countries factories and production that did not use local labour and abused the local environment, as well as paying little in local taxation. Poorer countries accept such enclaves in the hope that, somehow, they will achieve some economic development. 

Such things have been focused on before, and I like to think that we are now progressing and genuinely helping. It is about not just redistributing income—giving aid to countries—but letting poorer countries use whatever means they need to develop. One hopes that the Cotonou agreement will be more supportive and reasonable to ACP countries now and in the future. 

Even under the previous Labour Government, I was critical of our insistence on such countries privatising public services. Why should they have to privatise public

services if they do not wish to, especially if the private companies will come in from outside and take the profit out to the developed world, instead of leaving it behind in those countries? 

We in the developed world have behaved badly towards the less developed world on many issues. I hope that the Cotonou agreement will be a real and genuine attempt to help poorer countries, and not just another means of stopping them from taking advantage of the developed world. The poorer countries have had a hard time, and many of us who have been there have seen the incredible difference between their living standards and ours. It is perfectly understandable if people in such countries feel anger about the way in which they have been treated over the previous decades. I hope that the Committee will at least press the Government to be progressive in such matters, and to ensure that policies actually help poor countries and are not simply a clever way of continuing as we have in the past. 

5.25 pm 

Mr O'Brien:  I am grateful to members of the Committee for their examination of the issues that have been raised today. I genuinely welcome hon. Members’ continued interest in the EU’s development work, particularly through the Cotonou agreement. I thank the hon. Member for Bethnal Green and Bow for her remarks, in which she rightly emphasised the important fact that the Cotonou agreement is a partnership agreement. She referred to 105 states. The number of EU-ACP countries amounts to about 79. 

Rushanara Ali:  Plus— 

Mr O'Brien:  Plus the 27 EU member states. I wanted to ensure that the distinction between the two statistics was understood, so I thought that it would be helpful to place that on record. 

Our wide-ranging sitting has covered several issues relating to Cotonou. Importantly, we have discussed the political component in some detail. Our debate should be seen in the context of the commitment in the coalition agreement to maintaining—and boosting—our development assistance to the poorest countries of the world. Members of the Committee will be familiar with the coalition Government’s promise not only to reach the target of 0.7% of gross national income by 2013, which will be two years ahead of other EU member states—that is intended to represent leadership, commitment and encouragement, not least as articulated through Muskoka, the G8 and G20, the millennium development goals summits, Seoul, and the ensuing international and leader meetings that will take place—but that that, in the proper course of the legislative timetable, will be enshrined as a matter of law. 

One of the primary pleas from the hon. Member for Bethnal Green and Bow was that we should engage positively. I hope that she will be one of the first to recognise that the coalition Government are indeed engaging positively and deliberately with the EU, and recognising that there is a place for all partnership working, as indeed there is a place—in terms of our own accountability—for our bilateral aid programmes. To some extent, ensuring that we have a blend of both types of programme is a strength rather than a dilution; that is no different from the situation under previous Administration. 

We continue to engage in economic partnership agreements and in ongoing trade debates. As I said, we hope that 2011 will see the successful conclusion of the Doha round at last. Economic partnership agreements will open up EU markets to ACP countries, but an awful lot more needs to be done, as the hon. Member for Luton North highlighted. He is respected in this place for a long history of consistently making his tenacious arguments, even though we do not agree with all of them. 

We need to combine better trade rules and more trade-related support. The EU patently offers both. The hon. Member for Bethnal Green and Bow listed the factors of climate change, the political aspects of human rights, democracy and good governance, and the linking trade with tax. However, we must also consider the organisational and administrative structures—the architecture—of governance, be they in the form of national Parliaments or through the accountability that comes from the activity of organisations to strengthen civil society, let alone from economic integration. We have mentioned how those matters interrelate but do not necessarily either overlap, or indeed supplant, humanitarian and emergency responses to developing tragic situations. 

I was taken with the arguments made by the hon. Member for Luton North. I always enjoy hearing from him a certain number of points on which we might be described as ad idem, and others on which we have regular jousting sessions. Not for the first time, he made a case on protectionism and the absence of any privatisation of services, although it is not absolutely essential that I engage with that again in this debate. He cited historical examples; the hon. Member for Brecon and Radnorshire picked up on his example about sugar. However, he might be interested that today we have an example involving—dare I say?—bananas. 

ACP banana producers are being helped to adjust to the recent Geneva agreement on bananas, and the EU has agreed a budget of £161 million to assist them. However, implementation is being impeded due to disagreements. We are all European citizens—the hon. Member for Bethnal Green and Bow emphasised the multilateral and partnership nature of what we are engaged in—but there is an embarrassing disagreement among the European Parliament, the Commission and the Council. We are urging as firmly as possible that that should be resolved quickly. Agreement is vital, because the key obstacle to disbursement is something of a playground argument about who has power within delegated Acts as a result of the Lisbon treaty. The hon. Member for Luton North is correct to identity that we would do well to avoid such disputes, because they seriously prejudice the access to markets of very poor countries that we wish to encourage. 

