Examination of Witness (Questions 220-240)
Mr Syed Kamall
24 JUNE 2008
Q220 Lord Maclennan of Rogart: Is
your Committee principally focused on the multilateral activity
at the moment?
Mr Kamall: We are focused on whatever
the Commission tells us that they are doing. We will be doing
reports on particular bilaterals and we are constantly getting
either Peter Mandelson or David O'Sullivan before us to tell us
about the latest progress, or any progress, at the WTO. If there
is a bilateral we will do a report on it. There is an EU-India
report at the moment and the Foreign Affairs Committee will also
do an EU-India report at the same time.
Q221 Lord Maclennan of Rogart: In
your report you touched on the question of the mandate and you
said: "the Doha Development Round must focus on development
and that negotiations on trade in services must serve both the
interests of the EU and the economic growth of the poorest countries"
. Is that really the philosophy of the Committee and is it what
these negotiations are about?
Mr Kamall: It is not the philosophy of
the Committee, no. That is my philosophy rather than the philosophy
of the Committee. This will not be the final report, and I am
aware of that. I wrote a classically liberal report—it was
softened by the Committee—knowing full well that it would
be amended, that was my approach. I said that in the first exchange
of views, "I do not expect this to be the final report".
Q222 Lord Maclennan of Rogart: The
liberalism and development equate in your mind?
Mr Kamall: They could do. I will tell
you why this affects me. When I was eight years old I went to
Guyana, which is where my parents come from, and what struck me
about Guyana was what an economic basket case it was, even as
an eight year old. I do not know if I was a bit of an economic
geek at that age. What surprised me was one night my aunt flew
in from Martinique and she smuggled in a potato and we sat round
eating this potato, they sliced it, and at that age I could not
believe that my aunt was a criminal for smuggling in a potato,
but also that a country would ban imports of potatoes. I realised
that in many cases it is governments who get in the way of freedom
for people, freedom of choice, or even access. You see that all
over the world where if you ask citizens they will say, "We
want better access. We want access in the first place. We want
access to the kinds of services you have access to" and where
they do have access they want choice. I am not trying to wave
any sort of party political flag here, this is non-ideological
in many ways. They are fed up with not having access to particular
services and even where there is access they are quite often fed
up with the monopoly state provider.
Q223 Lord Maclennan of Rogart: The
clout in these negotiations has presumably been exercised by the
larger countries, the EU, the US and so forth. The choice that
you are describing for developing countries probably plays less
part, does it not?
Mr Kamall: If you look at percentages
of world trade, for example, it is probably 50 countries, 30 if
you count the EU as one, that account for 80 per cent of world
trade. If you are looking at the role that some of the poorest
countries can play, the role they play in negotiations is they
are not able to put positive recommendations on the table, if
you like. What they are able to do is form blocking minorities
or blocking groups. I think that comes down to WTO governance,
if you like. That is one of the problems, that because they are
not brought into a project or do not have the ability to put forward
proposals they end up in G90 or whatever group they end up in.
Q224 Lord Kerr of Kinlochard: Can
you give us your counter to the NGO arguments that knocking down
frontier barriers and tariffs reduces money for redistribution
inside the country in question, reduces government funds, because
tariffs raise money; and that replacing the monopoly state provider
by Centrica, Barclays, or whatever, means that the rent goes offshore
and the dream of the indigenous micro-credit provider is crushed
by the capitalist monster based in London or wherever? How would
you answer these two?
Mr Kamall: The first one is the reduction
of tariffs. You have to be concerned about any country that bases
its tax revenue base purely on tariffs and import tariffs. There
is a lot of criticism about Aid for Trade, if you like, and this
is where I do see a use for Aid for Trade which is helping governments
to diversify their revenue base. The easy argument is, "Well,
we can't do this because it's revenue for us". The counter
argument to that is in many of these countries you are talking
about the poorest people in the world. Take Ghana where they only
grow 65 per cent of the rice that they consume. That means they
import 35 per cent of the rice that they consume. Because of import
tariffs, the very poorest are paying more for their rice, a food
staple, than they need to because of import tariffs. To me, that
would be immoral. The same thing on drugs. Pharmaceutical companies
are quite often criticised as evil capitalist companies who want
to deny the poorest access to drugs, but if you look at the import
tariffs on drugs in many of the poorest countries, poor people
are paying more for their drugs. The second thing was?
Q225 Lord Kerr of Kinlochard: You
talked about the fact that they want to defend the monopoly state
provider.
Mr Kamall: Yes.
Q226 Lord Kerr of Kinlochard: Illiberal
opinion would be that once you let in a Centrica, Barclays or
whatever, the rent goes offshore and the hope of the indigenous
non-state micro-credit provider getting going is crushed.
