Ann McKechin MP

Labour Member of Parliament for Glasgow North

Fair Trade - 8 June 2005

I, too, welcome the choice of debate from my hon. Friend the Member for Ogmore (Huw Irranca-Davies). It is timely and appropriate given the current major debate on the best way for the international community to address world poverty and particularly poverty in Africa. As has been commented, this year will be a key period in political history if we are to achieve meaningful change.

Our thoughts are focused on the G8 summit in Gleneagles in a few weeks' time. I am encouraged that there are real signs of progress on the issues relating to aid and debt, but we need the world leaders at that summit also to make progress on the third main issue: world trade. As we can tell from today's debate, that is possibly the most difficult and contentious of those three major topics. It involves not only the simple movement of what is still a tiny fraction of our wealth to poorer nations, but substantial change in the operation of our economies and a phasing out of the huge range of subsidies and tariff rates that currently protect a sizeable amount of our own production. We need our political leaders to show courage and determined commitment to achieve change, and to do so urgently, before the opportunities fade away from us.

Our last substantive debate on world trade took place about 18 months ago, when we had the opportunity to discuss the excellent report prepared by the International Development Committee, following on from the Cancun ministerial summit. I attended that summit as part of the parallel parliamentary conference, so I had the opportunity to witness at first hand the frustration of many nations that their priorities on development issues were squeezed out by an overloaded agenda that eventually toppled over, with no real progress in any of the major areas. At that time, there seemed little sign that any substantial agreement would be reached, and there was a danger that major players, such as the USA, would slip back into relying on bilateral trade agreements and establishing free trade areas. However, there are now signs that most nations see the benefit of reaching a comprehensive multilateral trade agreement and, particularly in the west, there is increasing public pressure on leaders to consider the needs of the world's poorest in a development-focused round. The Commission for Africa report highlights the fact that unless Africa increases its diminishing share of world trade, it will fail to achieve sustainable growth and poverty reduction. However much aid we put into the continent, if we do not increase its share of world trade, we will never achieve the goals. As the report points out, in stark contrast to what has happened in the emerging economies in India, China and Brazil, the last 30 years have seen stagnation in Africa, with the composition of its exports essentially remaining unchanged.

The commission identifies the two main causes of the collapse in Africa's share of world trade. The first is its low capacity to produce and trade, which has been consistently hindered by protectionist policies such as those in the European Union, as my hon. Friend identified. The commission does not hold back in condemning current trading systems. It states that "barriers and subsidies are absolutely unacceptable; they are politically antiquated, economically illiterate, environmentally destructive, and ethically undesirable. They must go."

Secondly, the commission identifies the advance of other nations such as China and India as having made it more difficult for Africa to break into world markets at this time, as competitors have established strong advantages on the world market. Any new trade agreement that we consider this year must take into account both those issues, and it must ensure that there is a proper sequencing of the reforms and that special and differential treatment obligations are an integral part of any final deal.

It is very important that, when we reach agreement, a distinction should be made between the needs of middle-income and often larger nations, and those of the poorest nations, which include all those of sub-Saharan Africa. For a time at least, it will be vital to provide the poorest nations with some form of protectionism, so that they do not simply swap one form of export dumping from the USA and the European Union for a huge tide of exports from emerging economies, with which they cannot, at this stage, be reasonably expected to compete on anything like equal terms. We need to meet that challenge this year.

Since the Cancun summit, the EU has agreed to drop three of the most contentious Singapore issues: competition, investment and transparency in public procurement. The continued strength of the G20 group, which encompasses nations such as China, India and Brazil, shows that middle-income nations—we should recall that they comprise more than 50 per cent. of the world's population—are willing to show their weight on the world scene.

The recent cases brought by Brazil at the WTO tribunal against the EU and the USA on subsidies for cotton and sugar show that the G20 has a new and sophisticated political strategy, to which the richer nations will need to adapt quickly. That was completely underestimated at the Cancun ministerial summit, but now there is a growing realisation that the EU and the USA need to engage in the talks, out of not only altruism, but a recognition that they need to co-operate with emerging world economies if they are to protect their own trade positions in turn.

John Bercow : Does the hon. Lady agree that it is important that there should be a synchronisation of reform and relief in relation to sugar, for example? Does she accept that there is a real concern that if EEC reform takes effect in 2006, relief provision for developing countries suffering from that reform will take effect only between 2007 and 2013? There is an inequity that needs to be addressed.

