World Trade Organisation (EUC Report)

– in the House of Lords at 3:02 pm on 2nd December 2004.

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Photo of Lord Radice Lord Radice Labour 3:02 pm, 2nd December 2004

rose to move, That this House takes note of the report of the European Union Committee, The World Trade Organization: the role of the EU post-Cancun (16th Report, Session 2003–04, HL Paper 104).

Photo of Lord Radice Lord Radice Labour

My Lords, in producing the report we took evidence, both written and oral, from a wide range of witnesses. We went to Brussels where, among others, we saw Pascal Lamy, who was then Trade Commissioner. We also met ambassadors representing a number of key countries in the Doha round at the World Trade Organisation in Geneva. The Secretary of State for Trade and Industry gave evidence to our committee. On behalf of my committee, I thank all our witnesses. We are also grateful to our specialist advisers, Christopher Roberts and Matthew Cocks. I also thank our Clerk, Judith Brooke, for her exceptional contribution, and our European adviser, Charlotte Granville-West, for her help.

As chairman, I thank my colleagues on the sub-committee for their help and constructive contribution to its work. I thank the Government for their helpful response to our report; they agreed with almost everything that we said. Lastly but not least, I look forward very sincerely to the maiden speech of the noble Lord, Lord Vallance of Tummel.

It is a good moment to debate our report on the Doha round. The framework document on the basic principles and modalities was agreed on 1 August. We now have a newly elected US Administration, although not yet a new US trade representative, as Robert Zoellick is still in place. We now have a new European Commission and a new Trade Commissioner, Peter Mandelson. Technical negotiations have been under way in Geneva.

The main purpose of our report, which was published on 16 June, was to set out what was required to get the Doha round back on track after the sad and rather disastrous collapse of the Cancun meeting in September 2003. We brought to our report and to the inquiry a strong belief in the view that measures to promote further trade liberalisation were good things. We believe that the removal of trade barriers leads to faster economic growth and more employment. Further trade liberalisation allows economies to specialise in what they do best. That does not mean that one country's gain is another's loss. Two countries trading with each other can both be better off. In other words, it can be and very often is a win-win game.

We do not believe that there is necessarily a conflict between trade liberalisation and other important policy objectives, such as development and poverty reduction. On the contrary, the opening up of markets has enabled developing countries such as China and India to expand and compete more effectively in world markets. In our report, we applaud the work of GATT and its successor organisation, the WTO, in creating a more open market system. In a box on page 11, which I recommend to noble Lords, we note the beneficial impact of international trade on world economic growth.

We therefore believe that it is very much in the interests of the European Union in general and the UK in particular to bring the Doha round to a successful conclusion. The UK has derived great advantage from an open trading system. It is also in the interests of the EU that the Doha round should succeed, as its other countries also stand to gain a great deal from the expansion of trade. We often forget that some of the major economies of the EU trade at a percentage of their GDP in a greater way than we do.

Despite occasional differences, the United Kingdom benefits from being part of the combined power of the EU in trade negotiations, in our opinion. After all, the EU is one of the two biggest players inside the World Trade Organisation, so it is vital that it takes a view that is useful to us—advantageous to the UK—and good for the world. Our remarks are addressed to ensuring that the EU plays its full part in getting the Doha round back on track—that was our first priority—and bringing the Doha negotiations to a successful conclusion. Our key proposals are that the EU should make a firm commitment to reform its agricultural sector, including removing all agricultural subsidies by a specified date, improving market access for agricultural imports into the EU, and reforming the sugar support system.

That is what the EU has to do, but we point out that it is not the only party to carry responsibility for the success of the Doha round and its agricultural side. The United States and the leaders of the G20 and the G90—the groups of the more advanced developing countries and of the less developed countries—have to play their part as well. For example, the United States, Canada and Australia need to make equivalent commitments to removing agricultural export subsidies, while the leaders of the G20 should agree to further market opening, especially to agricultural products from the less developed countries. Incidentally, that is further evidence of the fact that open trade is helpful in reducing poverty.

If the EU makes concessions on agriculture, it is very well placed to press for the greatest possible liberalisation of trade in services and goods, and for so-called trade facilitation such as cutting red tape at borders. I am glad to say that the 1 August agreement on principles, made possible by the joint initiative of Pascal Lamy and Robert Zoellick, very closely followed the lines of our own proposals. I do not claim that we were the major influence on that, but I note that we said the right things. I also note that the Doha round is back on track.

The question is what happens now? There has been some progress since 1 August. My personal view is that the appointment of Peter Mandelson as trade commissioner is good news, because he is very well equipped to do the job. We await the appointment of a new US trade representative, although there have been useful technical talks at Geneva. However—and this is a serious point—we need to get a move on if we are to make substantial progress by the main ministerial meeting in December 2005 in Hong Kong. If the Doha round is to be brought to a successful conclusion by 2006, we do not want another ill-prepared ministerial meeting, such as Cancun, when all the concessions were left to the last possible moment. We do not wish for that, because we saw what happened at Cancun. Maybe there is a case for a mini-ministerial meeting, as some people describe it—a small-scale ministerial meeting where political decisions are made. That could take place earlier, perhaps in the spring.

In conclusion, it is time for us to move on from fine principles and fine proposals into serious negotiation, because it is essential for the world that the Doha round succeeds. If it fails, governments and their peoples all over the world stand to lose—not least the poorest. If it succeeds, there will be much to gain for all of us. Expansion will benefit the whole world community, including the UK and the EU. There is much at stake. We must ensure that the Doha round succeeds. I beg to move.

Moved, That this House takes note of the report of the European Union Committee, The World Trade Organization: the role of the EU post-Cancun (16th Report, Session 2003–04, HL Paper 104).—(Lord Radice.)

Photo of Lord Marlesford Lord Marlesford Conservative

My Lords, it was a fascinating experience to sit on Sub-Committee A and examine the problems of the WTO and the prospects of success for the Doha round. It was also an enjoyable experience, because we had the most distinguished chairmanship of the noble Lord, Lord Radice, who kept us stimulated and in good order. As the noble Lord has said, we had the most excellent support staff, both in terms of special advisers and our Clerk.

When we published our report, it looked as if Doha might disappear. In a sense, it was rescued at the eleventh hour and, as the noble Lord has told us, we hope that it will come to a successful conclusion by the end of next year or in 2006. That is still by no means certain. The collapse in Cancun was particularly unfortunate and sad, regarding the way in which, in a misguided manner, many of the NGOs celebrated that collapse. Better negotiation procedures could have made better progress. Part of that was mechanical and bureaucratic, but much of it was political. The most important lesson that I learned from examining the problems of the WTO was how enormously political the subject is.

Indeed, free trade versus protectionism was probably, with the possible exception of Ireland, the subject that took up most of the debating time in your Lordships' House throughout most of the 19th century. Many of today's problems are directly rooted in what happened at that time. Therefore, I make no apology for focusing my brief remarks primarily on agriculture. Although it is not particularly relevant to the scale of the matters that we are considering, I declare an interest as a medium-sized farmer in Suffolk.

Before I return to the 19th century, I cannot resist sharing with your Lordships a story that I read with fascination in a book, The History of the Caribbean by Dr Eric Williams. I do not know whether any noble Lords have read that, but he was a former Prime Minister of Trinidad and Tobago and a great scholar. It is relevant to the issue of sugar, which, as the noble Lord has said, is again one of the big problems. In 1786, a Frenchman, Monsieur Archard, began cultivation of sugar beet on his estate near Berlin. The King of Prussia provided some finance for both a factory and for the experiments. At that time, the sugar lobby was the biggest single lobby in the House of Commons. Indeed, it is said that that lobby was bigger than any single lobby there has ever been since. As a result of rumours of Monsieur Archard's operations, Dr Williams tells us that the British Government offered Monsieur Archard a bribe of £30,000—in the money of the time—to say that his experiments had failed. He rejected it indignantly, with the results of which we are all aware.

Taking up the thread of British agricultural protection, we must cast our minds back to 1815, when the infamous Corn Laws were passed to prevent the collapse in agricultural prices that was expected to follow the end of the Napoleonic wars. Actually, they were quite successful. The price of wheat—not adjusting for inflation—in the 1820s reached a level that was not reached again until the 1950s.

The Anti-Corn Law League was based primarily on the problems of the Lancashire textile industry, which was seen to be suffering from agricultural protection. It took the Irish potato famine of 1845 for a former Leader of my party, Sir Robert Peel, to persuade Parliament to repeal the Corn Laws. It cost him his job and split my party for years. The history of these matters is most relevant to today's discussions. Following the American civil war, the railways were built and there was a huge influx of cheap grain from America into Europe. That resulted in an agricultural depression that started in the 1870s and continued until the First World War. There was then a period of some hope up to the early 1920s but that was followed by the great agricultural depression of the 1930s which lasted until the Second World War. Then came a golden age for British agriculture, ushered in under the Labour Government of the day by the heroic figure of Tom Williams, the Minister of Agriculture. It was a period of agricultural prosperity, which lasted for some 40 years.

Another historical example comes from agriculture in the Soviet Union. The three years of total shambles which followed the Bolshevik revolution forced Lenin to introduce his New Economic Policy, giving the hitherto disliked kulaks, the richer peasant farmers, the job of feeding the country. They performed well until Stalin arrived, with his policy of collectivisation followed by the "liquidation of the kulaks as a class", and resulted in the great famines of the 1930s.

Why does one talk about such matters today? Even today agriculture in the new Russia has made remarkably little progress. There has been much glasnost in Russia, but perestroika has not been a great success. Some of us are deeply worried about the direction in which Russia is now moving. It is able to afford to move in that direction only because of the high price of oil.

The need to reform the CAP has been discussed almost since its invention. However, we must not forget that the EU was founded for agricultural protection. The original marriage contract between France and Germany encouraged German industry to open its markets in France. In return, Germany would ensure that through the CAP French agriculture was protected.

Agricultural protection was justified for five reasons. The first is that agriculture forms a deep part of the culture of most countries. The second is the obvious one of feeding a domestic population. The third is the need to be able to do so at a time of possible wartime blockade. The fourth is employment and the number of people who derive their living from agriculture. The fifth—with my particular interest in conservation, I see this as still important—is the contribution which agriculture makes to the protection of the countryside for its own sake. The countryside in almost all developed countries, certainly in Europe, is manmade and it depends largely on agriculture. The prospects for agriculture depend on the weather, on harvests and on prices.

