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I am pleased, Mr. Amess, to be under your chairmanship. I hope that neither I nor members of the Select Committee on International Development, which I chair, will cause you any trouble. I hope, too, that you will find the debate interesting. It is important and, I suggest, timely.
The Committee's presence demonstrates that we are pleased to have the opportunity to debate the report. In April, when we produced it, the situation was tricky and a little disappointing. It is now considerably worse inasmuch as the talks are suspended, time is fast running out and even the political will to find a solution seems almost invisible, and certainly unclear when it comes to utterances, never mind activities.
The importance that the Committee attaches to a successful outcome of the Doha round—by that, we mean one that favours developing countries—cannot be overstated. It goes much further than simply securing a development round. If the Doha round of trade negotiations does not deliver a deal for developing countries, not only will it be a betrayal of the world's poor, but it will prejudice the very foundations of and justification for free trade.
In a separate report earlier this year, the Committee argued the case for having an expanding private sector in developing countries as an essential component of poverty reduction. However, that in turn requires the opening up of trade possibilities as well as developing the capacity to trade. In other words, if a country does not have the opportunity to access markets, it will not be able to develop its private sector. We concluded that if such countries could not develop the private sector, they would not succeed in reducing poverty.
Earlier this week, I attended a lecture at the Royal Society at which David King, the Government's chief scientific adviser, projected that gross domestic product for Africa in 2050 will be less than that of the United Kingdom. The whole of Africa will be generating less wealth in 44 years' time than the United Kingdom will be. That is entirely unacceptable, and it reinforces the need for trade, aid and development all to be working in the same direction. David King also predicted that Africa will have fallen behind in the green revolution—a change that has enabled many other developing countries to feed their expanding populations, as well as achieving economic growth.
I am sorry to say that that reinforces somewhat the hypocrisy—I cannot find a gentler word—of the United States and the European Union in lecturing the developing world about free trade while applying the regressive protection of their own agriculture sectors and demanding conditions for liberalisation. Economies that still champion the Monroe doctrine and support agricultural subsidies are not well placed to offer leadership. The developed nations, notably the EU and the USA, have talked one way and walked another, and they seek to pass blame back and forth between them.
Although the Committee welcomed the Government's success in securing a commitment to policy space in the G8 communiqué under the British presidency, we believe that they have failed to use our presidency effectively to break the logjam. In particular, the Government allowed the EU to make conditional proposals on non-agricultural market access, and did not demur when benchmarking was tabled by the EU, both of which actions contradict the spirit of a development round. I am glad to say that benchmarking did not make much progress.
In that context, I refer to paragraph 39 of our report, which quotes evidence from Sheila Page. She said:
"If we believe that liberalising the EU will benefit the EU, to say that we will not do it unless someone else does something first makes no economic sense. It certainly does not make development sense to tell developing countries, you must do what we consider sensible or we will not help you in other ways."
If we believe that it is a good thing to do, there should not be any conditions. At paragraph 42, we say that the UK should have rejected the benchmarking proposals. That would have allowed us to avoid what was a wasteful distraction.
I repeat that if we are to have a real development round—one that people can understand—the least developed countries would have 100 per cent. and unconditional duty-free and quota-free access to our markets. That, I believe, is what people understand the development round to mean. That should be accompanied—I accept that this is more qualified—by the recognition of these countries' need for policy space. The Committee debated that, and some would argue—I concur—that policy space has to be time-limited and case-dependent. The purpose of that policy space is to allow those countries to achieve free trade competitiveness, and to recognise that small, weak, poor countries cannot immediately step up into the international marketplace and expect to compete on the same terms as the established, developed economies.
The Committee was also concerned, and remains concerned, that the EU wanted to designate up to 8 per cent. of its products as sensitive, and therefore eligible for continued protection against the weakest economies. A World Bank analysis suggested that even 2 per cent. would virtually eliminate the poverty impacts of a Doha agreement.
When we published the report, I said:
"If this is to be a development round then the EU should not make its offers on agriculture or wider market access to the EU conditional on reciprocal non-agricultural market access, services or anything else. A true development round gives developing countries unconditional access to developed countries' markets for the widest range of products."
Similarly, if we are to agree to an aid-for-trade package, it should be considered not part of the aid budget—I fear that the Minister will probably tell us it will be—but as an investment by the UK and the EU in developing stronger trading partnerships with emerging economies, to everyone's mutual long-term benefit.
If the current round collapses or goes into deep freeze, it seems likely that trade patterns will be determined by bilateral agreements rather than multilateral ones. That would be a negation of free trade; it tends to mean some developing countries getting more favourable treatment than others. In addition, it means that when the agreements come to an end, which must happen, there will be further pain and disruption. Indeed, the Committee took evidence on that with the sugar regime.
I am grateful to my right hon. Friend for giving way. It is not simply the timing of bilateral agreements. By and large, the big power holders in those bilateral agreements will beat down the poorer ones, so it will always be an unequal relationship from which the poor will lose. Bilaterals are bad news for poor countries.
That is a telling point. Indeed, Mr. Amess, you will have heard that the degree of agreement among the Committee is such that we can call each other our hon. Friends. We are good colleagues and friends.
The high hopes that the trade talks would be a development round—it was described by Pascal Lamy as a round for free for the poorest countries, giving them market access without reciprocal concessions—now look pretty jaded. Some people, including Pascal Lamy, are saying that there may be a brief window to secure a deal after the US elections next month and perhaps in February next year. Frankly, it is difficult to be optimistic, given the lack of progress to date over a much longer time scale.
The greater concern is that, because nothing is agreed until everything is agreed, less developed countries may feel pressured into making concessions to secure what is on the table now. Evidence from some countries is that that is the case. That demonstrates the point made by the right hon. Gentleman: it would effectively amount to an unholy alliance of the developed countries and the larger developing countries, to the detriment of poor countries.
There are those who welcome the current impasse on the Doha round. For example, War on Want says that resuming negotiations is now the worst possible option, and Christian Aid says that simply resuming talks on the same basis as before would be a mistake. However, Pascal Lamy, the World Trade Organisation director general says that if the talks were not resumed:
"All of us would pay...the breakdown of negotiations would cause for great celebration within the protectionist ranks".
"The pity in all this is that what is on the table now constitutes greater progress in rolling back farm subsidies and tariffs than anything seen before in global negotiations...powerful tariff cutting formulas that were on the verge of agreement would have opened global markets as never before".
However, somebody in the developed world has to take a lead at this time. Ministers and Commissioners say the right things, but we are currently at a standstill. The Financial Times speaks of
"a faintly silly game of competitive concern for the revival of Doha, with ministers and officials dashing around the globe ostentatiously holding meetings to prove their commitment to the trade round that their intransigence has just brought to a shuddering halt".
As I have said, the situation was difficult when we published our report in April, but it is much more serious now. If trade negotiations move from the multilateral to the bilateral we will, as the Financial Times again observes, replace the rule of law with the rule of the jungle. Rather eloquently, it says:
"The WTOtalks are a loom that weaves thousands of mercantilist strands into a tapestry of free trade."
That is a sentence worthy of John Bercow at his most florid.
I welcome the fact that the EU has exercised a moratorium on any new trade negotiations—bilaterals—since the beginning of the Doha round. Frankly, if that moratorium has ended—there are those who call for it to end—I suggest that that is a signal of the beginning of the end for the possibility of EU leadership in multilateral free trade.
I hope that the Minister will agree that such deals are not just, as some people think, second best in the absence of a WTO deal; I repeat that they are ultimately the negation of free trade. Despite the rhetoric, the EU and the USA do not have a credible track record on free trade. Therefore, the test now is not who blinks first, but whether the EU can stop blaming the US and unilaterally break the deadlock with a bold new initiative. Will the Government be prepared to put their head above the parapet and make such a demand? If nobody does, it is not just the developed world that will lose the Doha round: free trade will be the casualty and we will all be the losers, rich and poor alike.
We have one last chance to save the talks before the US President's trade promotion authority runs out. The window of opportunity will come after the mid-term elections, and frankly it will last weeks rather than months. Unless a draft deal goes back to Congress very early in the new year, the trade promotion authority will have ended before there is an opportunity to approve the deal. If there is no trade promotion authority, there is no deal. Whatever the US President or the US Administration via their trade representative might negotiate, it would be torn to shreds in a protectionist Congress—everybody involved in the talks knows that.
I urge the Minister and the Government to press the European Union vocally to make the most of this last opportunity. I simply ask: is the EU preparing a new offer to be publicly presented after the mid-term elections? We will not reach a deal in the WTO as a whole unless there is substantial movement both by the EU on the common agricultural policy and by the US on farm subsidies and on other agricultural protection measures, particularly in relation to cotton. There is no point having timid talks unless there is a bold offer to break the deadlock—it needs to be bold and to happen very quickly.
Deep in my heart I am pessimistic, although I hope I am wrong. Hon. Members need to ask and debate what the contingency is if the talks grind to a halt and fail or remain in deep freeze for several years to come. First, we need to learn the lesson that the stricture for this round that nothing is agreed until everything is agreed has been a recipe for failure. When the Committee was in Washington DC and met the US trade representative, that formulation was used to justify the lack of movement by the US. The US said that it had made an offer, and until others responded in a way that was acceptable to it, progress would not be made, and that progress could not be banked in one part of the negotiations while discussions continued in another, because nothing would be agreed until everything was agreed.
Anybody who has been involved in any kind of negotiation knows that a deal is built up incrementally. I spent a number of years as a full-time trade union official negotiating deals on pay and conditions for a range of health service staff. A deal was not created by a flash of inspiration on both sides of the negotiating table at a single point in time: a deal was put together in parts. In order to encourage and put together a WTO deal in obviously difficult negotiations, involving 130 parties, success needs be announced part by part. I do not see any reason why a deal cannot be reached and banked on agriculture when further deals have been made in other parts of the negotiations, for example on non-agricultural market access. If, as I suspect, the talks remain dormant for two or three years until, to be blunt, there is a new President of the US and a new President of France who are not out to sabotage them, we need to use the time between now and then to ditch the doctrine that nothing is agreed until everything is agreed. If we do not do that, the talks will have little more chance of success in two or three years' time than in the past two or three years.
Within the EU, the British Government have taken a position against conditionality with offers. We have taken the view that reducing tariffs and quotas, and increasing market access, is not something that harms the country or group of countries that do it; it is put into the negotiations because it benefits us and our trade partners.
