WTO Conference (Hong Kong)

– in the House of Commons at 12:32 pm on 20th December 2005.

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Photo of Alan Johnson Alan Johnson Secretary of State for Trade and Industry 12:32 pm, 20th December 2005

With permission, Mr. Speaker, I should like to update the House on progress made at the sixth World Trade Organisation ministerial conference, which took place in Hong Kong last week.

I attended the conference with my right hon. Friends the Secretaries of State for Environment, Food and Rural Affairs and for International Development and my hon. Friend the Minister for Trade. The UK delegation included representatives from the CBI, the TUC and Oxfam, as well as the hon. Members for Shrewsbury and Atcham (Daniel Kawczynski) and for Gordon (Malcolm Bruce) and my hon. Friend Roger Berry. I greatly appreciated their participation and thank them for their work.

The conference was attended by delegates from all 150 members of the World Trade Organisation, including Tonga, whose accession was approved during the week and which we celebrate here today.

The Hong Kong meeting was an important staging post in the Doha development trade round. The round commenced just after 11 September in a spirit of harmony and good will, and with a determination to entrench global security by promoting global prosperity. The round was due to be substantially completed by the end of 2006.

We had originally hoped that the Hong Kong meeting would put in place the essential elements of an ambitious and pro-poor conclusion to the round, but in the run-up to the talks, it became clear that substantial divergence between WTO members made such an ambitious outcome unlikely. We therefore set off for Hong Kong with the objectives of locking in the progress already made, constructing a meaningful development package and using the conference as a springboard for the successful completion of the round next year.

From the repeal of the corn laws in 1846 to the successive post-war GATT rounds, Britain's liberal trade policy has fostered rising national prosperity. However, as the Make Poverty History campaign has highlighted, trade reform—alongside debt relief and increased aid—is also crucial for those in impoverished parts of the world.

The UK's G8 presidency has focused on sub-Saharan Africa and the conditions needed to foster sustainable development in the region. The meeting of Finance Ministers in June and the meeting at Gleneagles in July delivered substantial additional aid and debt relief, but trade has far greater potential to generate sustainable prosperity for poor countries. The Commission for Africa, which my right hon. Friend the Prime Minister set up last year, judged that an ambitious conclusion to the Doha round represented the best opportunity to create a reformed world trading system that would allow poor countries new scope to trade their way out of poverty.

For all the heightened political interest in trade across the world in 2005, progress in the round has remained slow. Agriculture is the motor of the round, so it was always clear that there would be no movement on other areas in advance of progress on farming. The crucial elements were domestic support in the US and market access into the European Union. Offers were tabled in October by the US, EU and others to unlock that set of negotiations. While the offers led to intensive negotiations, the major players—both from developed and developing countries—all remained some distance apart on fundamental aspects of the talks. There was a great deal of frustration that the talks were bogged down in an agricultural quagmire that was preventing progress from being made on the other two trade areas: industry, or non-agricultural market access—NAMA, to use WTO terminology—and services.

The week itself saw little real discussion on the overall level of ambition on agriculture, either in terms of domestic subsidies or tariffs. With limited movement on agriculture, it was always going to be difficult to make any significant progress on industrial goods and services. However, there was limited progress in six areas, which meant that while the talks could not be described as successful, neither could they be categorised as a failure.

First, there was progress on the agricultural export subsidies that lead to first-world farmers' produce being dumped on the third world with ruinous consequences for local producers. The House is aware that we have argued that these should be scrapped. Some European Union members came to Hong Kong reluctant to concede anything. Others argued that the end date should be dependent on broader progress in the trade round. The compromise reached was an end date of 2013. Although that is later than we would have liked, the date is specific and fixed and, furthermore, the elimination is progressive. There is a commitment to phase out a substantial proportion by the mid-point between the end of the Doha round and the 2013 end date—by around 2010.

While the EU's export support is transparent, similar practices in many rich countries are opaque, but have exactly the same effect. American food aid provides some help in feeding the hungry, but it is primarily about boosting the incomes of the well-fed by guaranteeing that significant overseas demand is met exclusively by US produce. State trading enterprises in Canada, New Zealand and Australia use a mix of export credits, financial underwriting and monopoly power to similar effect. Although export subsidies are delivered in a number of ways, the effect on poor producers is the same, so we successfully ensured that the deal provides for parallel abolition of all such practices, also by 2013.

