EU-US Trade

– in the House of Commons at 7:16 pm on 22nd March 1999.

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Photo of Michael Moore Michael Moore Shadow Spokesperson (Scotland) 7:16 pm, 22nd March 1999

I beg to move, That this House deplores the failure of the USA and the EU to resolve the trade dispute arising from the so-called banana war; recognises the serious impact which the US retaliatory measures are having on British industries, in particular the devastating impact on the cashmere industry in the Scottish Borders; is concerned that these actions are a precursor of further major trade disputes over the importation into the UK of genetically and hormonally modified food products from the USA; and urges the Government to step up its diplomatic and other efforts to ensure that all parties work together to first reform the WTO regime to ensure compatibility with international biodiversity agreements, environmental and animal welfare objectives, and then to ensure compliance with the WTO objectives of free and fair trade. The motion stands in the names of my right hon. Friend the Member for Yeovil (Mr. Ashdown) and other right hon. and hon. Friends—[Interruption.]

Photo of Michael Martin Michael Martin Deputy Speaker (First Deputy Chairman of Ways and Means)

Order. The hon. Gentleman is addressing the House and hon. Members must come to order.

Photo of Michael Moore Michael Moore Shadow Spokesperson (Scotland)

Thank you, Mr. Deputy Speaker.

A vital part of world trade has entered a mire and, to an increasing extent, the very principles of free and fair international trade are at stake. A dispute about the world banana trade has got out of hand and now threatens the jobs of thousands of people employed in industries throughout the country, ranging from cashmere in the Scottish borders to candles in north Cornwall. Today we learned that not even the Scottish Tunnock wafer is safe.

To ensure the freedom and fairness of world trade, there have to be rules that are agreed by the participants and overseen by a credible international body. Painfully and painstakingly, over several decades, moves were made toward a consensus on that matter, leading only a few years ago to the establishment of the World Trade Organisation. Yet, as the WTO prepares for the new round of trade negotiations later this year, the whole trading edifice is on the verge of collapse.

The origin of the current dispute between Europe and the United States lies in a row over bananas that has rumbled on for many years. At the heart of that dispute is the European Union import regime, which offers special preference to former colonies in the Caribbean and elsewhere. The main points of today's debate relate to the manner in which the dispute has been handled by Europe and America and to the consequences of our failure to resolve it, but there are many other issues—for example, my hon. Friend the Member for Lewes (Mr. Baker) hopes to speak about genetically modified organisms.

It is worth remembering that, although the United States is much exercised about the problems affecting the export of Latin American bananas into Europe, the African, Caribbean and Pacific countries have only 20 per cent. of the European Union market, whereas three north American multinationals—Chiquita, Dole and Del Monte—control two thirds of the world banana market between them. The questions have to be asked, exactly how much do they think they need and how much do they think is fair? Ensuring fairness to African, Caribbean and Pacific countries in the resolution of the dispute will be one of the keys to a decent solution.

It is evident that there is great animosity between both sides in the dispute. At different stages, my hon. Friends, especially my hon. Friend the Member for Roxburgh and Berwickshire (Mr. Kirkwood), and I have lobbied various people and organisations, including American ambassadors and the WTO itself. It has been apparent throughout that the WTO is caught in the middle as Europe and the United States flex their diplomatic muscles rather than try to find a solution. The situation is out of hand.

Photo of John Bercow John Bercow Conservative, Buckingham

The hon. Gentleman mentioned three United States companies that he accused of controlling 60 per cent. of the market. Am I mistaken in thinking that the Liberal Democrats used to believe in free trade? Would the hon. Gentleman care to say instead that those companies won that share of the market?

Photo of Michael Moore Michael Moore Shadow Spokesperson (Scotland)

The hon. Gentleman may advance the cause of those multinationals later if he catches your eye, Mr. Deputy Speaker. In response to his point, some of the practices of those multinational companies in different parts of the world are entirely questionable. I pointed out that the African, Caribbean and Pacific countries that import to the European Union have only 20 per cent. of the European market. So Conservative Members have ignored the fairness argument, which is surely as important as the free trade argument.

Moving away from bananas, the immediate and painful consequence of this dispute is the loss of thousands of jobs in the cashmere industry, in both small and large operations in Hawick and Innerleithen, and in the candle industry in operations such as Art Candles in Bodmin and Eclipse Candles in the constituency of my hon. Friend the Member for Weston-super-Mare (Mr. Cotter). In the medium and long term, the very principles of international trade may be damaged irrevocably if there is no solution soon.

For months, my hon. Friend the Member for Roxburgh and Berwickshire and I have been putting the case for an early resolution of the dispute to both the European Union and the United States on behalf of our constituents in the cashmere business. The situation was summed up for us when we travelled with my right hon. Friend the Member for Yeovil (Mr. Ashdown) to the World Trade Organisation in Geneva just over a week ago. When we visited the European Union ambassador to the WTO, he was very patient. He took his time and explained that it was all the fault of those nasty Americans. We then travelled around the city of Geneva to meet the American ambassador. She was also patient and energetic. She expressed sympathy with our cause, but explained that it was all the fault of those nasty Europeans.

It is clear that the WTO can resolve the dispute only if both sides make a serious effort to sort out the basic differences. The organisation is under-resourced and under-staffed, and many would say that it is being asked to solve an impossible problem. There is no point in the European Union or the United States blaming each other, because that ignores the real pain endured by our constituents in the borders, where thousands of jobs have been lost in the textile, electronics and farming industries in the past two years.

There can be little doubt that the European Commission has been sleepwalking through this crisis. It has failed at every stage to recognise the seriousness of the American Government's intention to sort out the dispute on their own terms. For at least the past six months, the European Commission has been more interested in name calling than in serious diplomatic efforts. In this area—as in so many others recently—the European Commissioners have clearly not been earning their pay.

In the wake of the Commission crisis, nobody knows who is in control. It could not have come at a worse time for these industries and for the jobs that are in jeopardy across the country. The House must send a strong signal to Sir Leon Brittan: although he may be tempted to campaign for another job, he must remain firmly focused on securing a resolution to this dispute before it is too late. We do not want him to get a new job if thousands of others lose theirs.

While the Commission is in limbo, Sir Leon has an opportunity to devise a scheme that will resolve the dispute fairly and equitably and to present it to the President of the European Union, Chancellor SchrÖder. The President could discuss the issue on his shuttle trips around the capitals of Europe and provide some impetus for a solution. Every day counts. The seasonality of the business—particularly the cashmere industry—means that, if producers do not sort out their orders in the next month, job losses will follow almost immediately.

For its part, the United States has earned little credibility. Notwithstanding the merits of its case, its unilateral response is completely illegal in international law and outwith the framework of the WTO, which the US claims to support. The list of targeted goods is openly cynical and is clearly targeted at the most vulnerable European work forces. The tactics are those of the international bully boy, and our constituents up and down the country are entitled to question whether our special relationship with the United States—of which we hear so much—is worth very much. Both sides in the dispute must recognise that the World Trade Organisation alone is the judge of the merits of the case and must be respected.

The United Kingdom Government clearly appreciate what is at stake. They have been keen throughout to highlight the role of the European Commission and the fact that it is the lead authority in the negotiations. It is also clear that, in choosing the list of goods to target, the Americans wanted to influence the British Government, whom they believe have not tried seriously to solve the problem. Ministers will have an opportunity to respond to that point later, and I recognise that they have made serious efforts in the past few months. However, that is not the perception of the American Government.

The meetings with American officials and ambassadors to which I referred have illustrated an awareness of the seriousness of the situation. The Department of Trade and Industry and the Scottish Office have been keen to listen to our views and those of others. However, the Government must be seen to be getting behind a fair and equitable solution to the banana crisis that Britain actively supports and encourages. While not employing the bully boy tactics of the United States, this Government must be seen to be interested in finding a solution. If they do so, British goods may come off the American hit list.

On 4 March, in response to a private notice question from my hon. Friend the Member for Roxburgh and Berwickshire, the Secretary of State announced that the Government would introduce a guarantee scheme for the cashmere industry. My hon. Friend and I welcomed that announcement, which recognises the special conditions that pertain in the cashmere industry and the importance of the American market. However, we face a real problem because the scheme's detailed requirements are not yet in place. Although we accept in principle that the Government intend to introduce the scheme and keep it in place until the dispute is resolved, the problem is that every day without a scheme sees the erosion of the confidence of US customers and of carriers such as DHL and Federal Express. It is critical that we retain that confidence and ensure that we get the orders.

Speed is of the essence. On 4 March, in response to my question, the Secretary of State said: I agree that time is of the essence and that we have to get the scheme in place as a matter of urgency."—[Official Report, 4 March 1999; Vol. 326, c. 1226.] The statistics of the order book in the past fortnight vividly demonstrate that point. Two weeks ago, the United States' order book for cashmere was worth £4 million. Since then, that amount has doubled. This is a fast-moving situation. Perhaps more tellingly, however, although the amount on the order book has doubled, the same amount again has been lost because people are not prepared to gamble and take on board what the Government have been saying.

Murray Allan, a company in Innerleithen in my constituency, told me today that the latest visit to the United States by one of its sales representatives had resulted in two major US department stores declining to do business. One demanded a personal guarantee and disclaimer and another said that the risks were not worth taking. Those who work at Murray Allan, Ballantyne, Barrie and other companies in the cashmere industry want to know when the scheme will be up and running and the details known. For now, the clouds of uncertainty surround the industry and people are deeply worried. I hope that the Minister, in his response, will be able to give us an assurance and a reason to be optimistic.

As I have said, thousands of people are on the brink of losing their jobs because of macho diplomacy in the capitals of Europe and the United States which is divorced from the world of those whom it affects. Whatever the motivations of the different parties in the dispute, it is clear that one issue is a warm-up for the next set of issues to arise between America and Europe, whether they relate to bovine somatotropin, hormones in beef or genetically modified organisms.

Whatever else we learn from the dispute, it is clear that the macho tactics of the Europeans and the Americans do not work. The only way that we can hope to build up the credibility of the international trading order is to give the WTO full support. The Government have a major responsibility in that and must take the lead. We are in an awful mess and we need to get out of it as soon as possible.

Photo of Henry McLeish Henry McLeish Minister for Home Affairs and Devolution, Scottish Office 7:33 pm, 22nd March 1999

I beg to move, To leave out from "House" to the end of the Question, and to add instead thereof: recognises the significance of the EU/US relationship and notes that the majority of that trade relationship runs smoothly; commends the efforts of the Government to secure the Transatlantic Economic Partnership Agreement last year; acknowledges the efforts of the Government to find a way through the bananas dispute so as to minimise the impact on British industry and in particular the cashmere industry; notes the current position on the hormones dispute; welcomes the Government's commitment to sustainable development; and endorses the Government's support for comprehensive multilateral trade negotiations to be launched in Seattle at the end of this year. I am pleased to have the opportunity today to speak on the subject of the EU-US trade relationship, the Government's efforts to strengthen that relationship, our efforts on the dispute about the EU's banana regime and, among other matters, our wider ambitions for the Seattle World Trade Organisation ministerial conference at the end of the year.

The hon. Member for Tweeddale, Ettrick and Lauderdale (Mr. Moore) has put a reasonable case to the House about his local concerns and he expresses a view that is shared by hon. Members on all sides of the House, especially in relation to Scotland. However, it is important to remember early in the debate that this is an issue not only for Scotland, but for the United Kingdom and the European Union.

The EU-US trade relationship is substantial and strong. The EU and US are the world's largest two economies, and together they account for about 54 per cent. of world income. Even excluding trade within the EU, together they account for around 38 per cent. of world exports and 39 per cent. of world imports. In 1997, EU goods exports to the US were worth $160 billion, compared with imports from the US worth around $156 billion.

The bilateral trade balance has fluctuated between surplus and deficit over the previous five years. The US is by far the most important external export market for EU firms, accounting for nearly 20 per cent. of exports. In 1997, direct investment flows from the US to the EU amounted to $24 billion. The US is the most important source of external investment into the EU, accounting for over 50 per cent. of the total. In 1997, EU investment flows to the US were worth $42 billion, with the US accounting for over 40 per cent. of total EU direct investment overseas.

Those figures demonstrate the depth and significance of the relationship between the EU and the US, but the bilateral relationship is not the only reason why the EU and the US matter so much in the world trading system. Together, the EU and US are the twin pillars of that world trade system, and co-operate to advance our many shared interests in world trade, some which have been expressed by the hon. Member for Tweeddale, Ettrick and Lauderdale.

All in all, it is important to bear it in mind that the vast majority of that trade and investment between the EU and the US takes place freely and without any difficulty whatsoever. Although there are a number of important disputes, it is vital to keep those in their proper context, and to ensure that the relatively few—although admittedly important—disagreements do not colour the nature of the relationship as a whole.

The transatlantic economic partnership was negotiated under the UK presidency of the EU last year, and agreed at the EU-US summit in London in May 1998. The TEP builds on an already strong transatlantic trading relationship. It provides a range of opportunities to improve the bilateral trade relationship between the EU and the US. It provides also a formal opportunity for an on-going dialogue to remove trade frictions and build confidence between the EU and the US. In addition to bilateral benefits, it provides a means of maintaining open markets and promoting the expansion of trade through the continued development and strengthening of the multilateral trade system.

The bilateral aspects of the TEP include substantial elements relating to services, where there is an opportunity for addressing sector-specific obstacles, and to agriculture, environment, food safety and biotechnology, with an agreement to establish proper dialogues to provide a system of early warning for potential disputes in each of those areas. Although those initiatives are at an early stage, they are important and we must build on them.