It is unfortunate that a clear majority in the EU does not accept that non-mercantilist approach to trade negotiations, but what we are arguing is right. Yes, of course transitional arrangements need to be provided for developing countries with fragile economies as they liberalise. A big bang is not helpful to the least developed countries, but the principle is right. If we sincerely believe that trade liberalisation will help to raise the incomes of poor people in poor countries because they are able to sell the product of their labour internationally in places in which they were hitherto unable to do so, we must use the time between now and whenever a global deal is made to put that principle into practice by changing the policies of the European Union.
We cannot unilaterally change the trade policies of the United States or Japan. I wish that we could, but we cannot. That is the problem with these negotiations, but we, as a leading country in the European Union, can press for and, I hope, achieve changes in our European Union policy. That has been done before. The "Everything but Arms" agreement was introduced before we got to this round of trade negotiations. It was introduced for the right reason: it increased opportunities for poor people from poor countries to sell their goods—primarily agricultural products—to a European market. We need to go further unilaterally by tearing down the barriers. To use the words of my hon. Friend the Minister for Climate Change and the Environment when he was the Minister for Trade and gave evidence to our Committee, we need to "kick open the door" that keeps the goods of poor people from poor countries out, and we can do that in the EU by ourselves.
We have a package agreed in the EU to phase out export subsidies by 2013, conditional on reaching an agreement in the Doha trade round. It is the right thing for the EU to do, and I am sure that it is the right thing to do for the countries where we have been dumping subsidised agricultural produce and undermining local markets and the livelihoods of local farmers. It is possible for us to ensure that we unilaterally phase out export subsidies by 2013, or by an earlier date, if that is feasible, simply because we choose to do so. It would be to our benefit to do so and it would be to the benefit of some poor farmers in poor countries if we did so.
We can unilaterally, if we choose to do so, make further progress in modifying the nature of subsidies under the common agricultural policy and reducing subsidy levels overall under that policy, so that farmers who are producing unsubsidised agricultural produce in Africa who have open access to our markets will be competing more nearly on a level playing field; in other words, competing with less highly subsidised agricultural produce produced in Europe. Those are things that we can do by ourselves.
I hope desperately that this window of opportunity can be used to achieve progress in the round as initially intended, but if that is not possible, the greatest betrayal would be for us simply to walk away from the trade agenda and not to do what it is in our power to do unilaterally within the European Union to promote development and the attainment of the millennium development goals. I am talking about achieving that through our own unilateral actions on trade.
Let us remember why this kind of trade round was launched at Doha. It came just a couple of months after 9/11, when there was a feeling throughout the world of global solidarity and a recognition in the rich world that if we do not promote development and create opportunities for economic development in poor countries, we create, at least in some poor countries, failed states within which terrorism can thrive and terrorists can find sanctuary, rest and recuperation for their operatives, and money laundering facilities from a poor but compliant Government. It was because of that recognition that the big power blocs of the western world agreed that the priority of this trade round should be to deliver a development agenda for the poor. However, that has been forgotten. The round so far has failed and may fail in the short term, although I think that in the long term an agreement will be made. However, that is not an excuse for us in Britain and for the EU to forget that we can reform trade unilaterally to benefit the poor, and we must do so. That is in their interests, but also in ours.
It is a pleasure and a privilege to take part in the debate, and I begin by paying tribute to Malcolm Bruce, the Chairman of the Select Committee on International Development, for his work in bringing about the report, to which all members of the Committee have signed up.
I am sad to say that, on the strength of experience, I am inclined to agree with the verdict of Hugh Bayley. I fear that his pessimism is all too justified, because we do not have to look into a crystal ball when we can read the book. That said, we have an overriding obligation to try to rescue the Doha development round, and the British Government have an important role to play in that process, in the hope that some sort of arrangement can be fashioned, the net effect of which will be to reduce the poverty of the poorest at the expense—let us be explicit—of some necessary and considerable sacrifice by the richest.
In the brief time available, I should like to focus on a couple of points. First, both because it is significant on its own and because it is emblematic of the wider problem with which we are wrestling, I shall talk about duty-free and quota-free access. There was a widespread hope and a partial commitment that 100 per cent. duty-free quota-free access would be provided for the least developed countries to export their produce and to reduce thereby their destitution.
In fact, we got something rather different. We got—principally on the ultimate insistence of the United States that it was thus far and no further—an agreement only to 97 per cent. The significance of that can hardly be overstated. It would be easy to be beguiled by the rhetoricians, the spin doctors and the press release merchants—of whom a plentiful supply was in evidence in Hong Kong in the delegations both of the United States and of the European Union—and to suppose that 97 per cent. was really quite good. I might be thought rather churlish to suggest that the cup was half empty rather than half full. In fact, the situation is worse than that. The cup is not just half empty; there is scarcely any water remaining in it.
Let me explain why I say that. If we think about the 3 per cent. that has been protected, we see that we are in practice talking about somewhat more than 300—probably nearer 330—product lines that are exempt from the duty-free quota-free access arrangement. Are they a purely incidental and arbitrarily chosen 330 lines? Is it a matter of happenstance whether or not a line is included in the agreement? No, that is not the case at all. Those that are excluded and fall within the 3 per cent. have deliberately been put into the exempt category to satisfy the selfish commercial interests of states that are much more powerful, principally the United States and the European Union—a collection of states—and, to a considerable degree, Japan.
Just reflect on the facts. Under the agreement, unless it is amended and improved, the United States will still be able to resist the export of textiles from Bangladesh, and Japan will be able to resist the export of rice from Cambodia. So far as Bangladesh is concerned—to pluck out one important example—about 20 to 25 product lines account for two thirds of its exports. When one reflects on those limited but important statistics, one recognises just how desperately damaging it is that the agreement so far is for only 97 per cent. and not 100 per cent.
I have flayed the United States, and I make no apology for doing so, because it has taken a thoroughly selfish and irresponsible approach thus far to the negotiations, but let us not suppose for one moment that the European Union can or should be let off the hook. The Chairman of the Select Committee mentioned the EU's original insistence on large numbers of sensitive products. I think that the figure has sharply fallen since then, but even now the European Union is positing a scenario in which a significant number of products shall be judged to be sensitive so far as it is concerned, and developing countries will therefore not have an opportunity to export them. That is wrong. If we are serious about trade reform, about a development deal, and particularly about a pro-poor outcome, which was the whole rationale behind this set of negotiations in the first instance, we must resolve to secure a far superior outcome to the unsatisfactory mish-mash that is currently on the table.
Secondly, I am disappointed that far too little attention was paid to the subject of special and differential treatment. I think that the Committee also felt that an opportunity was lost. When reflecting on this subject, we have to adjust our mindset to the context of the totality of the negotiations. In this day and age, in the light of industrial development around the world, it is a mistake to view the debate as consisting of a Manichean divide between the forces of good and darkness, or even between the forces of developed and developing countries. That is part of the debate, but it is a simplistic characterisation because there is a world of difference between the position of India, China, or, indeed, Brazil, and the circumstances faced by Bangladesh, Ethiopia, or, dare I say it, Benin, Burkina Faso, Mali and Chad. If we are to create equitable and sustainable deals that respect the different circumstances of developing countries, we in the international community must be prepared to roll up our sleeves and attend politically, but, more importantly, intellectually, to the different circumstances faced by a range of countries. On that basis, we can come to arrangements that on the whole favour the poorest and the poorer, rather than the richest or richer.
My third point is that although there is a desperate threat of insecurity, collapse into failed states, internal conflict, and the acquisition of small arms and unregulated circulation of such weaponry, which kills about 400,000 people around the world each year, there is also an ultimate threat of terrorism. I have made the point before, and I make no apology for repeating it, that if as a matter of calculated policy we exacerbate the plight of the poor and increase the gap between them and us, it is only a matter of time before a proportion of them decide to pursue another route to redressing the balance. They may do it voluntarily, or they may find themselves being used by others, but it will happen.
There is another danger, which is a less apocalyptic scenario than that which the hon. Member for City of York validly articulated, that we will make next to no progress in the pursuit of the millennium development goals. There is a danger, in the international development debate, that we end up discussing these issues in a compartmentalised fashion. In the conduct of domestic politics, it is often said that we need joined-up government; the Government say that they are delivering it, and we sometimes claim that they are not, but there is a regular debate about it. We need a similar approach to the formulation of policy on international development.
It is no good the European Union, the United States, Japan and others patting themselves on the back and feeling some sense of vindication, and perhaps of collective altruism, that they are doling out substantial sums of taxpayers' money, the better to assist the poorest countries in the world, if they pursue trade policies that go in precisely the opposite direction. The danger is even greater when trade massively exceeds aid in volume—as we frankly know it does. Realistically, it always will. If we continue to operate in that way, we will be giving $1 with one hand and taking probably nearer to $6 with the other. I think that those are the denominations in which the debates should be conducted. There is a hugely greater sum involved with agricultural turnover than with the contributions made by OECD states in the form of Government assistance to the poorest countries in the world.
My final point, in expressing the hope that what looks like a calamity might be prevented, is that there is no moral equivalence between the position of rich countries pursuing unfair trade—hugely subsidising their own produce and dumping the surplus on the poorest people on the planet—and developing countries declining wholly to agree, or, perhaps, to agree at all, with the demand from the richest countries on earth that they should open their markets. The richest countries on earth are perfectly entitled to take the view that markets should be opened for services and the like, but developing countries are perfectly entitled to take the view that they do not want to do so because they prefer for substantial periods to enjoy policy space to build up their own domestic markets and to pursue their priorities. They are also entitled to take the view that they will consider doing so over a graduated period, depending on their economic strength, or when they have had the Doha offer, which they thought was the whole purpose of and rationale for the negotiations in the first place.
I do not like the fact that people, particularly in the western world, sometimes become so embroiled in the minutiae of the negotiations, or, in a professional capacity, are so stuck within the interstices of the system, that they can genuinely find themselves persuaded that it is really a question of a bit of give and take on both sides, and that if we are to consider abandoning or heavily reducing our agricultural subsidies, it is only reasonable for us to say to developing countries, "You've got to give us something in return"—the principle of the quid pro quo. I confess that I do not accept that principle. It seems to me that in the conduct of international trade, ethics do not have much to do with it, but they should. As well as a healthy dose of realism, which should of course inform any constructive approach to political negotiation, we should not lose sight of the need for a decent dose of idealism. It is wrong for the European Union massively to subsidise its agricultural produce in a way that hugely distorts trade and makes poor people in developing countries still poorer, and we should commit, within a specified, and preferably short, timetable to stop it. If we are then able to persuade other countries to give something to us in recognition of our contribution, so be it, but we should stop it in any event.
