Examination of Witnesses (Questions 593-599)
Rt Hon Lord Mandelson, Mr Edward Barker and Ms Fiona
Shera
6 NOVEMBER 2008
Q593 Chairman: Welcome everybody
to the open phase of this meeting of Sub-Committee A and a particular
welcome to Lord Mandelson and his colleagues Mr Barker and Ms
Shera. Can I ask everybody before we start, as this session is
being broadcast, to put mobile phones not just on to "silent"
but on to "off" because otherwise interference is caused.
This session is being broadcast and we will appear on BBC Parliament
and we are of course on the record. Lord Mandelson, as well you
know, every word is being taken down and a transcript of the meeting
will be provided to your office for correction. Thank you very
much for coming. I know you have got a few other things to do,
but we are really extremely glad to see you. We are in the process
of finishing a long report on trade with particular reference
of course to the EU and to the Doha Round and when we last saw
you you were of course the Trade Commissioner. It is particularly
pleasing to be able to ask you now in your position as the responsible
UK Secretary of State the various questions of which I am sure
you have had notice that we would like now to air with you, and
indeed enable ourselves to complete our report. If you would like
to start with a statement, Lord Mandelson, please do. If you do
not particularly want to do that, if I may, I will start asking
the questions. Which would you like to do?
Lord Mandelson: Let me make a very short
statement to say first of all how glad I am to be here again and
to have this opportunity of meeting the members. Thank you for
rearranging your time to accommodate my attendance at the Cabinet
this morning. Secondly, to say that I hope that the opportunity
that I will have to correct the transcript of what I say also
applies to the press and the sketch writers who are behind me!
Thirdly, to say that my passion for the Doha Round and my commitment
to it, the evidence for which you have seen plenty of during the
last four years, is undimmed in my new role. I regard the cause
of world trade, the openness of markets, our ability to prevent
the global economic machine rolling backwards under the pressure
of protectionism as vital if not more vital now than it has ever
been, but I also see trade as a huge opportunity for poorer countries
in the world. The main feature of my approach to trade and development
during the last four years has been to harness trade to the cause
of development and that too will be undimmed as I exercise my
responsibilities in my new role. Having said that, I am open to
respond to any questions that you would like to put to me.
Q594 Chairman: Thank you. Our first
question with which I will lead off is that we have never felt
that we quite understood how and why at the last minute the Round
actually failed and in that context there are questions like was
the Special Safeguard Mechanism the true reason for failure and
what happened to services? Is there anything you feel able to
tell us about why the Round did not make it in the end?
Lord Mandelson: Let me say something
very clearly and firmly at the outset: this Round has not failed.
The ministerial meeting in July did not end in success in its
objective of agreeing the modalities, that is putting in place
the formulae for the reduction of tariffs in agriculture and non-agricultural
market access and the formula for reducing agricultural subsidies.
When the Director-General of the WTO called the ministerial meeting
everyone said at the time that he was taking quite a risk, quite
a gamble given the gaps that persisted in the positions and in
the views of a number of key negotiators. Some suggested that
he was inviting failure by calling this meeting of ministers prematurely
before the groundwork, staff work, foot work had been done to
bring everyone's positions closer together so that in a sense
the ministers could sign off on the final detail, as it were.
I did not agree with those who took that position. As the EU Trade
Commissioner I argued that the ministerial meeting should be called
despite the risks because I felt first of all that, as it were,
technical negotiators and senior officials in many respects had
taken the negotiation as far as they could and that now ministers
needed to make some difficult political judgment calls which only
ministers can do. Secondly, I felt that if the ministerial meeting
did not take place before the summer the prospects of it taking
place at all in the autumn would not be very great because of
the American elections. My firm judgment was that whilst the US
Administration would be prepared, as it were, to go for a ministerial
meeting in July which was sufficiently far in advance of the American
election date for them to take some risks in the negotiations,
the possibility of their being prepared to do that would be reduced
the nearer the election date they got. I feel that we were vindicated
in that judgment because we did make substantial progress in a
whole number of different areas in July. We agreed for example
in respect of agriculture that the proposed reductions in agricultural
trade barriers in tariff reductions would be set at an average
of at least 54 per cent, with the highest tariffs enjoying the
greatest cuts, in the case of the European Union something in
the region of 70 per cent, and that trade-distorting subsidies
also would be subject to agreed cuts, in the case of the United
States I think it was again 70 per cent and in the case of the
European Union 80 per cent. Those are very important offers and
commitments and we signed off on them. In non-agricultural market
access again the outcome of the position we reached in July was
that we would be reducing the maximum industrial tariffs in the
developed world to below eight per cent, with almost no tariffs
above six per cent in the whole of the European Union, and that
an important reduction would also be made in maximum tariffs in
the developing world. For example, India's bound average tariff
would fall from 45 per cent to 17 per cent. I could go on illustrating
for you across the range the many tentative convergences and agreements
that we reached, including, I might say, some important developments
in trade in services, where significant indications were given
by some of our key trading partners amongst the emerging economies
that when the time came for them to make their final offers, which
would be one or two months following the agreement of modalities
at the ministerial meeting, some major new trading opportunities
would arise within the international trading system. However,
as you say, there were nonetheless some tricky issues on which
we tripped up and the principal issue on which we tripped up,
which became the effective cause of the failure to agree at the
ministerial meeting and its inability to end in a successful conclusion,
was that relating to the Special Safeguard Mechanism. This was
a new piece of machinery to be introduced within the WTO that
would allow developing countries with non-commercial agricultural
sectors to use that mechanism to protect their agricultural sectors
against sudden and substantial surges in imports in agricultural
goods to their economies. That became the subject of very sharp
disagreement, I am afraid, between India and other agriculturally
defensive countries in the G33 group of developing countries and
on the other side, the key agricultural exporters, who of course
want to maximise their access to the agricultural markets of developing
countries, in particular and led by the United States. That is
why colloquially people said the talks failed because the US and
India fell out. Well, they were the main protagonists in this
disagreement but they were not the only ones. They had other countries,
as it were, with similar interests lining up behind them. I was
very disappointed when this happened and as Commissioner at the
time used considerable effort throughout many days and nights
to broker an agreement between the United States and India and
those other countries that they represented or spoke for informally,
but that I am afraid in the event was not possible. The Director-General
himself contributed a Herculean effort and my admiration for Pascal
Lamy knows almost no bounds. His energy, his stamina, his technical
grasp and his ability to operate politically amongst so many cross-cutting
interests and issues really was remarkably impressive. I notice
that he has announced that he is standing for re-election as Director-General
of the WTO and the British Government will certainly be supporting
him very strongly indeed. In the end, it was a collective failure
of the talks but not of the Round itself.
