Treaty of Lisbon (No. 6) — [6th Allotted Day]

Part of Business of the House (Lisbon Treaty) (No. 5) – in the House of Commons at 5:58 pm on 25th February 2008.

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Photo of Colin Burgon Colin Burgon Labour, Elmet 5:58 pm, 25th February 2008

In his opening speech, the Secretary of State said that eliminating global poverty was one of the greatest challenges facing the world, and nobody could possibly argue with that. We should look not just at the principles to which people say they are committed, including the eradication of poverty, which no one in the House would oppose, but at how they are carried out in practice. That is the true test of any institution or organisation. In this country we view Europe either as a utopia which represents the most perfect mechanism ever constructed by man or woman, or as an empire of evil. Of course it is neither, but those are the themes that run through the debate. We should try to avoid such thinking.

We should look at how the philosophy and the principles of the European Union as they relate to aid and trade are implemented. At its root, Europe's approach to trade and aid is incoherent. The treaty states that it aims to improve the coherence of wider EU policies with development objectives and poverty eradication. Who can argue with that? However, in the articles on trade policy, the treaty's apparent favouring of a liberalisation approach over other objectives risks enshrining incoherence at the heart of the treaty. We must examine that.

My view of the current trend in the EU is probably not the majority view in the House, but we should encourage minority viewpoints at all times. I would argue that the EU Commission is perhaps—the Minister may wish to disagree—the most powerful neo-liberal force in the various world trade organisations which do much to shape the world and the lives of its people. In the most recent world trade talks, it adopted key demands made by corporate pressure groups such as the European Services Forum to force open services markets in poorer countries to multinational companies.

Despite massive opposition from developing countries, the EC and the ESF got almost everything they wanted into the services text of the Hong Kong World Trade Organisation ministerial decision, which increased pressure on poor countries to open up their markets for basic services such as water, health care and education. Previous episodes of liberalisation in these sectors restricted poor people's access to those essentials.

The world is dotted with examples of that. It was the EU Trade Commissioner Peter Mandelson, our former comrade, who said:

"We want to liberalise trade and grow markets in which to sell European goods and services. Multilateral negotiations"— in the WTO

"offer the biggest prize in achieving this."

So EU trade policy makers generally share with the massive number of corporate lobbyists who hang about in Brussels the belief that promoting business interests by opening up markets in developing countries will automatically generate economic growth and reduce poverty. Accordingly, Governments actively encourage the corporate sector to help formulate trade policies. As one senior Brussels-based business lobbyist says:

"There is a broad political consensus. We share a common interest."

The assumption that trade liberalisation will automatically lead to economic growth and cut poverty in developing countries has become the received wisdom. It was openly stated by our good friend, Trade Commissioner Mandelson, most recently in an article in The Observer on Sunday 2 February. That argument is advanced despite little convincing empirical evidence that trade liberalisation is associated with subsequent economic growth, and strong evidence that it can have extremely destructive impacts on poorer economies and the lives of poor people there.

A report from the Commission for Africa, which was set up by Tony Blair, concluded:

"Forcing poor countries to liberalise through trade agreements is the wrong approach to achieving growth and poverty reduction in Africa and elsewhere."

The economists Adam Smith and David Ricardo, the godfathers of free trade theory, were also against rapid trade liberalisation. After a quarter of a century of experimenting with trade liberalisation, poor countries remain locked in a poverty trap, and rich countries continue to push developing countries to liberalise trade through global institutions such as the WTO. The EU plays a key role in that process.

The Lisbon treaty makes international trade an exclusive competence of the EU and includes foreign direct trade in a common commercial policy. It reduces the power of the member states over trade. Article 188 of the new treaty retains a special committee of officials from EU member states which is currently known as the article 133 committee. The House will be pleased to hear that I shall not elaborate on that, as I covered it extensively in a previous debate.

Economic partnership agreements are the instruments through which the neo-liberal policy of Commissioner Mandelson is pursued. To his credit, the Under-Secretary of State for International Development, my hon. Friend Mr. Thomas, has expressed reservations about the effect of economic policy agreements. A briefing from the Trade Justice Movement explains what those agreements mean, and it is worth putting that on the record. I shall highlight three elements.

First, EPAs require countries to liberalise tariffs on the vast majority of products, with exclusions only in exceptional cases. That would open up markets in African, Caribbean and Pacific countries to the EU's subsidised agricultural products and more competitive manufactured products, undermining the livelihoods of smallholder farmers and the promotion of value-added production. Secondly, EPAs introduce new regulations on services, competition and Government procurement that would make it extremely difficult for ACP countries to support local companies, create new jobs and grow their economies. Thirdly, EPAs introduce stricter rules on intellectual property that would make it more difficult to access and afford educational materials on the internet.