Mr Kamall: That could be true in certain
cases. If you look at financial services liberalisation in Mexico,
for example, the argument NGOs often cite is what happened was
the foreign banks, particularly American banks, came in and bought
the indigenous banks and then the very poorest entrepreneurs do
not have access to credit. That is a fair argument. It does depend
on how you liberalise. The best way to sell liberalisation quite
often, or sell the non-state sector entering these markets or
these sectors, is to say, "Fine, let the monopoly state provider
carry on providing, but where it does not have the resources geographically
or sectorally to provide these services, for example if the monopoly
state water provider cannot provide a certain area of the country
and does not have the resources to extend its reach, why not allow
in a non-state company to fill in the gaps?" I am not going
to say that it has to be 100 per cent foreign-owned, it could
be a public-private partnership. We are back to the argument we
had in Britain in the 1980s, state bad, private good, or the other
way round. In Britain we recognised it depends on the particular
circumstances in a particular sector.
Q227 Lord Woolmer of Leeds: You said
that bilaterals should be trade liberalisation heavy and that
things like governance, I assume social and labour conditions
and so on, in trade negotiations should be secondary, less significant
than those, and yet you said it is the governments that get in
the way of access to markets and so on and so forth. Two things.
First of all, the NGOs, as you said earlier, place a lot of emphasise
on non-trade issues as being important, certainly in bilaterals.
What is your answer to NGOs and, indeed, there are a lot of people
in the European Parliament who will be saying there should be
a lot more on non-trade issues and social and labour conditions
and governance and so on? What is your answer to that? When you
acknowledge that it is governments that get in the way and there
are governance issues, as we have said to Romania, Bulgaria and
others, if we feel that in Europe are you saying you do not say
something about that in the rest of the world? I know it messes
up trade negotiations but are they not important issues?
Mr Kamall: Undoubtedly they are important
issues. You cannot look at things in a black and white way. They
are very much a part of it and I understand that there are things
like ILO standards and whatever, but we seem to have even more
environmental standards, sanitary standards, phytosanitary standards
and all those sorts of issues and they end up becoming, if you
like, non-tariff barriers or technical barriers to trade. That
is one concern I have. The second thing is the World Trade Organisation
should be about trade, but I really do not believe that many companies
in the world do not care about their employees. There are other
avenues for improving all sorts of social and labour standards.
This is just a personal view, it is certainly not the view of
the Committee. The Committee would say you always have to have
the ILO somewhere in an amendment. My concern is they are very
important but it is when they inhibit trade negotiations, that
is where I have a problem.
Q228 Lord Woolmer of Leeds: In the
current negotiations, the Doha Round, do you feel that those issues
are (a) being raised and (b) if they are, is that a cause on the
other side of the negotiating table for resistance? In other words,
are the developing and less developed, the poorest countries,
negative about that being put on the table as an issue in trade
liberalisation talks?
Mr Kamall: Can you just repeat that?
Q229 Lord Woolmer of Leeds: Do the
less developed and developing countries take a negative attitude
towards being told what to do as part of trade liberalisation
talks?
Mr Kamall: It depends on the countries,
but some of them do see it as European imperalism, if you like.
If you look at different models of development, you do not start
off with the best standards from day one and as you trade more,
trade yourself out of poverty, a consequence of that is improvement
in environmental and social standards. In every country that has
come out of poverty, as people become wealthier, more educated,
more responsive, they will demand better health standards, better
labour standards, better environmental standards. It depends on
who you speak to. It depends on the politician you speak to, but
in many countries they say, "For us it's a luxury, we are
not at that stage yet. Let us develop". Some of these issues
are not black and white. Child labour is an example. None of us
want to see child labour, children working wherever, but it is
the alternative they are given. Are we really saying that wherever
we abolish child labour we are going to go in there and provide
education? If we are doing that, fine, but if the alternative
to child labour is unemployment and no income, and in the worst
case scenario selling their bodies or whatever, then who are we
to tell them about child labour. We have the luxury to say child
labour is terrible because there is an alternative for children
in Britain and in the EU, but in many countries there is no alternative
and unless we are prepared to shut down that supplier and as a
consequence of that we build a school, or encourage a company
to build a school, are we really going to throw children out onto
the scrapheap. It really depends on the particular issue in a
particular country, but in general all of us would agree that
we want to abolish child labour.
Q230 Lord Kerr of Kinlochard: Your
position is probably not the middle position.
Mr Kamall: Certainly not, no. That is
a fair point.
Q231 Lord Kerr of Kinlochard: For
many people in the European Parliament, probably in the Council
too, it is not just about trade, it is quite a big thing. Do you
think that we need to worry about the Chinese attracting people
in Africa with their very different model where they just build
a road or a railway and are not interested in attaching social
or environmental conditions, their own self-interests are pretty
clear because it would tend to be a railway line from a copper
mine or whatever, but they go in and build it and they do not
insist on changing the governance of the country and they do not
insist on consultants' reports or whatever. Are we losing out
in African developing countries to that model?
