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The Lord Bishop of Oxford: My Lords, I am very grateful to the noble Lord, Lord Dykes, for initiating a debate on this important subject. As he and other noble Lords have said, there is a whole range of subjects that we could consider under this heading. I am especially anxious that the UK should use its presidency to enthuse and motivate others with its commitment to development.

It may be suggested by some that the role of the presidency is simply to try to create a consensus among European countries. Of course, that is an important part, but the role of the presidency is also to set a lead. I am very much looking forward to the United Kingdom setting a lead in the area of development.

I briefly mention the question of debt, because that really belongs to the G7 group of countries—of which, of course, the UK will also be president. The United Kingdom has agreed to remit 100 per cent of debt servicing from 2005-15 and it could persuade other countries in the European Union, such as France, which is rather resistant to it, or the Netherlands, which is resistant to the idea of revaluing IMF gold, to follow its own example and commitment in that area.

There is another aspect of that which is not directly related, but is of particular concern to many non-governmental organisations. That is the way in which so many stolen assets, especially from African countries, have found their way into banks. Can the UK use its presidency to encourage the European Parliament to insist on the co-operation of the banks in investigating those stolen assets? I have been very brief on debt, but I hope that that brevity will not be taken as any indication that I regard remission of debt, especially for the poorest countries of the world, as anything other than a priority.

Secondly, equally briefly, on aid, we need more and better aid. The figure of 0.7 per cent of gross national income has been around for many decades now. The European Union might commit itself to achieving that target by 2010 as a collective entity. Why is it that,
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35 years after that figure was first put forward, countries are still setting such low targets? Better aid is indicated by greater coherence and consistency between policies on development and trade and policies related to aid. It is no good putting in a lot of aid if trade relationships are fundamentally flawed.

The aid needs to be well targeted. It has been suggested that at least 20 per cent of aid needs to go directly on the social services of developing countries, but most countries are putting in less than 10 per cent in that area. Many countries tie their aid to reciprocal arrangements whereby that country is forced to buy goods and services from the country that is giving the aid. The United Kingdom is not an offender in that respect: all its aid is untied; but Italy, for example, has 92 per cent of its aid tied and a good number of other countries have 50 per cent or more.

My next point is not directly related but still crucial. We know that in many of those countries there is endemic conflict involving arms. How do the arms get there? Do we have an effective arms treaty at the moment and effective regulation of arms brokers? I suggest that we do not and that that may be another area where the United Kingdom could use its presidency to good effect.

I do not regard aid as anything less than a priority, but I want to spend a few minutes on trade. In an ideal world there would be no need to remit debts and to give massive amounts of aid because people would be able to trade with mutuality: mutual giving and receiving. We need to remind ourselves that the European Union is responsible for 20 per cent of the world's trade. It is the biggest importer and the second biggest exporter of agricultural goods. That is a huge share of the world's market and much of it is in relation to the developing world.

As the noble Lord, Lord Dykes, emphasised, the common agricultural policy is a continuing scandal. There is no other word for the way in which food is dumped on other countries and agricultural products are so subsidised that other countries' economies are ruined. We all know the example of the tomato industry and rice products in Ghana. Markets and industries are decimated because of heavily subsidised goods from outside.

The aid agencies are particularly concerned at present about the economic partnership agreements. It has been suggested that they will involve a great deal of liberalisation of trade and that 90 per cent of all trade should be fully liberalised within 10 years. Yet it is also recognised that that may not be in the best interests of the developing countries, not least because total liberalisation, particularly if conditionality of other kinds is attached to it, has been shown to be not in the best interests of those developing countries.

I should like to spend two or three minutes of my time on the economic partnership agreements. Although the Trade Commissioner, Peter Mandelson, has suggested that we may have to reconsider the economic partnership agreements and that there may be other ways of engaging in trade relationships, there
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are still a number of concerns. There are concerns about the nature of the negotiations; for example, that they are being undertaken by the department dealing with trade rather than the department dealing with development.