Agricultural employment in the EU 15 is still some 4 per cent of total employment. In Greece and Portugal, it is still over 10 per cent. In France, it is down to 4 per cent from 13 per cent in 1970. In Italy, it is 5 per cent, down from 20 per cent. In Germany, it is down to 2.5 per cent from 9 per cent. In Britain, it is now only 1.4 per cent. That is another example of the way in which Britain has the benefit of a restructured industry. That is due largely to the remarkable revolutionary policies of the government of my noble friend Lady Thatcher. They made changes in this country which have yet to be made in some of the other main European countries.

Some of the new entrants have considerable agricultural populations. In Poland, some 20 per cent of people are employed in agriculture. The subsidies are considerable. I do not have time to give the figures, but the current agricultural recession makes it more sensitive and difficult as prices of most of the main products have fallen considerably.

Agricultural protection exists not only in Britain. The USA is a major protector and one hopes that now President Bush has been elected for a second term he will be subject to fewer protectionist pressures than John Kerry would have been in a first term. Japan, too, is a supreme example of agricultural protection. When the Select Committee visited Geneva and the WTO, we asked the Japanese delegates what had happened as a result of the Uruguay round which had required Japan to open up to imports of rice. Noble Lords may know that rice was once sold in the duty-free shops in Los Angeles. After the Uruguay agreement, politicians in the Japanese parliament said, "Not one grain of rice must enter the country". We were told that some 30,000 tonnes of rice entered Japan and that it is still in the warehouses. That is the kind of obstacle which must be overcome.

The WTO and the Doha round is crucial, but if that does not work out, bilateral, trilateral and regional deals will encourage free trade, or the breaking down of protectionism. But there are other ways of doing so. The entry of China to the WTO is of world-wide importance. China will be the source of a huge volume of low-cost, high-quality, high-tech goods. But, equally, as China becomes more prosperous, its population of 1 billion will become a valuable market for the rest of the world.

China has accumulated enormous reserves of foreign currency, currently some 550 billion dollars. China is starting to invest this money overseas. Last month, the Central Bank of China authorised one of the state-owned oil companies to spend 1 billion dollars buying a large oil field in Oman. I can foresee that trade will develop further through such outsourcing on a global scale. Japan also has large balances of foreign currency with which to do the same.

In conclusion, of course we want the Doha round to succeed and the multilateral route is the preferred one. However, I believe that in a global economy protectionism will gradually be eroded by the initiatives of those for whom it is an obstacle.

Photo of The Bishop of Manchester The Bishop of Manchester Bishop

My Lords, I, too, am grateful to the noble Lord, Lord Radice, for his eloquent opening speech in this take-note debate on the significant report of the committee he chaired on a subject that is immensely important. I, too, look forward to the maiden speech of the noble Lord, Lord Vallance of Tummel.

I am reminded of my days as rector of St Thomas's Church, Salisbury, and of the occasions when we hosted some grand services. On one such occasion, as the procession of greatly bewigged and much-robed dignitaries moved through the church, I noticed, as did astonished members of the congregation, that a small mouse had joined the procession immediately in front of me. With suitable dignity, the mouse continued up the length of the aisle, retaining an admirable processional symmetry and going forward at exactly the right pace until, near the chancel, it turned off towards an empty seat. That week the local newspaper had the headline, "Stately mouse takes a pew", while another article noted the appropriateness of the grand and great being eclipsed by the vulnerable and small.

That is how it should be in matters concerning world trade and nations that are vulnerable and small. Sadly, grand-sounding organisations, conferences and committees, for all their good intentions, often create policies that can work against the very people and countries they set out to support. That is why this debate is so timely and why I want to speak initially not about the European Union Committee on the World Trade Organisation but about a person who is being ill-served by international policy.

Kofi is a Ghanaian. He works 12 hours a day in a quarry breaking rocks to make gravel. It is the only way he can earn enough to provide for his family. He used to own a tomato farm, making a living growing and selling tomatoes. The local markets where he used to sell his produce are now full of cheap imports from the European Union. Farming, for Kofi, and for other tomato, rice and poultry farmers in Ghana, and indeed for poor farmers across the developing world, is no longer viable.

It is one of many stories that demonstrate the danger of forcing poor countries to liberalise their economies. In the 1980s, Ghana, in return for loans, was forced by the international financial institutions to do just that—to open its markets and remove government help for industry and farming. Ghana is no longer allowed to limit the amount of imports that enter the country; nor is it allowed to help poor farmers like Kofi.

The impact of these policies being forced on poor countries is obviously devastating not only for individuals like Kofi but also for whole communities. Governments of poor countries have had taken away from them the means to intervene in their own economies in order to tackle poverty.

That is why members of the Trade Justice Movement, including Christian Aid, are calling for trade justice. Trade liberalisation is neither the best nor the only option for developing countries to work their way out of poverty. The governments of poor countries must be given the right to intervene in their own economies in the interests of the poorest and to give help and support to their own farmers and industries. It is only by helping industries and farmers to establish themselves that they will then be able to compete with international products.

I shall now give an example of where this type of intervention has benefited an economy—the economy of Mozambique. The noble Lord, Lord Marlesford, mentioned sugar. Mozambique is a country ravaged by civil war and devastated by floods and, indeed, is one of the poorest countries in the world. A policy by the Government there to help the sugar industry has resulted in the creation of 25,000 jobs and has attracted foreign investment from South African and Mauritian sugar companies. Mozambique was able to persuade the World Bank to allow it to regulate the price of imported sugar, and that has enabled the sugar industry—plantations and factories—to establish itself, provide employment and help local communities to tackle poverty.

But, sadly, I have to say that Mozambique is an exception. The commitment of the International Monetary Fund, the World Bank and the World Trade Organisation to free trade and liberalisation means that poor countries are forced to accept policies that prevent them intervening positively in their own economies.

Her Majesty's Government have a vital part to play in ensuring that there is trade justice across the world and that trade is a means by which poor countries can work their own way out of poverty. Prior to the ministerial meeting of the World Trade Organisation in December 2005, a number of issues for negotiation would, if they go wrong, further limit the freedom of poor countries to manage their economies and would force upon them greater, and unwelcome, liberalisation.

I hope the Minister will agree that the Government must call for the European Union's negotiating position on these issues to be one that promotes the right of poor countries to protect and support their industries, for there are some real worries about these forthcoming negotiations. For example, there is much concern about non-agricultural market access. In its current form, what is essentially an agreement to open markets to manufactured goods poses a real threat to industrialisation that has taken place in poor countries. Christian Aid is one organisation that believes that opening markets further to manufactured goods from rich countries will undercut local industry.

Another concern is about agreements on services. Poor countries are being forced to accept the privatisation of public services, which has not resulted in universal and affordable provision. Yet a further concern is World Trade Organisation procedures. The ability of poor countries to negotiate effectively in their own interests is hampered by current WTO procedures. There must be reform so that the supposed equality of "one member, one vote" becomes a reality.

Trade should be a means by which poor countries can work their own way out of poverty. They are being prevented from doing so because free trade and liberalisation are being forced upon them. For Kofi, and millions of people like him, trade liberalisation has cost him his livelihood. Therefore, the European Union must not further this liberalisation agenda in the WTO, and it must recognise that government intervention in an economy can increase the prospect of long-term economic development for poor countries.

Next year, as your Lordships know, Her Majesty's Government will hold the presidencies of the G8 and the European Union, and, as I have already mentioned, the WTO ministerial meeting will take place in December next year. That provides a unique opportunity for the Government to champion trade justice. Certainly Christian Aid, with the Trade Justice Movement, will be campaigning throughout next year for trade justice.

So I urge the Government to take this opportunity to make real progress in tackling the poverty that still blights our world. I hope that there will be further opportunities for debate next year to assess what progress has been made. But, for the moment, it is time for me to take my pew!

Photo of Lord Vallance of Tummel Lord Vallance of Tummel Liberal Democrat

My Lords, it was always going to be difficult for me to follow the right reverend Prelate the Bishop of Manchester. He, quite properly, is ensconced on the spiritual side of your Lordships' House, whereas I, with a lifetime of a business and commerce background, am rather rooted on the temporal. I do not think that there will be any differences between us in our objective of supporting developing countries but I think, as we shall see, that we have rather different opinions on how to achieve that objective.

First, I declare an interest as chairman of the European Services Forum. This is a Brussels-based organisation of services, companies and trade associations right across Europe, with a particular interest in matters of trade and, indeed, in the Doha round. It was established in 1998, at the request of the European Commission, at a time when the noble Lord, Lord Brittan of Spennithorne, was Trade Commissioner.

I very much welcome the European Union Committee's report and congratulate the members and authors on a clear and very balanced analysis and set of recommendations, some of which turned out to be quite prescient. To my mind there is perhaps only one ingredient missing: that is the need for the protagonists of further trade liberalisation to set out clearly and actively to market the true benefits of successful completion of the Doha round for developing countries. After all, this is billed as a development agenda. In the past we have sometimes allowed those NGOs that are sceptical of, or antagonistic towards, globalisation and further trade liberalisation to outgun us in the matter of presentation. Post-Cancun, that is no longer a feasible option.

One thing that I have learnt over the years is that it is often a virtue and sometimes a necessity to state the obvious and to keep on repeating it. So I make no apologies this afternoon in underscoring what I believe are the key presentational points that need to be repeated and repeated.

First, and foremost, as the committee's report makes clear, and as the noble Lord, Lord Radice, stressed, the liberalisation of trade is not a zero sum game. It is twice blessed. It can benefit those countries that open up their markets and it can benefit those that trade in such markets. All participating countries stand to gain if it is properly done.

Secondly, liberalisation—the opening up of markets—does not imply either privatisation or deregulation. Opponents of liberalisation tend to conflate and confuse those three, whether wilfully or not. But there is nothing, for example, in the General Agreement on Trade in Services—the GATS—which requires a service, now provided by the public sector, to be privatised, although governments can clearly do so if they wish. Nor is there anything in the current debate in GATS on domestic regulation to suggest that governments should be restricted in their ability to regulate in the interests of consumers, health and safety, the environment or whatever. Far from it, responsible companies providing services to developing countries want to do so in a properly regulated environment.