The second area of limited progress concerns duty-free and quota-free access for least developed countries—the very poorest countries—to developed country markets. The European Union has already committed to that principle under its "Everything but Arms" initiative, and at Hong Kong we pushed hard to get the developed world to take the same approach. Other nations signed up to the principle, but only on the condition that they retained some temporary flexibility to exclude 3 per cent. of tariff lines during a transition period of indeterminate length.

That is a step forward, but the risk of a 3 per cent. exclusion is that developed countries will apply them to precisely those products where the poorest countries have the best chance to export. I very much hope that the US, Japan and others will now face real pressure from the rest of the WTO membership to give an early date for 100 per cent. coverage in this area.

The third important area was cotton—colleagues may remember that this was largely the cause of the complete collapse of the Cancun talks—where progress was made, but on a very disappointing scale. There was a commitment to end cotton export subsidies by 2006. There was a commitment to grant duty-free and quota-free access to least developed countries' cotton from the date of implementation—progress, yes, but market access had never been the key concern over cotton. The real issue on cotton remains the $4 billion a year in trade-distorting domestic subsidies received by American producers that deny a level playing field to west African producers. On this there was agreement to discussions with the most affected countries, but sadly as yet no commitment to action.

Fourthly, on aid for trade, which will help poorer countries to build the capacity that they need to trade successfully, the week saw new commitments and a new Geneva-based taskforce set up to maintain momentum.

Immediately before the conference Japan committed to US$10 billion in aid for trade over the years to 2010; in Hong Kong the Americans committed to $4 billion by 2010, and European member states committed to new money to go alongside that already pledged by the Commission. The various announcements take us well beyond Gleneagles, replacing vague aspirations with specific commitments and specific dates.

Fifthly, solid progress was made on trade facilitation. To give just one example of how important this area is and the sort of bureaucracy that it will tackle, in India an exporter needs 29 documents for clearance, in quadruplicate, with 257 signatures along the way. Progress in trade facilitation is important, although it is fair to say that progress was virtually guaranteed before we went to Hong Kong, so it cannot be described as an outstanding outcome from the conference.

Finally, and crucially, we have agreed a road map for conclusion of the round. Reaching a deal on an agreed way forward is an important, if modest, achievement for the WTO and the multilateral trading system that it encapsulates. After failed ministerial meetings in Seattle and Cancun the credibility of the WTO and the prospect of concluding the round next year depended on such a deal. So how does this outcome from Hong Kong measure up against our objectives? Overall, the outcome is disappointing. While it was good that talks did not break down, it is fair to say that we wanted much more progress than we achieved.

An agreement of a development package covering aid for trade, cotton and duty-free and quota-free access for LDCs is to be welcomed. But this is no substitute for fairer trade rules, which will bring the majority of gains for this round, where there was no breakthrough. We welcome the decision to phase out export subsidies progressively. This is an important step forward. We will continue to press to ensure that they are phased out as quickly as possible.

I said in my opening remarks at the ministerial conference in Hong Kong that we still faced a mountain to climb and that we needed to use the week of talks to get beyond base camp. The conference did do that—WTO director general Pascal Lamy has judged that we are now more than halfway to the final deal. And it has set out a potential route to the top—agreement of the final architecture of a deal in agriculture and industrial goods by the end of April 2006, and the substantive conclusion of the round by the end of next year.

We should not underestimate the challenge that this poses. Talks have moved slowly over the past four years and some of the trickiest terrain still lies ahead, but we remain passionately committed to a successful round. The Doha development round has the potential to lift hundreds of millions of the world's poorest out of poverty for good, and entrench prosperity and security across the world—a huge prize that we will continue to pursue unrelentingly. I believe that we have the support of the whole House in this endeavour.

Photo of Alan Duncan Alan Duncan Shadow Secretary of State (Trade and Industry)

I thank the Secretary of State for giving me a copy of his statement in advance. It is four years since we last faced each other across the Dispatch Box as deputies in our trade and industry teams, and I am happy to resume our friendly battle of the Alans.

To be successful, the WTO talks in Hong Kong needed to advance the cause of free and fair trade. Agreement was needed to reduce global tariffs, to give poorer countries more open access to our markets, and to remove trade-distorting subsidies, especially for EU exports. It is in everyone's interest that that should happen, and we risk failing in our obligations to the developing world if it does not do so. The outcome of the talks has been cloaked in the language of disappointment and failure. Looking back at them, they were not as good as we had hoped, but they were not all bad. In fact, we should give credit to many people who have striven to make progress in what, inevitably, is a laborious and cumbersome undertaking. In addition to the attendees listed by the Secretary of State, my hon. Friend Mr. Mitchell has just returned from the talks.