On electronic commerce, there will be further dialogue to ensure the elimination of unnecessary legal and regulatory barriers and the continued duty-free treatment of electronic transmissions. The TEP deals also with technical barriers to trade, and there is agreement to identify and implement jointly defined general principles for effective regulatory co-operation and to extend the current mutual recognition agreements to new sectors.

The issue highlighted by the hon. Member for Tweeddale, Ettrick and Lauderdale is the banana dispute, which is faced by the UK, along with many other EU member states. Acting through the European Commission, we have made a great effort to seek a solution to the banana dispute through the World Trade Organisation. I say again to the House—emphasising what my right hon. Friend the Secretary of State for Trade and Industry said on 4 March—that we view the US action of withholding liquidation on a range of EU products as deplorable. That action was completely unauthorised by the WTO and ignored the WTO arbitrator's appeal for discussions to continue without premature action. We have raised our objections at the highest levels. Only last week, my right hon. Friend the Secretary of State for Scotland lobbied the US Administration and the US Congress during his visit to Washington.

It is particularly unfortunate that the US action is directed against industries that are in no way connected with bananas. That is the source of the irritation that most people feel on this issue. There can be no justification for inflicting great damage on small, vulnerable businesses and communities, as the hon. Member for Tweeddale, Ettrick and Lauderdale pointed out. The US action has already stalled American orders for Scottish cashmere, and there is a real threat of job losses in the textile-dependent borders region. Of course, it is not only cashmere that is affected; biscuits, batteries, plastics, packaging, candles—to which the hon. Gentleman referred—bed linen and many other products are also on the US list.

Although the US argued that its higher tariffs will not apply until the WTO arbitrator rules and it is granted authorisation by the WTO, the effect of its action of 3 March is the same as if the higher duties were in place now. In view of the highly seasonal nature of the cashmere industry, where a high proportion of the industry's annual orders are being placed now for delivery later in the year, the Government announced that we would implement a scheme to guarantee the bonds requested by US customs in respect of cashmere knitwear.

I am pleased that the announcement was warmly welcomed by the industry and hon. Members on all sides of the House and, later in the debate, my hon. Friend the Minister for Trade will give details of the way in which we shall implement that commitment. The hon. Member for Tweeddale, Ettrick and Lauderdale sought clarification on that, and I pleased to say that my hon. Friend will provide that.

Even now, it is not too late for the US to reverse its decision on retaliation in the interests not only of the EU-US relationship but to safeguard the WTO. Recognising the importance of resolving this dispute and of safeguarding the WTO' s dispute settlement system, the Government are, first, fully committed to implementing the WTO panel and arbitration outcomes, whatever they may be, without delay.

Photo of Mr Archy Kirkwood Mr Archy Kirkwood Chair, Social Security Committee

Does the Minister understand that there is an opportunity between now and the dispute resolution panel's finding being published on 12 April to seek an accommodation between the United States and the European Union that would be acceptable to all parties, and that would be the end of the matter? Are the Government using every capable power that they have to hand to obtain for the EU a sufficient mandate to enable a deal to be struck with the US before 12 April?

Photo of Henry McLeish Henry McLeish Minister for Home Affairs and Devolution, Scottish Office

I am pleased to give the hon. Gentleman that reassurance. I think that everything that can be done is being done by the Government to bring this matter to a conclusion. Clearly, we await the arbiter at the end of the process. There is then a meeting of the panel, and 12 April is a pretty important day. In the meantime, every conceivable step is being taken because of the importance of the issue not only to the cashmere industry, but to the principles that lie behind what is happening. Obviously, we expect our EU partners and the United States to take the same approach. We are hoping that, in the United Kingdom and elsewhere, there will be positive moves to try to resolve the matter.

We are encouraging the European Commission to discuss options with the US. For example, the WTO lays down that compensation is a preferable alternative to retaliation. If the WTO rules against the EU, compensation would be preferable in this, as in other cases.

I assure the House that we are also very concerned to safeguard the interests of traditional African, Caribbean and Pacific banana suppliers. Both the United Kingdom and the EU have long-standing political and legal obligations, which we shall respect. The UK also remains fully committed to safeguarding the WTO's dispute settlement system, and we shall do all that we can to make it work effectively.

Photo of Gwyneth Dunwoody Gwyneth Dunwoody Labour, Crewe and Nantwich

Could my hon. Friend get over a fairly straightforward message to our American cousins, which is that, if they wipe out the one-crop export from very poor Caribbean islands, the people on those islands will certainly grow other products? In the end, the United States will be the recipient of those various products. If that is not so, the Caribbean islands may very well act as gathering points for other people's drugs. If that is a message that cannot be understood, will my hon. Friend please try to put it in simple terms or picture language, or something, that will get over to our American cousins what they are doing?

Photo of Henry McLeish Henry McLeish Minister for Home Affairs and Devolution, Scottish Office

I am grateful to my hon. Friend's contribution. I can reassure her that what she says is being done by my hon. Friend the Minister for Trade day in and day out, given the implications of what is happening. It is important also to acknowledge the importance of bananas to the countries that we are talking about. They are part of the wider and complicated matters with which we are dealing. I can reassure my hon. Friend that every step will be taken in a straightforward way to impress on the United States the importance of the matter being resolved.

I was talking about the WTO's dispute settlement system. It has already served us well, for example, in opening Japan's market to Scotch whisky, and it will continue to do so in future.

The European Union's ban on hormone-treated meat has been in place for more than 10 years. In 1998, the WTO found that the EU ban was inconsistent with WTO rules because it did not follow from a properly conducted risk assessment based on science. The EU was given until 13 May 1999 to comply with the ruling. It now seems that the EU will not meet that deadline.

The rules of the WTO require that trade measures put in place to protect human, animal and plant health must have a sound scientific basis. Governments can and do apply restrictions to protect their consumers, but they must be in line with international standards or justified by a risk assessment where they are more stringent than international standards. If those rules were not in place, countries could impose restrictions simply designed to protect their own domestic industries, but disguised as consumer protection measures.

We are encouraging the Commission to explore constructive solutions with the US and Canada, particularly ideas on labelling, and temporary compensation to avoid further escalation of the hormones dispute into a damaging trade war. I hope that those discussions will find a way forward in this dispute.

The hon. Member for Tweeddale, Ettrick and Lauderdale raised the issue of sustainable development, to which the Government are committed. All Governments need to consider their trade and environmental policies together. Protecting the environment and maintaining an open, non-discriminatory and equitable multilateral trading system are essential to achieve our objective of sustainable development. There are many effective, internationally recognised measures which aim to protect the global environment. There is more to be done, however, although significant progress has been made in the past 20 years or so with a number of multilateral environmental agreements. Liberalising trade helps to ensure that resources are used efficiently; it helps generate the wealth necessary for development and environmental improvement, and it encourages the spread of clean technology.

The world trade system should not be undermined. To do so would put at risk our aim of achieving sustainable development. That in turn would, of course, have negative environmental impacts.

It is clear that trade and environmental policies must accommodate each other to be fully effective. They are less in conflict than some might claim, but that does not mean that potential conflicts do not exist. Governments have a duty to balance the objectives of protecting the environment and of upholding the multilateral trading system, whether they are negotiating in a trade forum or an environment forum. It is therefore for parties to both existing and new agreements to ensure individually and collectively that they do not sign up to conflicting requirements. At the most recent WTO ministerial meeting in Geneva, my right hon. Friend the Prime Minister said: Governments need to consider the environmental impact of everything they do, including in the trade sphere. Trade rules should not be used to impose unfair standards on developing countries, nor to discriminate against their exports. I shall make some brief points about comprehensive multilateral trade negotiations. This is a welcome and timely opportunity to say something about the Government support for a comprehensive round of trade negotiations, which will be launched at the WTO ministerial conference in Seattle at the end of the year. The Seattle ministerial will be the third ministerial conference. The first meeting in Singapore in December 1996 put in place a work programme on new issues such as investment, competition, procurement and trade facilitation. The second meeting in Geneva last May agreed the process of preparation for Seattle. The UK believes that a comprehensive round would allow all countries, including developing countries, to secure an overall package that would reflect their broad interest, largely because of political impetus and because it would allow trade-offs across a range of areas.

Some have questioned the wisdom of pushing ahead with trade liberalisation proposals at a time of difficulties in the global economy. Trade policy was not the cause of the Asia crisis, nor does it provide a complete solution. However, it can help the world on the road to recovery. Freer trade has brought substantial gains to the global economy in the post-war era. Most recently, the Uruguay round brought a significant boost to world trade and incomes. One of the key lessons from the 1930s is that a protectionist response to a global crisis makes matters much worse. So far, there has been relatively little protectionist backlash. However, there are some signs of growing pressures, especially in the US. It is therefore essential that momentum for further liberalisation is maintained. That is why—I repeat the reassurance—the UK and the EU have pledged to resist protectionism, and are at the forefront of efforts to secure a new round of multilateral trade negotiations.

Photo of Terry Rooney Terry Rooney Labour, Bradford North

The House may know that the largest cashmere manufacturer in Britain is in my constituency. Part of the settlement under the Uruguay round was that British textile goods sent from the United Kingdom to the United States carried a 37 per cent. tariff, reducing by 1 per cent. a year over 10 years. Can we have that issue on the agenda at the Seattle conference at the end of the year? It is not free trade, but protectionism.

Photo of Henry McLeish Henry McLeish Minister for Home Affairs and Devolution, Scottish Office

The first priority is to resolve the outstanding issues that we face in that regard. I think that my hon. Friend acknowledges that. I am sure that my hon. Friend the Minister for Trade has acknowledged my hon. Friend's contribution and that he will make some reference to it in terms of the agenda for the next round in Seattle later this year.

I shall identify briefly some of the subjects that are particularly important to the UK. They include further tariff reductions, reducing the burden on business and barriers to trade represented by industrial standards and technical regulations, opening up Government procurement markets in third countries, simplifying import and export procedures, seeking substantial progressive reductions in support and protection for agriculture and developing better regimes to cover issues such as food safety, deepening and broadening the liberalisation of trade and services and establishing a liberal rules-based framework for international investment. Those are all issues that are very important for the UK and, of course, for the EU.

The Government are conscious of the fact that not all WTO members support a comprehensive round: many are more focused on market access than on new rules issues, and others stress the need to stick only to those negotiations to which we are already committed—those on agriculture and services. President Clinton's recent signal, in his state of the union address, of support for a new round was a welcome development.

It is too early to say what package will emerge from the ministerial conference this year. Discussions in Geneva have so far been necessarily general, in order to avoid pre-negotiation. As with all issues in the WTO, decisions on the scope and shape of those negotiations will be taken on the basis of consensus.

New issues, including new work on the environment, are likely to be the most difficult in the new round. Developing countries in particular are saying that those issues are not ready for substantive negotiation. Although we must be realistic about what is achievable in the circumstances and within the time constraints, we see value in such issues being included.

Clearly, there will be a strong focus on agriculture. The WTO negotiations will put added pressure on EU common agricultural policy reform. Agriculture liberalists are making it clear that they will want major liberalisation of tariffs, quotas and export subsidies. That is an important issue for developing countries.

Concerns are being expressed in Geneva about the implementation of existing agreements. A more coherent focus will be needed on technical assistance and capacity building. That is not, of course, for the WTO alone—the United Nations conference on trade and development, the World bank and the International Monetary Fund will have a part to play.

Developing countries make up the majority of the membership. Decisions in the WTO must be taken by consensus, and there is every sign that developing countries will articulate a clear agenda of their own interests, including implementation issues, anti-dumping rules, textiles liberalisation and agriculture. They will not be silent partners. The UK is doing all that it can to encourage their active participation. That is vital. Trade liberalisation is, of course, essential for economic growth, development and raising living standards.

Photo of Jim Wallace Jim Wallace Liberal Democrat, Orkney and Shetland

Hon. Members in all parts of the House would agree with much that the Minister has said. He acknowledged that my hon. Friend the Member for Tweeddale, Ettrick and Lauderdale (Mr. Moore) was constructive in the way in which he moved the motion and gave credit to the Government where it was due. Is there anything in the motion that the Minister finds objectionable? If not, would it not be better for the House to speak with one voice?

Photo of Henry McLeish Henry McLeish Minister for Home Affairs and Devolution, Scottish Office

It is always a pity to undermine consensus by making a thought-provoking suggestion to a Minister at the Dispatch Box. I am in a mood, in a jocular way, to resist the hon. Gentleman's invitation. [HON. MEMBERS: "Why?"] We will find out later. I am sure that my hon. Friend the Minister for Trade will continue in our easy-going style at the Dispatch Box.

In summary, we are clear that free trade has never meant a free-for-all. That is always a danger. There is plenty of scope for reflecting particular concerns about health and so on in any country's actions. However, a system of international rules must have objective reference points. That is why it is important to rely on scientific justifications, to avoid a free-for-all.

The WTO has the difficult task of balancing the interests of all its members, which are at different stages of development. That fact, together with concerns about access to third-country markets on a non-discriminatory basis and the ability of member countries to develop and improve living standards, will influence the future as it has the past.

The subject is complex. I hope that, in the House, we can co-operate to ensure that we move quickly to resolve the issues globally and for the communities that each of us represents in the United Kingdom.

Photo of Christopher Chope Christopher Chope Conservative, Christchurch 7:53 pm, 22nd March 1999

This is indeed an important debate. We heard interesting contributions from the hon. Member for Tweeddale, Ettrick and Lauderdale (Mr. Moore), who introduced the debate, and from the Minister.

Global free trade must be in our economic and political interest. We as a nation have more to lose from protectionism and trade wars than the Americans or most of the continental Europeans. As we have heard, there are innocent victims in any trade war.