Thirdly, and with respect to the noble Lord, Lord Marlesford, we must put history behind us and settle the arguments on agriculture once and for all and move on. All too often the amount of time and effort spent on debates in this area are in inverse proportion to their economic significance. In their own interests, let alone those of developing countries, the European Union and the United States must be more flexible in their forthcoming negotiations in this area.

Fourthly, we should obviously concentrate on those areas where there is most to be gained. Objectively, that is on the services sectors, which make up roughly 70 per cent of the GDP of developed countries, rising to 50 per cent of the GDP of developing counties, and about 60 per cent of foreign direct investment, yet only some 20 per cent of trade. The fact is that, by comparison with goods, only modest steps have been taken so far to liberalise trade and services. Indeed, the World Bank in its Global Economic Prospects report of 2002, calculated, on what they say are conservative estimates, that by opening services markets, developing countries could increase income by nearly 900 billion dollars a year. That is some four and a half times greater than the gains from further liberalising trade in goods.

Fifthly, that substantial prize is not just something dreamt up by theoretical economists, but supported by practical examples in developing countries which have opened up their markets of their own accord—autonomously, to use the jargon. I can give just three examples, small but indicative, in the sectors of transport, telecommunications and finance: Chilean exports of fruit and fish increased markedly post-liberalisation once exporters had access to a wider choice of shipping with proper refrigeration—quite simple when one thinks about it; in the Philippines the number of telephone lines post-liberalisation rose from 1 million to 6.5 million in a mere five years; and in Mauritius the acceptance of offshore investment funds generated benefits of around 2.5 per cent in GDP. There is nothing surprising in all that. Indeed, when one thinks about it, a defining characteristic of a developed country is its pervasive and up-to-date services infrastructure of transport, utilities, telecommunications, financial and legal services, retail, tourism and so on.

We owe it not just to ourselves in the UK, but to developing countries around the world, to state our case for liberalisation clearly and convincingly, in every sector, and to press for a successful conclusion of the Doha round.

Incidentally, as a postscript, from personal experience in this area, we stand a far better chance of achieving that aim as a member of the European Union—actively influencing and fashioning the European trade agenda—than ever we could as a trade-dependent nation acting on its own, just one of 150 voices.

Photo of The Earl of Sandwich The Earl of Sandwich Crossbench

My Lords, it is a great privilege to congratulate the noble Lord on his authoritative speech. The famous name of Tummel almost tempts me into song, because the noble Lord is evidently at his best when he is walking high up in the Perthshire hills and taking the high road.

However, in a distinguished career, the noble Lord has not escaped the controversies of public and private ownership—as the chairman of BT, at the CBI, Mobil and, as he mentioned, the European Services Forum, and in many other frontline positions. As we have heard today, he has to tread a difficult path between liberalisation and corporate responsibility. On these subjects we all look forward sincerely to hearing him again, and many times, in the future.

This report contains a rich repository of evidence from most of the protagonists at Cancun and it keeps up the momentum, not to say the morale, which is needed to relaunch the Doha round in 2005. Some of it is now getting out of date and it is unfortunate that, owing to the timetable, it is nearly a year since the first witnesses were called. But that is not the committee's fault. The committee, the Clerks and advisers deserve every congratulation.

From the outset, the report reaffirms the importance of trade liberalisation. I recognise that as a general principle, although my emphasis may be different from that of the committee. I should declare an interest as a trustee of Christian Aid, which is part of the Fairtrade Foundation and the Trade Justice Movement, which has been one of the active NGOs involved in lobbying for the poorest developing countries.

I was pleased to see that the NGOs have been consulted on that subject in some detail, partly because of their expertise but also because they informally represent some of the least developed countries, which are never at the table. They do not have enough people to go round. I fully accept the point about NGO transparency in paragraph 185, but I was surprised that none of the individual embassies from those countries was asked to comment.

I am not sure whether they feel "twice blessed", in the words of the noble Lord, Lord Vallance. The history so far of liberalisation in Africa, the Caribbean and the Pacific is not a happy one. Even countries now quoted as successful economies—and the noble Lord gave some interesting examples—such as Ghana, Uganda and Mozambique, have been hit hard by successive waves of structural adjustment and other IMF-enforced programmes. As the right reverend Prelate said, with falling commodity prices they are finding it impossible to trade successfully under the terms and conditions expected of them.

In spite of the comments in the report, the NGOs which belong to the trade justice campaign are only too well aware of the need for trade liberalisation in its broadest sense. They are concerned about the betrayal of principles already worked out on the multilateral stage by European Union negotiators who seem bent on representing their own agenda for the sake of results. There is no doubt that world trade negotiations have been agonisingly slow, and may well get slower.

At this point I should like to ask the Minister: what attitude will the UK now adopt towards the next round in relation to the EU, remembering that one lesson from Cancun was that certain members states—against the UK's advice—distanced themselves too far from a common position which eventually had to be withdrawn? Will the Government take an even closer interest this time and remind member states of their common obligations to developing countries under various agreements at Copenhagen, Laeken, Lomé and more recently Cotonou?

Last week in the debate on the gracious Speech, I tried to re-emphasise the section of the Cotonou agreement of 2000 which sets out the objectives of poverty eradication and sustainable development. Under Article 1 it states:

"The partnership shall be centred on the objective of reducing and eventually eradicating poverty consistent with the objectives of sustainable development and the gradual integration of the ACP countries into the world economy".

The following year, the Laeken declaration of 2001 described the EU as:

"A power seeking to set globalisation within a moral framework, in other words to anchor it in solidarity and sustainable development".

It was a disappointment to me that the report did not refer to those objectives. They explain why globalised and liberalised trade may not, in itself, be in the interests of the more vulnerable developing countries. Obviously, the agenda of the G20 and the G90 cannot be the same. The committee recognises that, but its instinct was to see the NGOs as culprits, rather than to recognise the real difficulties of those countries.

Cotonou states that there should be a,

"coherent support framework for the development strategies adopted by each ACP State".

That means that sovereignty is a hallmark of any trade agreement. As the right reverend Prelate said, every country has, in theory, the right to accept or not to accept a new agreement. The important concept of special and differential treatment under Article 24, although formally proposed by the ACP countries, seems to have slipped down the EU agenda.

The "Everything But Arms" agreement has been helpful to some, but it has not been taken up because of its strict rules of origin criteria and because it is confined to the LDCs. However, I am glad to see the report, in paragraphs 89 to 110, reflecting some of the concerns that NGOs have about the EPAs and their reintroduction of the discredited Singapore issues, as I mentioned last week. At paragraph 109, the committee concludes that,

"the bilateral route can add value as long as it does not replace multilateral negotiations".

That seems fair.

It was also a relief to see the committee's strong support at paragraph 157 for the removal of EU export subsidies, which have been mentioned. I hope that the Minister can give us some reassurance that the Government are pressing for that, given that the timetable may have slipped. Although it may appear to be a mantra for campaigners, slow progress in CAP reform has, at times, held up the entire process of WTO negotiations.

It was a pleasure to hear the DTI and DfID giving evidence together on Tuesday, but I wonder whether joined-up government will stretch to a new policy for the poorest countries. For example, what will happen if some countries prefer not to have EPAs and to fall back on the present GSP arrangements? Will the European Union recognise that universality cannot apply to all EPAs, when there is already provision for special treatment for LDCs? What alternatives will be offered to ACP countries unwilling or unable to find common ground? Can they return to the relative safety of the revised GSP? Will there be transitional assistance for some producers? Will that assistance have to come out of the aid budget?

There are many ways of getting round WTO compatibility, if the central principles enshrined in EU agreements are followed. Once again, I thank the committee for keeping these important matters alive.

Photo of Lord Judd Lord Judd Labour 4:24 pm, 2nd December 2004

My Lords, the noble Lord, Lord Vallance of Tummel, is to be congratulated on a particularly effective maiden speech. It is clear that authority and power will be brought to future deliberations on this and other subjects in the House. At the outset, I should declare an interest, in the sense that I am a past director of Oxfam. As such, I am a member of what, I suppose, could be described as a club, the "Friends of Oxfam".

My noble friend Lord Radice and his colleagues have produced a very interesting and challenging report. I join with those who have expressed appreciation. In his introduction, my noble friend said that it was time to get a move on. I thoroughly applaud that sentiment.

The noble Lord, Lord Marlesford, for whom I always have a particular affection—we came into this House at the same time—has given us a historical survey with some charm and delight. He also brought home the point that the EU's purpose and foundation was about agriculture and the CAP: we should never underestimate the significance of that. As someone deeply committed to the European Union and to our membership of the European Union, I find myself among those who say that the future of the EU simply cannot be based on the significance of the CAP. If there is a certain route to disaster for the European Union, it is to remain committed in that direction.

The position of the Government on overseas aid and development matters is strong and enviable. As a former Minister with responsibility for overseas development, this is the first time in my experience that this country has a Chancellor who has made overseas development one of his personal priorities in public policy and one of the issues by which he wants to be judged. It is very much part of his political profile. I am glad therefore that we are now committed to meeting the target of 0.7 per cent of GNP, even though I feel that the date by which the target is to be fulfilled is not all that ambitious. If we take aid and development seriously, trade and, indeed, debt issues are obviously central to an effective strategy.

I, too, would like to start by saying a word or two about agriculture because it will be pivotal to any success of the next Doha round. I turn, first, therefore, to some challenging realities. The present rules of global trade, whatever is intended, in effect leave millions of farmers in poverty while greatly promoting the interests of the big agricultural enterprises and corporations. Most farmers around the world are among the poorest rural poor—some 1.2 billion people. They still struggle to exist on a dollar or less a day. Nearly 75 per cent of the workforce in the poorest countries depends on agriculture to eke out any kind of living.

While big agricultural corporations do well, very many poor farmers face ruin without access to land, water, credit, roads, transport, schools and healthcare. Of course, even in rich countries such as the UK, support for agriculture is heavily weighted in favour of the big farmers, while family farmers receive relatively little support and find it very difficult to compete.

