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The Lord Bishop of Manchester: My Lords, I, too, am grateful to the noble Lord, Lord Radice, for his eloquent opening speech in this take-note debate on the significant report of the committee he chaired on a subject that is immensely important. I, too, look forward to the maiden speech of the noble Lord, Lord Vallance of Tummel.
I am reminded of my days as rector of St Thomas's Church, Salisbury, and of the occasions when we hosted some grand services. On one such occasion, as the procession of greatly bewigged and much-robed dignitaries moved through the church, I noticed, as did astonished members of the congregation, that a small mouse had joined the procession immediately in front of me. With suitable dignity, the mouse continued up the length of the aisle, retaining an admirable processional symmetry and going forward at exactly the right pace until, near the chancel, it turned off towards an empty seat. That week the local newspaper had the headline, "Stately mouse takes a pew", while another article noted the appropriateness of the grand and great being eclipsed by the vulnerable and small.
That is how it should be in matters concerning world trade and nations that are vulnerable and small. Sadly, grand-sounding organisations, conferences and committees, for all their good intentions, often create policies that can work against the very people and countries they set out to support. That is why this debate is so timely and why I want to speak initially not about the European Union Committee on the World Trade Organisation but about a person who is being ill-served by international policy.
Kofi is a Ghanaian. He works 12 hours a day in a quarry breaking rocks to make gravel. It is the only way he can earn enough to provide for his family. He used to own a tomato farm, making a living growing
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and selling tomatoes. The local markets where he used to sell his produce are now full of cheap imports from the European Union. Farming, for Kofi, and for other tomato, rice and poultry farmers in Ghana, and indeed for poor farmers across the developing world, is no longer viable.
It is one of many stories that demonstrate the danger of forcing poor countries to liberalise their economies. In the 1980s, Ghana, in return for loans, was forced by the international financial institutions to do just thatto open its markets and remove government help for industry and farming. Ghana is no longer allowed to limit the amount of imports that enter the country; nor is it allowed to help poor farmers like Kofi.
The impact of these policies being forced on poor countries is obviously devastating not only for individuals like Kofi but also for whole communities. Governments of poor countries have had taken away from them the means to intervene in their own economies in order to tackle poverty.
That is why members of the Trade Justice Movement, including Christian Aid, are calling for trade justice. Trade liberalisation is neither the best nor the only option for developing countries to work their way out of poverty. The governments of poor countries must be given the right to intervene in their own economies in the interests of the poorest and to give help and support to their own farmers and industries. It is only by helping industries and farmers to establish themselves that they will then be able to compete with international products.
I shall now give an example of where this type of intervention has benefited an economythe economy of Mozambique. The noble Lord, Lord Marlesford, mentioned sugar. Mozambique is a country ravaged by civil war and devastated by floods and, indeed, is one of the poorest countries in the world. A policy by the Government there to help the sugar industry has resulted in the creation of 25,000 jobs and has attracted foreign investment from South African and Mauritian sugar companies. Mozambique was able to persuade the World Bank to allow it to regulate the price of imported sugar, and that has enabled the sugar industryplantations and factoriesto establish itself, provide employment and help local communities to tackle poverty.
But, sadly, I have to say that Mozambique is an exception. The commitment of the International Monetary Fund, the World Bank and the World Trade Organisation to free trade and liberalisation means that poor countries are forced to accept policies that prevent them intervening positively in their own economies.
Her Majesty's Government have a vital part to play in ensuring that there is trade justice across the world and that trade is a means by which poor countries can work their own way out of poverty. Prior to the ministerial meeting of the World Trade Organisation in December 2005, a number of issues for negotiation would, if they go wrong, further limit the freedom of poor countries to manage their economies and would force upon them greater, and unwelcome, liberalisation.
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I hope the Minister will agree that the Government must call for the European Union's negotiating position on these issues to be one that promotes the right of poor countries to protect and support their industries, for there are some real worries about these forthcoming negotiations. For example, there is much concern about non-agricultural market access. In its current form, what is essentially an agreement to open markets to manufactured goods poses a real threat to industrialisation that has taken place in poor countries. Christian Aid is one organisation that believes that opening markets further to manufactured goods from rich countries will undercut local industry.
Another concern is about agreements on services. Poor countries are being forced to accept the privatisation of public services, which has not resulted in universal and affordable provision. Yet a further concern is World Trade Organisation procedures. The ability of poor countries to negotiate effectively in their own interests is hampered by current WTO procedures. There must be reform so that the supposed equality of "one member, one vote" becomes a reality.
Trade should be a means by which poor countries can work their own way out of poverty. They are being prevented from doing so because free trade and liberalisation are being forced upon them. For Kofi, and millions of people like him, trade liberalisation has cost him his livelihood. Therefore, the European Union must not further this liberalisation agenda in the WTO, and it must recognise that government intervention in an economy can increase the prospect of long-term economic development for poor countries.
