"With permission, Mr Speaker, I should like to make a Statement about the Fifth World Trade Organisation Ministerial Conference in Cancun, from 10th–14th September, which I attended together with my right honourable friends the Secretary of State for the Environment, Food and Rural Affairs, the Secretary of State for International Development and the Minister for Trade, Investment and Foreign Affairs. Commissioners Lamy and Fischler negotiated on behalf of the EU.
"The UK delegation included my honourable friend the Member for Putney, representing 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 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 with the US, EU colleagues and others.
"The conference was the WTO's opportunity to restore momentum to the Doha development round that 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. That position was fully supported by the British Government.
"Many other WTO members also signalled a willingness to be flexible on various issues. With more time, I believe it would have been possible to reach agreement. Failure to agree at Cancun is a serious setback for the Doha round. But it is not the end of the round for the WTO itself.
"In anticipation of Cancun, we had already reached agreement—overdue but none the less welcome—on access to medicines for developing countries. That agreement stands. It must now be built on, particularly through the global funds to fight AIDS, TB and malaria. "And in June, the Agriculture Council of the EU agreed significant reforms of the common agricultural policy—reforms that will mean substantial cuts in the trade distorting support and export subsidies which we give to our own farmers and which do so much damage to the farmers of the developing world. The EU has also already offered in principle to phase out export subsidies on products of particular interest to developing countries. The agreement on CAP reform was not conditional upon agreement at Cancun.
"We 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, this Government have led the way in 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 last week by my right honourable friend the Secretary of State for International Development.
"Furthermore, at Cancun itself, we made real progress in discussions on agricultural 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 15th December to try to resolve the issues that we could not sort out at Cancun. We in the United Kingdom will engage fully to try to make this a reality. I have already spoken to the Director-General of the WTO, Dr Supachai, about how we in the UK can drive this forward.
"The final ministerial statement urged that renewed discussions be based on the concessions delegates offered at Cancun and not on their earlier positions. In the case of the EU, this means we should accept that, despite our continuing commitment to encourage and facilitate direct investment in developing countries, WTO agreements on investment and competition are off the EU's agenda.
"The IMF and the World Bank also announced in Cancun a new initiative to help developing countries to overcome problems in adjusting to a more liberal trading environment. I warmly welcome this. The UK Government will make a substantial input to the design and implementation of that initiative.
"In the wake of Cancun, I am afraid it is inevitable that more emphasis will be put on regional and bilateral trade agreements. Although these 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 find ways of addressing the issues of substance that prevented agreement at Cancun. We shall be discussing how best to make progress on all those issues with our EU partners, the European Commission and others, taking into account particularly the views of developing countries.
"The UK Government are determined to do all they can to help to deliver a development round in line with the promises 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 why we will continue to work for its success".
My Lords, that concludes the Statement.
My Lords, I thank the noble Baroness, Lady Amos, for repeating the Statement on what the press have referred to as the "farce and failure" of the Cancun trade talks.
The walkout of the G21 is a stark contrast to the excitement and genuine hope which characterised the beginning of the Doha trade round in November 2001. It is sad that the atmosphere of scepticism surrounding the talks, following the lack of progress, numerous missed opportunities and collapsed deadlines running up to September, culminated in the breakdown last Sunday night.
That major setback in negotiations postponed the implementation of the Doha Development Agenda. It may not be the "end of the round", as the Secretary of State said, but it makes the January 2005 deadline defunct. The collapse will damage business confidence. A fear already expressed by officials in Geneva is that momentum will move away from a multilateral agreement on trade to bilateral agreements and projects, such as the US's Free Trade Area of the Americas, thus sapping what little energy is left for Doha. Can the Secretary of State please outline what Her Majesty's Government are planning to do to try to rectify this impasse on trade and explain what will be our "substantial input", which she mentioned, into the joint IMF and World Bank initiative?