However, that is no accident. Rich and powerful countries have deliberately slanted the rules of agricultural trade in favour of the big farmers, inevitably at the expense of small farmers, all over the world. Global trade policies still allow the European Union and the United States to spend billions of dollars on subsidising their wealthiest farmers, encouraging over-production and the dumping of cheap surpluses.

Dumping pushes prices so low that it devastates the poorer farmers. In 2002, the US Government spent more than 3 billion dollars subsidising their cotton farmers. That amount is almost double the total US aid provided for the whole of sub-Saharan Africa.

The rich world lectures the nations of the poor world on the need to eliminate subsidies from their economic systems, but continues to spend 1 billion dollars a day subsidising its own agricultural enterprises. That is frankly immoral and undermines all commitment to development. The right reverend Prelate the Bishop of Manchester powerfully illustrated the issue.

Against that background, the position of the United Kingdom Government in the European Union is certainly commendably progressive in their determination to reform the CAP. A comprehensive ban on agricultural subsidies is essential to end the cycle of overproduction and disastrous export dumping. However, currently the European Union negotiations indicate that export subsidies will not be eliminated for at least another 10 years. Our Government should be encouraged to toughen up still further their negotiating position and press for immediate reform, as advocated by the Treasury, and call for a unilateral commitment—if need be—to get rid of the pernicious subsidy system. The European Union has talked about the right of developing countries to protect their vulnerable farming sectors, but talk is not enough. Practical and effective proposals are urgently required.

More generally on trade issues, there has been much advocacy of the virtue of level playing fields, but too many players are simply not fit enough to play on those fields. I suggest that it is na-ve, cynical or both to believe that if our commitment to enduring development is genuine, we do not have to have special arrangements tailor-made to ensure that all players can reach a point at which any prospect of a fair game becomes possible.

I have no doubt that trade can potentially bring enormous benefits to third world countries. However, the economic partnerships presently envisaged between the European Union and ACP countries are not a convincing model. As the executive secretary of the UN Economic Commission for Africa put it in the Financial Times on 23 November:

"Another challenges lies in the Economic Partnerships Agreement negotiations between African countries and the EU. Studies on the proposed EPAs suggest that if African countries agree to equivalent reciprocity for commitments by the EU, it will be the EU that gains economically, with Africa suffering significant costs. If the EU were to abandon the idea of symmetry in the final agreements to accept 'non-reciprocity', it would demonstrate a commitment to a new, pro-development approach to trade".

That is a challenge indeed.

As the right reverend Prelate has argued, it is essential that the European Union does not push for inappropriate liberalisation of public services. There should invariably be impact assessments of liberalisation proposals so that the likely real and specific net impact of what is proposed can be determined. While I carefully noted the argument of the noble Lord, Lord Vallance of Tummel, personally I remain convinced that caution is especially important about making an overly dogmatic commitment to the privatisation of public services and infrastructure and to untrammelled outside investment in the process. Subsequently, if that happens, the tenets of liberal economics can too easily be mobilised to inhibit sensible initiatives by the country concerned.

As we begin to take a second look at our own recent infatuation with such policies in the United Kingdom, it would be ridiculous to be associated with a pig-headed insistence that developing countries, with the danger of far more dire consequences, make all the same mistakes. The day of a recommitment to the rational virtues of a mixed economy is coming. We should encourage the European Union to recognise this in its approach to trade policy.

Meanwhile, the European Union should convincingly open up its own markets for exports of goods and services from developing countries. Non-agricultural market access quotas end, I understand, on the 31st of this month. It would be deplorable if these were to be replaced by additional tariffs or other barriers to trade for the developing world.

It is, on the other hand, encouraging that the United Kingdom Government favour technical assistance for poorer countries in their participation in making trade policy. This deserves all possible support and should be urged on the European Union as a whole. Maximum possible transparency in decision making is an imperative.

I conclude with two wider thoughts. First, in this age of liberal economics we tend to forget that Adam Smith brought forward his ideas in the context of a strong, ethical system, to which he was committed. Liberal economics without strong ethics can become a nightmare—we have seen that in parts of the former Soviet empire—and we need to be very cautious about what we are doing in the wider world.

Finally, we have spent a great deal of time agonising about the dangers of global insecurity and terrorism. After a lifetime of working in these areas and international affairs, I have come to one firm conclusion: that terrorism and the cynical manipulators who use it to advance their objectives operate most successfully when there is a climate of ambivalence in large sections of the population—an ambivalence as to whether or not they are living in a just world.

Therefore—while I take second place to no one in the argument about the importance of the redistribution of wealth and resources more fairly in the world and fairer access to the riches of the world—we fool ourselves if we do not realise that one of the issues is redistribution of power in the world. What matters therefore is not only how we provide technical assistance to the governments of the third world in preparing for the negotiations at Doha—which is important and I support it—but how far the agenda at Doha is the agenda of the majority of the world's population and not the agenda only of the rich club members, however sophisticatedly presented, to which the majority of humankind is asked to respond.

Photo of Lord Cobbold Lord Cobbold Crossbench

My Lords, I add my congratulations to the noble Lord, Lord Vallance, on an excellent and authoritative maiden speech. I am sure that his experience will be of great value to the House in the years to come. I offer him a big welcome and many congratulations.

I speak as a member of the sub-committee but as one who has not been a member for long and for whom work on the report we are considering today was a new and fascinating experience. In that context, I echo the words of the noble Lords, Lord Radice and Lord Marlesford, by saying how impressed I have been by the seemingly effortless professionalism of our support team. I both thank and congratulate them.

As has been said, our report has, to some extent, been overtaken by events. We started our work a year or so ago in an atmosphere of gloom following the failure of the Cancun meeting. It seemed doubtful that the Doha agenda could be saved. Our report, published in June, stated that,

"the EU must put the failure of Cancun behind it and work for agreement by the end of July 2004 on a framework for negotiations in order to secure a successful outcome to the Doha Round by early 2006".

Happily, it turned out that the WTO General Council meeting on 31 July reached agreement:

"To complete the Doha Work Programme fully and to conclude successfully the negotiations launched at Doha".

The derailed train was thus put back on the track. That this happened at all must not be attributed to any great extent to our report but very largely to the efforts of Pascal Lamy, the EU Trade Commissioner, and his opposite number in the US, Bob Zoellick. Both those gentlemen were due to be moved from their present positions by the end of this year, following the presidential election in the United States and the new Commission in Brussels. They were therefore keen to leave their mark positively, which they did.

Pascal Lamy was one of the most interesting witnesses we interviewed. Among other things, he stressed the importance of the new G20 group of emerging economies, which includes China, India and Brazil. This group has growing and powerful economic interests in common, which increasingly differ from those of the G90 group of less developed countries. This process will make it easier for the problems of the G90, the less developed countries, to be assessed. We heard from the right reverend Prelate and from the noble Earl, Lord Sandwich, about the difficulties that individual developing countries have in working in the area of trade liberalisation. Certainly, the WTO has a huge resonsibility to treat those problems very carefully and with careful discrimination between individual participants. This separation of the G20 and the G90 will be a beneficial factor.

We questioned M. Lamy on the adequacy of organisation of the WTO itself. He felt that there was considerable room for improvement. For example, he felt that the director-general who is:

"presently . . . a sort of chief clerk with no power at all", should have more authority and greater status. It seems to me that Pascal Lamy would be an excellent candidate to be the next director-general. The future structure of the WTO is being considered by a WTO consultative committee under the leadership of Peter Sutherland, who was also one of our witnesses, but it has yet to report. We await the report with interest.

Our report and its recommendations have been well covered by the noble Lord, Lord Radice. As I said, the post-Cancun clouds that surrounded our deliberations were blown away at the council meeting in July and the Doha round is now back on track. Pascal Lamy has passed the torch to Peter Mandelson and we will watch with great interest how Peter Mandelson takes negotiations through to the next stage.

Photo of Lord Lea of Crondall Lord Lea of Crondall Labour

My Lords, I was a member of Sub-Committee A when it made its first report on the collapse of the Seattle meeting of the WTO in November 1999. We produced a report on it in June 2000. It may be said that some of the analysis is rather similar but the plates, tectonic or otherwise, have been moving and it is useful to make that five-year comparison.

Before doing so, I would also like to congratulate the noble Lord, Lord Vallance, on his excellent maiden speech and take the opportunity of saying that I am a member of the Parliament Choir, which BP supports. Putting the Parliament Choir on the permanent London choir scene has been very much appreciated. In this House, he will find that all-party groups—including that for ski-ing, which masquerades as the United Kingdom All-Party Group on Switzerland, and other similar groups—are worth investigating.

The noble Lord made another point that I wish to pick up. Everyone says that parking the Singapore issues is a good idea. I am not so sure. I think that trade is now a subset of investment in a way that has not been recognised in this debate or in the report. The proportion of world trade in and out of Africa has fallen from 5 per cent to 2 per cent. Foreign direct investment into Africa has fallen to 1 per cent of the world's FDI, and Africa has 10 per cent of the world's population.

The great engine of growth and the biggest changes in India, China and Brazil are to do with domestic generated savings becoming profitable investments but also because multinational corporations want to be there. In the case of BT, the great debate in which some of my trade union colleagues have been involved about offshoring and globalisation are relevant. As a former trade union official who still has close links with the trade unions, I believe that one has to have more joint information and consultation bodies in the global corporations. That will remove at least some of the cultural misunderstandings that can arise when people in totally different situations say that they are not accepting something without figuring out where the possible benefits may go. The benefits have to be shared.

I recently chaired a conference for the IPU with the UK's oil and gas companies operating in Bolivia, the second biggest field in Latin America and worth 500 billion dollars. The difficulty that the multinationals have in going to the Altiplano and laying gas pipes anywhere near where people live in conditions of very great poverty is a challenge. We have to follow the audit trail and follow the flow of funds. In that regard, there is also a connection between the dismal performance of some parts of the world in getting FDI and their performance on governance, rule of law, and so on.

As vice-chairman of the Africa All-Party Parliamentary Group, I may have got this a bit out of perspective, but one tends to get bees in one's bonnet. I think that this is central to the next 10 years. Clearly, it would now be correct to say that we have to put Doha to bed, without Singapore, which is short for the wider rules governing direct investment.

