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Lord Hannay of Chiswick: My Lords, it is good that the House is discussing the issue while the failure of Cancun is fresh in our minds. Let us be clear. The failure was a major setback which will damage all concerned, developed and developing countries alike, although I fear that developing countries, which are so much less well placed to ride out such setbacks, will be the more damaged. It could undermine the fabric of world trade rules, on the maintenance of and respect for which the prosperity of all of us depends. Let us not delude ourselves with talk of clouds with silver linings and possible simple ways back on to the high road that leads to freer and fairer world trade. It will take a good deal of statesmanship and much hard work to achieve that. Success is far from a foregone conclusion.
I do not intend to dwell much on apportioning blame for the fiasco at Cancun. The air is already thick with the protagonists allocating blame to everyone but themselves. There are lessons to be learned, but playing the blame game does not get one very far, and it cuts across and undermines the effort to get back to the negotiating table and on with the matter in hand, which is bringing the Doha round of world trade negotiations to a successful conclusion, by which I mean a conclusion that brings clear, early and measurable benefits to the developing countries to which the round is dedicated.
I have just one complaint to air. Countries which invite large international gatherings of this sort and those who organise them must be prepared for them to overrun, and for the last days to be spent in a marathon of late-night meetings and efforts to reconcile conflicting positions, as the noble Lord, Lord Judd, said. There is no other way to come to closure. Cutting short negotiations prematurely and giving way to impatience is a recipe for failure. It must not be repeated.
Where do we go from here? One must clearly start with the problem of the developing countries, which came to Cancun in an angry and determined mood. They had, in my view, a good deal of justification for that anger. Previous trade rounds had failed to bring them benefits proportionate to those gained by the developed countries. They had watched paper concessions on the matters that really counted for themtrade in agriculture and in textilesfail to materialise, and be finessed away by the developed countries. They had been on the receiving end of cheap, subsidised exports of agricultural goods which damaged their own domestic agriculture and their prospects of winning external markets. So they came to Cancun with their blood up. Unfortunately, most of the blood they shed at Cancun was their own, by setting back the cause of agricultural policy reform in the three key playersthe European Union, the United States and Japanand by delaying the date on which any concessions agreed in the Doha round begin to bite. However, that is no cause for satisfaction.
We should be thinking nowby we, I mean the European Union, since the United States will be hampered by the run-up to next year's presidential electionof some significant ways of demonstrating up front our commitment to ensuring that developing countries do benefit from this round: more funds and more expertise to help them participate effectively in negotiations; perhaps some unilateral moves to give them better access to our markets already; perhaps some proposals for the accelerated phasing-in of concessions in the round which particularly benefit developing countries. I hope that the noble Baroness the Leader of the House can address that.
Evidently, if this round is to succeed, the European Union will have to put more on the table with respect to agricultural trade than it did at Cancun. I am not one who criticises what the European Union offered at Cancun in that respect. The meeting was only a staging post on the way to a conclusion by the end of 2004. It is naive to suppose that all the cards would be played
I note that there has been a good deal of complaint about the cumbersomeness of WTO procedures; the difficulty of reaching consensus in such large organisations; the need for slimming down and speeding up decision-making. I am sure that all those points are well taken, but it would surely be suicidal to try to solve all that as a prelude to, or even as part of, finishing the round. Do we really believe that developing countries, who have only just felt their strength, are going to see it diluted as part of a deal that gives them what they want on trade? Of course not. The sensible way to proceed is to give the WTO a remit to examine possible institutional reforms after the conclusion of this round, and not as part of it.
What, then, are the priorities for the two months which lie ahead before the WTO contracting parties meet again in December to try to put the train back on the rails? That is clearly too short a period for serious, substantive negotiations. However, I would hope that we could secure a political commitment at the highest level to completing the round by a date that is now more practical than the end of 2004. Could not the European Union lead the way when the heads of state and government next meet at the end of this week by pointing in that direction? It is important that the European Union should get on with giving a lead.