With elections due next year in India, the US and France—three key members of the WTO—it is vital that we restart talks as soon as possible. The current situation means that everyone is losing out. All countries—developed and developing—need to be prepared to compromise more. We recognise that the two Singapore issues—investment and competition—were the flashpoint at the conference. We cannot let that hide our own intransigence over agriculture. That continues to be one of the major stumbling blocks to progress so far.
The US and the EU have failed adequately to reform their agricultural regimes. The European Union CAP reforms made in August, although in the right direction, were less impressive than Her Majesty's Government would have us believe, and they fall far short of the radical changes needed to improve the lot of poor countries. We accept that farmers need support, but not subsidies that distort trade.
One major criticism of the negotiations is that the rich members are over-represented, leaving poor countries little voice. In May, Conservative Members in another place made suggestions for an advocacy fund, which developing countries could use to provide themselves with quality legal and economic advice on trade issues. Developed countries would contribute to the fund, thus keeping the cost to individual countries to a minimum, while at the same time ensuring that poorer countries had the means to select the advocates they needed to negotiate on their behalf. Her Majesty's Government have said that they are committed to,
"an agreement that works for developing countries".
The advocacy fund is surely one example of a programme that would benefit poorer countries.
Last week, DfID announced a £50 million allocation to help to integrate trade into their plans to reduce poverty. While that £50 million is an obvious reflection of our proposal for an advocacy fund, it falls far short of any trade capacity-building initiative.
The failure of Cancun has damaged the credibility of the WTO, but can the Secretary of State reassure your Lordships that Her Majesty's Government will do all they can to support this organisation while also pressing for the recommendations that the WTO should become,
"more transparent and facilitate full participation by developing countries"?
The WTO is arguably more democratic than some other international organisations. It is one of the few international organisations in which poorer countries form a majority, and it proceeds via consensus rather than voting.
The breakdown of trade talks also raises other problems. Recent trade disputes put on hold under the "peace clause" negotiated during the Uruguay round will expire on 31st December 2003. If the Doha round remains stalled, big exporters such as Brazil may resort to litigation. Can the Secretary of State inform the House what plans there are to extend the deadline and how Her Majesty's Government plan to address the consequences of its expiry? There is also the issue of several simmering disputes between the EU and the US, which could boil up again, for example the foreign sales corporation tax.
In sum, let us not lose sight of the importance of these issues. The World Bank estimates that eliminating all barriers to trade would generate between 250 and 520 billion dollars extra in global income. Up to half of that would go to developing countries. That could lift over 144 million people out of poverty by 2015. The time for rhetoric and missed opportunities is over. We must be prepared to be bold and make the first move in restoring the political impetus into these critical issues relating to multilateral trade.
My Lords, I, too, thank the Secretary of State for repeating the Statement made today in the other place. On these Benches we share the deep disappointment that the talks ended in failure. Despite the anti-capitalist celebrations, the real losers in this are the poorest countries. Indeed, there is now a real danger of trade conflict and bilateral agreements, which are likely to benefit stronger rather than weaker countries.
As we have heard, there are some positive developments from Cancun. The new grouping there of developing countries is very welcome. However, is the Minister concerned that many of those in the G21 were stronger developing nations, such as China and India? Might the poorest countries again be squeezed out?
Comments afterwards seemed almost to blame the Mexican chairman of the last session. Patricia Hewitt and Caroline Spelman of the Conservative Party, both speaking on the "Today" programme on Monday morning, seemed very taken aback. Mrs Hewitt stated that there was a deal to be done and that they had been close to achieving that. She reiterated in the other place today that a deal might have been achieved with another six to eight hours of talks.
Does the Minister agree that we need to look wider for the reasons for failure and that perhaps it should not have been such a surprise? Every deadline set in the Doha round has been missed. Did the fact that the agreement in the EU on farm subsidies was not reached until June, long past its deadline, play a part? Above all, can she comment on why the so-called Singapore issues were introduced; issues which the developing countries were simply not prepared to discuss while agricultural subsidies had not been settled? Surely, the developing countries made it very plain before Cancun that no new issue should be added to what was already a difficult enough agenda. What part did the UK Government play either in allowing that or in seeking to prevent it? Having raised them, why were these issues not withdrawn from the agenda at an earlier stage? However, I welcome the Government's commitment that they should not be reintroduced in December.