I was disappointed that the Minister did not say what would happen after 12 April. If the World Trade Organisation rules against the revised EU regime, what will be the approach of the EU and of the British Government? If the WTO rules in favour of the retaliatory action that the United States said it will undertake, what will be the approach of the EU and of the Government? I was worried when the Minister seemed to imply that compensation was a better option than compliance. Surely, if we are to make the WTO rules work, we should look for compliance before we look for compensation.

The Government have not taken the matter as seriously as they should have done, certainly in the earlier stages. When, on 23 February, my hon. Friend the Member for Woodspring (Dr. Fox), who speaks for the Conservatives on constitutional affairs, asked what contacts the Government had made directly with counterparts in the United States, and what contacts the Prime Minister had made with President Clinton on this serious subject, he was effectively told that there had been no contact at all.

We know that the Prime Minister is prepared to talk turkey with the President of the United States on issues affecting the President's personal life. It is a pity that the Prime Minister has not used his working relationship with the President to pursue the United Kingdom case in this important trade dispute. It was not until 4 March that the Secretary of State for Trade and Industry did anything.

Some Liberal Democrat Members have tended to simplify the issue. It is simplistic to say, as the right hon. and learned Member for North-East Fife (Mr. Campbell) did, that United States companies have 78 per cent. of the European banana market, compared with the Caribbean's 9 per cent, and that none of the bananas about which there is a dispute are actually grown in the United States", but where does that take us in the context of global trading rules?

In opening the debate, the hon. Member for Tweeddale, Ettrick and Lauderdale called the United States an international bully-boy engaged in macho diplomacy. Such comments are hardly designed to improve relations. I agree with the hon. Gentleman that the WTO must be respected. As the Under-Secretary of State for Scotland, the hon. Member for Western Isles (Mr. Macdonald), said, The European Union banana regime is designed to comply with the World Trade Organisation regulations while honouring our commitments to those countries in Africa, the Pacific and the Caribbean with which we have relations through the Lomé agreement. We stand by those commitments.—[Official Report, 23 February 1999; Vol. 326, c. 162–63.] It has been common ground among British Ministers both before and since the change of Government that the commitment to traditional ACP suppliers, as confirmed in the current Lomé convention, should be honoured, but there has always been a recognition that there might be different mechanisms for honouring that commitment.

As we know, the dispute goes back many years. Under the new WTO regime, unanimity is required for the report of a disputes panel to be overruled. The ruling of a disputes panel cannot be ignored. The WTO can justify retaliatory action against a country against which a ruling has been made. That is the problem facing us.

The WTO disputes panel reported as long ago as May 1997 its finding that the EU's banana import regime violated free trade rules on 19 counts. Significantly, as emphasised at the time by the Financial Times and other newspapers, the report did not target EU tariff preferences for Caribbean banana-producing countries, but focused on the EU licensing regime. The proportion of bananas that are coming from the Caribbean countries is irrelevant. The US and the WTO have accepted the tariff preferences that the EU has in place for the Caribbean banana producers.

In May 1997 the WTO panel ruling was confirmed, and in September 1997 it was confirmed on appeal. The EU was required to make its banana regime compatible with WTO rules by 1 January this year—quite a long period in which to do so. On 26 September 1997 the EU announced that it accepted the WTO ruling. It is important to remember that. As the then Minister of Agriculture, Fisheries and Food said, We have obligations under the WTO. We must find ways of revising the EU arrangements so that they conform with the rules. The issue is whether that has been done.

We have not heard anything about the consumer, but the World bank estimates that the EU banana regime is costing consumers $2 billion a year and, that for every dollar, only 7.5 cents goes to the benefit of the former colonial producing countries. Going for a compensatory rather than a compliant regime would, I fear, result in the burden on the consumer becoming even greater.

In June 1998, a deal was agreed in the Council of Ministers. It was announced to the House on 3 July by the Minister of State, Ministry of Agriculture, Fisheries and Food. The United States and five Latin American countries argued that the EU' s changes were merely cosmetic and that the WTO should reopen its disputes panel on that issue. The United States announced its intention to impose duties on products exported from Europe, arguing that that was justified under the WTO rules. The EU argued that the matter should be referred again to a disputes panel, to determine whether the revised EU regime was incompatible with those rules. As we know, in January 1999 Ecuador called for a disputes panel to rule on the compatibility of the revised regime.

The United States agreed not to impose duties before 3 March and the EU went to the WTO arbitrator for a ruling on whether the level of retaliation proposed by the United States was appropriate. We know that 12 April is decision day and we will find out then whether the revised EU banana regime is compatible with WTO rules, but we do not know what will be the reaction of the EU, or of the Government, to any findings which emerge. More information has been asked for and, I understand, is being provided, but, from a United Kingdom perspective, it is important to realise that those Caribbean arrangements are not the issue of dispute.

It is also worth reminding individuals in the United Kingdom who are caught up in the dispute—not least those people in the cashmere industry in Scotland—that two European countries, Denmark and the Netherlands, voted against the revised banana regime in summer 1998. As a result, they have earned themselves exclusion from the list of retaliatory duties proposed by the United States. If the Government had done likewise, the threat to the Scottish cashmere industry would never have materialised. Perhaps the Minister will respond to that point.

Photo of Mr Bowen Wells Mr Bowen Wells Conservative, Hertford and Stortford

Does my hon. Friend know why the Netherlands and Denmark voted against the regime? The reason, if I may suggest it to him, is that the subsidiaries of Chiquita, which distribute central American bananas, have the entire Danish and Dutch markets to themselves.

Photo of Christopher Chope Christopher Chope Conservative, Christchurch

My hon. Friend implies that there is something unjust about a large number of bananas being produced for market by three United States-controlled companies. I have to disagree with him if he is implying that there is something inherently unfair about that; in itself, it is not against the WTO rules. This dispute is not about those particular companies. My hon. Friend suggests that the behaviour of two other members of the EU is wholly motivated by their connections with those companies. Although I understand his concerns on that point, I certainly would not jump to such a conclusion without clear evidence.

Photo of Mrs Maria Fyfe Mrs Maria Fyfe Labour, Glasgow Maryhill

The hon. Gentleman is displaying a great deal of interesting expertise. Does he know the typical daily wage of a worker on a plantation owned by Chiquita and of a worker on a Fair Trade plantation in any of the relevant nations? I am concerned about knitwear workers in the borders and other workers in this country, but, like many people in this country and in the United States, I am also concerned about fair pay for people who grow the bananas in the first place.

Photo of Christopher Chope Christopher Chope Conservative, Christchurch

I fear that the hon. Lady's intervention is depressing, because it shows that Labour Members are willing to engage in irrelevancies in the context of a world trade dispute. How much people are paid to produce bananas in any particular country is not the issue in dispute, and the WTO rulings do not take it into account at all.

Photo of Stephen Dorrell Stephen Dorrell Conservative, Charnwood

Did not the hon. Member for Glasgow, Maryhill (Mrs. Fyfe) reveal a split between herself and her Front Benchers? We heard an impassioned plea for free trade from the Minister, but the hon. Lady seems to be in favour of free trade only where she is in favour of the wages paid by the producers.

Photo of Christopher Chope Christopher Chope Conservative, Christchurch

My right hon. Friend is absolutely right; one either believes in global free trade or one does not. Disputes will arise if any individual nation starts to interpret global free trade on the basis of whether it thinks that trade is fair from its perspective. That is why we have the WTO, which has—

Photo of Christopher Chope Christopher Chope Conservative, Christchurch

I shall not give way any more; I will make my point.

Photo of Christopher Chope Christopher Chope Conservative, Christchurch

I am not needled in the least. I am sure that Labour Members will want to ask Ministers why their views have not been reflected. Conservative Members have always been somewhat suspicious about the commitment of some hon. Members to global free trade; I hope that the Minister will reaffirm that the Government are unequivocally in favour of it.

Photo of Henry McLeish Henry McLeish Minister for Home Affairs and Devolution, Scottish Office

It is interesting to see how the consensus in the House is breaking down. The costs of employing people in third-world countries have been dismissed as "irrelevancies". If that is official Conservative policy, let us have it on the record. The hon. Gentleman referred to "those people" in the cashmere industry. They are workers with families and commitments and they want their products to be exported. Are costs in the third world irrelevant and is he dismissing the concerns of people in the borders, the east midlands and elsewhere as the concerns of "those people"? That would be outrageous; he should make clear what he means.

Photo of Christopher Chope Christopher Chope Conservative, Christchurch

I am glad that I gave way to the Minister, because he has had the opportunity to try to wriggle on the issue of what will happen on 12 April. What will be the response of the EU and of the Government when the ruling comes? We have made it clear all along that we sympathise with people in the cashmere industry, who are the innocent victims of this trade dispute, but what will be done on 12 April to ensure that the cashmere industry is able to survive in the way that it has under the regime of free world trade?

The wages that people receive for producing goods in different parts of the world is not a world trade issue. I hope, as a lot of Labour Members may hope, that one of the outcomes of the Seattle meeting in November this year will be that China becomes a member of the WTO, which would be good for global free trade. We cannot emphasise enough the fact that we in this country depend more than the Americans and the European continentals on the concept of global free trade, which means that people should be able sell their labour in the marketplace and market their goods without facing unfair tariff barriers.

World free trade is in the best interests of the third world and the developing countries. It is a shame that the EU and the United States cannot negotiate a deal on bananas, but it is also unfair to put the blame for that failure largely on the Americans, as Liberal Democrat Members seem to be doing. If one looks at the facts, one can see that the Americans have complied with past WTO rulings.

I understand that this is the first occasion on which a WTO member that has lost a case has failed to eliminate its measures altogether or to change them after consultations with the complaining parties. The United States has made such changes in three cases, but the EU is the first WTO member to fail to do so. That was the response of the United States representative.

Photo of Michael Moore Michael Moore Shadow Spokesperson (Scotland)

The hon. Gentleman has been at pains to characterise some of the Liberal Democrat arguments as simplistic. Are we to believe that the fault in this whole dispute relates entirely to Europe, and that the Americans are for some reason devoid of responsibility?

As for simplistic arguments, surely it is utterly simplistic to suggest that American multinationals should have carte blanche to do what they wish in world trade, with no regard for the fairness of that trade or the way in which the work forces are protected.

Photo of Christopher Chope Christopher Chope Conservative, Christchurch

I do not suggest that the Americans are without fault. Certainly, they were offside in introducing a retaliatory regime while the issue was still before the World Trade Organisation; we have never advanced a contradictory view. I think we are naive, however, if we do not understand some of the frustration that is felt in the United States about the long time that it has taken to resolve the matter in the European Union. There was a ruling in its favour back in May 1997; now, in March 1999, it hopes that the issue will be resolved. Meanwhile, the European Union seems to have been delaying the issue. I hope that it will not delay further beyond 12 April, and that, notwithstanding the demise of the European Commission, there is a clear policy, worked out on a contingency basis, for an immediate response to the rulings that will be made on 12 April. If not, it is a serious matter.

Photo of Dr Norman Godman Dr Norman Godman Labour, Greenock and Inverclyde

The hon. Gentleman is right: we should not engage in a blanket condemnation of the Americans. May I point out that the American labour movement is actively engaged in a campaign to improve the terms and conditions of employment of those employed by American multinationals in central and south America, and elsewhere?

Photo of Christopher Chope Christopher Chope Conservative, Christchurch

I thank the hon. Gentleman for pointing that out.

I have responded to a number of interventions. Let me now deal with the next issue on the horizon—the issue of hormone-treated beef, to which the Minister has referred. He told us, in a very matter-of-fact way, that he does not expect the European Union to comply with the World Trade Organisation ruling, which it must by 13 May, but he did not say why the EU would not comply with the ruling by that date. Is it surprising, in the light of that behaviour, that Richard Rominger, United States Deputy Agriculture Secretary, announced on Friday that the United States was drawing up a list of products that could face retaliatory sanctions if the EU failed to comply with the ruling? He is at pains to avoid such sanctions, but he has come to Europe seeking meetings with European Commission representatives, and, according to newspaper reports, has been told that it is not even possible to see officials at Cabinet level, let alone Commissioners, to discuss the crisis relating to hormone-treated beef. Moreover, only last week two European Commissioners missed a biotech conference at which they were to share a platform with Mr. Rominger.

That shows, on the part of the European Union, a disdain for the importance of world trade issues. I hope that the Minister will be able to assure the House that the Government are putting all possible pressure on the European Union to pull its finger out and get to grips with these important matters.

Another issue on the horizon—not mentioned in the motion—is that of hushkits. The EU is scheduled to put into effect, on 29 March, a law freezing the use of the aeroplane mufflers called hushkits, under which companies would be forbidden to add hushkitted aeroplanes to their fleets. A meeting is due to take place on 23 March between the United States Transportation Secretary and the European Union Transport Commissioner. It seems likely that the dispute will exacerbate the issue of EU-US trade, and it appears to be related very much to European Union protectionism. The only people who produce the hushkits are the Americans, and for the most part it is American airlines that use them. The European Union is saying that an arbitrary interpretation is being placed on an International Civil Aviation Organisation agreement, which seems to be being used to prevent the import and use of hushkits in the EU. That is another potential disaster for global trade. I hope that, as a Brit, the Commissioner responsible will realise that it would be counter-productive to proceed in the way proposed by the EU.

I shall end my speech now, so that others can speak, but I look forward to hearing the Minister's response. The Government have clearly recognised the importance of the debate, given that they have asked two Ministers to speak.

Photo of Stuart Bell Stuart Bell Second Church Estates Commissioner 8:16 pm, 22nd March 1999

I agree with the hon. Member for Christchurch (Mr. Chope): this is an important debate. The issue of hushkits is also important, but I shall leave it to the Minister to respond to a pertinent question put by the hon. Gentleman, which was also touched on by the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood): what will happen on 12 April?