I hope that the noble Baroness the Leader of the House, when she replies to our short debate, can tell us something of the Government's thinking on the way ahead. I have been authorised to tell the House that Sub-Committee A of your Lordships' EU Select Committee will be debating its next major report on finding a way through the post-Cancun maze.
Lord Desai: My Lords, I would like briefly to take an opposite view to that of most people. While Cancun was a failure, it was a better failure than Seattle. The reason for that is that at Cancun, the developing countries found their bargaining muscle much better than was the case at Seattle. At Seattle, they were excluded from Green Room negotiations altogether and the US played a high-handed card in dismissing the concerns of developing countries.
At Cancun, a group of 21 or 22 developing countries emerged which was able to put together a coherent strategy. Those are the more industrialised of the developing countriesthe larger developing countries such as China, India, Brazil, South Africa and so on. They were able to put forward a bargaining strategy
Therefore, I would be against any of the Tokyo round proposals that my noble friend Lord Dubs put forward. They are basically saying that developed countries will once again run the world. Those days are gone. I do not expect that developed countries meeting by themselves will make concessions that they do not make when developing countries are there bargaining with them.
It is important to note that we should not have expected very much out of Cancun, because only three or four weeks before it started, at a round-table meeting organised by the Commonwealth Business Council, where many Ministers and business leaders spoke, it was quite clear that insufficient preparations or concessions had been made even two or three weeks before Cancun was about to start. We were therefore expecting that even the modalities of further progress would be difficult to agree on at the end of Cancun.
Importantly, it has now been established that there are limits beyond which developing countries will not be pushed. However, among them, there is a division between the 21, who are more industrialised, and the poorer, more agricultural sub-Saharan African countries. It is very important that their interests, especially those affecting cotton subsidy, be regarded as important as those of the 21 that want better access to developed country markets because they have manufacturing exports to sell.
I agree with many noble Lords who have said that we need to look again at WTO procedures. However, we must not change the principle of one country, one vote. We must not have any permanent members or hierarchies. In as much as it is a bargaining forum, the strength that developing countries have is in numbers. It is very important that that strength be maintained.
What must ultimately happen is for WTO bargaining to become an all-year-round session. I know that there are new negotiations starting in December and that within a year we will have to arrive at a decision, but I do believe that negotiations ought to be permanently staged.
Baroness Whitaker: My Lords, I have three, small points to add to this very timely debate. The first follows from the fact that it is also very much in the interests of all the citizens of Europe that subsidies and tariffs protecting European and other Western goods should disappear. Consumers in our part of the world are hit three times over. They pay the tax which cushions uneconomic production; they pay more than they need for goods which without protection would be uncompetitive; and they also pay for surpluses to be dumped on world markets. The Consumers'
That is not the only citizen interest to be damaged by subsidy. Subsidies for agriculture foster the overloading of croplands and in many places the topsoil is eroded. Everywhere, there can be more pollution from synthetic fertilisers and pesticides and the release of greenhouse gases. Our environment also suffers from subsidies.
So when we think about the interests of the voters in the European Union countries, we should think that while some of them are indeed farmers, all of them are consumers who stand to gain from the market access which would in turn free African farmers to enter our markets.
My question to my noble friend is, therefore: what efforts can our Government make to persuade their colleagues in France, Germany and elsewhere to give due weight to their own consumers' interests in comparison with that of their farmers?
The second point I make is that the emergence of Group 21, or however many it ends up as, under the influence of the distinguished and dynamic Brazilian Foreign Minister, Celso Amorim, while marking an improvement in equality of bargaining power between richer and poorer countries, risks marginalising those much poorer countries which are not included. South Africa and Egypt are, I believe, the only African countries in G21, and some might think that South Africa has to a degree jumped ship to join the richer non-Western group. It is the poorerparticularly sub-Saharancountries, of course, whose economies could really be transformed by better market access. Can my noble friend use her good offices to ensure that the G21 Ministers remain open to the cause of the poorest countries?
