WTO Ministerial Conference

– in the House of Commons at 12:30 pm on 17th September 2003.

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Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry 12:30 pm, 17th September 2003

With permission, Mr. Speaker, I should like to make a statement about the fifth World Trade Organisation ministerial conference in Cancun from 10 to 14 September, which I attended together with my right hon. Friend the Secretary of State for Environment, Food and Rural Affairs, my noble Friend the Secretary of State for International Development and my hon. Friend the Minister for Trade and Investment. Commissioners Lamy and Fischler negotiated on behalf of the European Union.

The UK delegation included my hon. Friend Mr. Colman, who represented the Select Committee on International Development, as well as representatives of the CBI, the TUC, the Consumers Association and the UK Trade Network. I warmly welcome their participation and thank them for their work.

The conference was attended by delegates from all 146 members of the World Trade Organisation, accompanied by many thousands of parliamentarians and civil society organisations as observers. On the opening day, we welcomed the accession of Cambodia and Nepal.

The British delegation worked hard to help to secure an outcome that would meet the needs of developing countries. Ministerial colleagues and I met a large number of representatives from those countries, and we ensured that their views were reflected when we met the United States and EU colleagues and others.

The conference was the WTO's opportunity to restore momentum to the Doha development round, which was launched with such high hopes in November 2001. It is with great regret that I must report that we were unable to reach an agreement. Talks broke down on the final day.

Before the talks ended, however, Commissioner Lamy, on behalf of the European Union, offered to abandon completely negotiations on two of the so-called Singapore issues—investment and competition—which was a position that the British Government fully supported. Many other WTO members also signalled a willingness to be flexible on various issues. With more time, I believe that it would have been possible to reach agreement.

Failure to reach agreement at Cancun is a serious setback for the Doha round, but it is not the end of the round or the WTO itself. In anticipation of Cancun, we had already reached agreement, which was overdue but welcome none the less, on access to medicines for developing countries. That agreement stands and must now be built on, especially through the global fund to fight HIV/AIDS, tuberculosis and malaria.

In June, the Agriculture Council of the EU agreed significant reforms of the common agricultural policy. The reforms will mean substantial cuts in the trade-distorting support and export subsidies that we give to our own farmers, which do so much damage to farmers in the developing world. The EU has already offered, in principle, to phase out export subsidies on products of particular interest to developing countries. The agreement on CAP reform was, of course, not conditional on agreement at Cancun.

We also saw at Cancun the formation of the G21 and other strengthened developing country groupings. I wholeheartedly welcome the emergence of this stronger voice for poorer nations. Indeed, the Government have led the way on helping developing countries to build their negotiating capacity. We have given £110 million to trade-related capacity building and technical assistance since 1998 and an additional £50 million was announced by the Secretary of State for International Development last week. Furthermore, at Cancun itself we made real progress in discussions on agriculture and other vital issues. There is no doubt that we were closer to agreement at the end of the Cancun conference than we were at the beginning.

We now need to lift our sights once more to the prize that is on offer, particularly for developing countries, if we can get the round back on track. The Cancun conference agreed a new deadline of 15 December to try to resolve the issues that we could not sort out at Cancun. I have already spoken to the director general of the World Trade Organisation, Dr. Supachai, about how the United Kingdom can help to drive that forward.

The final ministerial statement of the conference urged that those renewed discussions be based on the concessions that delegates offered at Cancun and not on their earlier positions. In the case of the European Union, that means that we should accept that, despite our continuing commitment to encourage and to facilitate direct investment in developing countries, WTO agreements on investment and competition are off the EU's agenda.

The International Monetary Fund and the World Bank announced in Cancun a new initiative to help developing countries to overcome problems in adjusting to a more liberal trading environment. I warmly welcome that. The UK Government will make a substantial input to the design and implementation of the initiative.

In the wake of Cancun, it is, I am afraid, inevitable that more emphasis will be put on regional and bilateral trade agreements. Although those could help to promote south-south as well as north-south trade, they risk excluding many poorer countries and leaving others isolated in negotiations with far larger countries. We continue to believe that the multilateral system should be the cornerstone of world trade rules.

All WTO members now need to reflect on the lessons to be learned from Cancun and to find ways of improving processes. We also have to address the issues of substance that prevented agreement at Cancun. We shall discuss how best to make progress on all those matters with our EU partners, the European Commission and others, taking particular account of the views of developing countries.

This Government are determined to do all we can to help to deliver a development round in line with the promises that we made at Doha. All countries stand to gain, but the poorest stand to gain the most. That is why we support the round and will continue to work for its success.

Photo of Tim Yeo Tim Yeo Shadow Secretary of State (Trade and Industry)

I welcome the Secretary of State back from her sojourn in the sun and am grateful to her for making available a copy of the statement in advance of it being delivered.