If, on 3 March, the arbitrator had come forward with a resolution of the dispute between the United States and the European Union on whether the new regime conformed with WTO rules, or had made it clear that he had fixed the amount of compensation in some other way, it might not have been necessary for all this to happen. It might not have been necessary to withhold the liquidation of entries for products such as cashmere. What will happen on 12 April? The United States has taken its action because it believes that it will be given a compensatory amount in damages of some $500 million—possibly $520 million.

That being the case, what will be the EU's response? Will it accept that the amount should be paid by the EU overall in compensation, after which the withholding of liquidation of entries on the products that we are discussing will disappear? The question is pertinent; we shall have to await the outcome. The United States has clearly stated that it will accept any arbitration result. If the arbitration favours the US, it will accept that; if it favours the European Union, and the EU has followed WTO rules in relation to bananas, it will accept that, as is proper.

The House moves through many moods. Not long ago—two weeks ago, perhaps—we were all deriding the European Commission, and applauding the fact that all the Commissioners had resigned en bloc. We were all calling them incompetent. Now, we are having to try to defend the way in which they have handled a dispute with the United States that goes back for at least six years, as the hon. Member for Roxburgh and Berwickshire said.

When we speak of the United States, there is a point that we often overlook. The Minister touched on it when he said that 38 per cent. of world exports come from America, and that 39 per cent. of imports go into America. America remains the largest trading nation in the world. It is also self-sufficient. If it ever decided that free trade was not the policy that it wished to follow, the rest of the world would go bust. We ought to bear that in mind, and be grateful for the fact that the United States follows free trade policies. In January this year, it had a $17 billion deficit on its trade. It took in other countries' washing to the tune of $17 billion against its own exports.

We in the European Union vaunt ourselves because we have a surplus on our exports, rather than a deficit. The largest bilateral trade deficit that the United States has is with China—$4.88 billion, up from $3.98 billion.

The hon. Member for Christchurch mentioned China's involvement with the WTO, and hoped that it would happen in the autumn, when the Seattle conference would take place. It is a pious hope that China will be able to come into the WTO at that time, but I do not think that it is ready as a nation state to meet the obligations placed on it because of the WTO' s free trade and fair trade rules.

My hon. Friend the Member for Bradford, North (Mr. Rooney) talked of the Uruguay round and its impact on textiles. For 12 years, we all followed the route of the Uruguay round—it went from Uruguay to Marrakesh—before the agreement was signed. The question of the entire Uruguay round was: how can free trade in the world be rules based? That touches on the point that was made by my hon. Friends the Members for Glasgow, Maryhill (Mrs. Fyfe) and for Greenock and Inverclyde (Dr. Godman). There have to be rules not only on trade through the WTO, but on labour through the International Labour Organisation.

There has to be free and fair trade for goods and services. There have to be rules under the International Labour Organisation. There have to be financial rules through the World bank and International Monetary Fund, which my right hon. Friend the Chancellor of the Exchequer is trying to bring about, but there cannot be free and fair trade in the world unless it is based on rules. In that sense, the hon. Member for Christchurch is right. It is a dispute about rules and about the interpretation of rules. It is important that we keep that fact in mind.

The issue of the African, Caribbean and Pacific countries and the European Union has been raised. The so-called Lomé convention is being renegotiated. In a few months, the 10-year agreement on issues such as bananas will come to an end. It is time for a renegotiation.

Photo of Dr Norman Godman Dr Norman Godman Labour, Greenock and Inverclyde

What my hon. Friend says makes much sense, but may I point out that many of the small producers in the Windward islands, for example, are deeply concerned about the massive lobbying power that Chiquita and others have on Capitol hill? The Caribbean producers feel at a distinct disadvantage because of that massive lobbying campaign.

Photo of Stuart Bell Stuart Bell Second Church Estates Commissioner

Of course. We have heard much tonight about the various brands—Chiquita and the rest. I am grateful to my hon. Friend for reminding me of the situation in the Windward islands of Dominica, St. Lucia and St. Vincent, where bananas provide over half all export earnings. In St. Lucia, for example, the industry contributes about 16 per cent of GDP. In St. Vincent and Dominica, the figure is 17 per cent. Notwithstanding that, over the past year, production in St. Lucia has dropped by 7 per cent. because of drought and poor prices.

I take up the point about the African, Caribbean and Pacific countries and the negotiation with the EU. It may be an appropriate time for the two sides in the convention to design a specific and long-term aid package for banana growers that reconciles the need of those producers to continue to export to the EU, and ensures that agreement is reached between the United States and the EU on the implementation of WTO rulings. We come back to the rulings and to resolution of the dispute on bananas.

When we talk about the conclusion of the Uruguay round, I am reminded of the terrible difficulty that the EU had with the United States in resolving agricultural issues. There was a conference at Blair House in Washington in the United States. There were huge demonstrations in Paris by French agriculture workers and farmers, yet the issue was resolved in such a way that the Uruguay round could be signed. As we come up to 12 April, it is important for the EU and United States to resolve the issue of bananas in such a way that we can continue with our rules-based trade and with the type of conference that is to be held in Seattle, to which the Minister for Home Affairs and Devolution, Scottish Office referred.

It is interesting and significant that the United States declined to enter into a new Uruguay-type round. It wished to tie up all the fine pieces of string that had been left lying around after the Uruguay round. In the end, it agreed that there should be a new comprehensive round that took into account trade, the environment and other issues.

Therefore, the United States is making an effort in that area. That effort should be welcomed and commended, but this is the beginning of a series of major trade disputes. The question of beef hormones has been referred to. I understood from the hon. Member for Tweeddale, Ettrick and Lauderdale (Mr. Moore) that genetically modified foods might be raised by the hon. Member for Lewes (Mr. Baker) before the evening is out. All that is significant and important. It means that the rules of the WTO become even more important.

The President of the United States has received telephone calls from the Prime Minister on the issue. The Secretary of State for Trade and Industry has made his views known. The Minister for Home Affairs and Devolution, Scottish Office has done so, and so will my hon. Friend the Minister for Trade, but I agree with the recent statement by the President of the United States: This dispute is not really about bananas, it is about rules.We cannot maintain an open trading system which is essential to global prosperity unless we also have rules that are abided by". As I have said, in terms of finance, the rules should be through the World bank and the International Monetary Fund. In terms of workers, they should be through the International Labour Organisation.

If we can develop those rules over time, the world can look forward to the next millennium with some confidence that the disputes can be resolved for the benefit of all. There is no question that we should let the banana producers in the Caribbean go to the wall. When he was the Minister of Agriculture, Fisheries and Food, my right hon. Friend the Member for Copeland (Dr. Cunningham) made it clear in a statement in October 1997 that we would not do so. We have their interests at heart. We will seek to maintain their interests. We will do it within the compass of the WTO and the Lomé convention. We will do it in such a way that their interests are defended and protected, but world trade rules are supported.

Photo of Vincent Cable Vincent Cable Shadow Spokesperson (Trade and Industry) 8:27 pm, 22nd March 1999

It is a great pleasure to speak in support of the excellent speech by my hon. Friend the Member for Tweeddale, Ettrick and Lauderdale (Mr. Moore). I do so from two standpoints. One is a constituency interest and the other is a long-standing interest in trade policy, particularly the current dispute, which has rumbled on in different forms for the best part of a quarter of a century.

The constituency issue is not textiles, unless it is well concealed in Twickenham. Other industries are affected. One in particular, the sweet biscuit industry, touches base in south-west London. I have heard from the companies concerned about the problem, but the major issue is the fundamental one of principle that underlies the whole subject: the idea of the rule of law applied to international trade.

We should not underestimate the achievements of the early 1990s when the Uruguay round produced a dispute settlement agreement under the WTO. For the best part of 40 or 50 years, there had been semi-anarchy in international trade, with disputes being settled largely by force. Now we have a system of law. Independent panels apply the rule of law principle, which is of value, above all, to small and weak countries.

There have already been several examples of the system's value. In cases brought by Costa Rica, which is a very small country, and by Venezuela, the United States has been obliged, for example, to accept rulings based on the principles by which the World Trade Organisation disputes settlement panels operate. We should be concerned with upholding that principle. Both the major powers involved in the current dispute, in roughly equal measure, have done violence to that principle.

I do not think that it is helpful for us to be picking sides between the United States and the European Union. In their different ways, they have each added to the dispute and aggravated it. The United States has, for example, acted unilaterally, and the current case is not an isolated example. For a very long time, the United States has fallen into the habit of acting unilaterally and without warning in trade disputes. Throughout the 1980s, it used the so-called section 301 powers to bully countries into opening their markets.

The US's behaviour has been curbed somewhat by the World Trade Organisation, but its habits are still there. The US Congress has passed the Helms-Burton and D'Amato legislation, which are all about using power unilaterally to force other countries to open their markets. Its habits are now returning.

The European Union also has had serious faults. Although the hon. Member for Christchurch (Mr. Chope) was at the receiving end of some barracking in doing so, he was quite right in how he catalogued the way in which the dispute has evolved, and the fact that, for the best part of two years, the European Union has dragged its feet in implementing an international legal agreement.

There is a feeling—I am sure that some hon. Members will echo it in the debate—of some sympathy for the European Union, which is acting in the interests not of its own producers, but of producers somewhere else. However, we have to get the issue in balance. In many ways, I have some emotional sympathy for the Caribbean producers. In the 1980s, I worked for some time in the Commonwealth Secretariat and helped in negotiating the Lomé convention, and I saw the force of feeling in the Windward islands about the vulnerability of their economies. However, I do not think that we should be over-sentimental about the issue, as there is another side to it.

The main banana producer in Latin America is Ecuador. Producers in Ecuador are not in large multinational plantations; they are small-scale peasant producers. Honduras is another major Latin American producer. It has just been devastated by a hurricane, in which the northern city of San Pedro Sul, the banana capital of Honduras, was virtually destroyed. They are very poor people who are trying to earn a living in the world market. They, too, have legitimate interests.

I think that the European Union has been seriously negligent in not appreciating sooner the problem that has been building, and has been around for a very long time. In the mid-1970s, I worked for some time in the diplomatic service, in London, and the section that I headed dealt with Latin America. We were perpetually on the receiving end of missives from the Ecuadorian and other Governments complaining about the dollar-area quota, which discriminated against them. The reply that we always gave was that it was a temporary measure.

The British Government—the Colonial Office—had invested a lot of money in the Windward islands, and, having given them that aid, we could not abandon them. That was 25 years ago. Consequently, we went out to the Caribbean islands and talked to people at St. Lucia, Dominica, St. Vincent and the other producing islands, and agreed with them that they had to diversify. That was a quarter of a century ago.

Photo of Stephen Dorrell Stephen Dorrell Conservative, Charnwood

I have been listening with great care to the hon. Gentleman's comments; he is making a powerful case very well. His point on the alleged temporariness of protectionist controls is not unique to bananas, as the argument is used to justify almost every protectionist measure that is introduced. The "temporary" nature of the controls almost always proves to be much longer than people imply at the time.

Photo of Vincent Cable Vincent Cable Shadow Spokesperson (Trade and Industry)

The right hon. Gentleman is quite right—protectionism always generates its own vested interests. Although, as I said, the European Union has an important historical reason for wanting to be protective, it could have, and should have, thought much earlier about the need to switch quotas to tariffs, for example, and gradually to level out the tariffs. Those issues were discussed more than a decade ago, but no action was taken on them.

It is important to stress that the British Government have a particular responsibility in the current dispute, as they are in a uniquely advantageous position to influence the outcome. Britain is generally recognised, both within the European Union and outside it, to be a relatively free-trading country. We also have the confidence of the United States, in a way in which most other European Union countries do not. We also have an historic responsibility for the Caribbean islands. Combining the three factors, it is an issue on which the British Government should be giving leadership. Although the Minister for Trade made sympathetic noises, I feel that such leadership has, so far, been absent from the dispute.

The Minister was quite right to put the dispute in its wider context. If the dispute is not dealt with quickly and properly, we are on a conveyor belt to a very serious international trade conflict. Other disputes are brewing. Only the other day, the House of Representatives passed very serious protectionist measures on steel, and many other measures are coming. The old principle applied by Jacques Delors in the context of the European Union applies also in the current context: trade is like a bicycle, we have to keep pedalling or fall off.

Truly proactive action has to be taken to keep the trading system open and free of disputes and discrimination. That is why I strongly support current initiatives to launch another round of trade negotiations. That is partly to clear up some of the backlog of problems from the past, notably the limited progress on agriculture, but it is also to introduce new and difficult ideas. For example, international monopolies now apply not just in the banana trade, but in software and the media. The competition policies of individual countries are hopelessly inadequate and often incompatible. We need a global competition regime to manage the situation.

We have also seen an initially commendable effort to eliminate discrimination on foreign investment collapse pitifully in the Organisation for Economic Co-operation and Development, because it did not have full participation from all developing countries. The system has collapsed as a fiasco, and the World Trade Organisation has to take it on.

As the hon. Member for Middlesbrough (Mr. Bell) and others have said, another key issue is bringing into the World Trade Organisation key countries such as China and perhaps Russia, which are currently outside it. Probably the most difficult issue, to which my hon. Friend the Member for Lewes (Mr. Baker) intends to refer, is the very tricky problem of reconciling different health and sanitation standards. We know from our experience of the single market in Europe that that is not easy. Either standards have to be harmonised or there has to be mutual recognition of standards; both involve a surrender of sovereignty, which is difficult, but there will be great friction unless the issue is dealt with.

Unless the problem that we are facing is dealt with properly and quickly, it could destroy the rule of law in international trade, which has been carefully built up. I appeal to the Government, partly on behalf of the industries that have been affected, but also on behalf of a wider constituency, to act proactively and positively for a resolution to the dispute.