The hon. Gentleman raises an interesting point about the moral issues behind the debate. Given the rapidly changing globalised economy, does he agree that it is in the west's long-term economic interests to accept that change is inevitable and that it would be better to deal with the issue sooner rather than later?
I agree entirely, but the problem is that the richest countries' approach to negotiations is broadly similar to the Treasury's attitude to public expenditure. In other words, given a choice between short-term saving and long-term benefit, the rich countries almost unfailingly err on the side of short-term gain for themselves. The hon. Lady is right to remind colleagues that, in the end, the richest countries need a deal; they do indeed need access, but they also need to get away from the subsidy-junky culture in the interests of their own consumers, and I hope that that will happen over a period.
Estimates vary as to how far successful negotiations would increase world trade and reduce the number of people who are destitute. Some of the figures are very high, but even if we take the World Bank figure, we are reckoning on the possibility, with a realistic deal, of gaining between $90 billion and $125 billion by 2015. Estimates vary as to whether we could release 2.5 million people in Africa from poverty or whether, if we were really bold and effective and drove the reform process forward in the interests of the poor, we could release nearer to 150 million. At the moment, we are nowhere near; indeed, we are teetering on the brink, and there is every danger of complete collapse.
We must ask ourselves whether it is right that we in the rich world should allow a situation of collapse, in which we continue to exist pretty comfortably thank you, with no destitution whatever of the kind that is found in the developing world. If we do not think that that is an acceptable state of affairs, all participating western Governments, including the United Kingdom Government, should be prepared to say, "We are willing to make significant short-term sacrifices," and then, through explanation, communication and galvanisation, to exercise the political leadership that is required to secure support from the British electorate.
There is sometimes an assumption that a deal that involves an element of material and striking sacrifice by us in the short term will be too difficult to sell, but I do not agree. If the Government were bold and made the case publicly and vociferously, Ministers would find that Opposition politicians would sign up to it to boot. I have never been afraid to tell people in my constituency, which is in a semi-rural patch with a not insignificant number of farmers, "British agriculture policy is wrong and needs to change." There is a case for public subsidy of agriculture, but it should not be public subsidy of a kind that is hugely trade distorting and whose effect, which we can anticipate, is to exacerbate the plight of the poorest people on the planet. That policy must change.
As the Chairman of our Committee said in introducing the report and as other hon. Members have said, things have moved on since it was presented in April. The negotiations have been broken off and elections are looming in America. Moreover, as my hon. Friend Hugh Bayley said, there is also an economic factor.
To pick up on some of the remarks made by John Bercow, the economic context in the west is worsening. Hon. Members may have seen an article in the financial press yesterday stating that wheat prices in the US have hit
"a 10-year high...on fears of a further decline in global wheat production" at a time when stockpiles are at a 20-year low. The article continues:
"The latest rise is expected to lead to higher food prices, affecting bread, breakfast cereals, pizzas and pasta" throughout the western world in the next 12 months. I read that out simply because there is a debate on climate change on the Floor of the House and because there is now pressure on food prices following the failed harvest in Australia and drought elsewhere. Who will pay the highest price in that worsening context? As ever, it will be the poor of Africa. They will not get a chance to catch up as wheat prices increase and the rest of us scrabble to keep our heads above water.
Since the 1970s, when pressure built up for aid, and the 0.7 per cent. target was first established, it has always been recognised that the real key to development would be fairer trade, not aid. There was a wonderful cartoon of a Mexican peasant facing a well-dressed business man who was holding a teaspoon out to him with the word "aid" written on it. However, the business man's other hand was round the peasant's windpipe and emblazoned on his arm was the word "trade". That has ever been the situation: a little teaspoon of aid cannot make up for the stranglehold on the windpipe of international trade. We should not resile, therefore, from insisting that trade and development go together, even if that seems to move back from an international agenda.
Over the past few years, there has been real progress on aid and debt cancellation, not least by this Labour Government. However, all the pressure that built up around the immensely popular Make Poverty History campaign, with the focus shifting to trade justice, is in danger of evaporating, not only because of the complexity of the issue, but because of the disillusionment about the Doha round.
Following the second world war, and even before globalisation became a major economic theme, it was generally recognised that there was a need for an international, multilateral, rules-based trading system, and that was the whole point of the general agreement on tariffs and trade. In 1995 the World Trade Organisation was set up. Encouragingly, it shifted the focus a little later by suggesting that we work towards establishing trade rules that worked for the benefit of those who were locked out of the economic system—the world's poor. It set out on purpose to enable poorer countries and their peoples to break into the dominant world economic trading system.
However, the rounds of talks, as we have debated endlessly in parliamentary Question Time, have repeatedly broken down. They have become enmeshed in the most incomprehensible arguments about intellectual property rights, investment measures and special product exemptions, and everything has been buried under complex acronyms, such as NAMA—non-agricultural market access—and the rest of them. Those of us who pay attention to the detail get stuck into the debate, but such problems are leading to increased disillusionment in the outside world, with people wondering whether the talks can ever deliver any change or justice for the poor. That generates disillusionment among those of good will, who believe in building, not an anything-goes free trade system, but a fair-trade, rules-based system that would at last be weighted in such a way as to deliver basic economic justice to poor people and their countries. There is now despair that that cannot possibly happen. As a result, we will lose all the pressure that built up around the Make Poverty History campaign, and people will believe that politics cannot change the world and nothing can be done.
There is therefore some onus on us as politicians, on Governments and on international bodies to tackle the agenda before us, even at this late stage. The Doha round is in suspension and is proving to be the most deeply disillusioning round of all time. It is not only blocking development progress, but making things worse by leaving a vacuum. Into that vacuum will move the bilateral agreements, which will increase inequality between the powerful and the poor trading countries.
During the development rounds, we talked about the limited negotiating capacity of the poorer countries, but that problem will be magnified in bilateral negotiations, when those countries will try simply to negotiate on a product-by-product basis. They will have no chance at all of getting a fair deal. "Bilateral" will mean that the poor get poorer.
In general it is recognised that poorer countries lost ground in the last negotiating rounds. Since 1994 the world trading system has reinforced the position, reach and access of the powerful, not the poor. Things have gone the other way. Deadline after deadline has passed and the Doha round has shown no sign of a development breakthrough.
Does my right hon. Friend acknowledge that one of the problems in Hong Kong was that the medium-income countries, such as Brazil and India, ended up negotiating on behalf of the world's poorest, and that in reality the very poorest countries, representing the very poorest people in the world, were, in effect, totally shut out of all talks and invited in at the end to hear the results?
I tend to agree with my hon. Friend. The message cannot be that we back away from complexity and getting down to the detail; nor should we have such a crude map of the world that we see it as rich versus poor, with the poor locked out again. I think that that is how things have worked out.
To put things in context, I think that I am right in saying that only a tiny fraction of world trade, which covers all goods and services, is in agricultural products. It is 3 per cent. that the EU, Japan and America are arguing about. It is massively dwarfed by financial services. Yet the continued refusal by America, the EU and Japan to reduce—not completely to abolish but to reduce—farm subsidies and tariffs is resulting in the complete blockage of the WTO system and, at the same time, as other hon. Members have spelt out, the dumping of excess crops. Dumping continues, and crushes small farmers and people with poorer land who are trying to scrape a livelihood in sub-Saharan Africa. Their chances of survival are being reduced, not increased, by that. It is little wonder that African countries are failing to catch up. They have no chance. They are being crushed by the system.
Where are we now? The US refuses to lower its farm subsidies to the extent that would be acceptable to the EU, which, in turn, accuses the US of keeping protectionist barriers to trade in agricultural goods in position. Despite all the rhetoric of commitment to so-called free trade, a protectionist row between America and the EU is what is going on. The poor countries are locked out completely, as my hon. Friend Jeremy Corbyn mentioned. The US will hold onto its $226 billion domestic agriculture subsidies, but it is playing that agenda off against the EU. The poor of the third world—African countries—are again locked out. The Doha round has ended as a fight for advantage in agricultural markets by large and powerful countries, corporations and lobbies, which are fighting among themselves.
I hope that our Committee will make some small effort to keep the agenda of the poor and of poor countries going. It is our job, and the Committee's job, even though the agenda is immensely complex, to keep trade and development locked together, right at the top of the local and global agenda, and to ensure that the political will exists to secure a development round that will not trickle away.
Finally, I want to mention two proposals. First, the EU did at least propose that the poorest countries should get full and fair access to the wealthy countries' markets. We should get behind that proposal, back Commissioner Mandelson and say that we want him publicly to continue to champion it, with more rigour and vigour, in the next few months. Secondly, perhaps all nations, rich and poor, could substantially reduce their long list of sensitive products—from 80 per cent. I completely respect the need to be sensitive to the fact that the livelihoods of vulnerable small farmers in poor countries can be completely wiped out by a surge of cheap imports, so that some sensitivity must be shown to the impacts of decisions, but we could at least consider some flexibility.
I close with a remark from a written statement made in September—we can obtain written statements in the middle of the summer now, when the House is not sitting, which is welcome. My right hon. Friend the Minister for Trade recognised:
"Developing countries, including the poorest countries, are the biggest losers from the failure to reach agreement."—[Hansard, 11 September 2006; Vol. 449, c. 122WS.]
I agree. He also said that there should be flexibility in future to revive the negotiations. I hope that the Minister who is present today can encourage that and suggest that it be on the agenda.
I share the pessimism and disappointment of my Committee colleagues about the current state of the WTO talks. Last year there was an unprecedented public and political campaign behind "Make Poverty History", and thanks to the lead taken by the Government we made substantial progress on debt and aid. However, unfortunately, on the third and most important issue—trade—we have signally failed to achieve what we aimed for.
In the past two and half years, until June this year, I represented the British group of the Inter-Parliamentary Union on the WTO parliamentary conference. I listened to a lot of talking in that time and attended two ministerial conferences, in Cancun and Hong Kong. Frankly, apart from some progress that was made about six months after the Cancun conference, there has been little progress in the negotiations as a whole. Fundamentally there is little political momentum in the EU or the USA towards achieving significant progress.