Photo of Alan Duncan Alan Duncan Shadow Secretary of State (Trade and Industry)

And my hon. Friend John Bercow.

There were some undeniable achievements, such as the accession to the WTO of Saudi Arabia and Tonga, and the very fact that, unlike Cancun, the talks reached agreement and did not totally break down. The decisions that were made, however, were not quite as certain as the repeal of the corn laws. Was it not a pity that the Hong Kong talks were under way at the same time as the budget negotiations in Brussels, given that the EU position on CAP reform was a crucial ingredient for success in Hong Kong? The Secretary of State, indeed, has just called it the "motor of the round". Was it therefore not ill-advised to hold Hong Kong concurrently with Brussels? With sensible planning, it would have been better to hold Brussels followed by Hong Kong, so that a pre-determined EU position could have played constructively into progress in Hong Kong. If we had used our agenda-setting powers under our EU presidency, and the talks had been consecutive, might we not have had some prospect of securing the removal of EU subsidies by 2010, instead of 2013, as eventually agreed? Does he not recall that Labour's election manifesto intended to meet a 2010 deadline? Far from Europe making that happen, as has been claimed for Hong Kong, anyone can see that Europe stopped it happening better, and must shoulder much of the blame for the Hong Kong talks not achieving more.

Any sensible person will welcome the fact that 97 per cent. of product lines in developing countries will have free access to European markets, but how was that figure reached and calculated? Of course, 97 per cent. feels tantalisingly close to the full Monty, but can the Secretary of State tell us exactly what makes up the 3 per cent. that is omitted? He has just said that the 3 per cent. might contain many of the goods that developing countries most want to trade. Might it not in fact cover items such as textiles and so on, thereby penalising developing countries quite severely? While one accepts that progress in the agricultural sector was stymied by everything that was going on, or perhaps not going on, in Brussels, surely there was no excuse for failing to make progress in the service sector? What agenda will the Secretary of State now outline for future progress in liberalising the international market in services?

On aid for trade, how much new money has been pledged by the EU as a whole, and how much by the UK itself over and above the commitments outlined in the pre-Budget report a fortnight ago? We are told that world trade talks are like a sausage. It is sensible not to look too closely at how they are made—it is what we end up with that matters. The great expectations expressed by the Government before our May elections have not exactly been delivered. Things have inched forward, but at least they have moved in the right direction.

Where do we go next? If the USA is to participate fully in the next stage, the modalities must be agreed next year to allow them to come into effect by mid-2007. What plans does the Secretary of State have to renew momentum in order to get the details hammered out as quickly as possible to convert what is only an outline agreement from Hong Kong into a fully implemented scheme? Will he reconfirm his confidence in the WTO as the best global vehicle for advancing the cause of free and fair trade?

We should all be grateful for the progress that has been made, and we should not be churlish about it being less than we might have hoped for. We are but one of 150 countries, and global agreements are never easy. We must see that what was agreed in Hong Kong is fully implemented, that the WTO continues to work with the constructive participation of all its members and that momentum is not lost. We must all continue to strive for a global economic model that increases prosperity, tackles poverty and builds harmony and co-operation between the nations of the world.

Photo of Alan Johnson Alan Johnson Secretary of State for Trade and Industry

I welcome Mr. Duncan to his new position. It is a great pleasure to be reunited with him after four miserable years apart.—[Laughter.] Perhaps I should say four disappointing years apart.

I mentioned the hon. Members who were in Hong Kong as part of the official delegation, and the hon. Members for Sutton Coldfield (Mr. Mitchell) and for Buckingham (John Bercow), in addition to other hon. Members, were also present in various capacities. There was huge interest in the Hong Kong conference.

On the timing of the discussions, the hon. Member for Rutland and Melton asked whether the outcome would have been different if we had managed to choreograph the Brussels conference before the Hong Kong conference. I do not think that that was possible—the date for the Hong Kong conference was set in stone, because it is not easy to rearrange accommodation for 6,000 delegates.

On the budget discussions in Brussels, it is almost par for the course that presidencies do not start moving until they approach their end. I do not know whether the conferences could have been choreographed differently, but I am sure that that would not have made any difference to the outcome.

The huge reluctance of member states, including France, to agree the end of export subsidies was about protecting the CAP, and I ask hon. Members to recognise that the big issue in relation to those talks and the CAP has not been tackled yet. Market access is the big issue, and it is responsible for 90 per cent. of the money made in terms of the three pillars in agriculture. To get a meaningful deal on not only agriculture but industry—services are a slightly different matter—next year's discussion will be very interesting, because given the mandate of the negotiators, Commissioners Mandelson and Fischer Boel, it will be very difficult to achieve a meaningful outcome to the talks without interfering with the CAP, which is where the galvanising effect of Hong Kong is significant. Watch this space and see what happens early next year.