Photo of Alan Simpson Alan Simpson Labour, Nottingham South 8:36 pm, 22nd March 1999

I have listened with amusement and sadness to the way in which the debate has unfolded. It reminded me of the parallels with a recently released film called "This Year's Love" which has had wonderful reviews. It is a film with Kathy Burke about a series of disastrous relationships, in which people hop in and out of bed with each other to no purpose and pursue ultimately futile and unsatisfying relationships into their common and individual disasters. The current obsession—this year's love for free trade—is embodied in the Uruguay GATT agreement that we have signed up to. We should take the fundamental issues that underpin the disputes about this agreement more seriously.

The Liberal Democrats' motion is sunk by the fact that it is based on the oxymoron of free and fair trade. There is nothing fair about free trade and there is precious little free about it. It is worth reflecting on the state of the world markets in some of the commodities that have been mentioned: three global corporations control 80 per cent. of world trade in bananas; three companies control 83 per cent. of world trade in cocoa; five companies control 77 per cent. of world trade in cereals; and fewer than 10 companies control 94 per cent. of the market in agrochemicals.

A corporate agenda of trade is increasingly overriding any notions of free trade. The powerful preside over the global economy. There is precious little that the weak or those with a commitment to social equity can do to redress the imbalance when the rules are governed by such powerful vested interests.

History will judge the Uruguay round either as a corporate charter or—perhaps more appropriately—as a crooks' charter. It allows for the serious undermining of lines of democratic accountability within and between democratic states, in terms of what suits the needs of their citizens and the framework of internationalism that they wish to pursue. To those who say that the Uruguay round was a wonderful achievement that opened up world trade, it is worth reflecting on a comment from the World Wide Fund for Nature, which said: the current pattern of trade and investment liberalisation has been accompanied by a worsening of all unsustainable trends—greenhouse gas emissions, deforestation, biodiversity loss—as well as growing inequality, both within and between nations. What follows is not only huge social undermining, but huge social protest.

Against all measures of sustainability, the regime has failed lamentably to have made the world a better place. It is driving us recklessly towards the illiberal, the irresponsible and the unsustainable. The disputes that we are addressing tonight deal with which corporations happen to control the biggest slice of today's markets; markets which themselves are riven by overcapacity, inequality and insecurity. The human and environmental casualties in the process simply do not matter. It is merely a matter of which corporate giants have their way today in relationships that they will abandon tomorrow.

The dispute strikes at the core of big questions that we must address about democracy and sustainability. The banana dispute is not about the shape or size of bananas, and it was a travesty for it to be misrepresented in that way when the dispute between the European Union and the United States emerged. It is about the right of countries to act individually or collectively to protect those who live and work in vulnerable economies.

Some think that free trade will bring the best of all worlds to all people. Anyone who has looked at the vulnerable Caribbean banana-growing economies knows that, if the US has its way and the dollar bananas dominate the whole market, those economies will be virtually destroyed.

It is tongue-in-cheek for the Conservatives to sing the praises of such free trade, because they never want to accept the consequences of it. When an economy is devastated by having all the rules removed, the only thing that can be guaranteed is what the UN consistently warns us about—that destroying the basis of sustainable economies in any one part of the world will mean that the people who live there flee in search of somewhere to survive.

It always amuses me to hear rallying cries about the free movement of capital, but when we have to deal with the consequences—the free movement of labour which goes in search of survival—the first thing that we hear, particularly from the Conservatives, is, "Not to our shores. These are just economic migrants. Let them fend for themselves somewhere else." Yet, time after time, we have been the ones who have removed the barriers that allowed those people to have sustainable economies and gave them a breathing space within which they could produce a sense of diversity. Those who want to take away the trade barriers also want to throw up higher and higher human barriers against the floodtide of refugees that those policies create.

Photo of Mr Bowen Wells Mr Bowen Wells Conservative, Hertford and Stortford

If the small Caribbean islands cannot export bananas, the islanders' only other way of earning a living is to grow drugs, which they are increasingly doing because of the dispute. Is that a desirable outcome?

Photo of Alan Simpson Alan Simpson Labour, Nottingham South

No, but it is a predictable outcome. Susan George, a social scientist, wrote in "The Debt Boomerang" about the way in which the poorest nations repay us in kind for all the damage that we do. We shift those countries from sustainable subsistence agricultures to industries that destroy the lives of many in our own northern industrial towns and cities. The hon. Gentleman is right to caution us about the hidden consequences of going recklessly down that path.

There is also a massive threat to democracy. Why should the United States threaten a trade war over banana regimes? The United States does not grow bananas, but it may well be a relevant factor that Carl Lindner, the head of Chiquita, just happens to be one of the biggest bankrollers of the American political process. Post-Uruguay, the corporate view is that one can expect the best democratic decisions that one is prepared to pay for. At every level of governance, corporations are increasingly insinuating themselves into the channels of democratic decision making, subverting accountability to the electorate and establishing a financial line of accountability to the corporation.

The history of Monsanto's interests in bovine somatotropin milk and genetically modified crops is littered with the company buying its way into public policy decisions in its favour. Last week, evidence was published to show that the science on BST milk is wretched, the politics corrupt and the consequences for human and environmental health potentially devastating. Monsanto faces a ruling either from us or from the European Union collectively that says that we are deeply unhappy about removing the ban on BST milk, because of the damage to livestock and the potential damage to human beings.

There are public movements against genetically modified crops. When Monsanto threatens to take us and the EU to the World Trade Organisation in pursuit of the free trade rights that it claims, it overlooks the fact that it has systematically sought to hide from politicians and the public the downside of all the magic science that it is sailing past us.

Monsanto has failed even to conduct the necessary broader-based research on environmental damage. It wants the right to pursue new monopolies in monocultures that it controls and that will be fundamentally self-destructive. It is an irony that, in the pursuit of free trade rights, Monsanto does not happily own up to the fact that it is invoking the part of the Uruguay agreement that gave it closed markets: the TRIPS agreements on trade in intellectual property rights. Those agreements allow the company to take out patents on the crops that it modifies and, in some parts of the developing world, it slaps patents on crops that it has found. Its rights to patent life are attempts to remove from common ownership things that we have had since civilisation has existed. The company also seeks to take away rights from democratically elected Governments to protect the diversity of their environments and adequately to protect the health needs of their citizens.

If Monsanto obtains the rights to introduce the terminator technology as part of any WTO ruling, it will have the right not only to take ownership of life itself, but to take out a patent on death. The company says that it has encountered no problems in its experiments in the United States, but one should look at the vast acreage of GM crops on the prairies of Arizona where, apart from the Monsanto crops, the land is sterile. It has been soaked in the company's herbicide. It does not have a weed problem because nothing else can grow. When Monsanto is asked about the impact of its actions on biodiversity, its representatives throw up their hands and say that it is not an issue for them.

The company has manipulated the rules of the vetting agencies in a way that is technically brilliant, but ethically corrupt and degrading for humanity. We have to be prepared to make a stand against that. We easily forget, in this country and in Europe, that there is no public demand for GM foods and no agricultural need for them. The GM process has been driven past the advisory committees on the basis that it is the science that will save humanity, but it is the science that will turn bad research into huge corporate profits at huge social cost.

As a Parliament, we have been slow to catch up with the public's understanding of the issue. They know, in ways that we are only beginning to acknowledge, that Monsanto's claims about safety are bogus. The public know now that Monsanto's research on milk was fiddled. They know that the inclusion of GM soya with the rest of the soya crop was the result of calculated efforts by Monsanto to discover whether the public would buy GM produce if it were clearly identified. The company knew that the public would not do so, and it manipulated the regulatory regime in the USA so that it did not have to meet the obligation to identify it. The environmental damage falls outside the terms of the monitoring agencies in the USA.

As we debate the relationship between Britain, Europe, the USA and the World Trade Organisation, we must understand that people have given up waiting for a parliamentary lead. There are good reasons for that: we have a 200-year history of the public taking food safety disputes into our own hands. It was about 200 years ago when the first of Britain's food riots was caused by the adulteration of food. Farmers adulterated flour with sawdust and supplied the flour as part of the workers' wages. The riots were about whether anyone had the right to adulterate food in that way and I say with some pride that that was the momentum behind the Rochdale co-operative. The people wanted to be able to provide food that was safe for themselves and their children to eat. The same is happening now in the riots in India.

The "Cremate Monsanto" campaign is not waiting for a Government lead before burning the fields of GM crops that it does not want. The campaign is led by farmers and villagers who foresee the destruction of biodiversity in pursuit of corporate greed. It is echoed by the coalition of developing world countries who, at the Cartagena biosafety convention, said that they wanted the right to say no to such produce in order to protect their biodiversity.

Any international trade agreement that fails to deal with workers' rights or environmental and food sustainability will not be worth adhering to. Social movements in France and Canada are attempting to take direct action to challenge the corporate rights assumed by today's global giants.

When I talked to my family about this problem, it was lovely to discover that my mother had been a food freedom fighter during my childhood. She put me in a shopping trolley when we went around supermarkets when there was a food scare about Argentinean corned beef. My mother insisted that nothing should cross the front line of her fully loaded trolley that might poison her children, and she was absolutely right.

We should bear in mind the public movements staking similar claims in relation to genetically modified foods in today's supermarkets. If the United States of America and the food corporations are to threaten us with a trade war and World Trade Organisation rulings that define our actions as illegal, we must reply that the British public would probably deem a trade war to feed safe food to ourselves and our children a war worth fighting.

Those who want to open up the market without ethical or safety constraints are backing a horse that the public will not bet on. Rulings may go in their favour, but, if Monsanto and the USA win the right to dump unsafe foods in United Kingdom markets, we can overrule that right with a civic right to dump those products in the sea or leave them stockpiled at supermarket check-outs. We can assert our right not to buy something that we believe to be endangering our health, the environmental viability of our country and the international sustainability of relationships in vulnerable economies.

The challenge before us is not whether we vote for or against the Liberal Democrat motion, which contains a huge contradiction. We must support a call for a new round of trade rules that are not driven by freetrade fundamentalism. The Government must face the challenge of whether we are prepared to make different statements about the importance of the Seattle meeting.

We must say that today's free trade rules are self-destructive and unsupportable. They must be replaced by a set of global and sustainable policies that protect vulnerable environments. They must set down terms and conditions for employment rights and pay. There must be a right not to be saturation-sprayed while on the Chiquita banana plantations or anywhere else. Are we to have a set of trade rules that are ethically driven and environmentally sustainable? I have no doubt that the public in the UK, across Europe and internationally already want that. The question is: does the House have the courage to join them?

Photo of Mr Bowen Wells Mr Bowen Wells Conservative, Hertford and Stortford 8:59 pm, 22nd March 1999

I shall briefly remind the House of the history of the banana dispute. In 1947, the islands of the Caribbean were given the exclusive right to export bananas to the United Kingdom. That right was given in compensation for the fact that, during and before the second world war, the European nations, including our own, had been subsidising the production of sugar beet.

Sugar beet is not an efficient convertor of sunlight into sugar. In fact, it has one tenth the efficiency of sugar cane. We wanted to produce sugar beet to make us more self-sufficient in sugar, rather than simply relying on cane production, principally from the West Indies but also from other Commonwealth nations. Similarly, sugar beet was also introduced in the United States of America. In both Europe and north America, sugar beet production was severely subsidised to enable it to compete in the market against sugar cane imports and, in the United States, against sugar cane production. Sugar beet is still heavily subsidised in Europe, the United States and most developed countries. As a result, sugar cane production was reduced or eliminated from many Caribbean islands.

In 1947, the then Labour Government were faced with trying to find some way in which the Caribbean islands could earn their own living. At the time, we did not have much money to give them—there was no aid budget available. As Michael Foot, luminary of this House, reminded me, the Government gave Britain's banana market to the Caribbean to enable the islands to grow bananas and diversify—we have heard that word already this evening—out of sugar.

That is why bananas became a major export of Caribbean islands that are undoubtedly, geographically and topographically, unsuited to their production. In contradistinction to central America, the land in the islands is mountainous. The soil is not the deep soil that the central American banana producers enjoy. In the Caribbean islands, bananas are produced by small farms in precipitous and inhospitable conditions. None the less, farmers there have managed to work the system and the plantations, many of which are as small as two or three acres, to produce a viable industry.

Importantly, the production of four tiny islands was combined and a shipment of bananas left the Leeward and Windward islands every week. In recent years, other diversified tropical products have been shipped on the same boats to be consumed in this country by West Indians and others who enjoy tropical fruits and vegetables. Unfortunately for the West Indies, without the banana trade the cost of transporting the other products would be prohibitive.

Therefore, in our arguments on the subject when we call for diversification, we must ask what the islands can diversify into. The answer is that, without bananas, they cannot hope to compete on any tropical vegetable or fruit with other major and efficient producers from the tropical countries of the world. The House should understand that the Caribbean islands can diversify their agriculture, but at a price.

Therefore, blocked as they are from coming to this or other countries to work, the islanders have to turn to something else, and that is undoubtedly happening. Perhaps you will be lucky enough, Mr. Deputy Speaker, to go on a Commonwealth Parliamentary Association trip to one of the islands. In St. Vincent in particular, there are empty banana fields because banana production has decreased by 50 per cent. Fields of marijuana are being destroyed by US helicopters with the permission of the Prime Minister. Let there be no doubt in the House that Caribbean farmers have no alternative other than to grow drugs if this ridiculous dispute continues.

I shall quickly remind the House of what the dispute is about. The banana protocol is protected by World Trade Organisation rules under waiver. Section 34 permits arrangements to be made, for poor developing counties, for preferential trade that is offensive to WTO rules under section 1. The banana protocol is protected in that way and the United States does not dispute that. However, that protection will last only until 2000, when regimes such as the banana protocol of the Lomé convention will have to be renegotiated.