Finally, as a subset of this point, NePAD has created a secretariat. Its purpose, of course, is to help African ownership of the development process by enabling peer reviews of the capacity of African states. But the purpose of the development is to lay the foundations for investment and thus economic growth. Investment and growth are both hampered if market access continues to elude the African producers. Could NePAD also develop a capacity for lobbying, so that it could intercede with G21 on behalf of its members? Or is the loose AU/ACP/LDC grouping up to the task? It that one of the capacities which Western assistance could help improve?
Lord Elton: My Lords, the noble Lord, Lord Dubs, has done a great service to the House and the community in demonstrating the acute injustice represented by the present imbalance of trade in the world. The noble Lord, Lord Judd, has made it clear that this is an acutely dangerous situation. I rise only to remind your Lordships and myself of the context in which this takes place. Since I was a child, the world has changed from a challenging globe, much of which
We used to comprise a collection of different peoplealmost different speciesbut it is becoming clear that we are one people and one species. Yet we are divided by astonishing differences of wealth. As the noble Lord, Lord Dubs, pointed out, an American cow has more spent on it than an African citizen consumes in one year. That is not acceptable. It is spiritually repulsive. It is sinful, in the view of the Christian community.
Furthermore, it is dangerous. The scene was set, quite appropriately, by the demolition of the Twin Towers. The inequalities which exist are so self-evidently unjust that any revolutionary, let alone one inspired by religious dogma, can say that those who wallow in surplus wealth should be dispossessed for the benefit of those who have nothing. Indeed, if one removes oneself from the argument and forgets one's own comfy residence and cushioned bank account, one finds it most difficult to distance oneself from that argument.
The Government returned to office with a clear commitment to doing something about this. However, they had not appreciated the difficulty of doing something. That is not merely the difficulty of the processes of the WTO, which has been expertly revealed by the noble Lord, Lord Hannay, and others, it is the political difficulty at home. If we are going to do something about it, it is going to cost us. If it is going to be effective, it is going to cost us to a degree that we will notice. That will lose governments votes when they propose it. I am pleased to see the noble Baroness, Lady Whitaker, shaking her head and no doubt in a later debate she will give us the magic key which shows how we can do something for free. With only 30 seconds to go, I cannot give way.
I ask the Government to look for friends in this. I cannot speak for my party, but there are many within it who would support such an approach. They would be prepared to recognise that there must be some cross for this country to bear. Responsible people must find a political formula which enables them not to slang it out on the hustings, paring away what we would give to the poor in this world, in order to get one party or the other into power.
Lord Brennan: My Lords, we, the rich, have preached the gospel of globalisation for years. But it is not a gospel the poor will accept unless it has a tenet in it that includes justice. If we, the rich, chose the WTO to be our vehicle for expanding world trade, we must make that vehicle have a just base. It does not have that now. It is failing.
Secondly, the developed world and we, the rich, must now accept that, whether it is the G22, the G90 or any other combination, the developing world has said, "We have had enough and, with our present unity and strength, we want change". Can wethe richjustify dumping our excess produce world-wide without limit? Can we justify limiting access to our markets from the developing world? Can we really justify what is called "de-industrialising" the south, producing a type of economic serfdom? Clearly not. Therefore, the second decision is to accept the reality that the developing world will now seek to speak, at least morally, on equal terms.
The third decision is for the future. I do not accept that talk about reform of the WTO must wait. How can one expect the developing countries to come to terms now with there being no prospect of change in the WTO? It was Keynes who, in the Bretton Woods negotiations after the war, very perceptively anticipated that there might well be a need then, as there certainly is now, for a component to be designed in the world trade structure to protect and advance the interests of developing countries. There is no such structure now. There should be, and it should be offered for debate. It is an incentive for the developing world to come to terms with other matters.