Mr Kamall: I view the Chinese involvement
in Africa in two ways. In one way I worry because one of the debates
where we were building consensus around the aid agenda was on
conditionality. Clearly we could not just throw money at governments
that were corrupt or govern countries in a poor way or whatever
and the Chinese, if you like, are undermining that whole conditionality
debate. I think that is a very negative result of Chinese involvement.
The positive involvement, as you say, is they just go in there
and build the infrastructure, no consultants' reports, 35 per
cent not coming back to the UK or the EU in terms of revenue for
consultants or whatever, the money just goes in and they build
the infrastructure. Many of the governments there are grateful.
Why are the Chinese in there? Resource seeking clearly, but market
seeking as well. Is market seeking such a bad thing? If they are
going to build infrastructure that is not a bad thing at all.
My main concern about the Chinese is the undermining of all the
efforts we are putting into improving governance.
Q232 Lord Kerr of Kinlochard: Darfur
would be an example.
Mr Kamall: Clearly, and propping up some
pretty unpleasant governments, to put it mildly. It is shocking.
I am not convinced that we use our leverage with the Chinese enough
either, but if we did that then I would be the first to criticise
in many ways why are we not focusing on trade. This goes to show
how complex it is.
Q233 Chairman: Riveting as this is,
we are fast running out of time. One thing I would like to ask,
assuming, as I do, that one day the Lisbon Treaty gets through,
is what changes to EU trade policy do you think the European Parliament
will be able to bring about if it has got the additional powers
that come in the Lisbon Treaty? What were you looking forward
to, as it were?
Mr Kamall: I am not looking forward to
it, despite my own views on the Lisbon Treaty or whatever, purely
on the international trade debate. I fear that we will end up
as a committee of national protectionism rather than a committee
of international trade. We do have similar debates to those we
have in Council. If you look at the make-up of the Trade Committee
and we are going to be given co-decision, we will have to ratify
bilateral agreements, we will probably have to ratify future WTO
agreements, I wonder what sort of conditions we would be attaching
to ratification. I have seen this in other areas. When I deal
with technology areas in the Parliament, quite often when the
Commission comes up with a proposal I am critical of it, I think
it has gone a bit too far, but by the time the Parliament has
thrown in all its amendments I actually want to go back to the
Commission proposal.
Q234 Chairman: As you were, yes.
Mr Kamall: As we were. I worry we are
going to see the same thing with trade and all the interest groups
that will get involved via the Parliament. Some would say that
is part of democracy and part of Parliament having a view or co-decision
powers, but one of the things I like about the Commission's way
of approaching trade negotiations is that we give it a mandate,
it goes away and negotiates. That is a pessimistic view. The optimistic
view is what we might end up doing is what the Americans do, we
might end up giving them a fast-track authority or trade promotion,
and we might end up with the equivalent, so all the nitty-gritty
negotiations involve the trade promotion authority or fast-track
but the Commission still has the mandate to go away and it just
comes back as a yes or no vote.
Q235 Chairman: I think that might
indeed be absolutely essential. It is how most countries negotiate
on that basis. That was great.
Mr Kamall: Can I just make one last point?
Q236 Chairman: Please.
Mr Kamall: You asked about the effectiveness
of our multilateral. Despite it all, I would still say if you
look at most countries that have developed, I think it could be
argued that most countries that have developed have benefited
from unilateral liberalisation. You only have to look at China
and India, they did not do it because of WTO undertakings. If
you look at the Asian countries around Japan, the reason they
liberalised was because they wanted to attract Japanese multinationals
into their countries and they went up that growth curve. Even
though we place a lot of emphasis on the multilateral negotiations,
actually the best way to develop is unilateral liberalisation.
Q237 Lord Kerr of Kinlochard: And
25 years of trying to persuade people that as part of the deal
we all give something away may be completely wrong, it could be
completely the wrong psychology?
Mr Kamall: What has happened is we have
ended up with negotiating chips—
Q238 Chairman: Rather than something
you ought to do.
Mr Kamall: It is not countries that trade
with each other, it is people in businesses in other countries
to mutual benefit. We can either get in the way or we can facilitate
that. I think the best way we can facilitate that is to get out
of the way.
Q239 Lord Maclennan of Rogart: Can
we do that in Europe on agriculture unilaterally?
Mr Kamall: The Commission in its mandate
is based on taking all 27 countries with it and you can only go
as far and as fast as the most protectionist country will allow
you to go. I am not going to give you any points for guessing
who that might be! We have heard the French President making noises
that he will veto any deal.
Q240 Lord Maclennan of Rogart: I
meant to put the question another way, which was not what is blocking
it in Europe but if Europe were to come up with unilateral liberalisation
on agriculture would that be Europe's pain at the start?
Mr Kamall: Yes, I think it would. Like
any process there are winners and losers, but if you look at where
other countries have unilaterally liberalised agriculture, they
have benefited.
Chairman: Thank you very much.
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