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Lord Norton of Louth: My Lords, this has been an interesting and very worthwhile debate. I am grateful to all those who have spoken, especially members of the Constitution Committee for their kind comments; I thank them for their support during my chairmanship of the committee, which has been a stimulating and thoroughly enjoyable experience. I very much welcomed the comments in the debate and the breadth of support for the recommendations embodied in the committee's report. The debate demonstrates the importance of engaging in critical examination of regulation in this country. We need to stand back and look at the regulatory regime as a whole, not simply at its individual parts.

I am very grateful to the noble Lord, Lord Triesman, for his reply, and I congratulate him on having undertaken rigorous homework. I want to respond to him on one or two of his points. Co-ordination and identifying a clear lead department does not necessarily involve extra bureaucracy; it could lead to a reduction. On other points that we raised, he developed the Government's published response. Although he made a plausible case, he has not persuaded us on those points. The House will return to those matters that affect government.

As has been stressed, the report seeks action not only by the Government but also by Parliament. I welcome the support expressed in the debate for a
 
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parliamentary committee, which I hope has been heard by the relevant authorities. It is something that we need to pursue; again, I am sure that we will do so.

On Question, Motion agreed to.

World Trade Organisation (EUC Report)

Lord Radice rose to move, That this House takes note of the report of the European Union Committee, The World Trade Organization: the role of the EU post-Cancun (16th Report, Session 2003–04, HL Paper 104).

The noble Lord said: My Lords, in producing the report we took evidence, both written and oral, from a wide range of witnesses. We went to Brussels where, among others, we saw Pascal Lamy, who was then Trade Commissioner. We also met ambassadors representing a number of key countries in the Doha round at the World Trade Organisation in Geneva. The Secretary of State for Trade and Industry gave evidence to our committee. On behalf of my committee, I thank all our witnesses. We are also grateful to our specialist advisers, Christopher Roberts and Matthew Cocks. I also thank our Clerk, Judith Brooke, for her exceptional contribution, and our European adviser, Charlotte Granville-West, for her help.

As chairman, I thank my colleagues on the sub-committee for their help and constructive contribution to its work. I thank the Government for their helpful response to our report; they agreed with almost everything that we said. Lastly but not least, I look forward very sincerely to the maiden speech of the noble Lord, Lord Vallance of Tummel.

It is a good moment to debate our report on the Doha round. The framework document on the basic principles and modalities was agreed on 1 August. We now have a newly elected US Administration, although not yet a new US trade representative, as Robert Zoellick is still in place. We now have a new European Commission and a new Trade Commissioner, Peter Mandelson. Technical negotiations have been under way in Geneva.

The main purpose of our report, which was published on 16 June, was to set out what was required to get the Doha round back on track after the sad and rather disastrous collapse of the Cancun meeting in September 2003. We brought to our report and to the inquiry a strong belief in the view that measures to promote further trade liberalisation were good things. We believe that the removal of trade barriers leads to faster economic growth and more employment. Further trade liberalisation allows economies to specialise in what they do best. That does not mean that one country's gain is another's loss. Two countries trading with each other can both be better off. In other words, it can be and very often is a win-win game.

We do not believe that there is necessarily a conflict between trade liberalisation and other important policy objectives, such as development and poverty reduction. On the contrary, the opening up of markets has enabled developing countries such as China and India to expand and compete more effectively in world
 
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markets. In our report, we applaud the work of GATT and its successor organisation, the WTO, in creating a more open market system. In a box on page 11, which I recommend to noble Lords, we note the beneficial impact of international trade on world economic growth.

We therefore believe that it is very much in the interests of the European Union in general and the UK in particular to bring the Doha round to a successful conclusion. The UK has derived great advantage from an open trading system. It is also in the interests of the EU that the Doha round should succeed, as its other countries also stand to gain a great deal from the expansion of trade. We often forget that some of the major economies of the EU trade at a percentage of their GDP in a greater way than we do.

Despite occasional differences, the United Kingdom benefits from being part of the combined power of the EU in trade negotiations, in our opinion. After all, the EU is one of the two biggest players inside the World Trade Organisation, so it is vital that it takes a view that is useful to us—advantageous to the UK—and good for the world. Our remarks are addressed to ensuring that the EU plays its full part in getting the Doha round back on track—that was our first priority—and bringing the Doha negotiations to a successful conclusion. Our key proposals are that the EU should make a firm commitment to reform its agricultural sector, including removing all agricultural subsidies by a specified date, improving market access for agricultural imports into the EU, and reforming the sugar support system.