Kelvin Hopkins:  The Minister talks about bananas, but that was the subject of another conflict that arose a few years ago, although I think that it has now been overcome by the fair trade movement. Large banana corporations that were owned as multinationals by rich countries drove down the production price of bananas in certain countries and that undermined small island producers who depended heavily on the sale of bananas. We should pay a little more for bananas from those countries to ensure that they have a viable economy,

instead of inflating the profits of corporations owned in America, for example. That involves interfering with the markets, but I would do that. 

Mr O'Brien:  I understand the hon. Gentleman’s point. Without going too far into the technical details, bananas are a particular case because they come in their own casing, so not much value can be added by the time that they land in the markets. A better case to consider might be coffee. That commodity is often traded at a bean level, and the value is added well outside the country of production, so a lot of price volatility has to be faced by those who have the least resilience to cope with it. They might also be those who have the least storage capacity for maintaining the highest possible quality that will ultimately allow production to the premium quality that is required for the branded goods that hit the shelves in our supermarkets, particularly those with a large purchasing power. 

Some of those barriers have been overcome, not least through some reasonably good private sector development. Some of the added value is now being introduced in the countries of production, which is certainly something that we need to encourage. That is equally part of good private sector development, so I hope that the hon. Gentleman realises that, as always, there is a blend in such things. This is not simply an ideological battle between privatisation and whatever, but it is actually to do with where we can secure the best added value and therefore get the yield. 

I want to widen the debate a tiny bit, if I may, by touching on the vital issue of land tenure. To some degree, the hon. Gentleman hinted at this point when he talked about often mistaken economic policies that were in place for a number of years after colonialism. He claims to be the oldest member of this Committee. For what it is worth, I can claim to have been there when independence took place in Kenya on 12 December, as I was at the celebration. 

There is no question but that the absence of a commitment to land tenure has held back the ability to secure added value to land, which helps to create forms of collateral that are easier to securitise for private sector growth than the simple discounted model of cash flows for a business that has not had the chance to exist. Recently there has been an interesting drive to clarify land tenure. We have been able to participate in that, as I said earlier, not least in Rwanda and Burundi, where it is proving successful. 

It is appropriate that I touch on the tagged explanatory memorandums discussing Madagascar, Niger and Equatorial Guinea. One issue about Madagascar is that because it was given sufficient time—indeed, extra time—to negotiate, the suspension of all EDF funding has been proposed, but that was due to the continuing failure of those in power in Madagascar to respond appropriately, as we see it. We are grateful for hon. Members’ indications of support for that judgment, which complies with article 96. 

Equally, given the facts on the ground in Niger and the improvement in circumstances, the graduated resumption of the relationship that exists under the Cotonou agreement is proposed, not least because it is anticipated that a poll leading to a civilian President by April this year will be conducted on 31 January. That judgment appears equally appropriate to us. 

Although the accession of Equatorial Guinea to the Cotonou agreement and the granting of observer status, which would run out in April in any event, have caused some question marks, they seem appropriate steps to ensure that respect for human rights and an increase in compliance with the expectations that come through the Cotonou agreement are underpinned in Equatorial Guinea’s participation. To our knowledge, the country holds no more reservations on the question of the International Criminal Court, which was included in the first revision of the Cotonou agreement and is therefore an important aspect of the question of whether countries are ready for full accession. 

I was pleased that the hon. Member for Bethnal Green and Bow mentioned the partnership with the African Union, which I agree is important. We must see how that interrelates with a—speedy, we hope—resolution in which Laurent Gbagbo accepts the position surrounding the presidency in Côte d’Ivoire, and with a recognition of the importance of required climate change mitigation and adaptation. 

The hon. Lady mentioned an important question in which I have been heavily engaged for many years across several Departments: do the countries most in need of a successful Doha round have the capacity to advocate and to respond to challenges within a WTO discussion? She will be aware that we are implementing an international advocacy programme to ensure that the expertise and necessary funding are in place for countries such as ACP countries that need to argue and make representations on terms with those that might be blessed with more economic muscle. 

We discussed reciprocity earlier. The way in which the Cotonou agreement and other trade rules work is that access to EU markets is, in effect, immediate. There is a deliberate lack of reciprocity, in so far as the greater openness of some of the African markets is sometimes graduated as part of a programme over 15 or even 20 years. That could even include some protectionist measures that might satisfy the hon. Member for Luton North, even if many of us find that a difficult principle to reconcile with best access and the greatest growth opportunities through free markets. 

I hope that I have covered the points that have been raised in our constructive debate. I am grateful to the Committee for its insights and support. 

Question put and agreed to.  

5.40 pm 

Committee rose.