The collapse of the Cancun talks is a serious setback for rich and poor countries alike. No one can take satisfaction from an outcome that threatens the timely and successful completion of the Doha round. There will be widespread dismay in Britain at the breakdown and at the absence from the Secretary of State's statement of any firm, specific proposals to overcome the difficulties that have arisen.

Reducing barriers to free trade is essential to raising living standards worldwide. If progress towards the goal of freer trade is hampered by the breakdown at Cancun, we need to understand why the talks failed. Does the Secretary of State agree that, despite the fact that the European Union went further than it has done previously in its offer to reduce agriculture subsidies, the continued existence of protectionist farm policies both in Europe and the United States remains a very big obstacle? Will she admit that claims by the Secretary of State for Environment, Food and Rural Affairs that the common agricultural policy reforms agreed earlier this year would meet World Trade Organisation needs have proved to be completely wrong? Is not the truth that, within Europe, the British Government have been sidelined from agriculture policy reform discussions by France and Germany?

Will the Secretary of State also admit that, although in 2003 Britain has had a unique and historic opportunity to influence United States policy, it has failed to do so in this respect and that United States intransigence on farm subsidies remains as strong as ever? Does she recognise that these talks are not a one-way street and that developing countries must make serious efforts to tackle corruption and to provide greater transparency? Does she share my disappointment that the breakdown of the talks was apparently regarded by some of the development non-governmental organisations as a cause for celebration?

Given the importance of making progress on steps that will encourage investment in developing countries and the understandable concern of those countries about burdensome negotiations, does the Secretary of State now accept that a specific advocacy fund, as proposed by the Conservatives, would be an excellent and practical way to help developing countries and to resume progress on the Doha round? The general trade facilitation programme announced by Baroness Amos last week and referred to in the statement is no substitute. In relation to Baroness Amos, does the Secretary of State understand the concerns of my hon. Friend the shadow Secretary of State for International Development that that important Department is no longer represented in the House of Commons by a Cabinet Minister?

Will the Secretary of State enlarge on the nature of British input in the IMF-World Bank initiative that she mentioned in her statement? Does she feel that Britain was justified in sending such a large and costly delegation to the talks? Does she now regret visiting Honduras, and one minute telling small farmers that they should be protected and the next, behind their backs, that they had no future?

Does the Secretary of State have any concerns about the way in which the talks were chaired? I share her view that their termination at a time when some people felt that avenues could still be pursued was a mistake. Does she feel that the existing arrangements in the European Union create the risk of the Commission sometimes negotiating in isolation without enough political input from member state Governments?

The world will be poorer if the Doha round fails. For the sake of men, women and children in both developed and developing countries—I share the Secretary of State's view that it is the poorest countries that stand to gain the most—Governments around the world need to work harder to overcome their differences. I trust that Britain will play its part in that process, and if the Government do so they will have our full support.

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

I welcome the hon. Gentleman's assurance that we will have his full support in our efforts to get the talks back on track.

The hon. Gentleman referred to the CAP reforms that we agreed with our European colleagues, which were described by none other than Ben Gill as revolutionary.

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

It is wonderful to hear the head of the National Farmers Union described as a Labour stooge.

The reforms were described as revolutionary, and nobody would have believed them possible if we had predicted them only six or eight months ago. I do not think that anyone in the House or, indeed, the NGOs should talk down the significance of the reforms for agriculture policy. They may not do everything, but they go a very long way indeed towards remove the trade-distorting subsidies that do so much damage to the developing world. Having made that enormous step forward in Europe, we are indeed entitled to expect other developed countries to match the reforms, particularly in export credits and food aid.

On the issue of transparency, one of the things that I welcomed at Cancun was the extent to which developing countries in the first two or three days of talks said how much better the process was than at Doha. Of course, it was streets ahead of where we were in Seattle. That, unfortunately, was not sustained in the final days, and it is one of the lessons that need to be learned. I agree with the hon. Gentleman that nobody should regard the breakdown of the talks as a cause for celebration, although some signs of celebration, especially among the smaller developing countries, reflected the fact that the developing countries themselves were much stronger. The dynamics and balance of power in the WTO have undoubtedly been altered.

I do not agree with the hon. Gentleman about the advocacy fund. Developing countries do not want to be given money to hire other countries' experts—they want their own people to be trained and supported so that they can negotiate more effectively. That is precisely what we have been doing through the significant investment that I described in trade-related capacity building.