When discussing the EU proposals back in June, the Minister stated that those were an opening position for Cancun and that she expected the EU to concede more. Does she not think that that was a risky position for the British Government to be in, relying on a developing world to put pressure on our EU partners? Was British influence over our French and German partners on these matters weakened as a result of differences over Iraq? Has that moved us to the periphery of influence in Europe?
Yet did our position on Iraq give us any influence at all over the US negotiators, especially, for example, over their position on their cotton industry? Is she concerned that the US negotiator has now said that the US will be encouraged to look at bilateral rather than multilateral deals? I note that the Wall Street Journal has urged the US Government down that line.
We have to move forward and I welcome the commitment that the Government made to get the talks back on track. Can the Minister tell the House more about the meeting in December and the part that our Ministers, as opposed to our officials, may play in that? It seems as if there has been a seismic shift of power within the WTO. Whatever their flaws, it has to be through international institutions such as the WTO that progress is to be made if weaker countries are not to lose out to stronger ones. I therefore welcome the Government's commitment to that, even though we failed to get our negotiating group to present acceptable proposals to this conference.
My Lords, I thank the noble Baronesses, Lady Rawlings and Lady Northover, for their comments. I shall try to address the comments and questions raised. The noble Baroness, Lady Rawlings, asked about the January 2005 deadline. It is very difficult to believe that we shall now meet that deadline. As the noble Baroness, Lady Northover, stated, we have missed just about every deadline in this round. Looking back, previous trade rounds took much longer than anticipated. This was a very ambitious round. We want that which was unanimously agreed at Doha to be achieved because of the impact it will have on the poorest countries in the world and we are ready to fight to secure that.
The noble Baroness, Lady Northover, asked what would happen at the December meeting. The communique states that there will be a meeting at official level. We shall push to ensure that the political elements are clear in terms of what we want to achieve. Given our failure to achieve that in Cancun when we had Ministers present representing the majority of countries in the WTO, it is difficult to speculate now where we will be in December. It is still early days.
The noble Baroness, Lady Rawlings, asked what we are planning to do next. The talks broke down only on Sunday. My right honourable friend returned yesterday from Cancun, although I returned earlier. We are currently in discussions on how best to take forward this process. The IMF/World Bank initiative is one of the options we are considering in terms of influencing the way forward. The initiative will consider issues such as preference erosion, the loss of revenue to developing countries due to tariff reduction, financial assistance, and looking at trade issues as part of a development programme, linking in to the priorities of developing countries.
When in Cancun I spoke to the trade Minister for Malawi and was struck when he said that because of an IMF monitored programme, Malawi was forced to open its markets too quickly. That resulted in an excess of cheap imports and it cannot access developed country markets. One of the things we want to do is to ensure that the IMF/World Bank initiative is sequenced and takes on board the very difficult decisions that developing countries have to make with respect to opening up their markets.
The advocacy fund was raised by the noble Baroness, Lady Rawlings, and has been raised many times in the other place. It would be enormously helpful if the noble Baroness, Lady Rawlings, and her honourable friend in the other place, Caroline Spelman, were to look at what we have done. Since 1998 we have put some £110 million into a range of initiatives to help developing countries. I announced an additional £50 million last week.
The noble Baroness, in talking about an advocacy fund, talked about the importance of developing countries having access to legal opinion. We have given £1.25 million to the Advisory Centre on WTO Law. It is an independent Geneva-based centre, which assists developing and least developed countries by providing free or low-cost legal support to members pursuing cases in the dispute/settlement mechanism. We funded the South Centre. We funded a Trade and Investment Access Facility. We have given £7.5 million for the Africa Trade and Poverty Programme. Far from us following the opposition, the opposition is following us.