Some, including many non-governmental organisations, have argued that no deal is better than a bad deal, but no one should be under the illusion that nothing will change if no deal is reached. There is a real danger of regressing back into protectionism. The most vulnerable victims would be the world's poorest. If that happens, the losses to the least developed countries will be much greater than those that have been modelled in the NGO reports. We must face the danger that the clock could be turned back, as well as being kept on hold for the next three years. That is why it is important that at this point the Government, with their EU partners, should closely examine the reasons for the problems and the underlying macro-economic dynamics that we need to address if we are to move the trade agenda forward in the next few years.
History tells us that trade negotiations are normally long and drawn out. The Uruguay round took much longer, and did not start out with such an ambitious agenda in the first place. Unlike the current Doha round it was not burdened with such an altruistic political aspiration as alleviating global poverty, or with being the subject of debate by millions of ordinary citizens throughout the world. As my hon. Friend Hugh Bayley mentioned, the development agenda—the Doha round was launched in 2001—came as a consequence of international solidarity after the terrible events of 9/11 and a wake-up call in the international community about the global security threat to us all. However, it was a reaction to the events, rather than a fundamental shift in the political strategy behind trade liberalisation.
In the grip of the need to address the causes of global instability, the language of the negotiations changed, so that development needs were seen to be put at the forefront. There was also an open acknowledgment of the need for a correction of the imbalance that had been created by the Uruguay round. However, there was a failure to emphasise that that could be a win-win agenda for all members, rich and poor.
That is a telling point. Is not it true that the corollary is the case: that no deal is a lose-lose agenda for rich and poor? That is the danger of some NGOs encouraging the idea that stopping the process is a good thing for the poor. In reality, everyone will lose.
I fully agree with the Chairman of the Select Committee. It is a very real danger. I have listened in the past two and a half years to many parliamentarians, from different parts of the world, discussing those matters, and the language of protectionism is becoming much more prevalent. Sometimes it is cloaked in different ways, and sometimes it entails the mention of environmental concerns or food security. I certainly agree that in a small, poor island community food security is important, but I find it difficult to accept that Iceland had a major problem with food security, for example. I have heard that the value of agriculture to France should be referred to UNESCO on the basis of culture, and about the unique quality of Italian soil. I have heard many statements of that kind, but in the end they mask serious protectionist bias that we must fight. We must not think that things will remain neutral because we do not go ahead with the talks.
This question of the consequence of failure is important. While I agree with Malcolm Bruce that no deal—the collapse of the talks—would be a lose-lose scenario, does the hon. Lady accept my view that there is a huge difference between the loss to be sustained by the richest countries in the world, which is a lesser increase in wealth, and the loss to be sustained by the poorest ones, which is to be a continuation, and probably an intensification, of grinding poverty?
I fully accept the hon. Gentleman's argument. However, the west will lose a major political battle in these talks, not an economic one, because if we do not hold to the virtue of multilateral talks, we set an unwelcome precedent in terms of the entire politics of global security as well as global economy.
As I said, the fact that we failed to emphasise the win-win situation entrenched the lack of political momentum. As my right hon. Friend John Battle mentioned, we might be talking only about 3 per cent. of our economy being adversely affected by these talks. If we are simply to be seen as losers and not necessarily net gainers, where is the apparent incentive for politicians to trudge through long years of hard negotiation to come out with not very much to produce to their citizens and electorate? We must reassess on which basis we look forward to these talks in the future.
There needs to be much more talk about creating more jobs in the global economy as a whole, rather than trying to rectify a trade imbalance between north and south, if we are to give that incentive. John Bercow appropriately discussed the moral argument, and I agree that a strong moral imperative exists, but the realpolitik is that we have to produce the incentive to encourage members of the international community to reassess their positions at these talks. In the past 30 years, there has been a growing disconnect between employment rates on the one hand, and economic growth on the other. That inevitably leads to a rise in protectionist sentiments if unemployment levels remain high or the perception is that further liberalisation may increase unemployment. The rise of the Chinese economy in particular has helped to increase those fears.
We must give a much higher priority to policy coherence between trade and labour sectors of government, so that more aid for trade is directed at labour market preparedness and providing greater social protection for emerging economies. If people are being asked to take the risk of moving from one sector of employment, such as subsistence agriculture, to industrial production of agriculture or to industry, for example, we are asking them to take a great risk in their own lives and those of their families. If there is no form of social protection at a basic level, the political reality is that people will be strongly opposed to taking that risk in the first place because they know the consequences of something going wrong. There is growing evidence that the use of cash transfers as part of a comprehensive social protection system can play a key role in reducing absolute poverty and the vulnerability and risk element in rapidly changing economies.
Yesterday, Mark Simmonds attended a meeting of the all-party group on debt, aid and trade, which I chaired. We took part in a briefing arranged by Oxfam on the next round of the European Union economic partnership agreements. We cannot see them in isolation from what is going on in the World Trade Organisation negotiations. I want to summarise the interesting remarks made by the Rwandan ambassador, who said that what people need to develop their economies is investment in infrastructure—transport, energy supplies, water, research and so on, but under poverty reduction strategy paper rules they are severely limited in taking on additional borrowing. He said:
"We can't get grants, and aid money" from western donors
"is focused on hospitals and schools. If we don't have the infrastructure, we can't compete against richer nations or cope with further liberalisation."
The Committee has just produced its own report on private sector development. It has become increasingly important that the sequencing of any trade liberalisation for the least developed countries must be accompanied by the opportunities for genuine improvement in economic infrastructure. We also need to focus on creating viable alternative streams of Government income to replace that lost by reductions in tariffs. I know that the Department for International Development is already carrying out work in the countries in which it operates and is helping in terms of customs and revenue reforms, but this needs to be done at a much greater level by all the international donors.
The international community must take a robust approach both nationally and at an international level on issues that severely restrict fair trading at a global level, and, as a result, employment creation, be they capital flight, tax avoidance or, in particular, the widespread and pernicious mispricing of exports and imports to shift profits out of a country. It is estimated that the aid flow of $25 billion, mostly to sub-Saharan Africa, is dwarfed by the $50 billion that the region loses in capital flight. We need to reassess where the money is going and where it is escaping from if we are to give the LDCs the chance to trade on fair terms.
It is understandable that many of those countries are cautious given their past experiences of forced liberalisation and the one-size-fits-all policies imposed by the World Bank and International Monetary Fund in the mid-1980s and 1990s. As recommended in the report, the Government need to press for the WTO to promote a system of independent, impartial and publicly available economic analysis of the effect of different proposals on different countries and groups, so that decisions can be made on the basis of the fullest information being available to all parties at the negotiations, regardless of their wealth or size.
The reluctance of western nations, including the EU and the USA, to reduce substantially their trade barriers remains the biggest negotiating hurdle. Those protectionist sentiments run deep; we need only witness debates in the US Congress and Senate to see that such sentiments are increasing, rather than decreasing as the years go by. That promotes the pessimism about any hope of a realistic settlement in the next few months. We should not speak about having an ambitious development-oriented agenda while offering only a small fraction of our own markets. We need to be much bolder and braver if we are to create a fairer global economic market and one in which we can all form a part.
The WTO has a lot of faults, some of which we mentioned in our report and in our comments today, but it is a unique international structure because it is based on one member, one vote. It is quite different from the World Bank, the IMF and the permanent United Nations Security Council. The growing shift in power to the new and emerging world economies as the talks have progressed has changed the nature of the negotiations as they have gone along. The G20, consisting of India, China, Brazil and some of the middle-income developing nations—if I can put it that way—has emerged. I remember that at Cancun everyone thought it was a temporary phenomenon that would last only for a few months and that it was simply a case of nations getting together on a very informal basis, but it has formed a resilient trade negotiating bloc within the WTO. It represents the shift in economic power from the north to the south, and that is inescapable; it will happen. It is about time that western nations faced up to that fact economically and came to terms with it.
It has been mentioned that the G20's priority might be different from that of the G90, although it must be remembered that there are more people in absolute poverty in India than in the whole of Africa. So the G20 has considerable problems with which to deal, but a new political economic order is developing in the world. We must be able to reach out and accommodate and to work with such countries to achieve fairer trade for all.
In the short term, it would be helpful if larger member states could avoid sniping at each other. If they could concentrate on getting at least some of the agreed negotiations on giving better access to LDCs—the aid-for-trade package has been mentioned—that would at least keep the multilateral concept on the road. That is important politically, if not economically in the short term, if we are to reach a better agreement that more fully represents the needs of developing nations, although that might be two to three years down the line.
I apologise, Mr. Amess, for missing the first few minutes of this debate. I was unavoidably delayed and sent you a note asking you to apologise to the Chamber.
This is not the first time that we have debated the World Trade Organisation and I suspect that it will not be last. Unless we get right the WTO final resolution, if there is ever to be such a thing, the poverty and the imbalance of power and wealth in the world will get worse, not better. As things are now, the situation for the poorest in the world is getting worse.
I was interested in the reference made by my hon. Friend Ann McKechin to the shift of power between the negotiating blocks of the traditional western powers—the EU and the United States—and development of the group of 20. That is a significant and important development. It has created success as well as problems. It shows that there has been growth in the economies of what were very poor countries, but also that they are prepared to combine to develop their own agenda—for example, with Brazilian soya, and so on—often at the expense of the poorest countries or the people in those countries. There are many very poor people in Brazil and even more in India, and I am not entirely sure that their interests are being represented by the agribusiness interests that dominate their Governments' national negotiating stance.
The point that I want to emphasise—perhaps the Minister will say something about it—is what we are doing to ensure that in the negotiating round the representatives of the very poorest countries, which are mainly African, get a reasonable hearing. I was not in Hong Kong, but I have talked at length to those who were and it seems that the representatives of a number of poor African countries went to Hong Kong, attended the opening session, spent a great deal of time sitting around and talking to any non-governmental organisation that happened to pass by, and took little part in any negotiations but were invited in for the final collapse to learn that their needs had been ignored during the previous several weeks. It is not for us to create a colonial system to ensure that they are represented in a different way, but it is up to us as part of the negotiations to recognise that those countries have an even more legitimate voice than anyone else and should have been heard because this was supposed to be a development round. We should bear that in mind.
Is the hon. Gentleman saying that the nub of the problem is formal lack of speaking or representation rights, or is the bigger part of the problem perhaps that the poorest countries have insufficient access to lawyers and technical specialists in trade policies?