I agree with the hon. Gentleman about tariff-free and quota-free access for the least developed countries. I cannot say exactly what tariff lines are included in the outcome, because the argument concerned the percentage—once one has agreed the percentage, one then decides the tariff lines. The US would not accept anything higher than 95 per cent., but the developing countries wanted 99.8 per cent. immediately, with the other bit being closed over a period of time. A compromise was reached at 97 per cent., which is why all 150 member states signed up to the statement and why the developing countries were in the end happy to make progress. However, it is important to close the other 3 per cent., because, as I have said, that 3 per cent. is likely to include the very tariff lines from which poorer countries can benefit by exporting into developed markets. However, the issue concerns not only the United States, but Japan and a few others.

On aid for trade, the UK will provide new money. We think that the EU will provide new money, but there is a process to make sure that the commitment is genuine. Many questions were asked about the substance of Japan's offer, and a process is taking place to make sure that that contribution is genuine.

How do we go forward, given that, to use the hon. Gentleman's comparison, the WTO is rather like a sausage—Bismarck once remarked that laws are like sausages? The process is difficult and tortuous, but the timeline set out in the statement agreed on Sunday night is that the modalities—in other words, the formulae—will be in place by April 2006. By July 2006, we will have completed the schedules—the items to which the formulae will be applied. Given the American fast-track system, which involves the US Trade Promotion Authority, America can put the package before Congress and the Senate on a take-it-or-leave-it basis until summer 2007. After that date, the process will become tortuous, which could mean that the US finds it difficult to deliver on an ambitious deal. The momentum exists to get the process moving satisfactorily: the director general of the WTO and the European Commission are key players, but heads of state probably have a role to play in galvanising the discussions.

Finally, I confirm our absolute confidence in the WTO. If we were to move from multilateral discussions and agreements back to bilateral agreements, the poor would be the losers. Although some voices, some of which belong to professional sceptics, say that no deal would be a cause for celebration, I think that no deal would bring into question the future of multilateral negotiations, which would be bad for developed countries and worse for developing countries.

Photo of Norman Lamb Norman Lamb Shadow Secretary of State (Trade and Industry), Liberal Democrat Spokesperson (Trade and Industry)

I thank the Secretary of State for providing an advance copy of the statement and note his sense of disappointment with the outcome of the Hong Kong conference. Does he share the view of Oxfam and others that on the whole little has been achieved for developing countries? Does that not demonstrate a collective failure by the rich developed world to end the hypocrisy of, on the one hand, calling for free and fair trade, and on the other hand maintaining protection of their own economies?

May I remind the Secretary of State of the G8 commitment to make a success of Hong Kong and, in particular, to

"reduce trade distorting domestic subsidies and eliminate all forms of export subsidies by a credible end date."?

Does he agree that the commitment to end export subsidies by 2013 represents no real progress, given what is already happening within the EU in particular, and avoids the wider issue of the trade-distorting effects of domestic subsidies? Overall, does he share the concern that a grand gesture in the G8 followed by an abject failure to deliver simply increases everyone's cynicism about whether anything can ever be achieved?

Following on from the questions about CAP reform by Mr. Duncan, the timetable for CAP reform within the EU fatally compromises any prospect of a breakthrough for developing countries in the Doha round, given that the date for re-examining the EU budget—2010—is after the date for the fast-track process in the States, to which the Secretary of State has referred. Does the Secretary of State have any plans that can genuinely re-establish the momentum of the Doha round, given the apparent intransigence of France and other EU countries and the sense of paralysis in Europe on any prospects of reforming the CAP? Does he share the view that that has been starkly demonstrated by the Prime Minister's total failure to secure a real breakthrough during the British presidency?

On the development of the EU's negotiating stance, will the Secretary of State respond to concerns about the secrecy of the process? The article 133 committee meets in secret. Those who are blocking progress can hide behind that secrecy, and no one ever knows who is the real block.

With regard to the United States, the Secretary of State seems to share the sense of frustration that no real progress has been made on a timetable for ending the outrage of US cotton farmers receiving more funding than the entire GDP of the four west African countries most affected—Benin, Burkina Faso, Chad and Mali. What can be done to get the US to move on that?

