Select Committee on European Union Seventeenth Report

2003-04, HL PAPER 104)

The context of our Inquiry

We recommend that the Government continues to pursue further trade liberalisation as an important policy objective. The continued removal of trade barriers will lead to greater economic growth and jobs around the world.

United Kingdom and EU interests in the Doha Round

If United Kingdom companies are to compete effectively in world markets they need to make use of the most competitive sources of supply, including global outsourcing where this makes good business sense.

We support the EU's recent offer to "move" on export subsidies. The EU should negotiate on the basis that, as long as others follow suit, it will firmly commit itself to phasing out its agricultural export subsidies by a specified date or dates.

The Doha Round should aim for the elimination or significant reduction of industrial tariffs, although developing countries should have longer implementation periods.

The United Kingdom should press for a wide-ranging EU approach to the Doha Round aimed at tackling the main barriers to trade in services.

The EU must put the failure of Cancún behind it and work for agreement by the end of July 2004 on a framework for negotiations in order to secure a successful outcome to the Doha Round by early 2006.

The changed landscape of negotiations

The EU, along with other WTO members, needs to adapt to the changes taking place in world trade negotiations. In return, leaders of the G20 and G90 need to recognise their responsibility in contributing to the re-launch and successful conclusion of the Round.

Although the growth of South-South trade over the last decade has been substantial, there remains considerable potential for further liberalisation. The recent agreement between India, South Africa and Brazil is an encouraging sign. This Committee strongly supports the extension of such agreements to the less developed countries.


We accordingly recommend that:

  • a framework for the Doha Round negotiations must be agreed by the end of July 2004;
  • a firm date of early 2006 must be set as the target date for the end of the Doha Round negotiations.


The EU does not need to attempt to determine at this stage the final outcome of negotiations on the contents of the domestic support boxes. However, having established a credible system of subsidy classification in the Uruguay Round, WTO members including the EU should avoid re-opening the boxes in the context of the Doha Round.

We support the EU's willingness to negotiate on the elimination of all export subsidies. The EU should proceed on the basis that, in line with the Doha declaration, all WTO members should phase out all export subsidies or equivalents by a specified date. We recognise that the timetable for individual products remains for negotiation.

Export subsidies and measures of equivalent effect are of course not limited to the EU. In that context the EU should maintain its demands that the US and other developed countries must also phase out the subsidy element in food aid and export credit.

We support the principle of South-South trade and would be keen for further discussion to help remove existing obstacles to such trade. In particular, we recognise the potential for South-South trade to benefit those developing countries who will be disadvantaged by the agreements that are likely to be necessary on market access—as is the case for the ACP countries.

Market access may well prove the most difficult of the agricultural issues to resolve. For the re-launch of the Doha Round the EU will have to be flexible in negotiations over alternative formulas to be adopted in working out reductions in tariffs and other forms of agricultural protection. A final settlement to conclude the Doha Round will require the EU to move further in improving market access for agricultural imports than it has so far been prepared to do.

We strongly support use of the WTO to provide practical and effective means for agricultural liberalisation. The EU can no longer postpone action on difficult issues. Every effort should be made to reach agreement within the Doha Round.

The United Kingdom should continue to exert pressure on her EU partners over agricultural reform, encouraging them to go further as quickly as possible. Spending has been agreed for the CAP budget up to 2013. This ceiling should be seen as the outside limit, and must not be exceeded.

In order to re-launch the Doha negotiations the EU should:

  • proceed on the basis that it will commit to the phasing out of all export subsidies by specified dates, on the understanding that other WTO member countries do the same.
  • Show the necessary flexibility to ensure that a formula (without precise figures at this stage) is agreed for reducing tariffs on agricultural imports.

In order to bring the Doha Round to a successful conclusion:

  • The precise timetable for phasing out export subsidies by product will need to be negotiated.
  • EU reform of the sugar regime is an opportunity to demonstrate real commitment to liberalisation, and should proceed as quickly as possible.
  • The EU will need to commit to greater market access for agricultural imports than it has so far been prepared to do.

Singapore Issues

We believe that the EU's approach should be to:

  • drop some Singapore issues from the Single Undertaking,
  • press for a consensus to launch negotiations on trade facilitation and on transparency in government procurement within the Single Undertaking, and
  • if any or all of the issues are excluded from the Round, explore progress on a plurilateral basis.

Multilateral and bilateral approaches

We conclude that there is no inherent contradiction between multilateral and bilateral approaches, and that the bilateral route can add value as long as it does not replace multilateral negotiations.

We recommend that the EU should continue to prioritise and push for gains in the multilateral WTO forum, given the greater gains that are achievable.

Formulation of EU trade policy

We do not believe radical changes are required in the way EU trade policy is formulated and executed. However, the Commission should maintain and if possible increase the flow of information and consultation on trade policy.

We do not see a compelling argument for increasing the formal powers of the European Parliament. Doing so would risk slowing down and politicising what is already a difficult negotiating process within the Doha Round. Furthermore, comparisons with the Fast Track authority in the United States highlight the potential danger for the European Parliament to become a lobby for protectionist interests, and thus for anti-liberalisation voices.

We recommend that there should be strong continuing dialogue between the Council, Commission and Parliament on trade policy, but that the formal powers of the European Parliament should not be increased.

There is scope for the United Kingdom to use its influence within the EU to make the case for agricultural reform. The Government should also use its strong links with the US to encourage them to look seriously at reforms to their own agricultural sector in order to get the Doha Round re-launched. The Government should continue to use its connections with individual Commonwealth countries in order to encourage progress on Doha.

We urge the United Kingdom Government to use its connections with the US, Commonwealth countries and others to press for progress within the Doha Round.

Role of WTO in global governance

The WTO should not be held responsible for failure to achieve non-trade objectives nor blamed for policy shortcomings elsewhere. But the WTO membership should acknowledge that its agreements have implications for other policy areas. Efforts to achieve international standards on labour and environmental protection should be pursued by national governments in other fora.

Role of NGOs in multilateral trading framework

We welcome NGO contributions to a broader debate on trade policy and their assistance in capacity-building in developing countries.

We are not convinced by the arguments of those NGOs who try to call in question the benefits which globalisation and trade liberalisation offer to developing countries.

NGOs should be transparent about their aims and accountable for their actions when advising developing countries on trade policy.

Reform of the WTO

We therefore recommend that:

    (i) in the short-term, the WTO should focus on procedural improvements which would make it easier for substantive agreements to be reached, notably better preparation and organisation of ministerial meetings;

    (ii) other, more major reforms of the WTO, relating to the Secretariat and Director-General, should be addressed only after the successful conclusion of the Doha Round.

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