In making those two present, and one future, decisions here in the rich West, I believe that the United Kingdom has a special role to play. The time has come to tell the United States, "You must change your attitude". First, this morning's article in the Guardian about the volte-face on supplying goods to South Africa for HIV/AIDS is unthinkable. Secondly, we must persuade the European Union to speak for its citizens, not for its Commission. That is a special task which I believe our Government can, and should, achieve if there is to be justice in world trade.
Baroness Northover: My Lords, I, too, thank the noble Lord, Lord Dubs, for introducing this important debate. I congratulate the noble Baroness, Lady Amos, on her appointment as Leader in the Lords, even though the circumstances are so very sad. I am glad that she is keeping her active involvement in international development. I have just returned from a CPA visit to St Vincent and I can tell her that there, as elsewhere around the world, there is enormous admiration and respect for her. It is places like St Vincent that show the need for the WTO talks to succeed.
Cogent arguments are made that the developed countries' industries grew because they were protected and that the poorest countries must be able to protect their own industries or they will be unable to compete against countries such as China and India with their stronger infrastructure but low costs. Indeed, that must be looked at on an international level, and that is why the failure of the talks is so worrying. The real losers are the poorest countries. As we have heard, there is now a real danger of bilateral agreements, which are likely to benefit the stronger countries.
There was the encouraging emergence at Cancun of the new grouping of G21 or G22 developing countries, but it has been noted that that is as yet an untried grouping and that it did not contain the poorest countries.
As countries now seek to put the WTO talks back on track, can we expect further progress in the EU on farm subsidies? Why were the Singapore issues introduced, and is there any possibility that those might reappear on the agenda? Were the UK Government on the outside as the EU stance was preparedperhaps because of other international issues? Is it likely that the US will co-operate in new talks or, as it has threatened, go it alone?
Both the US and the EU have made strong statements about the WTO's decision-making structure, indicating that the institution has become too unwieldy to deliver results. Will the US and the EU seek to change that structure and, if so, in what ways, or, instead, will they turn their attention increasingly to bilateral and regional efforts?
It has been said that the Mexican chairman pulled the plug on the talks and out went the bath water. We surely have to ensure that the baby does not go too. Whatever their flaws, it must be through international institutions, such as the WTO, that progress is made if weaker countries are not to lose out in trade to stronger ones. I look forward to hearing what progress the noble Baroness thinks can now be made.
Baroness Rawlings: My Lords, first, I take the opportunity to add my congratulations to the noble Baroness, Lady Amos, on her appointment as Leader of the House, even as we have just heard, in such sad circumstances. I am pleased that she is still covering international development, which she does so well.
We last heard that Her Majesty's Government were in discussion on how best to take the process forward. Have they decided to support the IMF/World Bank initiative, which aims, among other things, to look at trade issues as part of a development programme, linking it to the priorities of developing countries? If so, can she explain what will be our "substantial input" into it as mentioned in the Statement? When is that initiative planned to start? Will it be before or after the General Council meeting in Geneva on 15th December?
The final ministerial statement from Cancun instructs all 148 members, all with a veto, to continue talks taking fully into account all the views expressed in the conference. There appears to be uncertainty, however, about what that means and about what texts would be acceptable to members. What discussions are planned to iron out that uncertainty, which could only further delay discussions? What conclusions has the noble Baroness, Lady Amos, drawn from the news that countries such as Costa Rica, Peru and Colombia have decided to leave the G21? What are the views of Her Majesty's Government on the US regarding their explicit announcement that they too will move forward bilaterally?
In the light of those disturbing plans and a prior statement by the African Union's Commissioner for Trade, Industry and Economic Affairs, Vijay Makhan, that African countries should consider quitting the WTO if it does not deliver, do Her Majesty's Government have any plans to discuss that with members of NePAD, as mentioned by the noble Baroness, Lady Whitaker? Perhaps the WTO structure, as mentioned by the noble Lord, Lord Brennan, needs to be revisited.