I was a member of the United Nations Commission on Transnational Corporations from 1975 to 1979. As the trade union member, I went to New York four times a year. We nearly drew up a world code of practice—a world set of rules—on the operation of multinational corporations. The code was eventually blocked by Moscow and Washington together. Moscow could not swallow the idea that a global corporation was a viable concept. Washington's position would now be called unilateralism versus multilateralism: why should they, as the most powerful country in the world, the imperial leader, agree? Unilateralism was good enough for everyone else, surely. That approach is now more explicit in the Bush doctrine, but I think it has always been lurking around in Washington.

On the five-year comparison, I have noticed a trend over the past five years regarding how we have viewed the debate about regionalism. Regionalism can take the form of the European Union, Mercosur or the African Union, and I should like to mention the different sort of animals there. But it is all very mixed up in people's thinking and it can also take the form of sub-optimal deals between particular advanced blocs and other LDC blocs. That is a slightly different question.

We must increase the negotiating competence of LDCs, the best examples of which are in Latin America and Africa. There must be an enormous connection between the negotiating competence of African Union countries and their competence in other matters such as security, and standards of accountancy, prisons and governance. It sounds ambitious, perhaps ludicrously so, but a bigger, holistic agenda is needed. At the same time, we must narrow the agenda in the immediate future. However, those questions can be properly addressed only on a broad canvas.

I wish to speak about China and the sort of animal that it is. A couple of years ago I gave a lecture at a trade union conference in Bangalore. People there were beginning to realise that it was in their interests to have investment policies that were open to the rest of the world. Trade unions wanted to have more links. They were beginning to ask, if they did not consider how those changes related to their own freedom of association and the role of workers' organisations, what would be their solution when China started to become the big world leader.

That is the question that we are looking at today. I do not know the answer, but there are interesting cases. Let us take, for example, the explosion in textile export rates from China. Many poorer countries, such as Mauritius, have built up a textile industry on the basis of quotas from the USA and Europe; therefore they cannot withstand the competitive onslaught from China. China's share of the 350 billion dollar global trade in textiles could more than double, from 25 per cent to 50 per cent, once quotas are eliminated. But many smaller producers in Asia, the Caribbean and Africa fear extinction, with the loss of 28 million jobs.

The question of how to think through the negotiating leverage of groups of less developed countries is urgent; otherwise, there will be further polarisation of investment. There will be investment in Africa only once there is confidence that sustainability is possible. That is why perhaps we should help to build sustainability. If it comes from the European Union, it will not be perceived as neo-colonialism as easily as it would if it came only from Britain and France or from the multinational companies.

The key word must be "transparency". It is an overworked word; however, in the past 10 years, 500 billion dollars have disappeared in Nigeria without an audit trail. Is it not partly the responsibility of corporations, as well as the result of corruption in Nigeria? I am sure that such questions will become more central to the agenda for transparency of TNCs as we proceed.

I agree with the remarks of the noble Lord, Lord Cobbold, about Pascal Lamy. Lamy's comments on the management structure and negotiating procedures of the WTO were spot on. I have been an admirer—a friend, in some ways—of Pascal Lamy since the 1970s, when we worked with Jacques Delors on a report on economic and social concepts in the European Union. He is very French, yet very different from the stereotypical Frenchman when it comes to world trade. The commitment to a significant reduction in the agricultural share of the EU budget is clearly there. I agree with the noble Lord, Lord Cobbold, that he would make an excellent successor as the director-general.

Photo of Lord Beaumont of Whitley Lord Beaumont of Whitley Green

My Lords, I must apologise to the noble Lord, Lord Radice, that I was unable to be here from the very beginning of his speech. I am not as nimble on my feet as I was when I was the Liberal president of his old constituency, known as Chester Lee. I congratulate him on and thank him for his work on this report, and all other noble Lords who have worked on the committee. It is with a slightly heavy heart that I find it necessary to criticise it. I feared at one moment that I might be the only person to do so; however, I should have known, as a member of the inferior clergy, that the superior clergy would also join in the attack, and that there would also be a very worthwhile contribution from the noble Lord, Lord Judd, with all his experience.

I do not believe that the mouse of the right reverend Prelate the Bishop of Manchester would have done very well in my parish when I was very young, when I owned in Hong Kong, somewhat against my will, a rather mad poodle. It used to escape from where it was meant to be pent up and come rushing into the church, right up the aisle, to lick my nose where I was leading prayers at the altar. Probably it would have devoured a mouse quite easily as it passed.

I must criticise the classical arguments for free trade, still employed long after they have ceased to be valid. In paragraph 3 of chapter 1 of this report, I read that:

"Free Trade allows countries to specialise in what they do best".

Now that capital flits freely about the globe, as it did not in the days of Ricardo, who believes that that is really what happens?

What really happens is that, since the established objective of free trade is to produce goods as cheaply as possible, it achieves it by a race to pay as little as possible to the workers. That is one of the primary causes of the admitted phenomenon of the rich getting richer and the poor getting poorer all over the world, both internationally and intranationally. Likewise, for the same reason, the race to cut costs results in a race to have the least care of the environment. It is quite clear, for instance, that the present administration in the United States knows that and does not care.

In paragraphs 7 and 8 of chapter 1, the committee takes on board some of the criticisms of free trade and attempts to rebut them. It is my belief that the committee fails in this. For instance, it says that the argument for food security, which would mean strong protection of home agricultural industries, harks back to a period of naval blockades and supply shortages, which the committee claims have disappeared. I hope that the committee is right, but I see nothing in the state of the world today that would lead me to bet on it. That is one of the factors—another being the problem of air miles and its effect on climate change—which leads me and my party to believe that a country should do its best to feed itself.

Another is the issue of animal welfare. Your Lordships will know that I campaign for the welfare of battery hens and ducks. I know of hardly anyone who denies that those methods of agriculture are cruel in the extreme. Yet any attempt to cure that cruelty is met with the argument that, if we are not cruel, other people will be, and will flood our country with cheaper imports. That is directly the result of free trade. Of course, I agree that we should not subsidise food exports, but I am sure that we should be free to tax cheap imports, which are almost always the fruit of cruelty and deficient environmental protection. I therefore believe that the Doha mandate is manifestly wrong in at least half of what it says.

I do not expect this Government to take a stand against the insidious influence of received wisdom. Of course the Liberal Democrats are slaves to their past and to the need in the 19th century to win urban votes with cheap food. I would like to think, looking at the history of the Conservative Party, that they might at least stand up and be counted. I think of that wonderful passage in Disraeli's biography of Lord George Bentick when he recounts the passage of the Corn Laws and the vote of the squires behind Peel, as all the people who had served him and whom he had served trooped into the Lobby against him.

I suspect that it will be left, as usual, to the Green Party to stand up for decent values. While thanking the Committee for the work that it has done, I rather hope that the case that it has put forward will fall by the wayside.

Photo of Lord Hannay of Chiswick Lord Hannay of Chiswick Crossbench

My Lords, one of the pleasures of speaking fairly late is that I have the opportunity to congratulate the noble Lord, Lord Vallance of Tummel, on his maiden speech. I thought it was entirely excellent and followed very well in the tradition of Cobden, Peel and Gladstone. I agreed with every word of it.

The timing of this debate throws some light on the discussion recently held in this House on the report of the Procedure Committee. The report referred to on the Order Paper was, as the noble Lord, Lord Radice, pointed out, produced by your Lordships in June to boost the chances of a successful outcome to the rather fraught negotiations going on in Geneva following the debacle of the Cancun ministerial meeting in autumn 2003. Fortunately those negotiations were successfully concluded in August 2004, and the Doha development round is now back on the rails, albeit without this House having had its say. The report remains topical because it addresses not only the tactical situation that arose following Cancun, but also the substantive issues that will need to be resolved if the round is to be successfully concluded, as it needs to be, in the interests both of developing and developed economies and of the globalised world economy. That topicality owes more to luck than to good judgment.

One thread running through the report is the crucial role played by the European Union in multilateral trade negotiations. It is crucial because of its impact on the framework for international trade, which remains a driver of economic growth worldwide, and its impact on the prosperity of the Union's own citizens. In this field at least, Europe speaks with a single voice and punches its weight. I pay tribute, along with others, to the outgoing member of the Commission responsible for trade policy, Pascal Lamy, whose energy, skill and imagination contributed so much to the launching of the Doha round, and to its recent rescue from the doldrums. In this House and in this country we are often critical of the Commission; I hope that we can also give credit where credit is due.

Peter Mandelson now takes over the task of bringing the Doha round to a successful conclusion. I hope that he will rise to that challenge and fix as a firm target a conclusion date not later than 2006 for achieving it. If the role of the European Union is prominent, it is no longer as predominant as it once was, when previous multilateral trade negotiations were more or less fixed up behind closed doors by the European Union, the United States, Japan and Canada. Whether their approach was ever desirable, it is no longer possible. A group of important developing country players, led by Brazil, China, India and South Africa, known as the G20 has emerged, and is playing an increasingly influential role. Behind them is another group of smaller developing countries, the G90, whose voice also must be heard. Given that this round is explicitly directed towards the developing countries, and given the poor past record of the industrialised world of implementing concessions towards developing countries—textiles and agriculture were good examples of that failure—that is how it has to be.

Therefore, I share many of the views of those who have spoken about the developing countries, and of the right reverend Prelate, but I fundamentally disagree with his prescription. I can think of no more poisoned gift that we could convey to developing countries than the protectionism that we invented.

The large developing economies represented in the G20, which are now expanding rapidly, have responsibilities as well as influence, and a contribution to make as well as benefits to gain from the further liberalisation of world trade rules. I hope that they will rise to that challenge in the rest of the round.

Agricultural trade is a key element of the round. Whenever agriculture is mentioned, the spotlight inevitably falls on the common agricultural policy. For far too long, the European Union was inclined to concede in trade negotiations on agriculture as little as it could possibly get away with. The damage done to developing countries by its trade-distorting subsidies is not in doubt, but the decisions taken in 2003 to break the link between the level of production and the level of subsidy offer an opportunity to get away from that bad pattern. The commitment given by the European Union this summer to accept the full phasing out of trade-distorting subsidies by a certain date or dates means that that opportunity must now be seized.