The dispute is not over the protocol, but over the proposed banana framework agreement that the European Union now accepts was offensive to WTO rules. It was the hope of the EU that central America would agree, because only an extremely small percentage—less than 3 per cent. and falling—of the whole banana market in the EU enjoys the preferential arrangements given to the Caribbean, and in terms of the world banana trade, the percentage is less than 1 per cent. Incidentally, that trade is dominated—by more than 90 per cent.—by Chiquita, Dole and Del Monte. Those companies are in dispute with those tiny islands so that they can dominate the whole EU market, and they are making a huge trade war out of that dispute.

I do not want to go into the complicated details on which the WTO will opine in April. I appeal for sense and pragmatism to prevail. I give way to no one in my support for free trade, but free trade must be tempered with sensible arrangements for countries such as those small Caribbean countries for which special arrangements must be made. The alternatives are wholly unacceptable. I ask to the Government negotiators to appeal to the United States on the matter; indeed, I have asked the Prime Minister and the Secretary of State for International Development to intervene with President Clinton to call off this absurd trade war, which should not continue among sensible and pragmatic people.

Photo of Barbara Follett Barbara Follett Labour, Stevenage 9:07 pm, 22nd March 1999

I welcome the opportunity to speak in the debate, although I deplore the necessity for doing so. The United States is a giant on the world trading stage and it is a pity, to say the least, that the United States should be taking retaliatory action against another giant, the European Union, for giving a few of the poorest Afro-Caribbean countries preferential access to our markets for a single crop—bananas.

I must declare an interest. I was born in the Caribbean and spent most of my early life in Africa. The disputed bananas come from struggling countries in those two regions and, from personal experience, I know how important it is to the people of those regions that what for many of them is their sole export crop should have access to our markets. For the tiny Windward islands of Dominica, St. Lucia and St. Vincent, bananas provide more than 70 per cent. of foreign exchange earnings and 60 per cent. of agricultural employment. As the hon. Member for Hertford and Stortford (Mr. Wells) has so eloquently described, the banana trade is the lifeblood of those islands.

Unlike the hon. Member for Christchurch (Mr. Chope), I do not think that it is simplistic to point out that Caribbean bananas account for only 3 per cent. of the world market and only 10 per cent. of the European market. That point makes it clear that we are arguing about crumbs from the giant's table. If that giant cared about the development of his fellow human beings, he would be glad to allow them those crumbs.

As the hon. Member for Tweeddale, Ettrick and Lauderdale (Mr. Moore) pointed out, the world banana market is dominated by three companies—Chiquita, Dole and Del Monte—whose turnover accounts for more than 64 per cent. of world trade, whereas the total earnings of the Afro-Caribbean countries from bananas accounts for only 4 per cent. of the turnover of those three huge companies. My hon. Friend the Member for Glasgow, Maryhill (Mrs. Fyfe) pointed out that working conditions in those three companies cannot be described as fair. I am aware that the problem is difficult and that there is no prescription for fair trading rules, but we must bear that in mind when we consider the merits of the case.

Chiquita—formerly known as the United Brand Company and, before that, as the United Fruit Company—dominated my teenage years and my 20s. The company came into existence in 1899, since when it has completely dominated banana production in the United States, Europe and Japan. It made an attempt to take over banana production in Jamaica in the 1930s. It is controlled by the American Finance Company and its assets total $25 billion. It has little to fear from tiny family farms of the Windward islands, where wage costs are higher and the terrain and climate less friendly. In the Windward islands, an estimated 27,000 producers scratch out a living on farms of less than five acres each. Such producers can never compete on equal terms with the vast plantations on the flat and friendly terrain of south America—they simply do not have the economies of scale.

When giants fall out, it is always the small people and the small countries that suffer; in this case, those are the African and Caribbean banana producers and the cashmere producers of Scotland. As the EU Trade Commissioner Sir Leon Brittan said, the United States has acted in an "unacceptable and unlawful fashion". It has violated the rules of the WTO's disputes procedure. As hon. Members have pointed out, that establishes a dangerous precedent, which could extend to the 10-year long dispute between the EU and the USA over hormone-treated milk, or to the potentially explosive issue of genetically modified crops and food.

The United States has displayed a singular lack of interest in the needs of the people of the developing world, where, as my hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody) and the hon. Member for Hertford and Stortford pointed out, the consequences of the Americans' actions could be diversification into the sort of crops that could harm the youth of the United States far more than the sale of Caribbean bananas at a preferential tariff to the EU could harm Chiquita, Dole and Del Monte. I hope that the Americans bear that in mind in the coming round of world trade talks, which hold out the hope of a solution to the problem.

I welcome what my right hon. Friend the Secretary of State for International Development is doing to promote diversification in Caribbean countries, but, as the hon. Member for Hertford and Stortford pointed out, that is not as easy as it sounds. In fact, it is extraordinarily difficult to achieve within the trading blocs of today's world. In the next millennium, we must do all that we can to solve such problems and ensure that everyone in the world gets a fair share of the world's trade. That is our task and the task that today faces the two giants—the USA and the EU.

Photo of Norman Baker Norman Baker Shadow Spokesperson (Business, Enterprise and Regulatory Reform), Shadow Spokesperson (Culture, Media and Sport), Shadow Spokesperson (Culture, Media and Sport) 9:14 pm, 22nd March 1999

I shall curtail my comments to allow other hon. Members to speak. As a result, my speech will be slightly less balanced that it would otherwise have been— [HoN. MEMBERS: "Oh, no."] Believe it or not, it is true.

The issue is not whether the rules have been interpreted properly—although that is a cogent argument, which has been advanced by the hon. Member for Middlesbrough (Mr. Bell) and other hon. Members—but whether the rules are right. In my view, the rules are not right because there is inherent conflict between the World Trade Organisation rules and the convention on biological diversity.

The World Trade Organisation is a powerful organisation with rules that can be enforced, but the environmental arm of international agreements is not so powerful and cannot be enforced. The biosafety protocol negotiations broke down because, as theFinancial Times reported: The US has warned that hundreds of billions of dollars of agricultural trade could be at stake in a controversial international agreement on the safety of genetically modified organisms". Although the Americans were not a party to the agreement, it got Canada to scupper it for them. The consequences of the World Trade Organisation being more powerful than the CBD are significant.

I draw the attention of the House to what can happen if one multinational company seeks to abuse its position in the international market in order to cajole its friends in power to use the WTO to maximum effect. As the hon. Member for Nottingham, South (Mr. Simpson) said, that is what has happened with Monsanto. The company does not have a proud record. We have had problems with bananas and knitwear, but, as someone at the WTO meeting I attended said, GMOs will make bananas look like peanuts. We will have to address GMOs and bovine somatotropin further down the line. It is not simply about bananas, but about what we will do in the future. If we do not resolve this dispute properly, we will sell the pass. We will have not free trade, but trade on the terms of a small number of multinational companies that happen to be in a position to influence trade arrangements.

Is the system free and fair? No, it is not—Monsanto and other companies are making sure of that. Monsanto has said that we must accept BST. However, an independent European Union veterinary investigation was undertaken by Professor Donald Broom, who said that the drug should remain banned because claims for its safety are flawed. He said: There is too much mastitis, leg disorders, reproductive disorders and injection site problems—and this is not a medicine, this is a substance that doesn't have to be used, and we think it shouldn't be used. Those are the views of professionals in the European Union. Whatever happened to the precautionary principle?

The fact is that the World Trade Organisation does not take sufficient account of the environment and trade. Both those elements must be considered when the Government renegotiate the rules of the World Trade Organisation in Seattle later this year. I want the Government to confirm tonight that they will seek to include environmental, social and animal welfare issues in the discussions and will give them proper status within the WTO rules. We cannot enforce the rules regarding the shrimp-turtle case or leg-hold traps and, as it stands at present, WTO means "welfare taken out".

Monsanto has made itself public enemy No. 1. It has bulldozed elected Governments across the world and forced its wretched products on to the world's population, whether we want them or not. Monsanto must be brought urgently under democratic control. If the WTO rules permit such activities, they are wrong and must be changed. If we are not careful, Monsanto will become the bad news story of the 21st century. The company must be stopped.

Monsanto has deliberately refused to segregate GM and non-GM crops in order to deny consumer choice—something to which all hon. Members are committed. Monsanto also wishes to introduce GM crops, regardless of the possible environmental consequences. We know from the Advisory Committee on Releases to the Environment, other Government advisory bodies and the EU that there are significant environmental concerns about GM crops. Monsanto does not want to wait: it wants to steamroller those crops through and give us no alternative. When the crops are planted and problems arise, Monsanto will say, "Never mind, let's deal with it now."

The company wants to undermine alternative sources of non-GM crops. It is trying to stop us buying non-GM soya from Brazil by buying up Brazil and halting alternative supplies from that country. Monsanto is the antithesis of democracy. It is not worried about labelling; it is trying to persuade us that it is not necessary and that it is somehow a barrier to free trade. What nonsense. We are entitled to know what we are buying. To be fair, the Government have accepted that. They have always been committed to labelling. Monsanto does not want labelling: it wants its products to carry as little information as possible. It knows that if its products are labelled accurately—and they are not, because most GM material is not labelled under the present regulations—people will not buy them, and it does not want that.

Monsanto has been forcing crops into India and on to the developing countries of the third world. It has intimidated farmers in the United States by hiring private investigators and then fining farmers when a Monsanto seed is found in their soil.

In this country, Monsanto has been condemned by the Advertising Standards Authority, which found it guilty of making wrong … unproven, misleading and confusing claims in a £1 million campaign.

How does Monsanto manage to do all that? It uses the revolving door policy, and makes sure that personnel from Monsanto and Government agency advisory bodies frequently switch positions. Marcia Hale, the former adviser to the US President, is now the director of international government affairs for the Monsanto corporation. Michael Kantnor, the former secretary to the US Department of Commerce is now a member of the Monsanto corporation board. Josh King, the former director of production for White House events, is now the director of global communications for the Monsanto corporation. Margaret Miller, the former chemical laboratory supervisor for Monsanto, is now the deputy director of the new animal drug evaluation office in the US Food and Drug Administration. We have seen confidential European Union documents that have been passed to Monsanto by Dr. Nick Weber of the FDA, and a former Monsanto analyst.

Monsanto is abusing and twisting the system and getting from it as much as it can. It is getting the Food and Drug Administration on board and it is getting the US to fight its corner. I am in favour of free trade and the World Trade Organisation, but I am not in favour of one company so using its muscle and contriving matters for its own ends that the opportunity for consumer choice and Government decisions by democratic bodies is effectively removed.

Dan Verakis, the public relations manager for Monsanto in the UK, has said, "Everybody here hates us." I have to tell Monsanto that I hate it. It is the antithesis of democracy and it needs to be stopped.

Photo of Phil Woolas Phil Woolas Labour, Oldham East and Saddleworth 9:21 pm, 22nd March 1999

I am grateful for the opportunity to speak in this important debate. I congratulate the hon. Member for Tweeddale, Ettrick and Lauderdale (Mr. Moore) on raising this issue and giving us all an opportunity not only to express the concerns of the UK cashmere industry and others, but to have a fascinating debate about world trade and its future prospects.

I disagree with everything that the hon. Member for Christchurch (Mr. Chope) said in his speech, but particularly his earlier remarks. I say that not to win the sycophant of the week competition—I note that the diary sketchwriters are not with us this evening, perhaps because this is an important debate—but because the hon. Gentleman criticised the Government for their alleged inaction until the statement of 4 March. The work of the clothing and textiles all-party group has brought me into contact with employers, trade unions and hon. Members from both sides of the House. Since before Christmas, the industry has been supporting the Government in their actions and saying how well they have been doing, given the huge obstacles that they face. Those points were made by hon. Members from all parties in an Adjournment debate raised by the hon. Member for Tiverton and Honiton (Mrs. Browning).

The speech of the hon. Member for Christchurch contained a paradox in his tendency to attack the European Union for whatever it does and his wish to stand up for British industry. He is trapped in a cleft stick because he realises that, if he attacks the EU, his constituents will think that he supports the United States in this dispute. This debate has helpfully brought into the public domain the relationship between our industry and the EU on the one hand and the broader context of the US and the World Trade Organisation on the other.

I agree that the pay of workers in the developing world is not only a moral issue for Labour and Liberal Democrat Members, which the hon. Member for Christchurch dismissed it as being, but a part of world trade negotiations. The multi-fibre arrangement is, in part, premised on considerations of pay rates in China, north Africa and the Indian sub-continent. These issues are very important when considering the future of talks.

Photo of Denis MacShane Denis MacShane Labour, Rotherham

Is it not significant that the motion does not refer to social issues such as pay? It refers to environmental and animal welfare objectives and international biodiversity agreements". Those objectives and agreements are very important, but the motion exposes the extent to which the Liberal Democrats are divorced from the real life conditions of working people in this country and throughout the world.

Photo of Phil Woolas Phil Woolas Labour, Oldham East and Saddleworth

I agree with my hon. Friend but, to be fair, his point does not negate the points that are set out in the motion, as I think he would admit.

Another interesting feature of the contribution of the hon. Member for Christchurch was his failure to recognise our responsibility to our Commonwealth partners. The responsibility which France and we in the United Kingdom recognise to our partners in the Caribbean and Africa has, in part, led to the dispute.

The cashmere industry—I highlight also the threat to the unembroidered cotton industry, which concerns Lancashire in particular—faces a vicious attack. I believe that the Americans knew full well the seasonal nature of the cashmere industry not only in marketing, but in buying and shipping. The position is made worse by the knowledge that if, as is happening, we lose this trade, it will go to China, which is the only other significant producer of cashmere in the world. It will be extremely difficult to get that business back.

