Examination of Witnesses (Questions 760
- 776)
THURSDAY 6 DECEMBER 2007
Mr Peter Mandleson
Q760 Lord Plumb:
You would not expect me to use the word "moan" like
my Lord Chairman as far as producers are concerned.
Mr Mandelson: Never. You are not a moaning farmer,
Lord Plumb.
Q761 Lord Plumb:
But let me give my impression of the reaction of farmers, not
just in Britain but in some of the other parts where production
is taking place. They have two things in mind at the moment. One,
we are going to lose subsidies within a very short time, and they
are anticipating that and are prepared for it. Two, if we are
going to compete in this market we have got to produce the best
possible product, be it from grain or the livestock that we can
produce, and we are prepared to face that. I was particularly
pleased that you mentioned the two extremes, if you like, of America
and New Zealand in the context of what they are doing because
the Americans are being terribly dishonest in my opinion in not
facing up to the reality that they have to face up to under the
Doha Round. New Zealand do to a large extent but when you said
they are not always honest, and I was there last year—
Mr Mandelson: I do not think I said honest,
I think it was "pure". I am not accusing them of dishonesty.
Q762 Lord Plumb:
I know what you were saying. If we take the Doha Round, which
I favour and I favour free trade, the possibility of opening up
markets throughout the world, and you made a speech a little while
ago in which you said that we are now importing more products
from the ACP countries than any other part of the world and that
is fine, that is the sort of thing we should be talking about,
we should also be taking advantage of exports, and the difficulties
we have there we know only too well are related to disease problems
and so on which blot the market from time to time. I want to give
one example. We have had difficulty, certainly in Britain, this
last year with lamb, partly because the lamb is up on the hills
and you cannot get it down and there is foot and mouth. It was
only two or three months ago now, just as British lamb was coming
on to the market when 10,000 tonnes of New Zealand lamb landed,
and the reason for that was the Canterbury Plains were going dry,
the lambs were losing condition and, therefore, they were being
slaughtered and sent over in carcass form. I know that for a fact
from my contacts in New Zealand. They are now criticising themselves
because they realised that there was an element of dumping at
that time but, nevertheless, in legal terms what they were doing
was committing the amount that they could send in because they
had not met their commitments of lamb for a long time. I said
to New Zealanders only last year, "Britain did two things
for you that were always good for New Zealand, that was for Britain
to join Europe because we opened the door to 40 different countries
and, secondly, I go back and tell all the farmers in Europe that
we will get rid of the subsidies tomorrow night if we have the
same import controls that you have got" and they say, "We
don't have any import controls", and of course they do not
because they do not have to because nobody is exporting to them,
other than motorcars and this sort of thing. If we are going to
have a market under Doha, and a freer market, then we have got
to have some pretty tough regulations on some of these countries,
whether it is Brazilian beef, New Zealand lamb or American products
that are coming here. Another aspect of that is the whole question
of soya. We are bringing in so much soya from these countries,
98% of which is genetically modified. Is that coming on to the
market and declaring itself not to be genetically modified?
Mr Mandelson: I hope and assume not.
Q763 Lord Plumb:
If we are going to really have a free market then it has got to
be a fair market on the basis of the regulations that they will
adhere to in the same way that we are in Europe.
Mr Mandelson: Do you want to have a discussion
about whether we should be more prepared to embrace genetic modification?
Lord Plumb: I would be very happy to
but I do not want to do that now.
Q764 Chairman:
Not today.
Mr Mandelson: And whether we can maintain our
productivity and our competitiveness without doing so, because
I am not too sure.
Q765 Lord Plumb:
That is not my argument. My argument is that people unknowingly
are consuming a product which is so much cheaper believing, of
course, that it is just as good as it might be from elsewhere.
Mr Mandelson: It may be cheaper but is it lower
quality?
Q766 Lord Plumb:
Not necessarily.
Mr Mandelson: If it meets our SPS standards
and fulfils the terms of our SPS agreement then that is our—I
hesitate to use the words—"ultimate defence",
that sounds a bit beleaguered, but as tariffs go down and our
markets open then other goods will come towards our markets, that
is absolutely true, but they do not just pass freely into our
markets because they have to get over the hurdle of our SPS agreement.
In a sense, the more we reform internally and the more, assuming
the Doha Round ever finishes in a successful conclusion, our border
protection comes down, the more important our SPS agreement becomes.
Q767 Lord Plumb:
Exactly.
Mr Mandelson: That is what we rely on to ensure
that we do not just get well-priced products but that we get safe
products. It is going to become much more important in the future
even than it is now.
Q768 Viscount Ullswater:
Are you undertaking any analysis of these two things, the reduction
of export subsidies and—
Mr Mandelson: We model all the time. It is a
combination of the three things. I get very impatient and slightly
frustrated with our negotiating partners who choose just to talk
to me at one moment about domestic support and is it going far
enough, is it a genuine reduction, are you not just tabling what
you have already decided to do. We did decide to do it, partly
because we wanted to do it and partly because we knew we would
have to provide a basis for the offer that we table in these negotiations,
so do not doubly punish us for being good people coming in at
the outset with a good offer which you then pocket or discount
and say, "Where is your real offer?" This has been the
American fear which has inhibited them from coming forward before
now. That is an approach I have rejected. I have said, "You
can take it as a given that what we are tabling we do in good
faith. We will sustain that offer and will maintain that flexibility
but do not come back to me and say that if I am going to get anything
in return I have got to do twice or three times what I have already
tabled because that is when the negotiation will stop. I am not
playing that sort of game". It has enabled me to be on the
front foot as a negotiator, always knowing what I could table,
always putting in a good offer and knowing how far I can go in
subsequent negotiations but also knowing my limits and taking
it up to that point and not going beyond it, whereas some would
say that approach is simply na-ve. I think that was the
term President Sarkozy used repeatedly about me during his election
campaign when he referred to this, " . . . fonctionnaire
who goes round the world giving things away to America and to
developing countries. We need to have the negotiations taken out
of the hands of this fonctionnaire and put back into the hands
of somebody who is less na-ve". I must say, I have
never been called na-ve in my political career so it stung
me somewhat when it came from his lips. The point is this: I have
always been conscious, because we have computer modelled it, of
what the overall impact will be of all the changes that we are
prepared to take on and the offers that we are prepared to table.