I think it is a matter not of either/or but of both. One is that the west does not sufficiently respect the wishes and needs of the poorest countries and, in addition, when faced with a battery of corporate lawyers lobbying for corporate interests or extremely efficient and well-paid lawyers batting for national Governments or western national interests, they are not at the races. The issue is how we treat people and what respect we have. If we are serious about the development round and lifting the poorest people in Burkina Faso and elsewhere out of poverty, we must talk to them to find out what we are doing that is making their lives so much worse. We should think carefully about that.
The dominating issue is food dumping. Several hon. Members referred to the fact that only 3 per cent. of world trade is in agriculture. That is absolutely true and the effect of food dumping on the US or EU economies is not great, but its effect is massive on the poorest countries of the world. I shall give two personal examples. Bringing personal examples to debates such as this often makes the situation more real.
Last year, I went to Angola as part of an Inter-Parliamentary Union delegation to observe a co-operative farm that had been opened on a former sugar plantation. It was growing fruit and, as far as I could see, it was doing well and the farmers were working hard and making it an enormous success, but the price that they received for the fruit was such a joke that it was not worth picking the fruit off the trees. There was little internal market for it and if the co-operative could raise the capital—it probably could—to convert that fruit into processed fruit, jam, juice and so on, where would it sell the produce? Who would buy it and who would allow it to be sold? Those farmers were trying to improve matters, but were faced with an insurmountable barrier that prevented them from doing so.
More recently, in July, I attended the Congolese elections in the Democratic Republic of Congo as an observer on behalf of a group of NGOs, led by Christian Aid. Before the elections, I spent some time talking to a group of farmers in Bas-Congo in the south at a meeting organised by the local Catholic church and it was interesting talking to them. This is not the poorest area of the Congo by any means, but it is very poor by any stretch of the imagination and certainly in comparison with anything we know. I asked what the farming was like and the farmers immediately raised the issue of EU food dumping. People who tried to develop chicken farms and so on were put out of business because cheap chicken—they said that it was of poor quality, but I do not know because I did not see any of it—was being dumped on their market and virtually given away. What is the chance of their developing any kind of agriculture if no one will buy their produce? They would have to sell it in competition with stuff that is dumped by the USA or western Europe, so what is the point? That is the consequence of our happily voting for enormous subsidies for European farmers to produce an excessive amount of meat and so on that we dump on third-world markets. The USA is doing exactly the same through its agriculture programme.
I do not want to ruin the career of John Bercow or destroy his hopes for the future, but I agree that there is a case for some agricultural subsidies in Britain, particularly for hill farmers and so on. However, there is not a case for dumping food on the poorest people around the world because the consequences are appalling. I hope that in the forthcoming round we can do something about that.
I was with my hon. Friend in the Congo during the elections. Does he agree that whatever the outcome of a WTO round, the EU has it in its power to abandon export subsidies—to stop exporting produce that has been subsidised in a protected EU market? We have the ability to abandon that on our own and it does not have to form part of the negotiations. Let us hope that we get a deal and that it forms part of the negotiations, but if we do not, does he agree that our Government should be pressing for those exports subsidies to be abandoned unilaterally by the EU?
I absolutely agree with my hon. Friend. We had an interesting visit to the Congo. I was interested in meeting that farming group and we saw other exciting agricultural developments that had made limited progress. The farmers can produce subsistence food and do so extremely well in areas around Kinshasa, but they cannot go beyond that because they cannot compete with ludicrously dumped food. I agree with my hon. Friend that the EU does not have to wait for a WTO agreement or the neanderthal forces in the US Congress and Senate to move before saying, "We are not doing it. There is a moral imperative not to do it because it is simply wrong." We could do that; we could be unilateral about it. I am in favour of unilateralism in some respects, but I shall not digress at the moment. Perhaps I shall later.
What lies behind the issue? The second part of the agenda is non-agricultural market access. That is really what the agenda is all about. Although we want services to develop and improve, I suspect that behind the issue is non-agricultural market access and the privatisation of public services in many of the poorest countries in the world. There is a huge drive towards it, and we must recognise our duty to ensure that we pursue no longer the ludicrous policy of food dumping. That in itself will improve development prospects, because agricultural access is important in the poorest countries in the world.
We should not regard the situation as the chance to play a bargaining chip, whereby we agree not to dump food in the Democratic Republic of the Congo, Angola or any other country, in return for their opening up public services to western companies to take over and use for competition. No country in the world has reached the power and wealth of Japan, Britain, Malaysia, the United States or any European country without standing behind a tough, protective barrier. Consider the protectionism that Japan practised from 1945 onwards to promote its development. Who are we to say to the poorest countries in Africa that they cannot use protection to develop local import-substitution industries, or other industries beyond?
The Minister probably agrees with most of that, but one problem is that our powers are limited. Here we are in the House of Commons debating the World Trade Organisation with our Minister, who will reply to the debate. However, the European Union undertakes the negotiations on behalf of member states. I am sure that every Government in the European Union told the equivalent of the Trade Justice Movement how much they agreed with it in the run-up to the Hong Kong round, but it always seems a curious system of accountability that the sum total of 25 EU members' wishes and agreements was no agreement. The sum total was less than that, and we may have to address the question of EU structures and accountability.
We live in a world where there is a huge division between rich and poor, internally in particular countries and globally. As my hon. Friend the Member for Glasgow, North said, there has been growth in a middle-income group of 20 countries, and they have become a powerful negotiating bloc. I do not complain about it; in some ways, it is a welcome development. I do complain about the way in which the poorest countries are left out. The millennium development goals have been set down. They are ambitious and welcome. They include access to health, clean water and education. All those developments are clear and welcome.
The reality is that in country after country in the poorest parts of Africa, however, illiteracy and death rates are rising, and AIDS levels are getting worse. There are some places where things are getting better rapidly, but are we sure that the goals will be met in the DRC, Angola and other countries? I do not condemn the Government's aid programme—far from it. The programme has been very good in many ways, but unless we start to treat those countries fairly, stop dumping food on them, which prevents local agricultural development, and stop developing trade practices that prevent their industrial development, we will remain part of the problem that creates shanty towns around every major capital city throughout Africa. Let us approach the next round with the moral purpose of trying to eliminate poverty throughout the world. Trade is a very important part of that.
The Minister has heard a passionate series of speeches and a passionate debate. Members have expressed an almost universal disillusion with the fact that a round as important as the Doha development round should have crashed into a brick wall. It is suspended.
I came to this portfolio in the spring and it was like watching a slow-motion train crash. In meeting after meeting, people desperately tried to claw together an agreement, but they had to give ground. There were statements of hope, but in the end we reached the point where we now remain. I join other people who have little hope for the revival of that process.
It says little about the developed world that the US and the EU, two great trading blocs, should have acted as if protectionism were an important strand of their economic survival. The economic areas that they attempted to protect were marginal, amounting to less than 5 per cent. in almost every case. We must be honest: the game played by the US and EU has been not economic, but political to protect marginal votes in marginal constituencies, whether by the United States with its congressional elections, and its presidential election in 2008, or by the French and other European Governments.
The Germans, too. The game has been played to protect aspects of the farm vote, or certain sectors of the manufacturing vote. It has not been played to take a stance because core and critical economic issues were at risk. Ultimately, that is a disgrace.
Like others who have spoken today, I must stand apart from the NGOs, which have sometimes viewed the collapse of the Doha round with some satisfaction. Ann McKechin tackled the NGOs' view that no deal is better than a bad deal, pointing out that we are looking at a formula for a regression to protectionism. That is echoed not only in the NGO world, but in developing countries. My right hon. Friend Malcolm Bruce, the Chairman of the Select Committee on International Development, pointed out that it is a loss not only for the developed and developing world, but for free trade. The momentum and the arguments for the benefits of free trade have been brought into disrepute, and that puts at risk all who believe that an enterprise culture is essential to our economic development and that of some of the poorest countries on the planet. However, the NGOs' view is understandable.
Thanks to CAFOD, I visited Geneva and talked to many of the leaders of the different G groups, the G30, the G90, the least developed countries group and the African, Caribbean and Pacific countries group. They were attempting to get involved in the negotiations that were part of the Doha round. During May and June, each leader told me that the issues on the table were those that mattered to the EU and the US. The agenda was theirs. Most discussions seem to have been about sensitive, state products, which were for developed not developing countries. Many discussions happened in what was thought to be a breakthrough context: the green room. However, it has no agenda and no public report follows. Typically, one representative member of the LDC group, or similar, is invited to attend, but has no status in the discussion.
One could see that what was initially sold as a developing-country round—including the contract whereby the developed world would finally tackle developing issues, promote trade in advance in developing countries, and move towards a trading network that would give them new opportunities—would be sidelined and tagged on the end of the agreement. As for the non-agricultural market access issues, which are huge and complex, no one had even started on them. That was in June and early July.
I am an unapologetic free trader. In the early days of Doha we had the potential to set free trade as the ultimate goal while providing within it a structure and framework for developing countries to build their trading capacity so that they, as well as the developed countries, could use that free trade effectively. It is crucial to recognise that that goal would never have been achieved by Doha alone: with it there would have had to be aid for trade and a series of other agreements and structures.
I urge the Government to examine whether they can revive the Doha trade round, but I do not have a great deal of hope. One of the worst possible outcomes would be a terribly compressed negotiation period and a repeat of the past experiences whereby the agenda of the US and the EU has dominated until the last 30 seconds and the development agenda was dragged in only at the very end. The strategy must be to get from the US Government an extension of the fast-track process rather than to squeeze the Doha negotiation into the period between the end of the congressional elections and January. I believe that six months' notice must be given to Congress of a Bill using the fast-track process, so that would be near impossible.
Our Government are said to have a special relationship with the United States and they have in many senses put themselves on the line for George Bush. Doha is surely a matter on which they ought to be able to get a Republican President to spend some political capital, at least after the congressional elections are over. I do not have a great deal of hope, but that is a strategy that I hope the Government will at least attempt to pursue.
Does the hon. Lady agree with those who have said that if an extension of fast-track authority is not forthcoming, there is a powerful case for unilateral initiatives to be taken by the richest countries on Earth to assist the poorest?
When plan A is not available, one had better have plan B. I am a banker by trade and we never offer a loan unless we believe that there are at least two ways out of it, and preferably three. That is a good rationale for dealing with such policies: we must have a plan B. That must be to take advantage of all our other opportunities.