It is worth pointing out on behalf of the United Kingdom clothing and textile industry that, if cashmere were not under attack, it could be Nottingham lace, Savile Row suits or Axminster. It could be any of the high-skilled, value-added sectors in the clothing industry on which that industry's future depends.

In this context, it is a very good thing that we are members of the European Union. Without the protection of that trade bloc, that single market, we would be vulnerable to the United States. I hope that no one will draw the conclusion from this trade dispute that membership of the EU is anything other than a good thing.

I shall conclude my remarks by drawing the attention of the House to one particularly important line in the motion. It sets out the fear that the dispute could be, or is, a precursor to future world disputes. However, since the beginning of the banana dispute, there has been a change, in that between the European Union and the United States we have two roughly equal trading blocs. I urge on the Government the importance of recognising the danger of mutually assured destruction between the two blocs.

Photo of Stephen Dorrell Stephen Dorrell Conservative, Charnwood 9:28 pm, 22nd March 1999

I shall not detain the House for longer than a couple of minutes. I begin by declaring an interest as a director of, and shareholder in, a clothing company that is not directly involved in the dispute that we are discussing. However, like virtually all modern clothing companies, it is actively involved in international trade.

This is an important debate. It has been occasioned by bananas and by the implications for the banana trade in the Caribbean and for our domestic cashmere industry of the actions that the Americans have taken as a result of the dispute. The significant point that the House should draw from the circumstances in which we find ourselves is the central importance, not only to the United Kingdom and other countries in Europe, but to poorer countries throughout the rest of the world, of following through the progressive liberalisation of trade that we have seen over the past half-century, since the end of the second world war.

The real debate this evening has been fascinating. It is the one that has taken place among the occupants of the Government Front Bench, my hon. Friend the Member for Christchurch (Mr. Chope) on the Opposition Front Bench and at least some Liberal Democrat Members. Liberal Democrats have argued the case for progressive liberalisation, while the forces that I think those on the Government Front Bench would recognise as old Labour, who are ranged behind them—at least they were—are still instinctively seeking to control, or to plan to safeguard, very proper concerns. Of course we are all anxious for living standards to be improved. Of course we should all be concerned to protect biodiversity and the environment.

Surely the history of the development of trade over the past half-century should persuade us that the best way of improving people's living standards, and of providing resources for reinvestment in the environment and other desirable social policy objectives—the best way of underwriting the improvement not only of standards of living, but of quality of life—is to create the wealth that allows those options to be open. The progressive liberalisation of trade makes that possible.

I agree wholeheartedly with the hon. Members for Middlesbrough (Mr. Bell) and for Twickenham (Dr. Cable) that the great gain that we have made in recent years is a decisive move towards rules-based trade. That is why the UK, every other member state of the European Union and the United States share essential national interests in strengthening rules-based trade, and in respecting judgments when they are handed down by the World Trade Organisation—the organisation that we have jointly set up to deliver that generality in the particular.

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.

Photo of Ian Gibson Ian Gibson Labour, Norwich North

Scare tactics by the Liberals.

Photo of Mr David Chidgey Mr David Chidgey Shadow Spokesperson (Business, Innovation and Skills), Shadow Spokesperson (Foreign and Commonwealth Affairs)

I see that some genetically modified Members have entered the Chamber, but perhaps we can keep them under control until the end of the debate.

It cannot be right for America to use WTO rules against trade discrimination to force those products on to the European market; our farmers are banned by law from competing with such products. We are faced with growing conflict between regulation of biodiversity in environmental science and commercial exploitation of modified food. There is a conflict between harnessing the benefits of science, maintaining public safety and reassuring public opinion. It is clear that present international structures for regulating trade and the environment are not able to respond adequately to those new environmental and social challenges.

The World Trade Organisation's rules are designed to be flexible and not prescriptive, but fears are growing that the WTO seems to be incapable of enforcing its own rules, and that could prove to be a fatal flaw. If countries feel that the WTO does not work, more and more will be tempted to bypass and ignore it. The major trading powers—America and the European Union—will be tempted to act unilaterally. Already, there are worrying signs that America is negotiating a bilateral trade agreement with China, shutting the door on the European Union and on established convention.

We are in danger of losing a predictable and fair rules-based system under the WTO, and gaining instead arbitrary arrangements based on power. That can lead only to more protection, more trade wars and, eventually, trade anarchy, which would inevitably stifle any response to the global, environmental and social challenges that we face. We must change the WTO's commitment to untrammelled, purist free trade to embrace the wider goals of achieving a sensible balance between free, fair and sustainable trade. We need to build mechanisms to resolve free trade and environmental arrangements—mechanisms that simply do not exist at present.

If anything, the process is moving into reverse. The collapse of the recent talks in Colombia, aimed at establishing a biosafety protocol, is a serious setback. The implications for trade, the environment and food safety are of major concern. It is now becoming clear that America and Canada are attempting to present us with a fait accompli on genetically modified organisms, first, by overriding legitimate concerns in the European Union about the environmental health aspects of genetically modified crops and food products and, secondly, by preventing consumer choice through the segregation of supplies and comprehensive labelling.

Even more alarming is the stance taken by the United States and Colombia that rules to protect the environment must be subordinate to trade rules. That will only heighten fears that trade liberalisation and environmental protection are mutually incompatible—and there is a real fear that the United States will try to overcome EU resistance to GMOs by using WTO dispute processes.

There is clearly a political conflict between the rights and obligations of the WTO and those arising from multilateral environmental agreements. It is vital for all WTO members to reach binding understandings, both political and legal, that will ensure that the trade provisions of the MEAs are accommodated within WTO rules.

This is where our Government must take a leading role. I am disappointed that their amendment merely "notes the current position". We could have done that before we started; what we want is a commitment, and some action. It is simply not good enough to "note the current position"; nor are the signals being sent by the Prime Minister—signals that he supports the American position—good enough. He appears to be backing the Americans' multi-billion-dollar GM commercial and industrial interests. I hope that he is not, but that is the signal that is sent.

The Government are failing to give a clear lead in suggesting that, while tremendous benefits can be gained from the science of genetic modification, it must be regulated and controlled in the interests of public health and the environment. As a result, we see shock-horror tabloid headlines, and widely conflicting claims about the supposed danger, or benefits, of GM technology. What is needed now is a breathing space for rational public debate. We need to find a sensible way of proceeding that will command widespread public support.

The Government should ask the royal commission on environmental pollution to look at all the evidence. It examined the issues in 1989, and is well placed to produce a balanced and authoritative review in the shortest possible time. The Government must also take the lead internationally. They must stand firm with our partners in the European Union, and must use their influence with the United States Government to reduce the possibility of a trade versus environment conflict. They must step up efforts to reform the WTO to ensure compatibility with multinational environmental agreements and compliance with the aims of free, fair and sustainable trade.

Photo of Mr Brian Wilson Mr Brian Wilson Minister of State, Department of Trade and Industry 9:45 pm, 22nd March 1999

It is something of a cliché to say that we have had an excellent debate, but, more than usually, it is accurate. There have been some extremely well-informed contributions from hon. Members on both sides of the House. It has been an evening of serious speeches on serious matters.

It is an unusual debate in a sense. It involves some extremely localised issues, which I am obviously expected to—and will seek to—address, but I do not want that to take away from the fact that it also involves global issues and important questions that affect every country and every citizen of this country. I congratulate the Liberal Democrats on raising the matter as a subject for debate.

I welcome the degree of common ground in the House. There has been recognition of the problems, but, as my hon. Friend the Member for Middlesbrough (Mr. Bell) pointed out, there has also been recognition of the scale and importance of the European Union-United States trade relationship. Although there are a number of problems in that relationship, we bear it firmly in mind that such disagreements are the exceptions to the rule and that the vast majority of trade and investment between the EU and United States takes place without difficulty. It is in no one's interest to upset that arrangement unduly. Let us address the problems, but keep a sense of perspective.

Much remains to be done to develop the bilateral relationship and to identify further common objectives for the multilateral trade system, so we must work urgently to enhance the dialogue for better management of disputes that develop between us. That is necessary not only for the better handling of individual disputes, but to avoid those relatively few disagreements that are colouring the wider relationship at such a crucial time for world trade.

I do not want to discuss the merits of the banana dispute. I will follow my advice to the Americans and to anyone else who will listen—await the outcome of the WTO panel arbitration process, which we expect to come to a head by 12 April—so it is not for me to get into the merits of the case tonight and to beat the drum about who is right and who is wrong in the banana dispute. That will not be productive. As the hon. Member for Hertford and Stortford (Mr. Wells) pointed out in his interesting and well-informed speech, the dispute has been going on for more than 50 years, so it is improbable that we will sort it out tonight with another dose of rhetoric.

Having said that, there can be no avoiding the reality that the action that the United States announced on 3 March was wrong. Irrespective of the merits of the dispute, that can be said because it took the resolution of the dispute outside the procedures of the WTO. As many Members recognise—I have had contact with them over the past few months on the issue—it must be resolved quickly, without causing serious harm to many unrelated industries, particularly cashmere knitwear. That statement lies outside the issue of bananas. First, it is wrong to act before the WTO procedures come to a conclusion. Secondly, it is wrong to take action against unrelated products. I can make both those statements categorically without going into the merits of the dispute itself.

I come to the passage of my speech that will be of particular interest to hon. Members on both sides of the House who represent areas with cashmere interests. On 4 March, the Secretary of State for Trade and Industry announced to the House that he would put in place arrangements to guarantee bonds paid in respect of exports of cashmere knitwear to the United States. I am delighted to be able to announce the details of that scheme.

The scheme will be operated by the Export Credits Guarantee Department. The guarantee will indemnify exporters of United Kingdom-manufactured cashmere knitwear against losses on exports to the United States as a result of conditions arising from the unilateral action of the United States. The scheme will apply to those contracts placed before midnight on the date of the World Trade Organisation panel rulings on the European Union banana regime—expected to be on or before 12 April—under which delivery to the United States is due to be made by 30 November 1999. The Export Credits Guarantee Department will be open for business as soon as a direction can be issued in the light of this announcement.

I make it clear that the decision to set up the scheme was not taken lightly. As I know that hon. Members who have been involved in the matter will realise, it is an exceptional response to a unique set of circumstances. The cashmere knitwear industry is highly specialised and concentrated in areas that face difficult economic challenges. Although the borders area of Scotland is certainly the main centre of the cashmere industry, it is not the only centre of the industry. Cashmere is important in other parts of Britain, and those areas, equally, will benefit from the announcement and welcome it.

The main market for the industry is the United States. Moreover, we are right in the middle of the ordering season. If we had not taken that action, the United Kingdom cashmere knitwear industry, and its upstream suppliers, would have been devastated, and there would have been a very real risk that it would never recover.

Under normal trade conditions, the United Kingdom cashmere knitwear industry can—and does—beat the world. In recent weeks, I have seen that at first hand. It is a superb industry, and we should back it. In the measures that I have just announced, we are doing so. We have had to take that action so that the industry will still be there to compete when trade conditions return to normal.

I look forward with great optimism to the industry's future success. I wish everyone involved in the industry well, and thank them for their forbearance, understanding, and calm and rational negotiation and discussion in the midst of a very difficult time in recent months.

On the wider dispute, the Government will continue to do all that we can to press for alternatives to retaliation and—when we know the result of the rulings from the WTO arbitrator and panel—for immediate and positive action. We must safeguard the WTO's dispute settlement system, as it has served us well in the past, and will continue to do so in the future.

I should like to try to deal with some of the other subjects that have been touched on in the debate. Hormones were the next most topical issue. In that case, as in all cases, we must recognise the importance of sticking to scientific principles. In this case, the WTO found that the risk assessments that the European Union had conducted were deficient. The EU is now conducting new assessments. The view of the United Kingdom Government is that those should have been done well before now, as the WTO itself has said. Meanwhile, however, we must continue to engage in serious dialogue with both the United States and Canada to find a satisfactory way through the dispute.

The United Kingdom is encouraging the United States to discuss compensation—as an alternative to retaliation—and labelling options, taking into account on-going scientific assessments.

Events in the hormone issue have been moving rapidly. Just today, European Union Foreign Ministers agreed in Brussels to negotiate compensation. Meanwhile, the United States has been publishing a list of products for retaliation in the potential dispute. The list—which has just reached me—is rather eclectic, including products such as bellies (streaky) and cuts thereof of swine, salted, in brine, dried or smoked". The list moves on to oats, and sugar confectionary cough drops, not containing cocoa". Then again, it includes "lingonberry and raspberry jam". Prepared mustard also is included. The list on this matter is much longer than it was, the last time around, on the other matter.

The House should understand that the United Kingdom Government's position on the two sets of circumstances is that they are not directly comparable. We believe very strongly that the hormones issue should be settled by compensation, not retaliation. Once again, however, I deplore even the concept of going outside the trade disputes procedures, into the sphere of a retaliatory list. Once the list is published tomorrow, another set of industries throughout the United Kingdom and the European Union will be worrying about their future well-being and the livelihoods of the people who work in them. That is not the way to proceed. There should be negotiation on hormones. We have stressed the importance of scientific principles and we believe that the United States should back off from retaliation to settle the dispute.

Photo of Christopher Chope Christopher Chope Conservative, Christchurch

Does the Minister accept that the situation is the fault of the European Union in failing to meet the WTO deadline?