The hon. Gentleman mentioned my visit last week to Honduras, where I was able to see for myself, as I have done in other countries, the effect of abrupt market opening—in this case, 10 years ago, under pressure from the IMF, to subsidised rice imports from the United States. That abrupt market liberalisation—that opening to subsidised imports—destroyed the rice farmers of Honduras for many, many years. The rice farmers are beginning to come back into production, thanks to a change in the market rules made by the Honduran Government, underlining the importance of the discussions that we had in Cancun on special and differential treatment and different approaches for products of special concern to developing countries.

Finally, on the Department for International Development, I remind the hon. Gentleman that in the days of the Conservative Government, Baroness Chalker, who I thought was an excellent Minister for Overseas Development, was neither in this House, nor in the Cabinet. I will certainly not take lectures on international development from a member of the party that cut international aid budgets from where we had left them in 1979 to such an extent that developing countries lost out to the tune of £20 billion. We will deliver on development, and we will continue to try to deliver on fair trading rules that will benefit developing countries, as well as the rest of the world.

Photo of Vincent Cable Vincent Cable Shadow Chancellor of the Exchequer, Liberal Democrat Spokesperson (Treasury)

I welcome the Secretary of State back and suggest that she probably now appreciates the significance of the fact that in the Mayan language, I believe, the word Cancun means "snake-pit". I agree that it is genuinely bad news that the negotiations have broken down, and that those who were celebrating were being premature, if the breakdown opens the way, as it might well do, to much more unilateral and bilateral policy. That would be damaging, particularly to the weakest countries, which have little negotiating power.

I endorse the right hon. Lady's positive remarks about the ability of the developing countries to articulate their case much more forcefully and coherently. However, one of the serious misjudgments in the negotiations was the reaction of the rich countries, especially the patronising attitude of European Commissioner Fischler, for example, with his condemnatory remarks about the developing country group, and, even more, the attitude of the American Administration. The American trade negotiator revealed the protectionist and corrupt heart of the Bush Administration when he argued publicly that as President Bush could not conceivably be expected to give up subsidising his allies who own cotton plantations, developing countries in Africa should find a comparative advantage in something else.

It is not helpful for the Secretary of State to suggest, as she has been doing, albeit in quite subtle ways, that the failure of the negotiations is primarily down to the Mexican chairman or the process. Some severe miscalculations were made by the European Union, and she should be honest about those failures. Why, for example, did EU negotiators go into the negotiations with, as one of their central demands, a set of new issues for which the developing countries were clearly not prepared and for which there was little interest or enthusiasm in the investment community?

Why did the EU negotiators go into the negotiations publicly proclaiming, as Commissioner Fischler did on several occasions, that their central negotiating objectives were the interests of the 1 per cent. of the population of Europe who own large commercial farms? They failed to make it clear to the developing countries that there is a real commitment to get rid of export subsidies and production-linked subsidies and—something that was rarely mentioned—to improve market access.

Who does the right hon. Lady blame for that failure? Was it the European Union negotiators? When I criticised them in the past, she responded by saying that they, particularly Commissioner Lamy, are brilliant. Does she now reappraise her assessment or does she take the view that it was not their failure, but that the EU Ministers had a flawed mandate? If that is the case, does she not accept some responsibility for it?

In conclusion, let me turn to the future. The Secretary of State is right to put the emphasis on rescuing this disaster. What specific new liberalisation initiatives, especially in agriculture, will she and the Secretary of State for International Development seek from other member states in the next few months so that they go into the next negotiations with a much more credible position than on emerging from the last ones?

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

I am grateful for a number of the points that the hon. Gentleman made. First, on the reaction to the emergence of the G21, which also caused some consternation among smaller African countries in particular, my view is that, as with much else at Cancun, there are lessons to be learned all round. All of us need to reflect on what happened at Cancun.

Secondly, in relation to cotton, the hon. Gentleman is right that there was great anger not only among the four desperately poor cotton-producing African countries, but among all the other countries that had supported them. We had also supported them with money to help them in advancing their cause. There was enormous anger about the draft text that appeared on Saturday suggesting that those countries should be helped to move out of cotton production, in which they would be competitive if they were not competing against subsidised products.

Thirdly, as I have indicated, the European Union signalled its commitment to agricultural reform and flexibility in the negotiations. However, one of the problems at Cancun was that the negotiations began so late in the day and that so many days were wasted in restatement of uncompromising and uncompromised positions.

All members of the WTO—especially the larger ones—need to take responsibility for the breakdown of the talks, and we all need to learn lessons. On the next steps, I remind the hon. Gentleman that we have only just agreed far-reaching reforms of the common agricultural policy and that, as we put them into effect, they will have a beneficial impact on developing countries. We will continue to press inside the WTO and outside for other developed countries to match the commitment that Europe has already made to admitting "everything but arms" and ensuring that all non-armament imports from the least-developed countries are completely free of tariffs and quotas. As I said, we will redouble our efforts to try to achieve through the WTO in Geneva the agreement that we should—and, I believe, could—have made at Cancun.