Q595 Chairman: If I may be allowed
a supplementary on this Lord Mandelson, did you feel that the
Special Safeguard Mechanism failed to avoid talks on cotton tariffs
or was it a broader failure to agree?
Lord Mandelson: I suspect that what lies
behind your question is a suspicion that the United States was
keen to see the talks break down over the Special Safeguard Mechanism
because they did not want to reach the point of having to make
a substantive offer and reach agreement on the reduction of American
cotton subsidies in advance of the American elections. I do not
know whether that thought lay behind your question, but if it
did it is not something on which I could possibly comment obviously!
I know that the issue of cotton and subsidies is a matter of great
political sensitivity in the American agricultural community which
is well represented in a number of swing states, but beyond that
I could not make any further judgment.
Q596 Chairman: Can I have a go at
something that is probably equally controversial. If a deal had
been achieved were you confident that all the EU Member States
would have supported it?
Lord Mandelson: Yes.
Q597 Chairman: Fine!
Lord Mandelson: Yes in this sense: we
were seeking to agree the modalities, the formulae by which tariffs
and subsidies would be cut. We were not being invited at that
stage to agree the ultimate single undertaking, the final deal
of the Doha Round. In putting modalities in place we would have
had at least six further months to negotiate the country-specific
scheduling or application of those formulae to each and every
member of the WTO. Only at the end of that scheduling process
would we have reached the ultimate single undertaking on which
every member of the WTO, including of course every member of the
European Union would have to agree, because although as Commissioner
I negotiated collectively on their behalf they nonetheless had
their own independent memberships of the WTO, so in theory at
the end of the day as individual members of the WTO any member
of the European Union could in principle have raised their veto,
their card against the adoption of the final single undertaking.
At the stage of modalities, that was a stage of negotiation on
which I as Commissioner had the mandate to negotiate on behalf
of the EU without going back to ask the Member States to endorse
what I was actually signing up to. However, politics of course
is slightly different from constitutional theory. If the politics
of those modalities had been such that a strong group, let alone
a majority of EU Member States, had been really disgruntled with
my negotiating tactics and the position I finally reached, they
could have made that clear to me, and I would indeed have been
left in an extremely uncomfortable position as the negotiator;
I would in effect have had the carpet pulled from underneath my
feet. In the event, when the outline deal began to emerge four
days before the talks failed, I asked the Presidency of the Union
to call a meeting of the General Affairs Council. That met on
a Saturday morning and I put the scope, content and much of the
detail of the emerging deal to the Member States, and whilst a
number did express reservations about the balance of the emerging
deal, the overwhelming and preponderant view of the Member States
was that I should continue to negotiate on the basis of that emerging
outline. I took that as an endorsement and a green light which
enabled me to proceed over the next four days of negotiations.
If we had succeeded in putting in place the modalities, and I
would have brought that back to the Member States, I am confident
in saying that they (some rather more enthusiastic than others)
would nonetheless have gone along with the package that was emerging
at that stage of modalities.
Q598 Lord Maclennan of Rogart: Lord
Mandelson, I wonder if you would be able to characterise the respective
roles of the Presidency and yourself in constitutional terms?
Lord Mandelson: Do I have to!
Q599 Lord Maclennan of Rogart: It
is clearly a matter for you but there was an issue during the
negotiations and I do not think it should be regarded (perhaps
you think it should) as a purely personal one. It seemed to me
to raise constitutional questions about the respective roles of
the Presidency and the Commission. In the outcome how did you
view it?
Lord Mandelson: I think I would put it
in this way: the six-month Presidency in office of the EU, at
that time and still now France, had a responsibility for bringing
the Member States together, ensuring that I as the negotiator
was properly answerable to the Member States and was able to explain
and justify my negotiating actions and to give a proper opportunity
to the Member States to express their views back to me about my
actions. In that sense an accountability was operating but not
one where the Member States were able to block or veto my negotiation
on their behalf unless it could clearly be demonstrated that I
was acting outside the original mandate given to me for the negotiations
as a whole by the Member States. I would strongly contend—I
did at the time and I would still now—that in these negotiations
I was operating entirely within the mandate originally given to
me, that I was not stepping outside this mandate and was not proposing
to do so, and therefore on that basis the Member States should
be content with my actions and that the role of Presidency was
to reflect that. However, each Member State of the European Union
of course has its own particular views, its own particular domestic
interests, agricultural or otherwise, and it was really up to
the Presidency to reconcile its role as President in office with
the domestic interests and pressures that operated within its
own country, its own economy and society, and of course I was
entirely happy with the actions of the Presidency in their ability
to reconcile those two things.
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