It is unclear where the trade department's expertise in development comes from and whether the developmental aspects of the EPAs are receiving due scrutiny by development officials at European Union and member country level. There is an imbalance between the negotiating partners and the fact that no public reassurances have been given to the African, Caribbean and Pacific countries that rejection of the EPA proposals will not impact on future EC aid flows.

There is a lack of any specific clearly defined alternatives to the economic partnership agreements despite the commitment to offer such alternatives; and the Commission is unwilling to provide well-defined alternatives in the immediate future. So there are concerns about the negotiations. There are also concerns about the content of the proposals.

First, there is the presence of the so-called Singapore issues—trade facilitation; competition; investment; and government procurement—in the EPA negotiations despite their having been rejected at Cancun in the WTO negotiations and the extension of the proposals beyond the terms rejected at the WTO.

Secondly, there is the demand for reciprocity: the opening of ACP markets to EU goods in exchange for the opening of the EU market. As I have indicated, there is a great deal of concern that the African, Caribbean and Pacific countries will be compelled to liberalise their markets leaving them open to floods of EU goods with which they cannot hope to compete.

Thirdly, there is the inability of the poor countries to offset the loss of tariff revenues that result from the lowering of the tariffs. There are issues of debt and aid, but I have focused on trade and trade justice: making trade work for the poor; giving poor farmers in developing countries a chance to trade their way out of poverty by immediately eliminating all EU export subsidies; significantly reducing trade distorting subsidies; supporting the right of developing countries to protect their sensitive agricultural sectors; and ensuring that market access concessions work in favour of the poor.

Finally, the EU should stop pursuing potentially damaging economic partnership agreements in their current form with the African, Caribbean and Pacific countries. They need changing in order that the needs of those countries can be taken into account. I believe that the presidency of the European Union at this time offers a huge opportunity for the commitment and enthusiasm in this area shared by so many in this country to be shared also with other countries in the European Union.

6.7 p.m.

Lord Tomlinson: My Lords, I too would like to express my gratitude to the noble Lord, Lord Dykes, for his initiative in giving us this opportunity to debate the forthcoming British presidency this afternoon.
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Although I am not going to talk about development, I particularly appreciated the contribution of the right reverend Prelate. It reminded me that when I left the Ministry of Overseas Development where I was a junior Minister in 1979 we were closer to achieving our 0.7 per cent target than we are today. I have to say—not being too party political—that we went a long way down during the previous administration and we are working our way back up, but it shows how seriously we have been remiss as regards an obligation that we accepted so many years ago.

The presidency, which we will occupy the second half of this year, is important. One of the things that we have to avoid is creating too high an expectation of what can be achieved by our leadership in six months. All political leaders make the mistake, which we have to resist during our presidency, of claiming that they can do so much by leading from the front and being at the heart of Europe.

The pattern for the presidency is already set and fixed. We have only to read paragraph 2 of the February 2005 White Paper to see how precisely it is fixed in the form of an increasingly rolling multi-annual programme. So let us not hear too much from the Government about leading Europe; perhaps a little more about collegiality and the importance of working together.

That does not mean that the Government should not have clear aims and objectives of things that they want to do. The major aims and themes for the presidency will include issues, such as security, prosperity and sustainability. From that important agenda, if we are to do anything by way of leadership, we need to create the domestic climate in which we can persuade the British people to face up to two decisions that they will be obligated to make—one perhaps a little more closely than the other.

We will have to face the imperative of making a decision in a referendum on the constitutional treaty and, at some other stage, a decision in a referendum on our membership of the euro. Based on the common agenda that we have with our European partners in relation to security, prosperity and sustainability, we should use that as the springboard for domestic political activity to persuade the electorate to the right frame of mind in which they can meaningfully participate in those referenda.