Several hon. Members:

rose—

Photo of Mr Tony Colman Mr Tony Colman Labour, Putney

Will the Secretary of State pass on my thanks and those of other parliamentarians to the superb team of officials that we fielded in Cancun? Those of us who attended the conference were appalled at the criticisms made by certain Opposition Members, who questioned whether they should be present. Their skill and knowledge was appreciated not only by the European Commission, but by the many developing countries that sought advice from them and to which they were very helpful.

The Secretary of State mentioned the World Bank-IMF proposals that were announced on the first day of the conference. Will further work be done on them before 15 December, when the WTO reconvenes? What will our input be? In particular, work is being proposed for developing countries that reduce their tariff barriers and subsequently face budget deficits. The World Bank and IMF may be able to help significantly in that regard—for instance, in ensuring that the millennium development goals are not harmed by such reductions in tariff barriers.

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

I am grateful to my hon. Friend for his remarks about our officials, who have done outstanding work not only at Cancun, but at Doha and since.

On the World Bank and the IMF, my noble Friend the Secretary of State for International Development and I will meet shortly to see how we can most effectively support the initiative that he mentioned. For example, we need to find much better ways to help the African, Caribbean and Pacific countries as they face the erosion of their preferences that will come from a more liberal trade environment. We need to deal with the issue of possible loss of revenues from import tariffs, at least in the short term. That can all be achieved by a convergence between the WTO and the international financial institutions so that trade liberalisation, instead of devastating some of the poorest producers as it did in Honduras, can become an effective way of achieving more rapid development.

Photo of Andrew Lansley Andrew Lansley Shadow Secretary of State for Health

The Secretary of State will recall that, in November 2001, I urged that we retain the linkage between investment, competition and new issues and trade liberalisation. I regret the loss of that linkage. If it is taken off the agenda, it will be developing countries that lose the most in the longer term, because of the benefits of inward foreign direct investment. We can see those benefits even in the United Kingdom in terms of additional productivity growth. Will she at least give an assurance that we will continue to press hard through capacity building to try to encourage developing countries to build up the capacity to enter into those new issues as soon as possible?

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

As I made clear in my statement, increasing foreign direct investment into developing countries is essential. The problem that arose was that developing countries did not feel able to participate in negotiations on those issues, given everything else that was going on. On trade facilitation—one of the other Singapore issues—there was general agreement that it was valuable to developing countries to make progress. If and when we secure agreement on the next stage of the Doha round, I hope that we will start negotiations on trade facilitation. However, we will pursue by other means the issue of supporting developing countries in getting the investment that they need, rather than by seeking to add to the negotiating agenda in the Doha round.

Photo of John Battle John Battle Labour, Leeds West

It is encouraging to hear my right hon. Friend say that this is not the end of the round and that we must press forward. Will she assure us, however, that the new issues, as they are now becoming known, will not be pushed on to the table in Geneva by our Government or the EU, so that there can be some positive progress on the agenda?

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

I have already made the position clear: in line with the ministerial declaration made at Cancun, I anticipate that the European Union will no longer seek to press for negotiations on investment and competition. We will continue to support countries in other ways in getting the investment that they need, but not through those negotiations.

Photo of Tony Baldry Tony Baldry Chair, International Development Committee, Chair, International Development Committee

As one of those who was at Cancun, may I endorse the remarks made by Mr. Colman about the professionalism of UK officials and the contribution that they made?

When the Secretary of State gave evidence to the Select Committee on International Development, she said, with some perspicacity:

"If we do not get progress on agricultural market access and agricultural export subsidies we will not get a round."

We did not and have not done so. The Doha declaration states that we need to place the needs and interests of developing countries at the heart of WTO negotiations. Between now and the end of the round, how does she believe that the needs and interests of developing countries will be put at the heart of the WTO process?

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

I am grateful to the hon. Gentleman for his compliments to the officials.

We never got into the detailed discussions on agriculture that should have taken place at Cancun, although positions were already starting to shift. Indeed, the Trade Minister of one of the major developing countries, a member of the G21, told me and, I understand, the chairman that, with a further five or six hours of discussions on agriculture, he believed that an agreement would have been reached. That is what we now have to strive towards in the talks at Geneva, as well as agreement on industrial market access and special and differential treatment. That cannot simply be left to the ambassadors in Geneva; it will require the wholehearted support of Ministers, and I will certainly give such support.

Photo of Mrs Helen Jackson Mrs Helen Jackson Labour, Sheffield, Hillsborough

Was my right hon. Friend able to raise at Cancun the issue of steel tariffs, which are having a very serious effect on the special and stainless steel sectors in south Yorkshire?