We must, however, avoid giving the impression that the European Union alone is responsible for all the wrongs in the agricultural sector; it is not. The United States has in recent years greatly increased its subsidies. As the noble Lord, Lord Marlesford, reminded us, Japan has a rice regime that is indefensible. All that needs to be on the table if there is to be an equitable sharing of the burden of change.

The full resumption of the Doha round agreed in August has come at a price. That price was the dropping from it of three of the four issues known as the Singapore issues—trade facilitation, barriers in government procurement, investment, and competition policy issues. Only trade facilitation has survived. It was right to make that sacrifice. The developing countries were suffering from negotiation overload and were not ready to grapple with the complexities of those issues.

We really need to avoid two traps, however. The first is to allow those issues to disappear permanently from the WTO agenda. The second is to accept that the Singapore issues would have exclusively benefited the developed countries at the expense of the developing countries. The developing countries stand to gain as much as anyone else from greater transparency, predictability and the rule of law in government procurement, investment and competition policy. In the last resort, it is their economies that suffer from the lack of those elements. The World Trade Organisation should therefore not give up on the Singapore issues, but simply take a pause. It may be necessary and desirable at some time for those who are ready to move ahead on them to do so, before it is feasible to think in terms of universal commitments.

A great deal is said and written about the supposed conflict between bilateral or regional trade agreements and multilateral ones, such as those being negotiated in the WTO. Our report does not consider that there is necessarily any conflict between those two methods of achieving freer and fairer trade. The world trading scene lives and can continue to live with both. However, it is important not to allow limited amounts of negotiating skills and political back-up to be directed away from the WTO at this crucial stage in the Doha negotiations. The case for an all-out effort to conclude the Doha round is indisputable, and it should be given overall priority until it is achieved.

I have two final points. There is much debate about the relevance and health of the transatlantic relationship. Trade policy is an area where the inevitability of friction between the two sides of the Atlantic is as clear as the necessity to work together to achieve common objectives. Bringing the Doha round to a successful conclusion is certainly in our common interest on both sides of the Atlantic. It is an integral part of any agenda designed to make the world a more prosperous and secure place. That was one of the findings of the UN Secretary-General's high-level panel on threats, challenge and change published earlier this week. I hope that the Minister will be able to tell us that that will be an essential and prominent part of the Government's objectives, and that they will pursue it through the G8 and EU presidencies that the UK will hold in 2005.

Secondly, we really must learn the lessons of Cancun. Huge ministerial meetings of the type that the World Trade Organisation is condemned to hold from time to time—the next will be in Hong Kong in a year's time—are unwieldy animals, prone to end in deadlock if they are not well prepared and well managed. That was what happened at Cancun and, before that, at Seattle. It must not be allowed to happen again. There should be thorough preparation, identification of the most sensitive issues and identification of the possible solutions to them. Then there needs to be a willingness to go into extra time to achieve a result—as there was not at Cancun.

Photo of Lord Taverne Lord Taverne Shadow Minister, Treasury 5:10 pm, 2nd December 2004

My Lords, I begin by referring to the maiden speech made by my noble friend Lord Vallance of Tummel. There are not many people in this House who have his industrial experience. Certainly, on our Benches there are unfortunately very few. But it is particularly rare to hear a speech of such quality, because many industrialists are appointed but not heard. The noble Lord, Lord Vallance, is a most eloquent speaker and it is not any disrespect to the quality of the other speeches in this debate to say that his, in my view—and many will agree—was the outstanding speech of the debate.

I should also thank the chairman for his skilful and genial chairmanship of our committee, which is, perhaps, one reason why our deliberations were all sweetness and light. There was no dissent within it—indeed, we also agreed with other institutions. We agree with the Commission; the Commission agrees with us; we agree with the Government; and, it seems, that the Government agree with us. It was particularly encouraging to discover that after the disaster of Cancun that all the parties seem to have come to their senses and the prospects look fairly reasonable at the moment.

We are mainly concerned with the stand of the European Union. Those who want the Doha round to succeed and are concerned with the attitude of the EU should note the benefit that membership brings, as my noble friend Lord Vallance pointed out, by having one negotiator on behalf of the Union as a whole. Can you imagine what sort of concessions would be made by Europe on agricultural policy if all the members of the EU negotiated separately? One would never achieve any agreement or concessions—and those concessions are important.

It is also worth noting that the committee was wholly behind the WTO and the free trade process. That brings me to the speeches of the right reverend Prelate the Bishop of Manchester and that of the noble Earl, Lord Sandwich. Of course, we completely agree with the comments of the right reverend Prelate regarding the ruinous effect of European subsidies. It is a scandal, as he said. As the noble Lord, Lord Judd, pointed out, it is intolerable. Although it is a scandal that we hope will be remedied in the course of the negotiations, it is no answer to suggest that those countries should now have the right, as the noble Lord said, to intervene in their own economies. In practice, that would mean the pursuit of protectionist policies which would be totally against our experience in the world generally.

For example, Taiwan opened its borders and has become one of the prosperous countries of Asia. Look at the contrast between South Korea and North Korea. At one stage in 1950, the standard of living in North Korea was far higher than that of South Korea. Look at the contrast between the two now. Look at the experience of Singapore. Look at the experience of India, which followed a policy of protectionism and achieved only a low rate of growth. Since that country liberalised trade, its rate of growth has taken off.

The noble Lord, Lord Beaumont, said that free trade simply leads to greater inequality, but that is totally contrary to the statistics that have been collected by the World Bank and by other international organisations. Recently, there have been a number of books written about international trade, which demonstrate that clearly—Martin Wolf's book, an excellent book by Philip Le Grain and a book by Mr Baghwati. There is no case against free trade and it is a mistake for policies to be pursued which take that line.

It is worth mentioning the nature of the opposition to free trade and to the WTO. I am afraid that some of the NGOs played less than a constructive part, as many of our witnesses testified, at Cancun in advising the larger group of newcomers who came to the negotiation for the first time. Who are the campaigners who demonstrate against the WTO? They are a motley crew. They are trade unionists protecting their own industries against the lower paid workers of poor countries, linking arms with NGOs who are dedicated to relieving poverty in the world.

Photo of Lord Lea of Crondall Lord Lea of Crondall Labour

My Lords, I am grateful to the noble Lord, Lord Taverne, for giving way. Is that his considered view of the role that international trade unionists are playing on trade and development? If it is not, should he not choose his words with a little more care?

Photo of Lord Taverne Lord Taverne Shadow Minister, Treasury

My Lords, I stand corrected. I stand in a white sheet. I was pointing out that these trade unionists were protesting about the competition from workers in poorer countries and there is no question that they were very evident at Seattle. That does not represent the trade union movement as a whole, because the movement in this country has an extremely good record in seeking to help the developing world.

However, it is an extraordinary collection when Churches are protesting against Third World debt side by side with anarchists, vegans with meat importers, and pacifists with militant anti-capitalists. The driving forces behind the campaign are, unfortunately, the green NGOs and the aid NGOs, many of them motivated by the best motives. It was they who celebrated when the Cancun negotiations broke down.

It is worth noting that these demonstrators have much more support in rich countries than they have in poor countries. A world-wide poll was recently carried out by the Pew Global Attitude Survey among 38,000 people in 44 countries. It showed that in the developing countries there was much more support for international investment and integration. For example, in Uganda and Vietnam, two countries which received a substantial amount of foreign investment, those who thought that growing economic integration was "very good" for their country was 56 per cent and 64 per cent respectively. Only 28 per cent thought so in the Unites States and in Europe. The anti-globalisation protestors were approved of by 35 per cent in rich countries, but only by 28 per cent in Africa.

Indeed, the anti-free-trade protestors do not help those they claim to help. What is wrong with free trade is that there is not enough of it. Lack of access to the agricultural markets of Europe for the developing countries is a scandal, as many people have rightly declared. So are the export subsidies for European and American farmers. The trouble with the WTO is that it is not powerful enough. And what is the positive message of the protestors? There is not one.

The core of the movement represents an emotional reaction against power, authority and technology; us against them. Seattle, which started it all, was in the words of a star of the protesting movement, Naomi Klein,

"the moment when the rabble of the real world crashed the experts-only club where our collective fate is determined".

And what is the message from the Port Alegre Forum? It is that we should put people before profits and that we need more power to the people. Ultimately, it amounts to a slogan which was evident in Genoa, saying simply, "Capitalism should be replaced by something nicer".

I want to make one other point. Our report referred to the non-tariff barriers to trade—for example, regulatory requirements—but did not go into that. I want to give one example which I fear will prove to be very serious in the future. As a result of pressure from some of the same NGOs which oppose the WTO, the regulatory system in Europe for genetically modified crops provides no benefit and already causes serious damage to the developing countries.

The European regulations regulate the process, not the product. As a result, products which are virtually identical and equally safe are treated differently. Added to that irrationality, regulations for labelling and traceability go far beyond the requirement to ensure consumer choice. The requirements for traceability, for example, will mean that exporters to Europe will have to maintain separate grain elevators and separate freight wagons, barges and drying and processing facilities. Exports will become uneconomic and will drive GM products out of the European market altogether. Not only are these regulations a recipe for trade war between the European Union and the United States, in which the European Union will be wholly in the wrong, but the consequences for the third world are far more serious.

China is now the leading country in the development of GM crops for developing countries. Its motto has been: let a thousand GM crops bloom. It has developed more than 141 types of GM crops, of which 65 are already in field trials, and they could make an enormous contribution to the agriculture of the developing world. Yet hardly any commercial licences have been granted because of the effect that that would have on exports to Europe and, as the noble Lord, Lord Marlesford, pointed out, to Japan, which is also protectionist. Exports to Europe would be very adversely affected if they had any GM content.

The European Union's oppressive regulations cast a shadow over the cultivation of crops all over the rest of the world, although these crops have an enormous contribution to make in feeding the world. The regulations are already affecting Africa, Brazil and India. India has become a centre for biotechnology and may well soon overtake the United Kingdom. GM crops in India are spreading like wildfire.

I said that there were no countervailing benefits because it is clear that these crops are safe, or at least as safe as conventional crops. That has been the verdict of every international academy of science that has ever looked at the issue. More than 70 million hectares are now farmed in 17 different countries and no evidence of damage to human health or the environment has emerged.