The economic partnership agreements have been mentioned by a number of hon. Members.
Before the hon. Lady moves on to EPAs, does she agree that the business community is part of the equation that has been missing so far in the debate? At the end of the Uruguay round, after years of paralysis, business said, "We need a deal so badly that you"—the French Government and the EU—"had better face down the farmers and start modifying the common agricultural policy." Perhaps one of the failures of the Doha round is that it has not offered enough to western business so that it can sort the farmers out. Perhaps we need to make sure that something more is available in a reshaped round so that we can make progress.
I find the hon. Gentleman's comment interesting. There is a case to be argued that business tends to be parochial in using its incredibly powerful lobbying influence. In a debate earlier today the House discussed Heathrow, and it strikes me as incredible what the business community can achieve despite the feelings of local residents. It ought therefore to be able to take on the farming community with relative ease. With a few honourable exceptions, it is a matter on which the business community could do a great deal more.
I had intended not to move on to economic partnership agreements and ignore everything else but to say that we need to use every lever available to at least demonstrate our intentions to the developing world, whether those intentions are for unilateral action by the EU or otherwise. The context of EPAs is interesting because they present an opportunity to create template agreements that would open up markets without constraint and deal with the fascinating point made by John Bercow. He said that about 330 items that are key to the developing world are excluded from the basic duty-free, quota-free access for the least developed countries. Moreover, countries that have moved into the middle range should be able to sell, tariff-free, not just raw agricultural products, such as cocoa, but those such as refined chocolate or instant coffee. I do not consider Brazil, China and India to be in that range; they are off on their own and can fight their own battles successfully. If such opportunities are grasped in the EPA negotiations, it could start to create genuine templates and provide the opportunity to build on the fundamental aid for trade strategy that we have discussed.
I am most concerned that aid for trade should not be allowed to fall into a pit as have other development strategies or be a fad and fashion that comes and goes. The arena in question is incredibly fashionista: the strategy of one year seems to disappear and be replaced with something else the next, which is no way to achieve development. I am also conscious that discussions on aid for trade have so far been narrowly focused. I have spoken to representatives of the Windward Islands, who said that aid for trade will help the promotion of urban opportunities, but that there is no attempt to understand the need for stability in the rural communities where the banana industry will largely disappear and rural substitutes and new agricultural opportunities are needed. Aid for trade has tended to be narrowly defined, but as the hon. Member for Glasgow, North, pointed out, infrastructure is needed.
I have also had the opportunity to go with Christian Aid to India, a country that is always held up as an example of what trade and development will do. We are told to go to India and see the benefits flowing to the population. That is true for about 15 per cent. of the population, and some benefit has flowed to about another 30 per cent. Nobody would deny the importance and momentum of that, but about 50 per cent. of the population has not benefited. It has either missed altogether the benefits of expanding trade and development, or it has lost out. The subsistence farmer who used to be able to feed his family—not well, but at least he could provide a living—has now become the casual labourer living in an oilcloth tent by the side of the road. Such people are living in the most dire and desperate circumstances.
It is crucial that aid for trade does not come out of the rest of the aid budget, but is additional to it. We must also ensure that aid strategies are focused on the people who would otherwise be left out. No matter how brilliant our trading strategies or the attempts of domestic Governments to get the economic direction of their countries right, there will be serious losers. They and their suffering give much of trade and liberalisation a bad name and we have the opportunity to use trade to tackle that problem.
The developing countries were promised that Doha would be their round and their opportunity, but they have been disappointed. Hon. Members have mentioned the importance of the disillusionment that will follow. I find it hard to understand how a set of promises made by almost every major wealthy Government and institution has been allowed to fail. The G8 was supposedly on board, along with Blair and Brown here, as well as the UN, the IMF and the World Bank. It is hard to argue for the credibility of international agencies and institutions, or for the good intent of the developed countries of the world, when something quite as obvious and straightforward as creating a development round is not achieved.
Others have talked about the social turmoil that has occurred as a consequence of that failure, but John Battle made one of the most telling points about the context in which it has taken place. We have been through a benign economic period, but one now sees markers that suggest that that might be coming to an end. One hopes that it is not, but if we cannot achieve a sharing of the pie when the pie is large and growing, it is hard to understand how we will achieve a sharing of the pie if we enter a period of recession and the pie begins to shrink.
The hon. Lady has been extremely generous in giving way. Leaving aside the issue of good faith, on which she has pertinently focused, is it not reasonable to ask how the international community expects the millennium development goals to be achieved if it is not prepared to do a decent and generous deal? Although increased aid budgets will make some difference, they will not begin to get near to reaching the goals by 2015. Unless we are prepared to do something on trade, the 100-year delay and more for some of the MDGs that was anticipated and recorded by the Committee in November 2003 will, I am afraid, become the reality.
The saddest part of the hon. Gentleman's comments is that probably every leader in the western world would agree with them. The difference between what leaders say and what they are willing to use their political capital to deliver is probably the greatest problem that we face. We have seen people in this country become disillusioned with Governments, political parties and institutions, and we risk institutionalising that worldwide if we continue to allow that to happen.
I do not want to take any more time, but I hope that the Government will recognise that they need to expend genuine political capital on taking the issue forward. It has sometimes seemed to outsiders, whether fairly or not, that the Department of Trade and Industry takes responsibility for the discussions with our partners in Brussels on driving the issues forward, but the development issues, which are housed more within DFID, do not find full force and expression. If there is anyone whom the Government ought to have the ear of, it is surely Peter Mandelson. Now is the time to take advantage of every opportunity to take the lead, but also to understand that failure is not an option.
I congratulate Malcolm Bruce and his Committee on all the hard work that has gone into its excellent and detailed report. There have also been some passionate and knowledgeable contributions to this debate, which he began in his typically disarming manner. He highlighted some of the key issues—the expansion of the private sector and the hypocrisy of the European Union and the United States, which is a theme to which I shall return. The report rightly highlights the failure of the Government to use their presidency effectively for the purposes that we all want to come to fruition in the WTO talks.
I hope that the hon. Gentleman will at least recognise that, on the aid and debt fronts, the UK presidency of the G8 and the EU moved things on enormously. I agree with him that we failed to move things on enormously on the trade front, but on the other two fronts we did well.
The hon. Gentleman is right—significant progress was made on aid and debt, and I understand that detailed conversations were taking place at the G8 in an attempt to move the trade agenda forward when the terrible atrocities in London interrupted them. Who knows what might have been achieved had they not happened? But more still could have been done. The Prime Minister in particular could have done more to influence other leaders in Europe. The right hon. Member for Gordon was right that the lack of progress is to the detriment of free trade as a whole, which is the main driver for wealth creation, creating jobs and alleviating poverty.
We then heard from Hugh Bayley, whose remarks, unusually for him, were permeated by an atmosphere of pessimism, although he was right to be pessimistic in this instance. He made some thought-provoking suggestions about reordering the WTO negotiation strategy and not having either everything or nothing, but picking out the beneficial agreements that could be made, on a unilateral basis or otherwise.
My hon. Friend John Bercow made a typically polished and passionate speech, in which he highlighted the moral case for assisting the poorer and developing nations. He was right to raise the issue of farmers in his constituency. I have discussed the matter with farmers in my constituency, which is very rural. They would like to have a no-subsidy system. They believe that they could compete globally, because of the quality of their products and their expertise. I acknowledge that the quality of the land in Lincolnshire is high, but farmers there would like to move in that direction. I agree with my hon. Friend and shall return to one or two other things that he said later.
John Battle was absolutely right to highlight rising food prices. He will also be aware of the reason for it—some crops have collapsed or not come to fruition, not only in Australia, but in Russia and Ukraine, which has affected wheat prices particularly. However, there is another side to the issue. He was right to highlight the impact that such rises will have on the poor, but they also have a beneficial effect for the farmers in the United Kingdom. Farmers in my constituency are delighted that at last there is an increase in food prices and that for the first time in many years they may actually make a profit; so, there are two sides to that complex coin.
What the right hon. Gentleman may not be aware of—there is no reason why he should be—is that most of the crops that the farmers in my constituency grow are vegetables and are non-subsidised anyway. However, engaging with some of those subsidies would involve reform of the common agricultural policy and putting a greater emphasis on environmental sustainability—that is where we get into the complexities of the discussion between Jeremy Corbyn and my hon. Friend the Member for Buckingham. There is some defence for subsidies in certain cases, whether for hill farmers or for environmental purposes, which might negate the impact that the right hon. Member for Leeds, West discussed.
The right hon. Gentleman was also right to highlight the conflicts between the United States and the European Union and, in my view, the loss of sight of the initial purpose of the whole round, which was to help developing nations and the poor around the world.
Ann McKechin, in a typically knowledgeable contribution on this issue, was concerned about the clock being turned back and highlighted the danger of protectionism. I agree with her that there is an increasingly prevalent view about the necessity for greater protectionism. I think that that is a function of a view that has become ingrained in many developing countries, according to which the developed world cannot trusted to follow through the development round. That comes out of the Uruguay round, which was detrimental to developing countries. Developing countries no longer believe that the developed world is genuinely interested in helping them to facilitate and grow their trade. She also quite rightly mentioned the importance of China in the discussions.
The hon. Member for Islington, North highlighted the necessity of talking to the poor, and he is absolutely right. All too often we can become engaged in ministerial meetings and discussions at a high level, while forgetting about the need to listen to people on the ground, whether in the Congo, Malawi, Mozambique or elsewhere. He also quite rightly highlighted tariff escalation, the best example of which is the export of Chilean tomatoes to the United States. If Chile exports raw tomatoes, the tariff is 4 per cent. If it adds value and converts them into tomato ketchup, the tariff is 28 per cent. It cannot afford to do that, so the adding of value must take place in the United States. That is a total disgrace, and the World Trade Organisation needs to focus on such issues.
The hon. Gentleman will not be surprised to hear that I did not agree with what was almost a promotion of protectionism on his part. His argument that the developed world had started behind protectionist barriers is somewhat disingenuous. I am sure that he knows his economic history; the developed world really started to accelerate in wealth creation and economic growth when protectionist barriers were removed and it started to trade freely throughout the world.
I do not wish to lower the tone of what has been a very up-market debate, but is my hon. Friend not tempted to recall that the person ultimately responsible for, and bravest in securing, the repeal of the corn laws was Sir Robert Peel, a great man indeed? I do not think that he would have been a member of the same party as that of Jeremy Corbyn.