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

I did indeed take the opportunity to raise the issue of unlawful steel tariffs with Ambassador Zoellick. I urged on him the need for the US Administration to use the mid-term review of the tariffs, to which they are committed, to withdraw them in line with the WTO judgment that has already been given. Although he made no commitment—my hon. Friend will not be surprised to hear that—he indicated that the Administration would be considering their position very seriously in the mid-term review.

Photo of Pete Wishart Pete Wishart Opposition Whip (Commons), Shadow Spokesperson (Culture, Media and Sport), Shadow Spokesperson (Environment, Food and Rural Affairs), Shadow Spokesperson (Transport)

Does the Secretary of State agree that the most significant development at Cancun was the emergence of the G21 nations—a bunch of nations that are no longer prepared to be fobbed off, fought off or picked off? Rather than being the rebellion of the midgets, as suggested by some western Governments, is this not the rebellion of the up-and-coming nations—the economies of tomorrow? Will she pledge to meet those nations and take the opportunity to address their agenda? Most important of all, will she ensure that the British Government are part of the solution, not part of the problem?

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

As I said earlier, the emergence of the G21 and other groups of developing countries has transformed the dynamic and the balance of power in the WTO. I wholeheartedly welcome that, although we must not make the mistake of thinking that the G21 countries speak for the whole developing world, which they clearly do not. Some commentators made that mistake initially.

These countries are enormously important. They form the largest group of countries in the developing world, and include the fastest-growing. I am sure that the hon. Gentleman will be pleased to know that, for many months as well as in the past few days, I have had a number of telephone conversations with the Trade Ministers of Brazil, South Africa, India, Pakistan and China.

Photo of Colin Challen Colin Challen Labour, Morley and Rothwell

I, too, welcome the birth of the new, assertive developing-world groups, which I am sure we will see as a positive move when we look back on the conference.

Will my right hon. Friend enlarge on her comments in Honduras, quoted in the Financial Times on Saturday? She said:

"part of the development path for any country is to move people out of small-scale subsistence farming into larger-scale production or industrial production".

That, I think, has considerable ramifications for agricultural production in the developing world, especially in the context of employment, the environment and subsidies.

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

One of the greatest challenges to all the developing countries is the appalling poverty in which small-scale subsistence farmers live. Helping them to move out of that poverty is central to the achievement of the millennium goals.

When I was in Honduras I was able to discuss the issue with the Minister for Technical Co-operation, who is effectively responsible for social inclusion programmes. She made precisely the same point that I had made: that over time, with effective Government and NGO support, small-scale farmers who are struggling to live on less than $1 a day, scratching a living from a hectare or so of land, can move into larger co-operatives and gain some market power. Eventually more will move into larger-scale production, or indeed into other sectors of the economy. That is the development path followed by the rich countries, and we should not seek to deny it to the desperately poor countries of today's world.

Photo of Alistair Burt Alistair Burt Conservative, North East Bedfordshire

As the Secretary of State will know, those of our constituents who take an interest in these matters are strongly influenced by the many committed, dedicated NGOs that operate in the area. When one or two of them gave evidence to the International Development Committee on the Doha round, some of us felt concerned about the gap between their perception of what the round would be able to achieve for developing countries and the view expressed by the Secretary of State today, which a number of us share.

Bearing in mind the NGOs' influence on our constituents, is the right hon. Lady planning any initiatives to get closer to them and to ensure that they are given a rather different picture of a complicated issue which, if over-simplified, may give rise to a very clear sense of right and wrong that may not always be accurate?

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

I pay tribute to the excellent work that many NGOs do in developing countries. I was with Christian Aid when I visited Honduras.

We regularly meet NGOs, particularly in the trade justice network. We all meet them in our constituencies, but, along with my hon. Friend the Minister for Trade and Investment, I do so regularly on behalf of the Government. In Cancun, we had six meetings with the UK NGOs that were there.

Throughout our discussions before and during Cancun, we have tried to ensure that as far as possible we share an analysis of the potential gains for developing countries from a successful Doha round. On some issues, notably trade in services—as the hon. Gentleman and others will know full well—I simply do not accept the statements made by one or two NGOs, which we have sought repeatedly to rebut and disprove; but I am afraid that that is in the nature of those NGOs. We will continue to work with them, because the support and pressure from the Trade Justice Movement is entirely welcome. I wish that it were replicated in other parts of Europe and other parts of the developed world.