Therefore, these regulations are not only a triumph of ideology over reason but they are a barrier to free trade, and they will, in time, be just as serious a threat to third-world farmers as export subsidies or the other unattractive features of the CAP.

Photo of Baroness Rawlings Baroness Rawlings Shadow Minister, International Affairs

My Lords, first, I take this opportunity to thank the noble Lords, Lord Grenfell and Lord Radice, and the committee for all their hard work in producing this outstanding and important report, which I read with great care, interest and pleasure. It was not difficult because, like the noble Lord, Lord Taverne, I agreed with practically everything. There were more ticks all over it than one can imagine, a few question marks but no crosses.

I defer to the wealth of knowledge on the WTO that the committee's four members have shared with us in today's debate. I also express my regret that we did not have a chance to discuss it sooner, despite what the noble Lord, Lord Radice, said in his opening speech on timing, considering that it was published in June this year. I do not believe that we have had a significant debate on this issue since last winter. I note that this was the EU Select Committee's 16th report and, believe it or not, the website shows that it is now working on its 34th. That is a big workload.

I am sure that your Lordships will agree that it is vital that this House has the chance to consider all these committee reports as close to the publication date as possible. Indeed, we recognise that such reports are admirable and are recognised worldwide. We on these Benches have suggested that, subject always to the committee chairman's view, some debates on committee reports could, if necessary, be taken in a Grand Committee setting. That would allow for more legislation to be taken on the Floor of the Chamber. Taking some committee reports in a Grand Committee setting would also prevent it being suggested that these important debates should be subjected to a time limit—a practice, as yet informal, that seems to be creeping more widely into usage in the House. I digress on that matter of procedure.

I add my congratulations to the many others on the very interesting and eloquent maiden speech of the noble Lord, Lord Vallance of Tummel. I was most interested to hear his views on the liberalisation of trade, coming from such an experienced background. We look forward to many more of his contributions. He will surely be a great asset to your Lordships' House.

This report is one of great importance. It is interesting as it lays bare the issues surrounding the European Union and the WTO, in the aftermath of Cancun, in a very clear and concise manner. I found the investigation into the change of the organisation of particular interest. It is good to see that, like the UN and NATO, the WTO is adapting and evolving both internally and externally to meet the changing membership needs and environment within it.

It was interesting to hear, in his very good and concise speech, the views of the noble Lord, Lord Cobbold, as a member of the committee, on the development of the G20, G90 and ACP involvement.

We have seen much development since the events last September which were described as a "farce and failure". The framework for talks agreed in Geneva at the end of July have relit the candle of genuine hope that, despite the numerous missed opportunities and collapsed deadlines, we are now on the path to a final Doha round deal—a responsibility that I am glad that Her Majesty's Government and the European Union have not shirked.

However, the Geneva agreement still leaves much of the detail to be agreed in further negotiations. There is still a long way to go. While we commend the growing membership of the WTO, imagine 147 powers of veto, different countries all with their own agendas and pressures. That recipe can guarantee only slow progress, as reiterated by the noble Earl, Lord Sandwich. Perhaps there should be groupings such as that of the European Union to lessen the numbers. Who knows? It is impossible to please everyone. I stress here the importance of political will and the ability to compromise for the greater good. We have yet to see if the loopholes and exclusions will undermine the reinstated negotiations yet again.

On the subject of membership, I would like to take this opportunity to welcome the steps that Russia has made towards joining the WTO. However, I find it hard to reconcile the political will to join the WTO with Putin's recent behaviour regarding Yukos and I question how that bodes for the future. How, too, do all the agreements on trade liberalisation, agreed with Pascale Lamy on 21 May, fall into line? I add my congratulations on his outstanding work. Has Her Majesty's Government had any discussions with the Russian administration about meeting the country's deadlines for membership ahead of schedule?

The agreement of the European Union and the United States to remove agricultural export subsidies, which many noble Lords have mentioned, and to reduce other farm subsidies, is one that we welcome, as the noble Lord, Lord Radice, mentioned. As your Lordships know, the joint farm subsidies in the European Union and the United States, as stressed by the noble Lord, Lord Hannay, add up to £30 billion a year, an impact on trade that is hard to ignore.

I fully support the view of my noble friend Lord Marlesford—who was on the committee—on subsidies, and I so enjoyed his fascinating speech which put the subject into context. These agreed reductions have obviously played a significant part in re-gathering momentum for the Doha agreement and we congratulate her Majesty's Government on the part they have played in this policy shift.

It is now six months on from the Government's response to this European Union report, and I hope that the Minister will be able to update us on progress on all the committee's recommendations. Most importantly though, can he inform the House of the dates for the negotiations on the end-date by which the export subsidies have to be removed? If not, can he tell us what discussions the Government have had with other WTO members to try to decide a date as quickly as reasonably possible? Can he assure the House that it will occur in the next year, thus working towards the new 2006 deadline for the end of the trade round?

Can the Minister also update the House on the European Union's tabled offer on barriers to trade in services, and what substantial offers have been laid on the table by other WTO members in the sectors where the European Union has made requests?

Returning to Russia and the promises on subsidies, I should like to raise the question of who actually polices the WTO agreement and commitments made by members. I know that it may very well be a devil's gift, but if and when the final deal is done, is the political will strong enough for members to police each other through the WTO?

With the patience of the House, I have a final point on the issue of unfair subsidies. When I made my maiden speech in the European Parliament in 1989, it concerned problems surrounding a bid for the air traffic control equipment for an international airport that was being built in the Far East. The British company in my constituency had great difficulty competing with the two other European contenders due to the effectively legal "hidden" subsidies given to those two companies through research and development budgets. Of course ours did not win the contract. While this does not directly affect agriculture, it is an issue which overlaps once again with the political will of countries to ensure free and fair trade and illustrates the complexity of policing.

Will the Minister assure me that he will ask his representatives to look into this matter with regard to future trade negotiations? I am sure that your Lordships will agree with me that we look forward to the UK leadership of the G8. While we welcome the Chancellor of the Exchequer's promise that the presidency next year will be the development presidency, can the Minister shed a little light on how he and the Prime Minister intend to fulfil this promise? Do they have any particular plans within these on trade? Can he assure the House that the term "development" will refer to the whole of the poor world and not just Africa to the detriment of others as deserving causes? We look forward to holding the Prime Minister to his ideals and to see if he can turn his talk on international development into substantive action.

Finally, once again I would like to congratulate the committee on all its work on this vital issue. I thank those who have taken part in the debate today, especially the maiden speaker.

There is no doubt that all Members of this House wish to aid the alleviation of global poverty, particularly in a world where we continue to see the terrible consequences of regional and national conflicts.

I welcome the statement by her Majesty's Government that the Doha development agenda remains the UK's highest trade policy objective, but we will still have a long way to go on a path strewn with many pitfalls—for example, trade justice, which was mentioned by the right reverend Prelate the Bishop of Manchester in his colourful speech.

We have a human duty and responsibility to push for agreement, not only on the issue of trade but on all others affecting international development.

Photo of Lord Sainsbury of Turville Lord Sainsbury of Turville Parliamentary Under-Secretary (Science and Innovation), Department of Trade and Industry, Parliamentary Under-Secretary (Department of Trade and Industry) (Science and Innovation)

My Lords, I begin by congratulating the noble Lord, Lord Vallance, on his excellent maiden speech. Speaking for what I agree is a small group of appointed industrialists who like to make speeches, and for those such as me who have followed the noble Lord's distinguished career for many years, we were not surprised by his thoughtful contribution to the debate. His speech was authoritative, knowledgeable and practical, which are qualities that we greatly prize in this House and we look forward to many more such excellent speeches.

I welcome the opportunity for this debate. It is in an area of high priority for the UK Government and the House of Lords EU Committee has produced an excellent report. I thank the EU Committee for this useful report and my noble friend Lord Radice for his clear exposition of the issues. Trade is important because, in our view, the responsible and equitable opening of markets worldwide is an essential plank in achieving prosperity and security for all.

The House of Lords report provided a very constructive basis for our debate today. As your Lordships know from the response that we sent in September, we agree with many of the recommendations: the need for a successful conclusion to an ambitious round of WTO trade negotiations; the need to improve UK competitiveness in order to compete successfully in the more open markets of the future; the need to stimulate south/south trade; and the need for the UK to play a leading role in shaping the trade policy agenda in Brussels.

However, since the publication of the report, there have been some significant developments that we also need to consider. The first is the publication of the DTI's trade and investment White Paper, Making Globalisation a Force for Good; the second is the agreement of frameworks in Geneva at the end of July; and the third is the appointment of a new Commissioner for Trade. If I may, I shall structure my comments around those three themes.

The aim of the White Paper was to explain how we can achieve globalisation with a human face or, to put it another way, to secure both free and fair trade. For too long, as we have heard this afternoon, the debate about trade has appeared to be polarised between those who believe that the market must prevail at whatever cost and those who think that globalisation is an inherent evil that will sacrifice the weak and vulnerable on the altar of corporate profit. Of course, it is not that simple. Trade liberalisation and development can go hand-in-hand. Indeed, the whole approach of the UK government to trade policy and liberalisation must be viewed in the wider context of sustainable development.

There is widespread acceptance that freer trade promotes economic growth. What has not been recognised so widely is that trade is a driver of growth in the country that exports and in the country that imports. That is why we in the Government talk about being against mercantilism. That does not mean that we are advocating unilateral disarmament in international negotiations by opening our markets without discussion. No, that would be politically naive. It means that we advocate an approach to trade negotiations that recognises the benefits of opening both our and other markets and in which developed countries do not insist on equal, or sometimes any, reciprocal concessions from the developing world.

If we want to be successful in export markets, we must ensure that our firms are among the most competitive and innovative in the world. The way to do that is to ensure that they are exposed to competition. Of course, when we open our markets to competition, we must accept that it can lead to shifts in market share from domestic producers to imports. We must make provision for the people whose jobs may be affected by that. It is futile to try to erect barriers to protect those sectors from competition; a more proactive response is needed. We need to be sure that working people in this country have the access to the training, the range of skills and flexibility required to move from one area of work to another.