I do accept that in the case of tariffs, the reduction of border
protection, it is not an exact science. I know that Mariann and
her Director-General who provide the material when we try and
negotiate that cannot say with precision that this reduction in
border protection coupled with this price effect will have that
impact on domestic markets and producers, but they have a pretty
fair idea and, frankly, they approach this in a pretty prudent
way. DG Agriculture in the European Commission has not been operating
agricultural protectionism for 50 years without learning a trick
or two about how to protect European farmers.
Q769 Earl of Dundee:
I wonder if I could touch on long-term CAP for a second. You have
pointed out that all the players and sides have different journeys
to travel and that may be a fact that we cannot get away with.
Nevertheless, how do you think it will affect some degree of protectionism
after 2013 and maybe continuing for quite some years after that?
Mr Mandelson: First of all I reject the term
"protectionism". I might go as far as prudent protection
with you, but not "protectionism". What will the argument
be about after 2013? I suspect it will be more about the difference
between or the balance between Community expenditure and national
expenditure on agriculture, to be honest. I think that there is
quite a strong appetite for reducing the agricultural share of
the Community budget. If some of our Member States, within the
terms of the international agreements that we have signed up to,
want to exercise some national preference as opposed to Community
preference within limits it may well be that they are either encouraged
to do so or will choose to do so themselves.
Q770 Chairman:
Would you see the development of co-financing as part of that
as well?
Mr Mandelson: Yes, I think so. I am now getting
way out of my remit and depth, particularly my depth. These are
the sorts of things to talk to Mariann about. I always feel with
Mariann, and have you met her Director-General, Mr Dumartin?
Q771 Lord Plumb:
Yes.
Mr Mandelson: A very shrewd Frenchman. I always
have the feeling with those guys that they know exactly what they
want to do and where they are going to end up, it is just a question
of managing the Member States adequately to come in behind them
in the direction they have chosen, but you are never quite sure
what that destination is. You know there is a destination but
you are never going to be privy to the full picture with these
guys. That is the way they treat me as a trade negotiator. They
say, "Absolutely not. You cannot go below this. You cannot
table that. To go beyond that, the roof of the Common Agricultural
Policy would fall in" and, blow me down, three months later
I pick up a briefing paper and exactly what I was told was unimaginable
before has suddenly become not even my bottom line. They are skilled,
I was going to say manipulators but that is too tough. They are
skilled manoeuvrers. They are taken by surprise by market developments.
Q772 Chairman:
That is good.
Mr Mandelson: You also fine-tune your computer
model and find that what comes out is affected by the assumptions
that you put in and you put in different assumptions.
Q773 Chairman:
You said that you undertake the modelling on the impact of eliminating
export subsidies and import tariff reductions but you avoided
telling us what the model showed.
Mr Mandelson: The impact on domestic production?
Q774 Chairman:
Yes.
Mr Mandelson: Smaller production obviously.
Q775 Chairman:
In which particular areas?
Mr Mandelson: Look, if you were from the Irish
Parliament would I be saying to you that there is a question mark
over the future of the Irish beef industry? No, I would not be
saying it to them, but since you are not from Ireland, you are
from Britain, I can say there is a question mark over the future
of the Irish beef industry, they know it and they are very worried
about it and very angry with me, and I am routinely denounced
where effigies are burnt.
Q776 Viscount Ullswater:
They will get round it some way, will they not?
Mr Mandelson: I think they will get round it
but they have got to change their production model. That is the
same in every other economic sector. Think of the areas of production
where we face Chinese competition on a scale hitherto unimaginable
which is not going to go away in any short time. I have just been
in China crossing swords with them over their dirty products and
their filthy food. I do not mean all of it. They are not fair
traders. I am not saying they are completely unfair traders either
but our job, my job, is to keep them on their toes. Yes, they
have a set of comparative advantages which are unquestionable.
Secondly, they have a number of other distortions of price and
competition which add to their natural comparative advantages
which naturally I strongly object to. Do they open their markets
in the same way to us as we do to them? No, they do not. Do they
give us legal protection once we are in their markets with our
goods and services? No, they do not. We are prudent, precautionary,
sometimes offering protection where it is needed and justified,
but just as we have been serial offenders when it comes to trade
distorting farm subsidies in the world, we have subsidised, we
have dumped, we have now become the most active and successful
serial reformers. That is what people sometimes do not understand
or accept in the country I know best. They rage against the Common
Agricultural Policy as if it is in the same form that existed
in the 1960s, 1970s and 1980s, they have no idea how much it has
changed and how much reform has kicked in. Compare and contrast
the United States. I know they do not subsidise on the scale that
we do, or have done, but they have got a long way to go to catch
up with us when it comes to reform.
Chairman: Thank you very much.
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