Photo of Mr Denzil Davies Mr Denzil Davies Labour, Llanelli

Is it not less than satisfactory for negotiations with 15 individual European Union member states to be headed and conducted by, in effect, a single European Union civil servant? Given that from next May there will be 25 member states, should we not look at the arrangements again? Should not member states that wish to do so be able to conduct their own negotiations, headed by democratically elected Ministers accountable to democratically elected Parliaments?

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

The European Union is, of course, a single trading community. There would be havoc if individual countries tried to secure different agreements on some of the highly technical matters with which we deal in the WTO. I shall not name any states in particular, but I think that my right hon. Friend can conclude for himself that such an arrangement might not be entirely helpful in the case of matters relating to agricultural subsidies.

Photo of David Curry David Curry Conservative, Skipton and Ripon

If we were really five or six hours away from an agreement on agriculture, the break-up of the talks is inexplicable. The Secretary of State was right to point to the danger of allowing bilateral trade agreements to take over from multilateral agreements. The principal protagonist in that is the United States, an example being the proposed all-Americas trade agreement. What influence can the United Kingdom exert on President Bush to emphasise the primacy of a rules-based multinational approach to trade? As we approach the expiry of the peace clause, is there not a danger of a spate of extremely angry and violent disputes in the WTO, which would make the situation worse?

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

The right hon. Gentleman draws attention to an important issue: the expiry of the peace clause at the end of December. It is curious that no one mentioned the peace clause at Cancun. Following its expiry, all the trade-distorting agricultural arrangements could be subject to trade disputes in the WTO settlement procedure. That may prove to be the most powerful lever available to all of us who want the round to make progress, ensuring that everyone returns to the negotiating table and proceeds on the basis of the compromises that were beginning to emerge at Cancun.

Photo of Tony Lloyd Tony Lloyd Labour, Manchester Central

Does my right hon. Friend accept that the genuinely intelligent and enlightened view that she has expressed today was not, unfortunately, reflected in the EU's negotiating position? She deserves no discredit for that—and the same applies to the position of the United States.

If we are to return to the Doha commitment that the rich world will listen properly to the developing world, will my right hon. Friend pledge to convey that message to our colleagues in the EU? Will she tell them that we must listen to the developing world, as we did not in the case of the Singapore issues and the negotiating mandate for Pascal Lamy in Cancun?

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

Both the European Union and the United States played an important role in launching the Doha round nearly two years ago. My hon. Friend is right: if we are to make progress on this round, we must listen to the increasingly powerful voice of the developing countries. We must deliver on the promises that we made at Doha—and that is precisely the message that I shall reinforce in all my discussions with European and other developed-world colleagues.

Photo of Martin Smyth Martin Smyth Independent Ulster Unionist, Belfast South

The Secretary of State will be aware that many supporters of the Trade Justice Movement in the United Kingdom share her disappointment. However, I welcome her announcement that there has been movement in terms of aid going in to tackle the HIV pandemic. Bearing in mind the failure of others to implement the wiping out of debt that we have pursued, does she foresee any problems in implementing the decision on the AIDS pandemic? Will any countries resile from it?

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

The agreement that we reached on intellectual property and access to medicines was in no way conditional on agreement at Cancun, so it stands and will now be implemented. Indeed, the general council of the WTO endorsed it before we arrived at Cancun. Of course, dealing with the issue of intellectual property is only part of the picture; we also have to ensure that Governments of developing countries can actually afford to buy the drugs, even when they are manufactured under compulsory licence. This Government have already committed more than £1.5 billion to support the strengthening of health care systems in developing countries, and we have pledged an additional $80 million to the global fund to fight AIDS, tuberculosis and malaria.

Photo of Diane Abbott Diane Abbott Labour, Hackney North and Stoke Newington

In negotiating these trade issues, will the Secretary of State pay attention to the particular concerns of the Caribbean and other small island states? A completely free market in sugar and bananas would clearly be good for some of the very poorest countries in the world, but it would be unfortunate if that benefit were achieved at the expense of the Caribbean, a region in which 1 million British citizens still have very close family ties.

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

My hon. Friend makes an extremely important point. Indeed, my noble Friend the Secretary of State for International Development spent a great deal of time at Cancun, and previously, talking to representatives of the African, Caribbean and Pacific countries about the impact on them of trade liberalisation—in sugar, in particular. In the next month or so, we are expecting proposals from the European Commission on reform of the sugar regime, and the interests of the ACP countries is one issue that we will bear in mind as we seek to conclude reform of our wholly unjustified sugar subsidies. It surely makes no sense for the European Union to be putting so much subsidy into sugar that Finland is a major sugar beet producer. This has to stop.