My hon. Friend is absolutely right. He may not be aware that as a liberal Conservative, the leader of the Conservative party, my right hon. Friend Mr. Cameron, has been compared to Peel. I hope that that will be a precursor of what is to come; we shall wait and see.
So that the hon. Gentleman does not go overboard on his Robert Peel tendency, I should ask whether he does not concede that the Japanese example is apposite. After the second world war, Japan operated very tough trade protection barriers, built up a huge infrastructure and industrial capacity as a result and then happily lectured the rest of the world about the need for free trade, which it then joined in on.
Tempted though I am, I do not want to get drawn into Japanese economic history, except to say that we Conservatives recognise the necessity for a transition period and sequencing to allow developing nations to grow their industrial bases. That is the key to their ultimately joining the international trading system and alleviating poverty far faster than they would by exporting agricultural produce alone.
Susan Kramer was right to mention economic partnership agreements. As the hon. Member for Glasgow, North said, yesterday she and I were at a meeting with African representatives who are very concerned about EPAs and the damage that they may cause their growing economies and prospects for job creation. The hon. Member for Richmond Park will be pleased to hear that her conversation with a representative of the Windward Islands was the same as the one that the hon. Member for Glasgow, North and I had with a representative from Barbados. Consideration has to be given to small island states and landlocked countries, which have problems generating international trade and getting their produce to markets.
We Conservatives recognise that trade is the best way to lift people out of poverty. We agree with the World Bank that current trade restrictions are the biggest impediment to economic advancement and poverty reduction in the developing world. We support the Doha round and its specific development agenda, and, like other Members, we are extremely disappointed that it seems to have run into the ground.
We also acknowledge that the benefits of trade are numerous and varied; it contributes to faster growth, cheaper imports and new technologies and it enables Governments of developing nations to generate revenues and reinvest in infrastructure and essential public services.
The British agenda is a cross-party one; collectively, we all want poverty in the developing world to be alleviated and the developing world to join the international trading community. As the hon. Member for City of York rightly pointed out, progress has been made on aid and debt, but there is an enormous way to go on trade.
The Doha ministerial declaration clearly stated:
"International trade can play a major role in the promotion of economic development and the alleviation of poverty."
It promised to put the needs and interests of citizens of developing nations at its heart, but, as hon. Members have said, that seems to have been lost in the detail of the conversation and the negotiations that have taken place. It is now widely accepted that the millennium development goals will not be met in anything like the time scale envisaged without a successful and development-focused round of trade talks.
We all know that things have stalled due to the intransigence of the European Union and the United States, which both need to bear responsibility for the failures. I should like to highlight one or two of their highly cynical moves.
The US offered to end export subsidies by 2010, and that may appear very generous. However, it does not amount to much. The US provides very little by way of export subsidies; instead, it relies on export credits and food aid in kind. As I hope the Minister will be aware, food aid in kind has exactly the same impact as export subsidies, as it helps farmers find a market for their excess production.
I have another example. The EU offered to cut payments to farmers by 70 per cent., contingent on other reductions from other major countries. That offer includes a 50 to 60 per cent. cut in the highest import tariffs and smaller cuts in lower tariffs, giving an average of 25 per cent. The EU also offered to end export subsidies, but did not offer a date. Again, on the surface that appears extremely generous, but if we look at the detail, we see that the EU will not have to reduce the amount of money that it pays to farmers by a single euro. The EU offered to end export subsidies, which comprise only 3.6 per cent. of the common agricultural policy. Such highly cynical moves need to be exposed for what they are—a disgrace.
I do not want to repeat the very good point made by my hon. Friend the Member for Buckingham when he highlighted the importance of duty-free and quota-free agreements, but I should like to make two additional points to build on what he said. First, as I am sure he is aware, the 3 per cent. that he mentioned is supposed to apply only for a transitional period. However, that transitional period is indefinite and will go on into perpetuity unless it is specifically stopped. What really strikes me is that 98 per cent. of Bangladeshi exports are in textile manufacturing. If the 3 per cent. figure were agreed to, that would have a significant detrimental impact on the Bangladeshi economy.
As other Members have mentioned, steps must be taken on the special and sensitive product exemptions. The right hon. Member for Gordon cited the World Bank analysis that even if 2 per cent. of products from developed and 4 per cent. of products from developing countries came into that special or sensitive category, that would virtually eliminate the impact on poverty of the Doha agreement.
Many hon. Members have rightly mentioned the importance of aid for trade. The commitments on that are welcome. Will the Minister will say whether aid for trade will be within the umbrella of the already existing budgets, or in addition to them? It is essential to get over the supply-side constraints—whether they be in respect of electrification or water supply—to enable developing countries to generate the industrial base and wealth creation that they require. There is concern in the developing world that the international donor community's focus on the public services of health and education, worthy and important though they are, is distracting from the vital issue of putting more money into infrastructure projects.
Other hon. Members have talked about NAMA—non-agricultural market access—on which an enormous amount more needs to be done. I have a quick question for the Minister. The ability to decide sequencing and transition on a case-by-case basis may be limited by existing WTO agreements. Will the Minister explain whether that is the case or whether there is sufficient flexibility to ensure appropriate transition phases and sequencing in market liberalisation?
Members have rightly mentioned benchmarking. There seems to be a contradiction, which is highlighted in the report, in what UK Ministers are saying about the importance of and necessity for benchmarking. It would be helpful if the Minister clarified the Government's view on that.
There are significant other barriers that need to be overcome in respect of the infrastructure, roads and railways and financial conditions. Furthermore, Governments often follow short-sighted policies such as controlling interest rates below exchange rates, granting subsidised credits and keeping exchange rates artificially low. There is also the regulatory environment; there are serious barriers within African regions that I hope the Minister is trying to address.
For example, the average tariff for importing agricultural produce from one African nation to another within sub-Saharan Africa is 34 per cent. It is 21 per cent. on other products. Those tariffs must be reduced, but in the context of ensuring that sufficient revenue goes into particular sub-Saharan African Governments' coffers to enable them to provide the public services and all the other enhancements that we want them to provide.
Limited technological transfer needs to occur. Part of that comes out of the agreement on trade-related aspects of intellectual property rights. That needs to be more flexible, and there is a need for greater capacity on the ground.
I shall conclude, as I want to give the Minister plenty of time to wind up. It has been said that the United States and Europe have perfected the art of arguing for free trade while simultaneously working for trade agreements that protect them against imports from developing countries. As they have in the past in other areas, the British Government must take the lead in urging the EU and the rest of the world to do more to reach an agreement.
The Minister may have gathered that there is some pessimism in the Chamber today, across political parties. As the agreement is an urgent priority, I ask for three things to be done. First, the Prime Minister should be persuaded during his last few months in office to become re-engaged in trying to drive an agreement through. Secondly, the UK should urge the EU to reform the common agricultural policy further and faster by abolishing all production-linked subsidies, by scrapping import tariffs and by removing all export subsidies. The Minister should consider the suggestion made by the hon. Member for City of York that that will happen with or without WTO agreement.
Thirdly, pressure must be put on the EU Trade Commissioner and member states to enable movement in the agricultural offer from the EU. That would enable other key players to make offers in manufacturing trade and services, thereby unlocking the Doha round. Failure successfully to conclude the round would be detrimental to the developing world, to free trade, to wealth creation and, ultimately and most importantly, to poverty alleviation.
I join Mark Simmonds in congratulating the International Development Committee on its report and on securing this debate. I pay particular tribute to Malcolm Bruce for the way in which he chairs the Committee and for the way in which he introduced the debate. As he said, it is timely, and I shall add a second reason why that is the case.
On Monday, the European Union's General Affairs and External Relations Council meets for the first time, I believe, since the World Trade Organisation talks were suspended. The Finns, who currently hold the presidency of the European Union, have decided to bring Trade Ministers and Development Ministers together for the first time. It will be a unique setting, bringing together Ministers who normally operate separately, and providing an opportunity for them to speak with different voices. Trade Ministers and Development Ministers will be in the same room.
Those talks will take place on Monday, and the WTO talks will be very much on the agenda in those discussions, which represent the first opportunity for Europe to come together and begin to think through what needs to happen if we are to get the talks back on the road. Therefore, in that context, this debate is particularly timely.
Obviously, that initiative from the Finns is useful. If the Minister or the Minister for Trade will be present at that meeting, perhaps it would reinforce the idea that parliamentarians across the EU are looking to EU Ministers to give a lead in breaking the deadlock. The Finnish presidency also organised a meeting in Helsinki of the Chairmen of development committees of the EU national Parliaments, and there was overwhelming support for the EU to take a strong initiative in breaking the deadlock.
I will be attending the Council with my right hon. Friend the Minister for Trade, who represents the trade arm of the UK Government. Obviously, it is comforting to know that we have the support of parliamentarians here on the need to make progress, but also that other Trade Ministers and Development Ministers are getting similar messages of encouragement from their Parliaments.
John Bercow and my hon. Friend Jeremy Corbyn—and, implicitly, other hon. Members—reminded me, and the House more generally, of the need to restate the moral case for progress on trade to be made. At the heart of that moral case are two key statistics. All Members who have taken part in the debate will know, although other Members of the House may not, that 1 billion people in our world live on less than $1 a day. Too often, that means that they do not have a regular source of food, that they may have to walk miles to get access to water, which we in the UK take for granted, and that essential medicines that we rely on are unknown or unthinkable because they are inaccessible. Surely, in a world of plenty such as we are used to, that statistic should shame us into wanting more progress.
If that statistic were not enough in itself to make the moral case, there is another one: 100 million children do not have access to primary education—not secondary or university education, but primary education—and therefore do not have the opportunity to read and write, and do not have access to the computers or whiteboards that our children take for granted, or to teachers who can help children to lift their eyes beyond the communities in which they live and to think about the world beyond them.
The world's youngest and most vulnerable citizens do not have access even to primary education predominantly because their Governments do not have the resources to invest in building schools or to pay teachers' salaries. Those Governments do not have those resources because there is not economic growth to fund taxation revenues, and there are not trade opportunities to fund and drive the economic growth that they need. Those two statistics are at the heart of the moral case.
The Government have made many efforts to make that moral case—and to make it successfully—to the British people. The fact that the Government have created a Secretary of State with responsibility for such issues, the fact that they have given a commitment to make progress towards the 0.7 per cent. goal, and the fact that they seek regular opportunities to make the case for innovative sources of finance are proof not only that have we accepted and exercised the responsibility to show leadership on such issues, but that the British people want us to make progress and support the efforts that we are making.