On market access for developing countries, where some very limited progress has been made, does the Secretary of State agree that that access on its own is not enough? Vital assistance is also needed to overcome gaps in infrastructure, boost product quality and improve connections to international supply chains. He referred to the Geneva taskforce. What is the timetable for that meeting? Does he agree that the exemptions negotiated by the US and Japan substantially diminish the impact of the market opening agreement?

Does the Secretary of State share the concern of many that the continued failure to reach agreement and a significant breakthrough for developing countries ultimately puts at risk the multilateral process through the WTO? I agree that a drift away from that to bilateral and regional deals would be very damaging, particularly to developing countries, but if we cannot secure agreement that brings a genuine breakthrough for developing countries, there is a real risk to that multilateral process.

Does the Secretary of State have any real confidence that the road map will achieve the progress that we need, given the failure to deliver on other significant road maps? What progress can he secure to ensure that during 2006 a deal is reached in time for the fast-track procedure to work in the United States?

Photo of Alan Johnson Alan Johnson Secretary of State for Trade and Industry

I dealt with many of those points in response to Conservative Members, but I shall pick out a few.

I agree with Oxfam that very little has been achieved. We have always said that—we are not trying to suggest that this is a great celebration of a huge victory. "Low expectations barely exceeded" would be a good way to put it. However, there has been progress. Had we not made the progress that I set out in six points, the conference would have been an abject failure, but it could not properly be described as such. The hon. Gentleman mentioned hypocrisy. We made that point ourselves in the DTI White Paper last July.

On export subsidies, I disagree with the hon. Gentleman. Real progress has been made. The UK had set out a position—it was part of our election manifesto—on getting rid of export subsidies by 2010. Not many other member states were 2010-ers—they included Sweden and, I believe, Denmark. A great deal of concern was expressed about export subsidies. Germany, for instance, understood the issues but felt that its farmers would need much longer before such subsidies could go. Brazil and India did not want the abstract formula that was in the original text—subsidies to go after the finalisation of the round plus five years. Whereas we want Doha to finish at the end of 2006, the experience of the Uruguay round suggests that these things could go on for ever. A formula saying that export subsidies would go five years after the end of the round could have meant 2015 or 2020, so India and Brazil wanted a fixed, certain date. In the end, the fixed date of 2013, with the progressive elimination of those subsidies up until then, and with the parallel elimination of food aid and state trading enterprises, was an important achievement.

On the timetable for CAP reform, the writing is on the wall for the fixation with agriculture. Farmers in this country have adapted and changed in line with the 21st-century knowledge economy. Many other countries have been through a painful process—New Zealand in 1985, and Australia—but they would never go back to the old days. We need a combination of the review in 2008–09, agreed as part of the budget discussions in Brussels, and the elimination of export subsidies. As I said in response to Mr. Duncan, the real issue in these negotiations is how we sort out market access in the EU. Once that is achieved it will ensure that we say farewell to the ridiculous situation whereby the EU spends 40 per cent. of it budget on 2 per cent. of its population.

The article 133 committee is talked about as though it is some kind of secret society, but it is merely the committee of EU officials that meets when the Council of Ministers is not meeting. The secrecy to which it is subject is no more than one would have in any Government and civil service meeting. The poor souls who slog through every day on the 133 committee—the Council of Ministers met every other day; the 133 committee met every day for hours—should be congratulated on their contribution, not treated with suspicion.

Photo of Ann McKechin Ann McKechin Labour, Glasgow North

As my right hon. Friend will be aware, John Bercow and I attended the parliamentary conference in Hong Kong last week. I am sure that he shares my concern that many of the delegates to the parliamentary conference perceived last week as being a tug of war between the EU and the USA. May I urge him to follow up his suggestion that we need leadership at the very top from the world's political leaders in 2006 if we are to achieve a credible development agenda at the WTO talks?

Photo of Alan Johnson Alan Johnson Secretary of State for Trade and Industry

I add my hon. Friend to the list of people who made a genuine contribution. It is not the kind of conference that one goes to in order to have fun.—[Interruption.] Well, I did get this suit, but never mind that.

It is fair to say that the big beasts of the US and the EU needed to make progress on domestic support in relation to market access to the EU. The EU made a good argument to the effect that having agreed to eliminate export subsidies a year ago, although no date was attached, having agreed to duty-free and quota-free access to the EU for least-developed countries, and having put forward a serious offer on 28 October—it was serious, unlike the offer of 10 October—it was now time, in a proper negotiation, for some other countries, particularly larger developing countries, to start moving on industry so that a proper negotiation across the three elements of agriculture, industry and services could proceed.