That is what the EU has to do, but we point out that it is not the only party to carry responsibility for the success of the Doha round and its agricultural side. The United States and the leaders of the G20 and the G90—the groups of the more advanced developing countries and of the less developed countries—have to play their part as well. For example, the United States, Canada and Australia need to make equivalent commitments to removing agricultural export subsidies, while the leaders of the G20 should agree to further market opening, especially to agricultural products from the less developed countries. Incidentally, that is further evidence of the fact that open trade is helpful in reducing poverty.

If the EU makes concessions on agriculture, it is very well placed to press for the greatest possible liberalisation of trade in services and goods, and for so-called trade facilitation such as cutting red tape at borders. I am glad to say that the 1 August agreement on principles, made possible by the joint initiative of Pascal Lamy and Robert Zoellick, very closely followed the lines of our own proposals. I do not claim that we were the major influence on that, but I note that we said the right things. I also note that the Doha round is back on track.

The question is what happens now? There has been some progress since 1 August. My personal view is that the appointment of Peter Mandelson as trade commissioner is good news, because he is very well equipped to do the job. We await the appointment of a new US trade representative, although there have been useful technical talks at Geneva. However—and this is
 
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a serious point—we need to get a move on if we are to make substantial progress by the main ministerial meeting in December 2005 in Hong Kong. If the Doha round is to be brought to a successful conclusion by 2006, we do not want another ill-prepared ministerial meeting, such as Cancun, when all the concessions were left to the last possible moment. We do not wish for that, because we saw what happened at Cancun. Maybe there is a case for a mini-ministerial meeting, as some people describe it—a small-scale ministerial meeting where political decisions are made. That could take place earlier, perhaps in the spring.

In conclusion, it is time for us to move on from fine principles and fine proposals into serious negotiation, because it is essential for the world that the Doha round succeeds. If it fails, governments and their peoples all over the world stand to lose—not least the poorest. If it succeeds, there will be much to gain for all of us. Expansion will benefit the whole world community, including the UK and the EU. There is much at stake. We must ensure that the Doha round succeeds. I beg to move.

Moved, That this House takes note of the report of the European Union Committee, The World Trade Organization: the role of the EU post-Cancun (16th Report, Session 2003–04, HL Paper 104).—(Lord Radice.)

Lord Marlesford: My Lords, it was a fascinating experience to sit on Sub-Committee A and examine the problems of the WTO and the prospects of success for the Doha round. It was also an enjoyable experience, because we had the most distinguished chairmanship of the noble Lord, Lord Radice, who kept us stimulated and in good order. As the noble Lord has said, we had the most excellent support staff, both in terms of special advisers and our Clerk.

When we published our report, it looked as if Doha might disappear. In a sense, it was rescued at the eleventh hour and, as the noble Lord has told us, we hope that it will come to a successful conclusion by the end of next year or in 2006. That is still by no means certain. The collapse in Cancun was particularly unfortunate and sad, regarding the way in which, in a misguided manner, many of the NGOs celebrated that collapse. Better negotiation procedures could have made better progress. Part of that was mechanical and bureaucratic, but much of it was political. The most important lesson that I learned from examining the problems of the WTO was how enormously political the subject is.

Indeed, free trade versus protectionism was probably, with the possible exception of Ireland, the subject that took up most of the debating time in your Lordships' House throughout most of the 19th century. Many of today's problems are directly rooted in what happened at that time. Therefore, I make no apology for focusing my brief remarks primarily on agriculture. Although it is not particularly relevant to the scale of the matters that we are considering, I declare an interest as a medium-sized farmer in Suffolk.
 
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Before I return to the 19th century, I cannot resist sharing with your Lordships a story that I read with fascination in a book, The History of the Caribbean by Dr Eric Williams. I do not know whether any noble Lords have read that, but he was a former Prime Minister of Trinidad and Tobago and a great scholar. It is relevant to the issue of sugar, which, as the noble Lord has said, is again one of the big problems. In 1786, a Frenchman, Monsieur Archard, began cultivation of sugar beet on his estate near Berlin. The King of Prussia provided some finance for both a factory and for the experiments. At that time, the sugar lobby was the biggest single lobby in the House of Commons. Indeed, it is said that that lobby was bigger than any single lobby there has ever been since. As a result of rumours of Monsieur Archard's operations, Dr Williams tells us that the British Government offered Monsieur Archard a bribe of £30,000—in the money of the time—to say that his experiments had failed. He rejected it indignantly, with the results of which we are all aware.

Taking up the thread of British agricultural protection, we must cast our minds back to 1815, when the infamous Corn Laws were passed to prevent the collapse in agricultural prices that was expected to follow the end of the Napoleonic wars. Actually, they were quite successful. The price of wheat—not adjusting for inflation—in the 1820s reached a level that was not reached again until the 1950s.