The noble Baroness, Lady Rawlings, asked about the WTO becoming more transparent and facilitating discussion. In conversations with developing country Ministers, I was very struck by the fact that they all felt the process was more transparent and open, but they remained cynical about that process leading to the outcomes they would wish to see. The next stage needs to be developing countries having a stronger voice and the opportunity to contribute, but with that robust process of dialogue and discussion leading to an outcome that actually takes on board the needs of developing countries.
I agree with the noble Baroness, Lady Northover, that the real losers are the poorest nations. There were differences between developing countries. The noble Baroness referred to China and India and whether the poorest would feel squeezed out. There was the beginning of that kind of feeling at Cancun. Indeed, different developing countries formed different groups. So one had the G21 focusing very much on agriculture and another group, which were the poorer developing countries, with a little bit of overlap, looking at special and differential treatment and the special safeguard mechanism. They were particularly concerned about impacts on the poorest countries.
I agree with the noble Baroness that there is a range of reasons for the failure of these talks. It is not just one thing; the situation is complex and complicated. It is a pity that—although we were closer to agreement when we finished than when we started—many countries spent the first two days re-rehearsing arguments they had already put in the run-up to Cancun. So we needed slightly more time at the end of the process.
On the Singapore issues, in 1998 the European Union was considering what new agreements might help the benefits of trade to spread more widely within developing country economies. So there was a negotiating mandate to propose agreements on investment and competition. Noble Lords will know that the Government's position, which was stated publicly by myself and by my right honourable friend Patricia Hewitt, is that these issues were not a priority for the British Government. However, clearly we were negotiating as part of the European Union. We worked to persuade our colleagues on the best kind of negotiating tactics to use. But, at the end of the day, we agreed a negotiating mandate as part of the European Union and we stuck by that mandate.
I think that I have addressed all the issues and questions raised.
My Lords, can the Secretary of State help: is it correct, as reported in the press, that great resentment was expressed by representatives of developing countries at the failure to reform the CAP, which they rightly said ruins Third World farmers through the subsidised dumping of farm produce? Is it correct that the promised reform will do little to change the problem that now exists, which was one factor that led to the breakdown of this meeting?
Should not the Government be impressing on European colleagues the vast importance of sorting out this problem, which is far more important than the construction of a new European constitution? Can the Minister tell us what these promised changes to CAP will amount to? What evidence is there to suggest that they will meet the concerns of Third World countries and stop this subsidised dumping of farm produce, which is ruining their own farmers?
My Lords, the noble Lord will know that we were at the forefront of the discussions with the European Union which led to the CAP reform deal. The big element of that deal was the breaking of the link between production and subsidies. I am happy to write to the noble Lord giving some of the more technical details of the agreement.
Noble Lords will know that, in discussions on CAP reform, we wanted to go much further. But, obviously, there are very different interests within the context of the European Union. We thought that, given those differences, the CAP reform deal was historic. Despite the disappointment expressed by some developing countries that the CAP reform deal had not gone further, I do not think that that led to the breakdown of the talks. In fact, we were closer to some form of agreement on agriculture than on any other issue. It was on the new issues—the Singapore issues—that the talks fell down. There was a general feeling that—there not being agreement on the Singapore issues, despite the movement by Pascal Lamy—moving on to talk about agriculture would not take us much further. That was not necessarily our reading of the situation. Unfortunately the talks failed.
My Lords, I have not had the opportunity to congratulate my noble friend on her elevation to the Cabinet. I do so now. I am delighted with that promotion. I am less than delighted, not just about what came out of Cancun but with the policies of the European Union and, indeed, the United States—where we have no responsibilities of course. However, like the noble Lord, Lord Waddington, I am extremely concerned about European Union policies on agriculture.
I do not know whether my noble friend—she has been rather busy of late—has had an opportunity to read the unanimous all-party report on globalisation of the Economic Affairs Committee, which made it clear that globalisation has not been the cause of trouble in the poorest parts of sub-Saharan Africa; much of it is due to the corruption and civil wars that have taken place in those areas. On the other hand, while I appreciate the increase in aid that the Government have provided, it is a drop in the ocean in comparison with the damage that the common agricultural policy does to those poorest developing countries. Does my noble friend agree with that?