However, I agree that we have to break the logjam. We have to ensure that when people sit down and make conditional offers they turn over their cards at the same time, because the stage of holding cards close to the chest is well past. Heads of Government have already been involved in that, but they may have a greater role to play over the coming months.

Photo of John Bercow John Bercow Conservative, Buckingham

The constructive efforts by the Secretary of State and his right hon. and hon. Friends deserved a better reward in Hong Kong than they got. Given that the failure to achieve a satisfactory deal is a frustrating inconvenience for the rich north, but literally a death sentence for all too many people in the poor south, and that western agricultural protectionism is deliberately making the poor poorer, does the Secretary of State accept that there is a powerful case not only for bilateral or multilateral initiatives but for unilateral initiatives by the European Union and the United States to end trade discrimination against developing countries in dairy products, textiles and cotton in order to give the most destitute people on the planet the chance to compete and grow?

Photo of Alan Johnson Alan Johnson Secretary of State for Trade and Industry

I agree. That is what "Everything but Arms" was all about. However, we must accept that this is a huge political issue in many of those countries. There are problems in terms of their ability to reach a position where they can sell such deals, and there is a set of negotiations that requires 150 countries to agree with each one having a veto.

I agree with the hon. Gentleman about the sensitivity of reaching an agreement whereby we just eliminate those subsidies in the developed world. I understand the necessity to get to that point, but I accept that doing so in democracies—some of the countries involved are not democracies, but most are—will take a little longer. Huge political interest has been shown in this issue, and organisations such as the Trade Justice Movement and Make Poverty History need to keep the pressure on, because politicians now hold the elimination of subsidies as the major ambition, not just in terms of tackling world poverty but in terms of dealing with global security issues.

Photo of Tom Levitt Tom Levitt PPS (Rt Hon Hilary Benn, Secretary of State), Department for International Development

The whole House will be grateful to my right hon. Friend and the delegation for their efforts in the fight for trade justice last week. Clearly, the WTO is a large monster that is proving difficult to control—as much King Kong as Hong Kong. In discussions last week, was progress made on promoting trade between developing countries and less developed countries, or was it all related to the relationship between the more developed and less developed countries?

Photo of Alan Johnson Alan Johnson Secretary of State for Trade and Industry

Most of the discussion was about the relationship between least developed countries and developed countries. South-south trade is a very important issue, but it did not really get on to the agenda last week. Given the problems that needed to be resolved over five or six days, it is probably understandable that it did not. My hon. Friend is right, however, that the issue is an important part of the totality of this trade round.

Photo of Robert Walter Robert Walter Conservative, North Dorset

Ministers are prone to adopt the rhetoric of the Trade Justice Movement and Make Poverty History. There must therefore be some disappointment, given the strong position of the United Kingdom in holding the presidency of the European Union, that more could not have been achieved in Hong Kong or in Brussels last week. We have a commitment on 5 per cent. of farm support in terms of export subsidies, but what about the other 95 per cent. of support to farmers in the United States and Europe? On tariff barriers, can the Secretary of State be more specific on what will be included in the 3 per cent?

Photo of Alan Johnson Alan Johnson Secretary of State for Trade and Industry

Our policy is to go for 100 per cent., so we are not just interested in what the 3 per cent. should include. We are pretty sure about what Japan and the United States would include in that 3 per cent. box—cotton from Bangladesh springs to mind, for example, and other imports from Cambodia. In fact, the United States originally put forward a proposal whereby countries would be specified as not being able to sell their products into its markets. Eventually, thankfully, that was dropped. In terms of adopting the language of the Trade Justice Movement, that is done across the House because what that movement is saying is true. This is a crucial issue for developed and developing countries. What we do about the rest of those tariffs, which was the thrust of the hon. Gentleman's question, is to return to the fray to get a successful, ambitious outcome by the end of next year. Only then, when we reach the final part, can we judge whether the whole round has been a success or failure. We have taken a small step forward in Hong Kong, but there is still a long way to go.

Photo of Jeremy Corbyn Jeremy Corbyn Labour, Islington North

Does the Secretary of State accept that many people are very sad that food dumping policies will now continue for several years more, with the attendant problems for agriculture in the poorest countries in the world? Will he assure the House that in the discussions before the end of next year, no pressure will be put on the poorest countries to force them to lift import restrictions on manufactured goods from the western world or to privatise public services, which seems to be part of the agenda behind the NAMA—non-agricultural market access—proposals originally put forward?