Photo of John Gummer John Gummer Conservative, Suffolk Coastal

Does the Secretary of State accept that those of us who were in Cancun saw the huge steps that the European Union has taken to reform the common agricultural policy, and that we respected the way in which Commissioner Lamy put the case on our behalf? Does she also accept that the attitude of the United States on cotton and in terms of refusing to go back beyond the Farm Bill makes it very difficult for the rest of the world to believe that the Bush Administration are really interested in multilateral trade agreement? Will she bring home to that Administration that until they stop subsidising a $3 billion crop of cotton with $4 billion of subsidy, it will be impossible to take their position seriously?

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

I agree entirely with what the right hon. Gentleman says about cotton. As I said earlier, US subsidies are having a devastating effect on some of the poorest African countries. Through direct discussions with our American colleagues and through the European Union, we will continue to call for the United States—and other developed countries—to match the steps on reform of agricultural subsidies that we are taking here in Europe.

Photo of David Drew David Drew Labour/Co-operative, Stroud

Although the news is depressing overall, it is not fair simply to say that the outcome was depressing; surely we must also consider the process. Will my right hon. Friend look at ways in which the WTO itself can be further reformed, so that developing countries can have more of a direct voice? If nothing else, they should be able to speak for themselves, rather than having others arrogating decisions on their behalf.

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

I strongly agree with my hon. Friend's comments, and we will certainly look at how we can help to continue to improve WTO processes. As I said, they were better this time than at Doha or Seattle, and a number of developing country Governments welcomed that fact. We must also recognise that a very real change has taken place in terms of the strength with which developing countries speak for themselves inside the WTO. We in the United Kingdom have helped that process along through our capacity-building measures, which have been hugely important. We will continue to do that, and I hope that we do not hear again from parts of the anti-globalisation movement that the WTO is somehow trampling over the interests of developing countries, which in fact constitute the majority of WTO members and are increasingly powerful within it—a fact that all of us should welcome.

Photo of John Barrett John Barrett Liberal Democrat, Edinburgh West

What practical steps can the Secretary of State take to convince the poorest developing countries that what is in our interests is also in theirs? I welcome what she says about high tariffs on sugar, but will she also extend the idea to dairy products? We may see the negotiations as a failure, but for the poorest nations this is a matter of life and death.

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

I have said repeatedly that the developed world is not going to convince developing countries of our good intentions if we preach and impose liberalisation abroad but practise protectionism at home. That is why the reforms that we secured at the Agriculture Council in June are of such enormous importance. They may not represent everything that we—and some others—wanted, but they are a very significant step forward. Part of our task is to continue to discuss with developing countries the benefits that can come to them as we implement those reforms.

Photo of Jeremy Corbyn Jeremy Corbyn Labour, Islington North

Does the Secretary of State recognise that the very welcome development of the group of 21 has forced the de-linking of farm subsidies from investments? Will she use the gap between now and December to ensure that the United States addresses the issue of its huge farm subsidies and dumping of products, which are killing the livelihoods of many third-world farmers, and that we respect the independence of third-world nations? They want investment to be made not solely on the terms of the wealthy in west—to ensure the return of 100 per cent. of their profits to western interests—but in the light of the needs of poor people in the poorest countries.

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

I pointed out earlier the damage that food aid and export credits, as well as export subsidies, do to farmers in the developing world. One of the arguments that we made—albeit unsuccessfully—for a WTO agreement on investment was that from the point of view of developing countries, multilateral rules on investment would be preferable to their having to negotiate bilateral agreements with the USA or other major players. Such agreements generally include far more stringent requirements on investment, which can prove very problematic for some developing countries.

Photo of Chris Grayling Chris Grayling Shadow Minister (Education)

It is disappointing that no Minister from the Department for International Development has bothered to turn up for this statement.

Does the Secretary of State really believe, given all that we have heard, that the political will exists in the developed world to undertake the level of dismantling of protectionist structures—in agriculture, for example—necessary to create a truly fair trade system for the developed and developing worlds?

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

I have no doubt at all that the will is there within Europe. As I said, the CAP reforms that we agreed in June are a very significant step forward. We must to continue to work with, but also challenge, colleagues in other parts of the developed world, so that they step up to the mark themselves. If we do not, and as Cancun made clear, the developing countries—particularly the larger ones, to whose markets we also want access—will simply not agree. They must see far greater and more immediate gains for themselves in this round than occurred in the Uruguay round.

Photo of Jonathan R Shaw Jonathan R Shaw Labour, Chatham and Aylesford

Is not direct investment in the developing world the right type of investment, because it does not destroy capacity and prevent companies from emerging within those countries? Otherwise, such companies leave and end up in a worse position than when the richer countries made the initial investment.

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

My hon. Friend makes an important point, but in opening their markets to foreign direct investment, let us not forget that the Governments of developing countries retain the right and the responsibility to put in place whatever framework they want for investment in order to protect the local environment, social standards and so forth. That is an issue to which the World Bank and the IMF should also pay attention.