Does my noble friend agree that if there is to be any hope whatever of real help for countries such as those in sub-Saharan Africa, which suffer so much from the effects of the common agricultural policy, the UK Government will need to take measures to try to convince the European Union to change those policies?
My Lords, it is really important that we recognise what the CAP reform deal delivered earlier this year. We also need to recognise that it is part of a process of continuing reform. EU export subsidies have fallen by some 70 per cent in the past 10 years. The Government recognise that there is still some way to go. However, let us not rubbish where we have got to, because the split between production and subsidy is a very important step on agriculture. More CAP regimes are up for reform this autumn, including cotton, which was a big issue in our discussions at Cancun. Next year, we shall consider sugar, which continues to be an extraordinarily difficult matter.
I agree with my noble friend: we need to work to convince our EU partners to move further. I also agree that the volume of aid to developing countries will not deliver the kind of change in sustainable development that we want. That must come from economic growth. To meet the millennium development goals, developing countries will have to average growth rates of about 7 per cent. In sub-Saharan Africa, they are averaging only 3 per cent, so there is a huge gap to be met. We are attempting to increase aid resources through the international financing facility on which my right honourable friend the Chancellor is working, but giving developing countries access to trade and growth is the key to development.
My Lords, I thank the noble Baroness for repeating the Statement, despite its dismal contents. I listened carefully when she answered the noble Baroness, Lady Northover, who pressed her on the EU position. It is abundantly clear to all of us that there was a strong difference between our position and that of the European Union. The Secretary of State's answer confirmed that.
Does she agree that, as so many non-governmental organisations are saying, the developing countries viewed the Singapore issues as a form of Trojan horse to bring back the much-hated multilateral agreement on investment, which, as she said, we rejected so many years ago? Did they not fear that that would return all over again? Can she also elaborate on why the European Union had not discarded that negotiating position? Is she absolutely certain that it has now discarded it, or will it return in another form?
My Lords, first, it is important for noble Lords to recognise that European Union countries agree a negotiating position and a mandate. We stand absolutely behind that mandate. Having said that, my right honourable friend Patricia Hewitt and I have made clear that we did not view the new issues—the Singapore issues—as a development priority.
The concerns of developing countries crossed the spectrum. Some were concerned not to negotiate on new issues because they simply felt that they did not have the capacity to do so. Others were concerned about the impact on their economies. I have a personal view on investment. From talking to businesses about the need for greater foreign direct investment in Africa, it is absolutely clear that one thing that would help would be such an investment agreement.
That is a personal view that I have expressed to Ministers of developing countries, but I have also made it clear to them that their view of the subjects on which they feel able to negotiate at any particular time should prevail in the WTO. Given that the WTO is a "one member, one vote" organisation and that we cannot discuss issues unless all are agreed, we reached the situation that we did in Cancun.
However, there was by no means unanimous agreement across all developing countries. Some of the middle-income developing countries, as it were, argued that all those issues should be on the table. African countries were saying that all of them should be off the table. The European Union said that we were quite happy to withdraw on competition and investment, and that our starting point for the next round of negotiations assumed that.
My Lords, when Mrs Beckett returned from the CAP negotiations, she said that the results would put us in a good position for the forthcoming WTO round. In retrospect, does the noble Baroness feel that she was over-optimistic, badly advised or simply misjudged the situation?
My Lords, none of those. The CAP reform proposals put us in a much better position to move forward on agriculture. As I said in response to the noble Baroness, Lady Northover, we felt close to a deal on agriculture at Cancun, if we had had a bit more time. That would have made a substantial difference, especially to the poorest countries in the world. So I do not believe that my right honourable friend was being over-optimistic. When I left Cancun on Friday—the talks broke down on Sunday—the discussions were robust but there was then no feeling that the talks would collapse. There was still a feeling that, although there were differences, we could reach a deal.