Photo of Alan Johnson Alan Johnson Secretary of State for Trade and Industry

I agree with the thrust of my hon. Friend's question. In terms of this round, there should be no question of the least developed countries doing anything. Countries such as Singapore, however, which is listed as a developing country, are perhaps not in the same position as Sierra Leone, so certain elements must be considered. Our policy of no forced liberalisation remains, however, and in terms of the issues around services, even though the UK held the presidency of the European Union, we opposed the introduction of benchmarking in services. That has been replaced by plurilateral discussions, which do not interfere with developing countries' ability to say no on a particular service—they decide which services to open up under what is called the request and offer principle.

Photo of Peter Luff Peter Luff Chair, Trade & Industry Committee

I am sure that the whole House is grateful to the Secretary of State for his characteristically honest and thoughtful statement. Does he agree, however, that if we are to achieve a more successful outcome to the round during the coming months, the attitudes and intentions of the more developed developing nations are crucial? In that context, will he comment on the remarks by Jagdish Bhagwati in the Financial Times today:

"Indian industry has come of age and has moved, thanks to its success in information technology, from a defeatist embrace of protectionism to a 'can do' attitude. Manmohan Singh, the Indian prime minister, and Kamal Nath, his commerce and industry minister, both see protectionism as a relic of the past."?

Photo of Alan Johnson Alan Johnson Secretary of State for Trade and Industry

I think that there is a lot in that. Kamal Nath is visionary, in many respects, in terms of where he wants to take the Indian economy. Nevertheless, India is a democracy. In the summer, we had the pleasure of moving from the EU summit in China straight over to India. We were reminded that things could be done in China, in terms of opening up markets, that could not be done in India because of the huge consequences for constituents. India, in particular, will be very disappointed if we do not get a good agreement on industry and services, because its focus is on that rather than on agriculture.

Photo of Linda Gilroy Linda Gilroy Labour, Plymouth, Sutton

I welcome my right hon. Friend's statement in the sense of sharing all the disappointments that he has expressed but also sharing his determination to see as much progress made in the final stages of the trade round as is now possible. That disappointment will be shared by many thousands of our constituents and Members on both sides of the House who are part of the non-governmental organisations and faith groups in the Trade Justice Movement. What is his advice as to how they can best apply their undoubtedly effective campaigning energies in those final stages? As well as keeping us on track, are there other things that they can do?

Photo of Alan Johnson Alan Johnson Secretary of State for Trade and Industry

We meet the NGOs regularly, and the major message is to keep up the pressure and perhaps take French nationality.

Photo of David Heathcoat-Amory David Heathcoat-Amory Conservative, Wells

Is it not an eloquent fact that although there are eight Ministers in the DTI, only one is responsible for trade, and he is shared with the Foreign Office? Will the Secretary of State ensure that the entire subject of trade liberalisation on behalf of poor countries is given more weight, influence and prominence, both within the British Government and at future talks, rather than the whole thing being subcontracted to the European Commission, which has done a very bad job on behalf of British interests at the recent talks?

Photo of Alan Johnson Alan Johnson Secretary of State for Trade and Industry

I do not agree with the right hon. Gentleman's final comment about the Commission. We have our debates about Europe, and the Conservative party has more internal debates, but I thought that the issue of a single market generally found approval across the political spectrum. If we consider what is happening around the world, negotiating as a block is becoming de rigueur. We found out in Hong Kong that the G20 has now teamed up with the G90 to be the G110. I cannot wait for the day when we have the G150. Such trading blocks are quite common. I think that Commissioners Mandelson and Fischer Boel did a good job on behalf of the European Union last week, recognising that each of the member states, if we were not negotiating together, would still be able to block the whole deal because of the way that the WTO operates. Bringing them along together is therefore right.

I do not think that an equation can be made with the number of Trade Ministers in the Government. We have an excellent Minister for Trade who does the job extremely effectively. Other DTI Ministers also have an involvement in trade, and I think that we have the balance right. Certainly, one cannot judge the success of a policy in terms of how many Ministers are pursuing it.

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

Is not one of the WTO's greatest strengths its provision of the rule of law to stop discriminatory behaviour, and to stop the rich from bullying the poor? What steps are being taken to strengthen the dispute settlement procedure, and to halt the slide into bilateral and unilateral action?

Photo of Alan Johnson Alan Johnson Secretary of State for Trade and Industry

The matter was discussed briefly in Hong Kong in the context of other focus rules. There is much work still to be done, but member states recognise as a major attribute of the WTO the fact that if something happens, there is a rules-based system to deal with it. When we were in Hong Kong, the Polish representatives told us about a problem that they were having with Russia, which is not a member of the WTO. That problem could have been resolved if both countries had been members.