Finally, can the noble Baroness the Leader of the House keep noble Lords informed on a regular basis in the run up to the December meeting? There is no more time for rhetoric and missed opportunities, as my noble friend Lord Elton eloquently said. We on these Benches want to see bold changes and the restoration of impetus to help try to solve these critical issues concerning multilateral trade and the Singapore issues, all of which have such a significant impact on rural poverty.
Baroness Amos: My Lords, I am grateful to my noble friend Lord Dubs for securing this debate on an issue of vital significance for developing countries. I agree with the noble Lord, Lord Elton, that the level of inequality in the world cannot persist indefinitely. Reform of the trade rules was a key element of delivering greater equality.
It is a bitter disappointment to the Government that the Cancun ministerial meeting failed to reach agreement. Fortunately, before Cancun there was a breakthrough with agreement on a solution to the longstanding difficulty of helping developing countries without pharmaceutical manufacturing capacity to access more affordable medicine. But at Cancun we failed to deliver outcomes on the Government's three priorities: agriculture, market access for non-agricultural goods, and special and differential treatment for developing countries. As a result, the current imbalances and inequalities within the multilateral trading system will persist to the disadvantage of the world's poor.
Although it is tempting to dwell on the result of Cancun, it is more important to focus on how we go forward. I agree with the noble Lord, Lord Hannay, who said that we should not play the blame game. I also agree with him that Cancun was a staging post. The January 2005 deadline for the conclusion of the Doha round of trade negotiations now seems unachievable, but we must still focus on working for progress.
The agreement reached in late August on Trade-Related Aspects of Intellectual Property Rights (TRIPS) and public health was a significant step forward. The agreement enables developing countries with no or insufficient domestic manufacturing capacity to import generic copies of patented drugs, thereby increasing opportunities to access medicines at a more affordable price. The deal has been welcomed by several developing and least developed countries and shows that the WTO can reach agreement on a difficult issue with their interests in mind.
The noble Baroness, Lady Rawlings, my noble friends Lord Brennan, Lord Dubs and Lord Desai, and the noble Lord, Lord Hannay, all mentioned the WTO's procedures. The failure at Cancun was caused by real differences in positions that were not effectively tackled by the WTO process in the time available. Although some of the WTO's processes need to be improved, I must tell noble Lords that when I was at Cancun talking to representatives of developing countries' Governments, they all welcomed the greater transparency that they saw at Cancun, although they were not sure that that would be reflected in the meeting's outcome. I agree with the noble Lord, Lord Hannay, that the developing countries were determinedalthough I do not think that they were not necessarily angryat the meeting.
As my noble friend Lord Dubs pointed out, agriculture was at the forefront of the list of issues for developing countries. The current highly distorted system in which richer countrieshere I include the
However, the EU has made some progress on reducing trade-distorting domestic agricultural subsidies. The deal agreed by EU agriculture Ministers on 26th June this year marks an historic shift in the EU's agricultural policy. The decoupling of subsidies from production should connect European farmers much more closely to the market and have a real impact on reducing excessive production, which produces dumping and harms developing countries.
To the noble Baroness, Lady Northover, who mentioned sugar in particular and also discussed the banana regime, I say that that there are proposals for reform of other EU commodity regimes, including sugar and cotton. Those have been tabled since Cancun and discussions are about to begin. The noble Baroness may recall that the UK Government argued strongly for support for Caribbean banana producers. It is as a result of that that we achieved the phasing out over time of the special treatment for Caribbean bananas. We will work with the Commission and other member states to advance the agenda, especially on cotton and sugar, in the spirit of the Doha agenda.
The EU's June reforms were only ever going to address one element of the agriculture debate: trade-distorting domestic subsidies. The other two key aspectsmarket access and export subsidiescould and should have been addressed at Cancun. Regrettably, those discussions never really started and we must work to get back on track, as without all three, the real benefits to developing countries cannot be achieved.