However, in the context of the suspension of the talks at the end of July, I accept the sense of pessimism and frustration, and the desire to restate the case for progress and to make one last heave to get the agreement that we want. I understand the pessimism, but I believe that now is not the time for it. Now is the time to redouble our efforts to get an agreement, and that is why the meeting of parliamentarians under the auspices of the Finnish presidency is important. That is why the meetings initiated by Oxfam that took place this week in the UK and across Europe have been important, bringing people together from the developing world to discuss their concerns about the trade agenda, but implicitly recognising the benefits if we get the trade agenda right for those countries.
My hon. Friend the Member for Islington, North made an important point. He reminded us that the people who stand to gain the most from a good development outcome to this round of talks—the very poorest—must have the opportunity to have a say. They must have a stake in the discussions about the priorities in the negotiations. The Department has sought, through the national development planning processes of the developing country partners with which we work and through the paper process of the poverty reduction strategy, to encourage Governments to engage with civil society so that the voice of the poorest is heard on trade issues as well as other, wider issues.
I thank my hon. Friend for the way in which he has dealt with this point. At the Geneva talks, what particular representation was available for representatives of Burkina Faso, for example, and the poorest countries? The very poorest often lose out at the preparatory stages and the agenda-setting for the big talks.
I cannot comment specifically on Burkina Faso, but I shall make a general point. Through trade-related capacity building support—I know that that sounds like a terrible piece of jargon—and our funding for that programme, we have funded research by UN groups, by civil society organisations and, on occasion, by negotiators. We have also funded computers for different people in key negotiating teams so that they have the most basic infrastructure that they need to engage in those talks. We have done a lot, and other countries and the European Commission have helped to pick up the tab. Support has been provided and we will continue to provide it.
In response to the frustration at the lack of progress that was referred to by all hon. Members, I want to return to the point made by Susan Kramer, which was that one or two non-governmental organisations say that the worst possible thing now would be for the talks to resume. That flies in the face of what developing countries want to see. No Minister from a developing country that we have visited has ever said to me—nor, I believe, to the Secretary of State—"Please do whatever you can to derail progress in the Doha round of talks." They want progress to take place. Even the least developed countries, which will not be able to take advantage immediately of the opportunities that the Doha round might offer, want progress to take place so that they know that those opportunities will be there for them to take advantage of in time.
I accept the need to restate to our partners in Europe and beyond both the moral and practical cases for the need to make progress. However, beyond the moral case, we must recognise that we must be practical about the way in which we seek to make progress. Sometimes we need to be careful about the language that we use when we are frustrated about the pace of progress. Although it is true to say that one of the reasons that we did not make progress in the talks was because our friends across the Atlantic did not give enough ground in cutting the subsidies paid to farmers, we need to be careful about the language that we use when we refer to them and to our European allies. We need to see more market openings in the European Union, particularly in the agricultural sector. We all know which countries present particular challenges about giving ground on creating more openings in the market.
We also need an increased willingness to open the market for industrial goods from the larger developing countries, especially Brazil and India. That is the key not only to encourage support for further progress from key parts of the European Union but, in the long term, to increase opportunities for south-south trade. In essence, however, hon. Members are right to say that at the heart of why we do not so far have a trade deal is the fact that political will is not yet strong enough. As a Government, and as a coalition of Governments in the European Union, we must seek to build political will and to close the gap. Although the gap has narrowed substantially, more work clearly needs to be done.
I agree with my hon. Friend Hugh Bayley that it is unlikely that we will see more progress until after the mid-term elections in the United States. That is true, but there will be an opportunity for progress after that. It is certainly true that in public and in private we are doing a lot to try to build political will and to explore the scope to close the gaps. I am sure that hon. Members will understand that I will not go into detail about the various steps that the Government are taking, but I will say that not only the Department for International Development is playing a role. Ministers from the Foreign and Commonwealth Office, the Department of Trade and Industry and the Treasury, as well as the Prime Minister, have been making the case to close the gap, and we shall continue to do just that.
A number of hon. Members asked what progress we can secure outside the Doha round, not only to provide encouragement but to generate momentum and political will. There are two specific matters that I want to highlight. Both my hon. Friend Ann McKechin and the hon. Member for Richmond Park mentioned aid for trade: the capacity building support for customs and the improvement of infrastructure. The ambassador for Rwanda talked about roads, electricity and bridges—key things that help to make trade easier. We are pushing hard to ensure that substantially increased aid for trade goes ahead regardless of progress on Doha. It is a good thing in itself, but it will, crucially, help the least developed countries to make progress so that they can take advantage of the opportunities. It will also be crucial for the implementation of economic partnership agreements.
I think that developed and developing countries accept that infrastructure investment is necessary. Indeed, they were talking about that before the aid-for-trade initiative was moved forward. However, does the Minister understand that there would be a slight sense of disappointment and frustration if all we were talking about is how we focus the promised aid budget, rather than how we create new initiatives to make any trade deal deliver real trade benefits? If the same aid is simply redefined, that does not change anything for such countries.
If it were the same level of aid, I would accept that. However, the commitment was given in May 2005 by European Ministers, for example, to agree a target and a date for achieving a total of 0.7 per cent. as the proportion of national income for each country's budget for development assistance. That means that aid budgets will rise over the next nine years. Ensuring that additional resources are available for investment in aid for trade will be crucial. Further spending on aid for trade is clearly no substitute for progress in the Doha round, but if we can develop momentum around it, it is something tangible outside the Doha round that will help progress, which we all want to see, to be made.
It would serve to concentrate minds if we had some sense of the difference that would be made to progress on the millennium development goals by a successful conclusion to the round. Have officials in the Minister's Department or in the Department of Trade and Industry made any estimate as to the likely impact of a successful round on the speed with which some or all of the MDGs could be reached?
A number of surveys and analyses have been undertaken by a variety of organisations on what the benefits might be of a good Doha round. For example, the United Nations Conference on Trade and Development has suggested that a good outcome to the NAMA negotiations might generate gains of up to $100 billion. Similarly, the OECD has suggested that cutting tariffs and subsidies in agriculture and NAMA by 50 per cent. would generate gains of $44 billion. Research and analysis have considered possible scenarios for the Doha round, and they all show that the gains would be hugely significant in making progress towards the millennium development goals.
To return to the question of UK spending on aid for trade, we have made commitments before. Just before the IMF and World Bank annual meetings in Singapore, my right hon. Friends the Chancellor and the Secretary of State announced a new forecast for our spending on aid for trade, and we expect to see spending increase by some 50 per cent., to about $750 million, by 2010. That reflects a definition of aid that includes economic infrastructure, transport, energy, ports and communications, as well as support for capacity building work—the customs improvements—to which I referred.
The second factor that offers an opportunity for progress—it would help the Doha round outcomes but it stands in its own right as it, too, will be crucial in ensuring that economic partnership agreements are development-friendly—is if we move forward on the rules of origin in trading arrangements. They are crucial for developing countries because they determine the real level of market access that an agreement can provide.
Rules of origin made under the EU's current trading scheme are completely out of date, are complex and unnecessarily restrictive, and they impede developing countries in benefiting from the trade agreements. We want simpler and more liberal rules of origin, so that developing countries can source the materials that they need from other developing countries without losing their eligibility to trade those goods into our markets. We are determined to work with other member states in the months ahead to speed up the European Union's review and to seek implementation of the findings of that review, regardless of the state of progress on the Doha round.
My hon. Friend the Member for Glasgow, North was the first to mention economic partnership agreements. Whatever happens on the Doha round, there is a separate track of negotiations for economic partnership agreements. Those negotiations have their own energy and deadlines, but they are nevertheless related to the Doha round because of their importance.
Properly designed, EPAs have the potential to deliver genuine economic benefits and to contribute seriously to poverty reduction in African, Caribbean and Pacific countries. However, I must add a number of crucial caveats to that statement. The development potential of EPAs will be realised only if ACP countries make their own decisions on how and when to open their markets, in line with their development plans. That is the sequencing point referred to by the hon. Member for Boston and Skegness. We will not support the forcing of liberalisation on developing countries through either trade negotiations or aid conditionality.
We are also clear that three of the so-called Singapore issues—Government procurement, investment and competition—must be dropped from the EPA negotiations unless the negotiators of the ACP group specifically request their inclusion.
Another of the issues that the Minister for Trade and I will have the opportunity to discuss at the EU Council next week is economic partnership agreements. My hon. Friend will know that in March 2005, the Government published their position on economic partnership agreements, and we have been using that to lobby other member states and our friends in the Commission. A series of discussions under the Finnish presidency will provide us with the opportunity to restate those arguments, and a crucial review of the EPA negotiations is about to get properly under way. We will take advantage of those opportunities to press the case, as I have described.
There is a precedent here; we are not talking merely about what will happen in the future. If I remember rightly, in July 2005 the British Government set out their position as part of the G8 communiqué, which explicitly stated that there should be no forced liberalisation. However, as I understand it, the Government signed up to the EU position at the Hong Kong negotiations. Did the British Government feel constrained by the principle of polite chairmanship, or presidency, and thus less able to argue their case effectively?
As the hon. Gentleman knows—he is an enthusiastic supporter of the European Union—the reality is that we are one of 25 member states. The negotiating position of the European Union is therefore achieved through negotiation and, in the end, a consensus position. We cannot just put our documents on the table and expect every other member of the European Union to roll over instantly and agree with our position. If only that were the case.
However, we are using the document that we published in March 2005 on EPAs to make the case for development-friendly economic partnership agreements. At the heart of what we think a development-friendly EPA should look like are more liberal and less complex rules of origin and, crucially, maximum flexibility as regards developing countries' own market opening. That means, in our view, duty-free and quota-free access to EU markets for all ACP countries, not just the least developed countries that currently have such access.
There is no substitute for an ambitious and successful outcome to the Doha round. Considerable progress has been made, but there is undoubtedly more to do. We will use every opportunity that we have as a Government. A range of Ministries are engaged in discussion with our partners, from my Department right up to my right hon. Friend the Prime Minister. We will continue to press for change and the deal that we want. I hope that the pessimism, understandable as it is at this point, will in the end turn out to have been misplaced.
Question put and agreed to.
Adjourned accordingly at two minutes to Five o'clock