Photo of Mr Roy Beggs Mr Roy Beggs UUP, East Antrim

I welcome the Government's commitment to assisting poorly developed countries, but does the Secretary of State share my disappointment that only two of the poorer countries—Cambodia and Nepal—have actually acceded to the WTO? How many under-developed countries remain outside, and what special efforts are being made to help them join?

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

It is important for the least developed countries to make their own judgment about the point at which they join the WTO and accept the responsibilities as well as the benefits of membership. In common with the hon. Gentleman, I warmly welcome the accession of Cambodia and Nepal. In the EU, we have sought to conclude agreements that will be of special benefit to the least developed countries. Partly as a result of the everything but arms initiative, to which I referred earlier, the EU is now—I think by a long chalk—the largest importer in the entire developed world of agricultural and other products from the least developed countries, and we want to see that increase still further.

Photo of Ann McKechin Ann McKechin Labour, Glasgow Maryhill

I thank my right hon. Friend for her commitment to making further progress in the talks, and I welcome in particular her comments on investment and competition issues. Having been in Cancun, I know how hard she and her officials worked for a successful outcome, and I share her disappointment at the failure to achieve it. Does she agree that the EU and the US need to reflect on the failure to meet prior deadlines in negotiations regarding both special and differential treatment, which particularly affects the poorest countries in the world, and also on the failure to deal with issues of implementation? If we are to follow the spirit of the Doha agenda, we must now recommit to those issues and make substantial offers.

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

My hon. Friend is absolutely right. Since we launched the Doha round, we have unfortunately missed every deadline in the trade negotiations, so she is right that we must redouble our efforts and make offers that will enable us to secure agreements.

Photo of Norman Lamb Norman Lamb Shadow Spokesperson (Treasury), Liberal Democrat Spokesperson (Treasury)

I, too, welcome the Secretary of State's renewed commitment to multilateralism, but does she agree that the WTO as an organisation now faces a massive challenge, with the US vigorously pursuing bilateral and regional agreements and with Commissioner Lamy being reported today as questioning the EU's commitment to multilateralism? What specific steps need to be taken to get the Doha round back on track? Given that she said in her statement that we need to find ways of improving processes, does she have any specific proposals for reforming the WTO?

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

I said that I thought we all needed to reflect on what went wrong at Cancun, and I propose to reflect for a little longer than 48 hours. However, I have already said that we will discuss through the Council of Ministers the approach that the EU should take and how to strengthen the multilateral system. Nothing that I have heard from Commissioner Lamy suggests that the Commission wants to weaken the multilateral trading system. We will discuss it with colleagues in the Council of Ministers and work, as I said, with the WTO secretariat to help ensure that the EU itself and other countries work in Geneva on the basis of the compromises that we were beginning to reach in Cancun and the offers made there. We want to avoid everyone falling back into their own positions or simply giving up on the WTO and going off into bilateral agreements.

Photo of Mr Tony McWalter Mr Tony McWalter Labour/Co-operative, Hemel Hempstead

While commending the energy and moral commitment of my right hon. Friend and her team, and wishing her the very best for future rounds of negotiations, may I express a certain disquiet at her response to my hon. Friend Mr. Challen? She seemed to commend industrialised agriculture over small-scale producers. Such agricultural mega-businesses not only profit from very intense subsidies but benefit from the depression of oil prices, which makes fertiliser and the transport of agricultural produce cheaper, and they often avoid having to pay for the environmental damage that they cause. We need to take a different approach to such businesses, and I hope that my right hon. Friend will think seriously about the future of smaller-scale production, which could bring about a more realisable and sustainable agriculture for many of the world's developing countries.

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

I entirely share my hon. Friend's commitment to sustainable agriculture, whether in Europe or in developing countries. I am sure that he would share my commitment to ensuring that small-scale subsistence farmers are not left in the poverty that now afflicts them. One of the ways forward is to ensure, through measures for special and differential treatment and for special products, that Governments in developing countries have the policies base on which to ensure that vulnerable producers in rural communities are properly supported and protected. That also needs to be taken into account by the World Bank and the IMF.

Photo of Mr Harry Barnes Mr Harry Barnes Labour, North East Derbyshire

A major way in which the poverty-stricken in this country advanced their lot against the filthy rich was obtaining the vote on an equal basis. Is not that type of pattern within the WTO something that is necessary if we want to secure wider membership and the type of agreements that will be beneficial to the third world?

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

My hon. Friend is, of course, right about the importance of democracy, but let us not forget that the WTO is itself based on the principle of one country, one vote. That is why the developing countries have such a strong voice within it.