Non-agricultural market access is also high on our agenda. Seventy per cent of world trade is in non-agricutural products, so there is the potential for big gains in liberalising there for the benefit of both developing and developed countries. Some progress was made in Cancun for industrial groups. We must continue to work with the Commission to look seriously at areas of particular concern, such as textiles and clothing.
In Cancun, and indeed before, Benin, Burkina Faso, Chad and Mali made a clear and powerful case in the WTO about the need to address the plight of the West African cotton farmers suffering as a result of the low world cotton prices. They argued for both the early removal of production and export subsidies on cotton, as well as compensation for all less developed countries until subsidies are phased out. Due to their efforts, their initiative gained considerable support at Cancun and will no doubt maintain its momentum over the coming months until the issue can be resolved in the ongoing negotiations. We welcome their efforts to use the WTO to meet their trade and development needs. We have provided 50,000 euros in technical assistance to help them to promote their case in the WTO.
My noble friend Lord Judd and the noble Lord, Lord Hannay, asked about the resources available. Increasing the trade-related capacity of developing countries is a key area where we can add value. We have committed since 1998 over #160 million to trade-related capacity building. The money is designed to help developing countries, particularly in Africa, to develop their own trade policies, to participate properly in trade negotiations and then to capture the potential gains from trade.
As I was asked by the noble Baroness, Lady Rawlings, what happens next? The noble Baroness particularly asked about the World Bank and IMF initiative. A plan was announced by the World Bank and IMF to work more closely with the WTO, with a view to helping developing countries with adjustment problems if, for example, they have to lower their tariff barriers. We welcome that as a means to help the poorest countries implement, and benefit from, the commitments they make as the Doha agenda proceeds.
There has been much talk and speculation since Cancun about whether countries will retreat into bilateral deals and shy away from the multilateral system. My noble friends Lord Dubs and Lord Judd raised that issue. That would be a grave mistake. I agree with my noble friend Lord Desai that developing countries stand to get a better deal through multilateral negotiations in the WTO, where they make up two-thirds of the membership and can bargain on an equal basis. They cannot do that through a multitude of regional and bilateral agreements with bigger economic players. That approach also risks marginalising the poorest, excluding those countries, particularly the least developed, whose economy holds little interest for the big trading blocs. A strong, rules-based multilateral system is the best way of ensuring that the interests of the weakest economies are secured.
As the final ministerial statement from Cancun urges, we must now build on those areas of movement made in Mexico. For the European Union, that means accepting that, despite our continuing commitment to encourage and facilitate direct investment in developing countries, WTO agreements on investment and competition are off the EU's agenda. We believe that negotiations on trade facilitation and transparency in government procurement have much to offer all WTO members and we will continue to urge other WTO members to agree to move to active negotiations on these.
The noble Baroness, Lady Rawlings, asked about the agriculture meeting. It did take place and we were present. My noble friend Lord Judd asked me about the development of policy in the UK. There is complete agreement across government departments on the priorities for Cancun. Indeed, the ministerial team and officials reflected that.
NePAD, which was raised by my noble friend Lady Whitaker and the noble Baroness, Lady Rawlings, is a mandated initiative of the African union. It is not a vehicle for lobbying on trade issues. However, we are already supporting existing groups that are best placed to provide a strong voice for Africa in lobbying on trade issues, especially the African group at the WTO.
I will write to those noble Lords if I have not been able to answer specific questions in the time available. In conclusion, all WTO members need to reflect on the lessons learnt at Cancun and commit to renewing political impetus to the round. Many noble Lords mentioned the importance of political will. Senior officials meeting in Geneva on 15th December must take action to move towards a successful and timely conclusion of the negotiations. All 148 WTO member governments have a responsibility to ensure that the officials are mandated to make the tough decisions to progress the range of issues that matter most to developing countries.
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