First, as regards the referendum on the constitutional treaty, we must show that this is a fairly limiting treaty. It is a defining treaty that is based on a concept of conferred competences. We have to show that we have a European Union that does not have any autonomous competence of its own. It only has competence in so far as the sovereign decision of sovereign member states has transferred that competence to the union. Any competence not so transferred remains with the nation state. So we have a constitutional treaty which demonstrates that and defines what we should do together, but, at the same time, underpins the role of the national state and enhances the role of national parliaments by, for example, the proposals that are made in relation to subsidiarity.
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Therefore, during our presidency, we must use the opportunity to show that there is no greatly increased power to the centre and that the Tory argument about "a state called Europe" is not merely wrong, but is conceptually nonsensical. I hope that during the British presidency we will find some dormant, no longer useful or relevant directive and get it repealed. That would have enormous symbolic significance. There must be something in the 80,000 page acquis communautaire that is no longer of use to man or beast: get rid of one and that will be a major British achievement in the presidency, which shows that not all decisions permanently reside there.

Secondly, as I said, shortly after, at some time, we will have to face the matter of a euro referendum. Let us not forget that the Government are committed in principle to join a successful single currency. It is subject only to those economic tests. We have got, I believe, only a subjective decision to get over. But, without prejudice to the economic tests, during our presidency the Government must start more urgently, more systematically and more directly to spell out the benefits of euro membership.

We all know the arguments. We have been over them so many times before: for example, reduced transactional costs in circumstances where more than 55 per cent of our exports go to the European Union; greater certainty about export contract pricing; and more transparency concerning transnational comparisons of price. All of those things have to be spelt out, and the presidency gives us the platform to do that domestically. Forget about taking the lead in Europe: take the lead of the argument at home. Then there is the opportunity to win two referenda.

The presidency will require us to do other things, of course. One of the items on the agenda is future enlargements, including Romania and Bulgaria in the relatively short term; Turkey, a bit further down the line; and others further downstream—former Yugoslavia and even the Ukraine. People have aspirations. Future enlargements will be on our political agenda during the British presidency, not for determination but for discussion.

I make a special plea that during our presidency we should be particularly concerned about external borders and their security. I am one of the few freaks in the Labour Party—I say to the Minister—who walks around with a pledge card in his pocket. My pledge card for the next election says, "Your country's borders protected". But I say to my noble friend that you cannot do that unless you have secured the external borders of the European Union.

When we have an enlargement agenda that could wind up with us having common borders with Syria, Iran, Iraq, Belarus and Russia, we have to be a little bit more serious in some of the work that we do on securing external borders than perhaps we have been in the past. I say that particularly in the context of the debate that we have had during the past couple of days. Security on our external borders is imperative, not only for tax and economic security, not only for
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illegal immigration, including people trafficking, but also for arms and drugs trafficking and their relationship to terrorism.

My final point relates to a major internal issue—finance—which will be seriously on the agenda. We will have to get to grips, because it will not happen under the Luxembourg presidency, with the next financial perspective for the years 2007-2013. The Commission ambition is for a perspective based on 1.26 per cent of Community gross national income. We, together with Germany, France, the Netherlands, Austria and Sweden, are convinced about the merits of the argument for a 1 per cent of EU gross national income.

In the context of that, there will also have to be an own-resources decision. The Commission has quite clear proposals for a medium-term European Union tax. To my noble friend, I say that I hope we have his clear assurance that that will be resisted. Such a tax, as all own-resources decisions, will require unanimity. We expect a budget based on 1 per cent. Anything else needs to be resisted.

Horse trading based on the idea of surrender of the United Kingdom rebate in whole or in part should also be resisted. That is not because we want anything, or everything, for ourselves, but because there is a better way of getting rid of the British rebate; namely, get rid of the maldistribution of resources from the common agricultural policy. Mathematically, the need for a rebate then works itself out of the system.

I give my noble friend a challenging agenda where we can be at the heart of decision making, but leading the British people to circumstances in which we can get a majority in the necessary referenda.

6.18 p.m.

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