The Anti-Corn Law League was based primarily on the problems of the Lancashire textile industry, which was seen to be suffering from agricultural protection. It took the Irish potato famine of 1845 for a former Leader of my party, Sir Robert Peel, to persuade Parliament to repeal the Corn Laws. It cost him his job and split my party for years. The history of these matters is most relevant to today's discussions. Following the American civil war, the railways were built and there was a huge influx of cheap grain from America into Europe. That resulted in an agricultural depression that started in the 1870s and continued until the First World War. There was then a period of some hope up to the early 1920s but that was followed by the great agricultural depression of the 1930s which lasted until the Second World War. Then came a golden age for British agriculture, ushered in under the Labour Government of the day by the heroic figure of Tom Williams, the Minister of Agriculture. It was a period of agricultural prosperity, which lasted for some 40 years.

Another historical example comes from agriculture in the Soviet Union. The three years of total shambles which followed the Bolshevik revolution forced Lenin to introduce his New Economic Policy, giving the hitherto disliked kulaks, the richer peasant farmers, the job of feeding the country. They performed well until Stalin arrived, with his policy of collectivisation followed by the "liquidation of the kulaks as a class", and resulted in the great famines of the 1930s.

Why does one talk about such matters today? Even today agriculture in the new Russia has made remarkably little progress. There has been much glasnost in Russia, but perestroika has not been a great success.
 
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Some of us are deeply worried about the direction in which Russia is now moving. It is able to afford to move in that direction only because of the high price of oil.

The need to reform the CAP has been discussed almost since its invention. However, we must not forget that the EU was founded for agricultural protection. The original marriage contract between France and Germany encouraged German industry to open its markets in France. In return, Germany would ensure that through the CAP French agriculture was protected.

Agricultural protection was justified for five reasons. The first is that agriculture forms a deep part of the culture of most countries. The second is the obvious one of feeding a domestic population. The third is the need to be able to do so at a time of possible wartime blockade. The fourth is employment and the number of people who derive their living from agriculture. The fifth—with my particular interest in conservation, I see this as still important—is the contribution which agriculture makes to the protection of the countryside for its own sake. The countryside in almost all developed countries, certainly in Europe, is manmade and it depends largely on agriculture. The prospects for agriculture depend on the weather, on harvests and on prices.

Agricultural employment in the EU 15 is still some 4 per cent of total employment. In Greece and Portugal, it is still over 10 per cent. In France, it is down to 4 per cent from 13 per cent in 1970. In Italy, it is 5 per cent, down from 20 per cent. In Germany, it is down to 2.5 per cent from 9 per cent. In Britain, it is now only 1.4 per cent. That is another example of the way in which Britain has the benefit of a restructured industry. That is due largely to the remarkable revolutionary policies of the government of my noble friend Lady Thatcher. They made changes in this country which have yet to be made in some of the other main European countries.

Some of the new entrants have considerable agricultural populations. In Poland, some 20 per cent of people are employed in agriculture. The subsidies are considerable. I do not have time to give the figures, but the current agricultural recession makes it more sensitive and difficult as prices of most of the main products have fallen considerably.

Agricultural protection exists not only in Britain. The USA is a major protector and one hopes that now President Bush has been elected for a second term he will be subject to fewer protectionist pressures than John Kerry would have been in a first term. Japan, too, is a supreme example of agricultural protection. When the Select Committee visited Geneva and the WTO, we asked the Japanese delegates what had happened as a result of the Uruguay round which had required Japan to open up to imports of rice. Noble Lords may know that rice was once sold in the duty-free shops in Los Angeles. After the Uruguay agreement, politicians in the Japanese parliament said, "Not one grain of rice must enter the country". We were told that some 30,000 tonnes of rice entered Japan and that it is still in the warehouses. That is the kind of obstacle which must be overcome.
 
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The WTO and the Doha round is crucial, but if that does not work out, bilateral, trilateral and regional deals will encourage free trade, or the breaking down of protectionism. But there are other ways of doing so. The entry of China to the WTO is of world-wide importance. China will be the source of a huge volume of low-cost, high-quality, high-tech goods. But, equally, as China becomes more prosperous, its population of 1 billion will become a valuable market for the rest of the world.

China has accumulated enormous reserves of foreign currency, currently some 550 billion dollars. China is starting to invest this money overseas. Last month, the Central Bank of China authorised one of the state-owned oil companies to spend 1 billion dollars buying a large oil field in Oman. I can foresee that trade will develop further through such outsourcing on a global scale. Japan also has large balances of foreign currency with which to do the same.

In conclusion, of course we want the Doha round to succeed and the multilateral route is the preferred one. However, I believe that in a global economy protectionism will gradually be eroded by the initiatives of those for whom it is an obstacle.


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