Such problems are important, and they will be sorted out by means of the rules. We made a little progress in Hong Kong—not very much, but I do not think that the round will stand or fall on that basis. I think that we shall find a solution.

Photo of Julie Kirkbride Julie Kirkbride Conservative, Bromsgrove

May I take this opportunity to wish the right hon. Gentleman a happy and relaxing Christmas with his young family? I wonder whether, when he has time to reflect, he will regret sending a departmental Christmas card to his erstwhile right hon. Friend Peter Mandelson. Is it not a fact that Commissioner Mandelson is now the most effective exponent of the interests of French farmers, and is it not a fact that the deal that the EU put on the table would have cut agriculture subsidies by just 1 per cent. in real terms? Does it not now appear that until Commissioner Mandelson is history, the aspirations of the Make Poverty History campaigners are but a distant dream?

Photo of Alan Johnson Alan Johnson Secretary of State for Trade and Industry

First, I do not agree with the hon. Lady about Peter Mandelson.

Photo of Alan Johnson Alan Johnson Secretary of State for Trade and Industry

I can say with a straight face that he did an excellent job last week. Secondly, I do not believe that I sent him a Christmas card.—[Laughter.]

Photo of Peter Bone Peter Bone Conservative, Wellingborough

Was any progress at all made on north-north trade?

Photo of Alan Johnson Alan Johnson Secretary of State for Trade and Industry

No, because that was not the focus of the discussions, but north-north trade is very important. There was a significant development in Brussels a couple of months ago, when we opened a dialogue with the United States Government about EU-US trade. The hon. Gentleman is right: there are a number of barriers. Let me add that it would be good if we opened up trade in services within the EU as well as across the world.

Photo of Nigel Evans Nigel Evans Conservative, Ribble Valley

While the conference may not be termed an abject failure, ultimately it represents limited failure. During the general election a number of us met representatives of trade justice organisations, and a number of us have been to Africa and seen at first hand the impact that blockages of progress are having daily on hundreds of millions of people in the poorest parts of the world. The Secretary of State has been honest today in naming names when discussing the guilty countries. What more can be done in the European Union—although we shall lose the presidency at the end of the year—to give us a more positive role and the opportunity to take more positive action, and to provide a more united front enabling us to assist the poorest people in the world?

Photo of Alan Johnson Alan Johnson Secretary of State for Trade and Industry

I will resist the temptation to endorse the suggestion of my right hon. Friend the Minister for Industry and the Regions that staying in the European People's party might be helpful.

On reflection, after six months of chairing committees—the DTI has a huge number of committees dealing with telecoms, energy and so forth—I think that getting rid of the presidency cap and once more being able to express the UK view on trade, a view that unites the House, will do us a great deal of good. It will allow us to join our increasing number of allies. I believe that there is also a role for the electorate in the various countries. Representatives from New Zealand and Australia told us how difficult it was to face up to the electorate when it came to changing farm subsidies in their countries.

Just before we went to Hong Kong, we saw the depressing results of a poll to find out how individuals felt in various countries around the world. They did not give these issues the prominence that might have been expected by the Trade Justice Movement and Make Poverty History. There is a great deal of work to be done to get public opinion on our side. When we have done so, we can change the views of member states.

Photo of Philip Hollobone Philip Hollobone Conservative, Kettering

Despite Britain's best efforts, were we not badly let down by our EU counterparts? Does the Secretary of State agree with the Make Poverty History campaign that although EU decision makers have been quick to echo the words of trade justice campaigners, they have not changed their policies in practice? Is not Britain being let down by a combination of pressure from overfed French farmers and ineffective leadership from the EU's Trade Commissioner?

Photo of Alan Johnson Alan Johnson Secretary of State for Trade and Industry

I do not agree. I certainly feel that some member states were making life difficult and will need to have a complete rethink about their approach if we are to reach a successful conclusion, but I am absolutely sure that all member states want a successful round and none wants to be responsible for its failure. There is political pressure in that respect.

As for Commissioner Mandelson and Commissioner Fischer Boel, they did sterling work on behalf of the EU last week. They were in a negotiation. It was not an "Anne of Green Gables" world in which everyone just says nice things about each other; they had to negotiate a settlement that had the agreement of all their 25 member states, and would then have the agreement of 150 WTO countries. That was a very difficult task. I think that they performed it wonderfully, and I do not think it helps anyone to personalise the issue and apply it to one or two individuals.

Incidentally, I should be surprised if members of the hon. Gentleman's party who were in Hong Kong felt any differently about the work put in by Commissioners to secure a satisfactory outcome.