Photo of Mr Brian Wilson Mr Brian Wilson Minister of State, Department of Trade and Industry

I have set out the Government's position on hormones clearly. We agree with the World Trade Organisation that the new assessments on scientific grounds should have been carried out sooner. I have made my comments without the prompting of the hon. Gentleman. The way forward is through compensation, if appropriate—as the EU Foreign Ministers agreed today—not through retaliation, which drags in many industries, of which I have mentioned only a few.

Trade in genetically modified organisms is a matter of much discussion. Strong feelings have been expressed on the subject in the House tonight. We have enough problems in world trade without talking up trade wars that do not exist. Although the United States has expressed some concerns about the European regulatory system and the time that it can take to grant an approval for a new product, there is no trade dispute between us. The United States clearly recognises that the European Union has a right to determine whether genetically modified products are safe. The United States also recognises that consumers need to be able to make an informed choice. That is why we have labelling of products that contain GM ingredients.

The hon. Member for Christchurch (Mr. Chope) referred to hushkits. The way through the problem is discussion. There have been intensive negotiations between the EU and the US in the past few days to reach a compromise that addresses the concerns that the United States believes that it has on technical and trade policy. A solution to the dispute would be welcome and would prove that it is possible to resolve difficulties through serious, bilateral negotiations designed to recognise the concerns of each side.

That may not be a bad point at which to draw my comments to a conclusion.

Photo of Norman Baker Norman Baker Shadow Spokesperson (Business, Enterprise and Regulatory Reform), Shadow Spokesperson (Culture, Media and Sport), Shadow Spokesperson (Culture, Media and Sport)

Irrespective of applying the rules as they stand, does the Minister accept that the rules have to be changed in Seattle to take more account of environmental, animal welfare and social issues?

Photo of Mr Brian Wilson Mr Brian Wilson Minister of State, Department of Trade and Industry

I am glad to have an opportunity to comment on Seattle. Uniquely and unprecedentedly, from the outset of discussions about the agenda, the Government have called in trade unions, non-governmental organisations and representatives of business and industry across the spectrum of opinion and interest. That will enable us to proceed with complete transparency about our position and allow it to be influenced by representations from interested parties and by the maximum discussion. I do not have time to prejudge what the opposition on the issues will be, even if I wanted to. Negotiations on trade cannot carry all the world's concerns on their back. It is not the developed countries but the less-developed ones that have to be persuaded on many issues, because they see in them the spectre of protectionism in another guise. Consultation is taking place. That is unprecedented, but it is the way in which the Government do business on such issues.

The issues can be resolved through discussion. It is vital that we do not start grandstanding or—

Photo of Mr Paul Tyler Mr Paul Tyler Liberal Democrat, North Cornwall

rose in his place and claimed to move, That the Question be now put.

Question, That the Question be now put,put and agreed to.

Question put accordingly, That the original words stand part of the Question:—

The House divided: Ayes 39, Noes 314.

Division no. 124][10 pm
AYES
Allan, RichardKeetch, Paul
Baker, NormanKennedy, Charles(Ross Skye)
Ballard, JackieKirkwood, Archy
Beith, Rt Hon A JLivsey, Richard
Brake, TomMichie, Mrs Ray(Argyll & Bute)
Brand, Dr PeterMoore, Michael
Breed, ColinOaten, Mark
Burnett, JohnÖpik, Lembit
Burstow, PaulRendel, David
Cable, Dr VincentRussell, Bob(Colchester)
Cotter, BrianSanders, Adrian
Cunningham, Ms RoseannaSmith, Sir Robert(W Ab'd'ns)
(Perth)Taylor, Matthew(Truro)
Davey, Edward(Kingston)Tonge, Dr Jenny
Fearn, RonnieTyler, Paul
Foster, Don(Bath)Wallace, James
George, Andrew(St Ives)Webb, Steve
Hancock, MikeWillis, Phil
Harris, Dr Evan
Harvey, NickTellers for the Ayes:
Hughes, Simon(Southwark N)Mr. Andrew Stunell and Mr. David Chidgey.
Jones, Nigel(Cheltenham)
NOES
Abbott, Ms DianeClwyd, Ann
Ainger, NickCoaker, Vernon
Anderson, Donald(Swansea E)Coffey, Ms Ann
Armstrong, Ms HilaryColeman, Iain
Atkins, CharlotteColman, Tony
Austin, JohnConnarty, Michael
Bames, HarryCook, Frank(Stockton N)
Battle, JohnCorbett, Robin
Bayley, HughCorbyn, Jeremy
Beard, NigelCousins, Jim
Beckett, Rt Hon Mrs MargaretCox, Tom
Begg, Miss AnneCrausby, David
Bell, Stuart(Middlesbrough)Cryer, John(Homchurch)
Benn, Rt Hon TonyCunliffe, Lawrence
Bennett, Andrew FCunningham, Jim(Cov'try S)
Benton, JoeCurtis-Thomas, Mrs Claire
Bermingham, GeraldDalyell, Tam
Berry, RogerDarling, Rt Hon Alistair
Best, HaroldDarvill, Keith
Betts, CliveDavidson, Ian
Blizzard, BobDavies, Rt Hon Denzil(Llanelli)
Boateng, PaulDavis, Terry(B'ham Hodge H)
Borrow, DavidDean, Mrs Janet
Bradley, Keith(Withington)Denham, John
Bradley, Peter(The Wrekin)Dismore, Andrew
Bradshaw, BenDobbin, Jim
Brown, Russell(Dumfries)Donohoe, Brian H
Browne, DesmondDoran, Frank
Buck, Ms KarenDunwoody, Mrs Gwyneth
Burden, RichardEagle, Angela(Wallasey)
Burgon, ColinEfford, Clive
Butler, Mrs ChristineEllman, Mrs Louise
Cabom, RichardEnnis, Jeff
Campbell, Alan(Tynemouth)Etherington, Bill
Campbell, Mrs Anne(C'bridge)Fisher, Mark
Campbell, Ronnie(Blyth V)Fitzpatrick, Jim
Campbell-Savours, DaleFitzsimons, Lorna
Cann, JamieFlint, Caroline
Caplin, IvorFlynn, Paul
Caton, MartinFollett, Barbara
Chapman, Ben(Wirral S)Foster, Rt Hon Derek
Clark, Rt Hon Dr David(S Shields)Foster, Michael Jabez(Hastings)
Clark, Dr LyndaFoulkes, George
(Edinburgh Pentlands)Fyfe, Maria
Clarke, Eric(Midlothian)Gapes, Mike
Clarke, Rt Hon Tom(Coatbridge)Gardiner, Barry
Clarke, Tony(Northampton S)George, Bruce(Walsall S)
Clelland, DavidGerrard, Neil
Gibson, Dr IanLadyman, Dr Stephen
Gilroy, Mrs LindaLepper, David
Godman, Dr Norman ALeslie, Christopher
Godsiff, RogerLevitt, Tom
Golding, Mrs LlinLewis, Ivan(Bury S)
Gordon, Mrs EileenLewis, Terry(Worsley)
Griffiths, Jane(Reading E)Liddell, Rt Hon Mrs Helen
Griffiths, Nigel(Edinburgh S)Linton, Marlin
Griffiths, Win(Bridgend)Livingstone, Ken
Grocott, BruceLloyd, Tony(Manchester C)
Grogan, JohnLock, David
Hall, Mike(Weaver Vale)Love, Andrew
Hall, Patrick(Bedford)McAvoy, Thomas
Hamilton, Fabian(Leeds NE)McCabe, Steve
Hanson, DavidMcCafferty, Ms Chris
Harman, Rt Hon Ms HarrietMcDonagh, Siobhain
Heal, Mrs SylviaMcDonnell, John
Healey, JohnMcGuire, Mrs Anne
Henderson, Doug(Newcastle N)McIsaac, Shona
Henderson, Ivan(Harwich)McKenna, Mrs Rosemary
Hepburn, StephenMackinlay, Andrew
Heppell, JohnMcLeish, Henry
Hesford, StephenMcNamara, Kevin
Hit, KeithMcNulty, Tony
Hinchliffe, DavidMacShane, Denis
Hoey, KateMactaggart, Fiona
Home Robertson, JohnMcWalter, Tony
Hood, JimmyMcWilliam, John
Hoon, GeoffreyMahon, Mrs Alice
Hope, PhilMandelson, Rt Hon Peter
Hopkins, KelvinMarsden, Gordon(Blackpool S)
Howarth, Alan(Newport E)Marshall, David(Shettleston)
Howarth, George(Knowsley N)Marshall-Andrews, Robert
Howells, Dr KimMartlew, Eric
Hoyle, LindsayMaxton, John
Hughes, Ms Beverley(Stretford)Meale, Alan
Hughes, Kevin(Doncaster N)Merron, Gillian
Humble, Mrs JoanMichie, Bill(Shef'ld Heeley)
Hutton, JohnMilburn, Rt Hon Alan
Iddon, Dr BrianMiller, Andrew
Illsley, EricMitchell, Austin
Jackson, Ms Glenda(Hampstead)Moffatt, Laura
Jackson, Helen(Hillsborough)Moonie, Dr Lewis
Johnson, Alan(Hull W & Hessle)Moran, Ms Margaret
Johnson, Miss MelanieMorgan, Rhodri(Cardiff W)
(Welwyn Hatfield)Morley, Elliot
Jones, Barry(Alyn & Deeside)Mountford, Kali
Jones, Helen(Wamngton N)Mullin, Chris
Jones, Ms JennyNaysmith, Dr Doug
(Wolverh'ton SW)O'Brien, Bill(Normanton)
Jones, Jon Owen(Cardiff C)O'Brien, Mike(N Warks)
Jones, Dr Lynne(Selly Oak)O'Hara, Eddie
Jones, Martyn(Clwyd S)Olner, Bill
Jowell, Rt Hon Ms TessaO'Neill, Martin
Kaufman, Rt Hon GeraldOsbome, Ms Sandra
Keeble, Ms SallyPearson, Ian
Keen, Alan(Feltharn & Heston)Pendry, Tom
Keen, Ann(Brentford & Isleworth)Perham, Ms Linda
Kelly, Ms RuthPickthall, Cohn
Kemp, FraserPike, Peter L
Kennedy, Jane(Wavertree)Plaskitt, James
Khabra, Piara SPollard, Kerry
Kidney, DavidPond, Chris
Kilfoyle, PeterPope, Greg
King, Andy(Rugby & Kenilworth)Pound, Stephen
King, Ms Oona(Bethnal Green)Powell, Sir Raymond
Kingham, Ms TessPrentice, Ms Bridget(Lewisham E)
Kumar, Dr AshokPrentice, Gordon(Pendle)
Prescott, Rt Hon JohnStewart, Ian(Eccles)
Primarolo, DawnStinchcombe, Paul
Prosser, GwynStoate, Dr Howard
Purchase, KenStott, Roger
Quin, Rt Hon Ms JoyceStraw, Rt Hon Jack
Quinn, LawrieStringer, Graham
Radice, GilesStuart, Ms Gisela
Rapson, SydSutcliffe, Gerry
Raynsford, NickTaylor, Rt Hon Mrs Ann
Reid, Rt Hon Dr John(Hamilton N)(Dewsbury)
Robinson, Geoffrey(Cov'try NW)Taylor, Ms Dan(Stockton S)
Roche, Mrs BarbaraTaylor, David(NW Leics)
Rogers, AllanTemple-Morris, Peter
Rooker, JeffTimms, Stephen
Rooney, TerryTipping, Paddy
Ross, Ernie(Dundee VV)Todd, Mark
Rowlands, TedTouhig, Don
Roy, FrankTrickett, Jon
Ruane ChrisTruswell, Paul
Ruddock, JoanTurner, Dennis(Wolverh'ton SE)
Russell, Ms Christine(Chester)Turner, Dr Desmond(Kemptown)
Ryan Ms, JoanTurner, Dr George(NW Norfolk)
Salter MartinTwigg, Derek(Halton)
Savidge MalcolmTwigg, Stephen(Enfield)
Sawford, PhilVaz, Keith
Sedgemore, BrianWard, Ms Claire
Wareing, Robert N
Shaw, JonathanWatts, David
Sheldon, Rt Hon RobertWhite, Brian
Shipley, Ms DebraWhitehead, Dr Alan
Simpson, Alan(Nottingham S)Wicks, Malcolm
Singh, MarshaWilliams, Rt Hon Alan
Skinner, Dennis(Swansea W)
Smith, Angela(Basildon)Williams, Alan W(E Carmarthen)
Smith, Rt Hon Chris(Islington S)Wilson, Brian
Smith, Jacqui(Redditch)Winnick, David
Smith, John(Glamorgan)Winterton, Ms Rosie(Doncaster C)
Smith, Llew(Blaenau Gwent)Wood, Mike
Snape, PeterWoolas, Phil
Soley, CliveWright, Anthony D(Gt Yarmouth)
Southworth, Ms HelenWright, Dr Tony(Cannock)
Spellar, JohnWyatt, Derek
Squire, Ms Rachel
Starkey, Dr PhyllisTellers for the Noes:
Steinberg, GerryMr. Robert Ainsworth and Mr. Jim Dowd.
Stewart, David(Inverness E)

Question accordingly negatived.
Question, That the proposed words be there added, put forthwith, pursuant to Standing Order No. 31 (Questions on amendments), and agreed to.
MADAM SPEAKERforthwith declared the main Question, as amended, to be agreed to.
Resolved,That this House recognises the significance of the EU/US relationship and notes that the majority of that trade relationship runs smoothly; commends the efforts of the Government to secure the Transatlantic Economic Partnership Agreement last year; acknowledges the efforts of the Government to find a way through the bananas dispute so as to minimise the impact on British industry and in particular the cashmere industry; notes the current position on the hormones dispute; welcomes the Government's commitment to sustainable development; and endorses the Government's support for comprehensive multilateral trade negotiations to be launched in Seattle at the end of this year.