EU-US Trade

Part of the debate – in the House of Commons at 9:31 pm on 22nd March 1999.

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Photo of Mr David Chidgey Mr David Chidgey Shadow Spokesperson (Business, Innovation and Skills), Shadow Spokesperson (Foreign and Commonwealth Affairs) 9:31 pm, 22nd March 1999

I congratulate my hon. Friend the Member for Tweeddale, Ettrick and Lauderdale (Mr. Moore) on the powerful way in which he opened the debate. He made a strong case for the plight of his constituents, the thousands of people who run the risk of losing their jobs. He rightly pointed out the shortcomings in the diplomatic efforts of the European Union and the United States so far. We need a fair resolution and respect for the World Trade Organisation and its rule base, as the right hon. Member for Charnwood (Mr. Dorrell) said.

I am pleased that, when he spoke on behalf of the Government, the Minister recognised that my hon. Friend the Member for Tweeddale, Ettrick and Lauderdale had put up a reasonable case. There is all-party agreement on the matter. The Minister pointed out that we in the EU and the USA are the two key players on the world trade stage. We should all remember that. We are intertwined, and our economies are locked together. The Minister told us a great deal about our trade successes. With all due respect to him, we all knew that. The issue is what we are to do about the unwieldy and unbelievable dispute about bananas.

The hon. Member for Christchurch (Mr. Chope), who led for the Conservative party, made some interesting comments about his preference for compliance rather than compensation, and about his complete faith in market forces and the unfettered exploitation of the most vulnerable. I have always believed that trade should be not only free, but fair.

The debate has shown that the so-called banana war has all the makings of a Whitehall farce. It is a throw-back to 19th-century gunboat diplomacy, but it is a farce with deadly serious implications for sensibly regulated world trade, and for safely harnessing the science of genetic modification and hormone additives in the food chain—something about which my hon. Friend the Member for Lewes (Mr. Baker) spoke so eloquently.

Neither the EU nor the USA is blameless in the present fiasco. By using loopholes in the WTO compliance rules, the EU has tinkered with its banana import regime, stalling over the day when it must change the system whereby it protects its former colonies.

Very few, if any, independent observers believe that the EU is acting legally, but the EU claims that it cannot be sure about that until the WTO rules again. On that basis, the EU could carry on tinkering with the rules and never comply with the WTO judgment.

America is also flouting WTO rules. By retaliating with trade sanctions through 100 per cent. duties on EU products targeted at the UK, it is effectively stopping trade. Not only will that destroy the livelihoods of thousands of workers in the Scottish borders, but the US is acting in direct contravention of WTO rules on free trade.

At the heart of the dispute lies a fundamental clash of different obligations to different parties. The EU has obligations to WTO trade rules and obligations under treaty to former colonies in Africa, the Caribbean and the Pacific. To American eyes, those colonial links might appear to be relics of the past, but it is time for America, as today's super-power, to accept the responsibilities of its dominant position and to think and act beyond the interests of short-term commercial advantage.

The dismantling of the EU banana regime would only marginally increase the profits of the multi-billion dollar American banana distributors, but it would destroy at a stroke about 25 per cent. of the economy of a string of Caribbean islands. America's response appears to be that the EU should replace preferential trade with economic aid. Nobody can imagine that destroying the fragile economies of small island states, and throwing thousands of people out of work and into benefit dependency, is a constructive policy. It flies in the face of America's own claims to social justice and Bill Clinton's claim that he would give America's poor a hand up, not a handout. However, he wants us to hand out aid in the Caribbean rather than have those economies prosper.

There is a darker side to the banana war—the blatant manner in which corporate America can corrupt political thinking in the Senate and in the White House. It would be far fetched to say that it was mere coincidence that the American banana distributors donated $500,000 to the Democratic party coffers only 24 hours before America lodged its latest complaint over the banana regime. Their actions show that the producers are more bent than the bananas that they sell.

A still darker side to the banana war could be the reaction in the Caribbean to massive job losses on the banana plantations. America has spent billions of dollars in Latin America trying to turn fanning communities away from drug production to producing legitimate cash crops, and forcing a collapse in the Caribbean banana industry would only increase the likelihood of more illegal drug production. The hon. Member for Crewe and Nantwich (Mrs. Dunwoody) spelled that out early in the debate during an intervention. If more drugs are produced, they will go to the most profitable and readily accessible market. That is the United States of America.

The escalation of the banana war would bring a host of casualties—thousands of job losses in the Scottish borders, the destruction of island economies throughout the Caribbean and an increase in illegal drugs production and trade, targeted on America—but even more damaging in the longer term would be the signalling of a crisis of confidence in the WTO, which is the supposed arbiter of world trade disputes.

There is real danger that trade hostilities with America will escalate into other areas, and measures to protect its steel industry are before the Senate. America is angry about subsidies for Airbus, EU directives on data privacy and proposed rules on aircraft noise—the hushkits, which discriminate against American firms. Most worrying is American pressure on the EU to accept food produced from genetically modified crops and to lift the EU ban on American hormone-treated beef. At stake are the rights of the individual nation states, which have put the interests of public safety before access to the food chain for modified products.

As my hon. Friend the Member for Lewes pointed out, there are alarming reports from leading scientists in Europe about the drinking of milk laced with hormones increasing the risk of cancer. The bovine somatotropin hormone is the favoured method of American producers for increasing yields massively and reducing costs. In our view, the EU is right to ban those products in the face of scientific uncertainty over long-term public safety.