Yes, I agree. The hon. Gentleman makes a very good point. The EU has a duty to ensure that a proper agreement is made multilaterally and that a tribunal ruling on which it has to make an immediate decision is not made against it. Unfortunately, in such a case, developing countries' needs would probably end up being ignored. Increasingly, the EU and the USA are realising that nations from middle-income countries are now prepared to take cases against them to the WTO and that they have to respond to that challenge, while taking into account, as the hon. Gentleman rightly pointed out, the needs of the poorest nations.

The agreement reached at the WTO last July involved concessions to eliminate, in principle, all agricultural export subsidies in the richer nations and substantially reduce trade-distorting farm supports, including specific action on cotton. That shows a new trend in the current trade talks. Crucially, the EU and the USA came to an agreement, even though each side had a tendency in the past to blame the other when pressurised on its own agricultural support. They agreed that a €3 billion reduction in EU export subsidies will be accompanied by a matching reduction in the USA's trade-distorting export credits and food aid. That is a good sign, but the crucial test is whether a timetable for those changes can be agreed. They also have to agree about a large number of other outstanding issues concerning industrial products and services. Prior to the ministerial meeting in Paris at the beginning of last month, the WTO director general, Dr. Supachai Panitchpakdi, indicated that a high level of convergence was still needed in five areas if there was to be a breakthrough at the Hong Kong summit in December, moving to a final agreement during 2006. He mentioned agreements on agriculture and on non-agricultural goods, the need for a critical mass in service officers under the general agreement on trade in services, on which there has been little progress since Cancun, as well as significant progress on rules and trade facilitation, and a proper reflection on the development agenda.

The Paris meeting last month concentrated on agriculture, and there was a welcome breakthrough on something that is so technical that I had a bit of trouble understanding what it is. Apparently, it is an agreement to calculate tariffs on a percentage basis of the goods value. I understand that that has held up negotiations for many months. All sides recognise that much more needs to be done before the next ministerial summit, which is due to take place in July. That is why the G8 summit, which will take place prior to that meeting, offers an additional opportunity for reaching further agreement on producing a clear timetable for tariff reductions. It is a good sign that the new US trade negotiator, Rob Portman, has declared that an agreement can boost jobs and prosperity, and can help lift millions of people out of poverty, if we do the right thing. I hope that our Government will continue to strive for further major concessions at the G8 summit, and will hold the USA in particular to its statements on supporting a multilateral deal.

Time is beginning to run short, particularly for the USA, in reaching that final agreement. The second term of the Bush presidency has witnessed an increasingly stormy relationship between the Senate and the President, and it is clear that there are strong protectionist tendencies in both the Senate and the Congress. In 2007, the President's fast-tracking negotiating authority will run out, and there is little prospect of it being renewed. Accordingly, it is vital that we have a skeleton agreement by the time of the December conference, and I hope that the prospect of success in getting that can be improved in the next few months.

I also support the statements of my hon. Friend the Member for Ogmore about the recent negotiations on the EU economic partnership agreements with the African, Caribbean and Pacific nations, and I especially support our Government's position on those negotiations. I share the concern of many that there seems to be an attempt to reintroduce the Singapore issues through the back door without equal rights to negotiate on EU regulations and subsidies, when it was patently obvious from Cancun that there is no call for this from developing nations. That is the group of countries that needs the highest level of concessions in their favour. I agree with the Government's approach: developing nations must be able to choose the pace, sequencing and product coverage of economic partnership agreements, and remaining EU tariffs should be eliminated, without conditions on the poorest nations. I hope that the Minister can give an assurance today that there will be no change in the United Kingdom's position on that.

I congratulate the Fairtrade Foundation on its continued success in the United Kingdom, in terms of both its market share, which increases by significant amounts every year, and its important advocacy work in trade issues and the need to secure trade justice for the world's poorest. I have been fortunate in being involved over the past few months in the arrangements to try to achieve fair trade city status for Glasgow; it would then have the accolade of being the biggest retail centre in the UK to have attained that status. I also welcome the announcement last week of the Scottish Executive First Minister, Jack McConnell, who wants to follow on from the excellent example set by the home nation of my hon. Friend the Member for Ogmore by achieving fair trade nation status for Scotland. Many thousands of our constituents are greatly concerned about trade justice, and I know that they, along with Members present, hope that 2005 is the year in which we achieve the real breakthrough, by making world trade much fairer and freeing millions of people from poverty.


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