Next year, as your Lordships know, Her Majesty's Government will hold the presidencies of the G8 and the European Union, and, as I have already mentioned, the WTO ministerial meeting will take place in December next year. That provides a unique opportunity for the Government to champion trade justice. Certainly Christian Aid, with the Trade Justice Movement, will be campaigning throughout next year for trade justice.
So I urge the Government to take this opportunity to make real progress in tackling the poverty that still blights our world. I hope that there will be further opportunities for debate next year to assess what progress has been made. But, for the moment, it is time for me to take my pew!
Lord Vallance of Tummel: My Lords, it was always going to be difficult for me to follow the right reverend Prelate the Bishop of Manchester. He, quite properly, is ensconced on the spiritual side of your Lordships' House, whereas I, with a lifetime of a business and commerce background, am rather rooted on the temporal. I do not think that there will be any differences between us in our objective of supporting developing countries but I think, as we shall see, that we have rather different opinions on how to achieve that objective.
First, I declare an interest as chairman of the European Services Forum. This is a Brussels-based organisation of services, companies and trade
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associations right across Europe, with a particular interest in matters of trade and, indeed, in the Doha round. It was established in 1998, at the request of the European Commission, at a time when the noble Lord, Lord Brittan of Spennithorne, was Trade Commissioner.
I very much welcome the European Union Committee's report and congratulate the members and authors on a clear and very balanced analysis and set of recommendations, some of which turned out to be quite prescient. To my mind there is perhaps only one ingredient missing: that is the need for the protagonists of further trade liberalisation to set out clearly and actively to market the true benefits of successful completion of the Doha round for developing countries. After all, this is billed as a development agenda. In the past we have sometimes allowed those NGOs that are sceptical of, or antagonistic towards, globalisation and further trade liberalisation to outgun us in the matter of presentation. Post-Cancun, that is no longer a feasible option.
One thing that I have learnt over the years is that it is often a virtue and sometimes a necessity to state the obvious and to keep on repeating it. So I make no apologies this afternoon in underscoring what I believe are the key presentational points that need to be repeated and repeated.
First, and foremost, as the committee's report makes clear, and as the noble Lord, Lord Radice, stressed, the liberalisation of trade is not a zero sum game. It is twice blessed. It can benefit those countries that open up their markets and it can benefit those that trade in such markets. All participating countries stand to gain if it is properly done.
Secondly, liberalisationthe opening up of marketsdoes not imply either privatisation or deregulation. Opponents of liberalisation tend to conflate and confuse those three, whether wilfully or not. But there is nothing, for example, in the General Agreement on Trade in Servicesthe GATSwhich requires a service, now provided by the public sector, to be privatised, although governments can clearly do so if they wish. Nor is there anything in the current debate in GATS on domestic regulation to suggest that governments should be restricted in their ability to regulate in the interests of consumers, health and safety, the environment or whatever. Far from it, responsible companies providing services to developing countries want to do so in a properly regulated environment.
Thirdly, and with respect to the noble Lord, Lord Marlesford, we must put history behind us and settle the arguments on agriculture once and for all and move on. All too often the amount of time and effort spent on debates in this area are in inverse proportion to their economic significance. In their own interests, let alone those of developing countries, the European Union and the United States must be more flexible in their forthcoming negotiations in this area.
Fourthly, we should obviously concentrate on those areas where there is most to be gained. Objectively, that is on the services sectors, which make up roughly 70 per cent of the GDP of developed countries, rising to 50 per cent of the GDP of developing counties, and about
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60 per cent of foreign direct investment, yet only some 20 per cent of trade. The fact is that, by comparison with goods, only modest steps have been taken so far to liberalise trade and services. Indeed, the World Bank in its Global Economic Prospects report of 2002, calculated, on what they say are conservative estimates, that by opening services markets, developing countries could increase income by nearly 900 billion dollars a year. That is some four and a half times greater than the gains from further liberalising trade in goods.
Fifthly, that substantial prize is not just something dreamt up by theoretical economists, but supported by practical examples in developing countries which have opened up their markets of their own accordautonomously, to use the jargon. I can give just three examples, small but indicative, in the sectors of transport, telecommunications and finance: Chilean exports of fruit and fish increased markedly post-liberalisation once exporters had access to a wider choice of shipping with proper refrigerationquite simple when one thinks about it; in the Philippines the number of telephone lines post-liberalisation rose from 1 million to 6.5 million in a mere five years; and in Mauritius the acceptance of offshore investment funds generated benefits of around 2.5 per cent in GDP. There is nothing surprising in all that. Indeed, when one thinks about it, a defining characteristic of a developed country is its pervasive and up-to-date services infrastructure of transport, utilities, telecommunications, financial and legal services, retail, tourism and so on.
We owe it not just to ourselves in the UK, but to developing countries around the world, to state our case for liberalisation clearly and convincingly, in every sector, and to press for a successful conclusion of the Doha round.
Incidentally, as a postscript, from personal experience in this area, we stand a far better chance of achieving that aim as a member of the European Unionactively influencing and fashioning the European trade agendathan ever we could as a trade-dependent nation acting on its own, just one of 150 voices.
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