My Lords, with characteristic courtesy, the noble Baroness has put the whole agony of Cancun before the House and, understandably, said that she regretted its failure. But was she surprised? The World Trade Organisation seems to be the most ill-constructed body for decision-taking. The very size of it is a challenge. The dubious principle of "one nation, one vote" and the proliferation of non-governmental organisations make it an enormous gathering that cannot come to decisions.
We are now told that it was touch and go whether it did a deal on agriculture. If it had, would that deal in any sense be rooted in the real world? How can a whole group of itinerant politicians and their advisers sitting there really get down to carve up the global market in supply of and demand for agricultural products? That is unfeasible even in the context of the European Union trying to make its own painful arrangements in agriculture, which are modest in ambition compared with those of the WTO.
I ask one specific question to bring the issue of agriculture into greater reality. What decisions have been taken in the assessments of agriculture about the use of genetically modified crops? Is it accepted that they may have an enormous impact on the balance of supply and demand not only of agriculture but of many social problems related to it? Are decisions taken at Cancun or in the WTO automatically transferred to each national situation? Is it suggested that decisions in that forum will authorise what may or may not be done about genetically modified products in this country? Or is it accepted that that is a matter of such sensitivity that it properly belongs to this Parliament?
My Lords, first, the issue of genetically modified organisms is not on the agenda of the WTO round. I am happy to write to the noble Lord about some of the research that the department has been doing, which has been considering agricultural productivity and ways to enhance products in developing countries—for example, by the addition of vitamin E to help with health outcomes.
In response to the noble Lord's first question, I was surprised at the failure. Although there were robust discussions and very clear disagreements in Cancun, there was a feeling that a deal could be done. My right honourable friends the Secretary of State for Trade and Industry and the Secretary of State for Environment, Food and Rural Affairs were very surprised at the speed of the collapse of the talks. South Africa and India both expressed surprise and regret to my right honourable friend the Secretary of State for Trade and Industry later on Sunday, after the talks had collapsed.
I agree with the noble Lord that the WTO represents a challenge, but it also represents the best possible opportunity for the poorest developing countries, which do not have the capacity to negotiate bilateral—or, even if they come together, regional—trade agreements with some of the bigger countries.
My Lords, is my noble friend aware that the common agricultural policy is compulsory expenditure in terms of the European Union budget and is therefore subject to great influence by single member states, as we witnessed in the discussion between the Prime Minister and M. Chirac after a recent European Council meeting? Does not the disproportionate influence of a single country on agriculture make it extremely difficult to get a mandate from the European Union that represents anything other than the lowest common factor, when we ought to be looking for the highest common denominator in agricultural reform?
My Lords, with respect to the EU mandate at Cancun, I do not think that we had the lowest common factor. There may not have been the maximalist approach that we in the United Kingdom would have liked to see. However, as a result of the CAP reform deal that we managed to do in June—my right honourable friend the Secretary of State for Environment, Food and Rural Affairs played a very big part in that—the mandate may not have been as good as it was. I repeat what I said previously: a deal on agriculture was there to be done.
My Lords, does the Minister agree that the statement she made a few minutes ago—that the recent deal on the CAP reform was historic—is slightly exaggerated? The link between production and subsidy has not been broken for many commodities. The cost of producing sugar in Europe is three to four times that in the developing world, yet M. Chirac has ensured that the subsidy continues for the next three to four years. Will the Minister explain how the protection of French sugar beet farmers helps the Third World?
My Lords, I do not think that protection of specific products in the European Union helps developing countries. That is why it is so important that this is part of a process, and that we will be looking at cotton later this year and at sugar next year.
I draw noble Lords' attention to the fact that the European Commission has made it absolutely clear to developing countries that we are prepared to look at any specific products—where we have high tariffs, for example, which they feel restricts their development. There is frustration that developing countries have not come back to the Commission with a list of products. We are in the process of trying to ensure that developing countries understand what that means, because it is a great opportunity.