That is the theory of free trade; what about fair trade? In the context of the Doha negotiations, the issue of fair trade has several dimensions. One of the most important is summed up in the following question: should we expect developing countries to take on the full rigours of open markets and free trade immediately? Our answer to that question is, "No, not immediately, but yes, in the fullness of time". That is what we mean by the phrase "same destination, different speeds".

The Government would disagree with the speeches made by the right reverend Prelate the Bishop of Manchester and the noble Lord, Lord Beaumont of Whitley. They should have a look at the countries that are successfully working their way out of poverty—countries such as China and India. The world figures for the decline in poverty show that it is almost entirely due to the new dynamism of those two countries. What is striking about those countries is the fact that they have opened their markets to free trade, with China joining the WTO. Reference was made to peasants in a particular situation. Noble Lords should go to China, visit the towns, see the factories that are opening up there and see the generation of people who, not so long ago, were poverty-stricken peasants but are now beginning to get a modicum of prosperity.

There are also the examples of the various experiments in the two kinds of policy. There is North Korea and South Korea. I talked today to a trade delegation from South Korea, which is now, I think, the eleventh biggest economy in the world. We can compare it with North Korea in a perfect experiment in the relative merits of a closed economy and an open economy. We should ask ourselves what it tells us. There are no examples of rich closed economies.

At the same time, the Government will continue to press in the EU and with WTO members the importance of having a true development outcome to the Doha negotiations. They are focused on an effective, special and differential treatment. We will work to ensure that economic partnership agreements fulfil the development potential consistent with our trade philosophy, "same destination, different speeds".

To my noble friend Lord Judd I say that we recognise that too often in the past low-income countries have had little say in the terms on which they received World Bank and IMF support. That is why we support developing countries in the formation of their own national strategies to reduce poverty and promote growth. I agree with my noble friend Lord Lea of Crondall that it is an extremely important issue. However, I agree fundamentally with the noble Lords, Lord Hannay of Chiswick and Lord Taverne, that it would be a poisoned chalice to support protectionism in the long term in developing countries.

We agree that developing countries need to co-ordinate opening their markets with their wider policies for development, so-called "sequencing", especially when markets in developing countries are suffering from distortions caused by the widespread and substantial dumping of surpluses from developed countries. We agree that it is right to offer imports from such countries preferential access to EU markets. However, we must not forget that the reason we do it is to lift the level of development in those countries to the point at which they become competitive internationally, eventually on the basis of their own competitive advantage and not preferential tariffs. At that point, it is right that those countries should compete on the same basis as everyone else.

I shall now say something about the concrete issues that we face. Cancun was a failure, and the report goes into some detail about the reasons. Thankfully, the Doha process was brought back on track in the summer, by virtue of an agreement on frameworks reached in Geneva. Those frameworks sketched out the general principles of a final package. The framework on agriculture was the most detailed and included commitments by developed countries to eliminate export subsidies. That will be an important element of a genuinely pro-development package. There is still a long way to go, not just in agriculture, and it is too early to say what a successful outcome to the Doha negotiations might include in detail or when a final agreement might be secured. However, it is clear that there is now enough on the table to keep everyone interested—agriculture, industrial tariffs, trade in services, trade defence and trade facilitation. We shall need to work hard as the EU to ensure that that interest remains.

So the prospects for the coming months, and for the Doha negotiations in general, do not look as gloomy as they may have done when the report was compiled. From a UK perspective, we are clear on what we want to see in a final agreement: namely, the total elimination of agricultural export subsidies by developed countries; a significant reduction in developed country agricultural subsidies, which distort production; a significant reduction in tariffs and non-tariff barriers worldwide, both agricultural and industrial; significant liberalisation of services markets worldwide; new rules that simplify procedures for exporters and importers worldwide; a reduction in the scope for the abuse of trade defence instruments; an appropriate level of special and differential treatment for developing countries; and, finally, measures to promote south/south trade.

The period between now and the WTO ministerial in Hong Kong next December will be crucial in establishing whether those objectives can be met. Currently, negotiations are going on in Geneva, focusing on technical matters. We will push for the EU to play an active and constructive role in that process with the aim of taking this technical work and feeding it into the ministerial.

I have talked about our White Paper which articulates our approach to trade policy. I have also talked about the encouraging developments in Geneva over the summer and the challenges of the coming months. I now want to say something about the third development; that is, the appointment of a new commission in Brussels.

The report rightly gives considerable attention to the European angle in trade negotiations. Of course, that is because trade policy is an area of Community competence. So, in a way, it makes no sense to talk about "UK" trade policy. What is important is the EU's trade policy and how it is negotiated on our behalf by the European Commission. To the noble Earl, Lord Sandwich, I say that we will work hard through the EU to bring the Doha development agenda to a successful conclusion.

I must say that in the run-up to the agreement on frameworks in the summer, the Commission did a first-class job including, in particular, as many noble Lords have pointed out, the Commissioner, Pascal Lamy. Indeed, it is arguable that one of the keys to the agreement of frameworks was the letter written jointly by Commissioners Lamy and Fischer to the other WTO members in May. The letter offered the complete phase-out of agricultural export subsidies provided that that was matched by similar action by other developed countries. That was a brave move. The Commission had to deal with the scepticism of some WTO members on the one hand and the anger of some EU member states on the other. But Lamy pulled it off and the result was a framework agreement in July that went beyond the expectations of many.

We look forward to that trend continuing under the stewardship of the new Trade Commissioner, Peter Mandelson. He starts with a strong hand. We have frameworks in place and a firm commitment from the EU to a successful conclusion to the Doha negotiations. He will also represent 30 per cent of world GDP and 40 per cent of world trade flows.

But he will also face challenges. He will face the challenge of keeping on board some of the more sceptical members of the WTO, some developing countries which fear that the Doha negotiations might be as unbalanced as previous trade agreements and some developed countries which would prefer to sit behind protectionist barriers rather than open themselves up to competition.

He will face the challenge of consulting member states in a meaningful and timely manner without undermining his freedom and flexibility to negotiate with other WTO members. Of course, he needs to keep the European Parliament fully abreast of all relevant developments. Finally, he needs to ensure that "civil society", by which I mean the whole range of groups affected by the outcome of these negotiations, but not a party to them, are kept fully engaged.

I now turn briefly to one or two of the more specific points raised in the debate. Perhaps I may say to the right reverend Prelate the Bishop of Manchester and my noble friend Lord Judd that there is nothing in the service negotiation that forces governments to privatise their public services or to prevent them regulating suppliers appropriately. It is a matter for individual governments to decide what is best for their countries, which is as it should be.

The noble Lord, Lord Cobbold, raised the issue of the future of the WTO. We recognise the need for reform of the WTO and await the findings of the Sutherland commission with interest. However, to embark on such reform while seeking to bring the Doha negotiations to a successful conclusion would be a mistake. I think that we would risk overburdening the ongoing negotiations and place an intolerable burden on those WTO members with limited institutional capacity, those whose views need to be heard but rarely have been in the past.

My noble friend Lord Radice asked about the mini-ministerial in the spring. We are in favour of the idea of a mini-ministerial next year, but we need to ensure that the timing is right. Too early, and the anticipated new US trade representative will not be up to speed, while too late, and the opportunity to move the negotiations forward early will be lost. We will continue to feed our ideas on this issue to the Commission.

The noble Lord, Lord Hannay, raised the Singapore issues. We are pleased that negotiations have started on trade facilitation and we think that dropped Singapore issues would deliver benefits to developing countries. However, it is sensible to remove competition, investment and transparency in government procurement. The issues remain within the WTO mandate and we would like to see discussions on them continuing at working group level outside the Doha negotiations.

On the question of export subsidies and dates, an end date or dates will be agreed in future negotiations within the agricultural special session in parallel with its negotiations on other forms of export competition such as export credits and food aid.

I think that I have covered the points on services, but they are ongoing with the delayed deadline for raised offers set for 1 May 2005. We will be encouraging the EU and other members to table substantially improved offers.

Finally, so far as Africa is concerned, I do not think that anyone looking at the issues of development and what is happening today would disagree with the view being put forward by my right honourable friend the Prime Minister that if there is one priority in the world, it is to deal with the problems of sub-Saharan Africa. We must not neglect other areas, but given what is happening across the world, this is the one place where it is very difficult to see any real signs of hope. We need to make certain that there can be signs of hope for the future.

In conclusion, from the UK's point of view we shall be doing all that we can to help the new commissioner to drive forward a successful conclusion to the DDA negotiations, achieving significant market liberalisation but in a way that brings real benefits to both the UK economy and to others, especially those in the developing world. And we should not forget that we have a special role to play since, from July next year, the UK will hold the Presidency of the EU. Of course this does not mean that we can dictate the agenda or determine the outcome of the DDA, but it does mean that through confident and effective stewardship, we can help to ensure that the EU takes a positive and constructive position in the WTO ministerial in Hong Kong in December 2005, which will be a key date in the Doha negotiations.

Photo of Lord Radice Lord Radice Labour 5:54 pm, 2nd December 2004

My Lords, we have had an extremely interesting and important debate and I thank all noble Lords for taking part. I thank my noble friend for his comprehensive reply and, above all, I congratulate the noble Lord, Lord Vallance of Tummel, on his splendid maiden speech. It was crisp and authoritative, really a model of how such speeches should be made. We look forward very much to hearing him in the future, particularly on the issues he addressed today with such authority.

One of the key themes of the debate has been the issue of liberalisation of trade versus—I will not be unfair and call it protectionism—a feeling that globalism and freer trade bring a lot of evils with it. That is not the view we have taken in our report, and I accept that. We did hear evidence from CAFOD, Oxfam and Christian Aid and we took their views into account, as the report shows. But we did not agree with those who argue, as did the right reverend Prelate, that further trade liberalisation undermines and is bad for developing countries.

Let me make two short points. First, in Africa, for example, a relatively small increase in trade is worth probably twice what aid and debt relief can bring with them. Secondly, who do you think will benefit by getting rid of EU export subsidies? It will be the poorer countries. So we should hesitate before we damn freer trade as being a barrier to helping the poorer countries. The contrary is true.

But we shall return to the Doha issue in future. We hope to return to it in our Select Committee as a follow-up to the report. I hope that we will have further debates—but perhaps rather sooner following the publication of our report than happened this time.

On Question, Motion agreed to.

House adjourned at five minutes before six o'clock.