Examination of witnesses (Questions 60
WEDNESDAY 20 DECEMBER 2000
BROWN and MS
60. It is a question of tariffs.
(Mr Caborn) In terms of negotiations on the banana
regimes the lead department has been MAFF.
61. May I go back to sugar then? You talk about
safeguard clauses and about being able to stem a surge of imports
of sugar from least-developed countries by suspending the regime.
The record of the European Union on actually taking action in
this kind of connection, namely when sugar was coming in through
the back door, through the Netherlands Antilles, is extremely
slow and very, very difficult to get them to take action. That
is our experience in the past, is it not?
(Mr Caborn) This was part of a discussion we had this
morning in my office with some of your colleagues. One or two
of the points which were made were very valid points and I gave
you an assurance and I give the Committee the assurance that we
shall look at that and raise these questions with the Commission
about the concerns of yourselves and indeed other back-bench members
about the way that the Commission have policed previous regimes
and it has been found wanting. We shall raise those questions
and when we have the answers back I shall write to the Committee.
62. We were just finishing off on the advantages
to the consumer of liberalisation of the sugar trade. Are there
not also enormous environmental advantages in that the production
of sugar from sugar cane, I understand, is far more environmentally
friendly than the production of sugar from sugar beet? Is that
not the case?
(Ms Quin) There can be environmental advantages to
cane sugar. To be fair, in its reform of the sugar regime the
Commission has said that it wishes to look at the environmental
implications of the existing sugar regime so there is actually
a way in which those issues can be looked at for the future. Sugar
beet is, as was being pointed out earlier, often part of a rotation
of crops and certainly has some advantages to farmers in the UK
as a rotational crop.
63. May I just come back to this question of
bananas? As we all know, there is a very contentious issue between
the United States and the European Union in the WTO on the subject
of bananas and this dates back to the British Presidency before
the previous one when the banana regime was negotiated. We now
have cutting across this another proposal which influences bananas.
How do we sort out the knots in this particular piece of string?
(Ms Quin) Without any doubt it is not easy. The Agriculture
Council discussed bananas at its meeting yesterday and basically
came out in favour of a mixed tariff quota system leading to a
tariff only system in 2005-2006. However, the UK actually voted
against this proposal because we were not happy with the safeguards
for ACP, particularly Caribbean producers, because of the issue
which I know some of you here are very familiar with in terms
of the reference period, the historic reference periods which
we wanted in order to help the Caribbean producers and the perceived
difficulty for the Caribbean producers in having a first-come,
first-served system for allocating licences. The Agriculture Council
declared itself in favour of the first-come, first-served system
as a way of trying to get agreement with the United States and
others over the future of the banana regime. We actually feel
that is not fair to the Caribbean producers and in any case what
is on the table at the moment does not look as though it is going
to be agreed to by the United States, so we are still going to
have further difficulties in trying to resolve this issue.
64. This is precisely the point, is it not?
If the United States objects to a regime which seeks to give assistance
to some of the least- developed countries and some others who
might be just a tiny tier above that, how will it react to a generalisation
of that preference which would not include countries in South
America who are not amongst the least-developed and whose trade
is in the hands of American companies which have provoked the
conflict we have at the moment. Will this not exacerbate United
States/European arguments on this trade?
(Ms Quin) There certainly could be further difficulties
between the United States and Europe and indeed further difficulties
within the World Trade Organisation about this. It is disappointing
in that I was hopeful a few months ago that the United States
might accept a proposal put forward by the Caribbean producers
which seemed to us to represent a reasonable compromise, but agreement
has not been reached on that and therefore discussions will continue.
Obviously the United States will have a new administration in
place as from the end of January and I cannot predict at this
stage what attitude that new regime would take. Certainly the
difficulties look likely to continue.
65. If as a result of this it did become more
complicated and harder to resolve, the people most likely to lose
out would be the Caribbean producers.
(Ms Quin) Indeed and that is one of the reasons why
we have been arguing both within the UK and indeed in the wider
trade context, for an arrangement which would help the Caribbean
more than the current proposals do.
66. May I ask a question about the bananas proposal
and its implications for rice imports, in particular ask the Minister
which are the main least-developed countries which might increase
their exports of rice as a result of these proposals?
(Ms Quin) The rice issue is also a complicated one
because again we are dealing with two proposals. We have the "everything
but arms" proposal on the one hand: we also have some ideas
for reform of the rice regime within the European Union which
are somewhat inconsistent with the "everything but arms"
proposal. Once again, on rice it is particularly hard to predict
what will be the outcome. There is tension between those in the
European Union who want to support European Union rice producers
basically in the southern part of the European Union and other
Member States, including ourselves, who import a lot of rice,
particularly from the Indian sub-continent, and feel that the
import of that rice in any case responds to specific consumer
demand in our country and also is a rather different quality and
often used for different purposes than rice within the European
Union. We are keen to see liberalisation in terms of rice and
we have expressed very real concern about the limited nature of
the Commission's current proposals for the reform of the rice
regime. We believe that the "everything but arms" proposal
on rice does offer potential for some of the least-developed countries.
I mention again Bangladesh in this sense. We believe that greater
liberalisation rather than less liberalisation is what is wanted.
67. Would there be any particular impact on
(Ms Quin) Certainly from the Commission's reform proposals,
reform of the internal rice regime, if that is not handled properly,
there could be a negative impact on Basmati rice producers and
we have been arguing very strongly in favour of the position of
68. Could you tell us what impact these proposals
will have on the UK milled rice industry?
(Ms Quin) It depends on the final version of the Commission's
rice reform proposals. The "everything but arms" proposal
would not have a significant effect on UK millers, but I do believe
that the proposals which the Commission are putting forward on
the reform of the rice regime, if it disadvantaged some of our
suppliers of rice from overseas, could also disadvantage UK millers.
69. Is it likely to disadvantage producers who
have a rice quota coming into this country from ACP countries
(Ms Quin) Regarding the Commission's rice regime reform
proposals it is too early to say. In their existing form, but
I stress we are at an early stage in this discussion, they would
not be particularly helpful, but we have to ensure in the discussions
on this that we achieve as many safeguards for those producers
as we can.
70. Is it not a strange way to proceed, to agree
a regime and then hope like hell you can get some safeguards written
into the regime which is eventually put in place? That seems to
me to be the cart before the horse in a big way, is it not?
(Ms Quin) If you are saying that the "everything
but arms" proposal and the proposals for reforms of European
Union regimes such as sugar and rice should have gone hand in
hand, then I would agree with you. In saying that, let me say
that I am not expressing any hostility to the "everything
but arms" proposal, which is absolutely right in principle,
I simply deplore the failure of the European Union to address
the issues of Common Agricultural Policy reform seriously.
71. I should like to make that clear too. I
am in favour in principle of the "everything but arms"
proposal but we do have to manage this situation, which is clearly
being handled in an extraordinary manner, of making decisions
to remove tariffs before you have any of the regimes either for
sugar, rice, bananas or even rum in place.
(Ms Quin) Indeed because those products are sensitive,
that is why the "everything but arms" proposal has the
phased in approach. It is also why that proposal with regard to
rice as well as what we were discussing in relation to sugar,
does have safeguard mechanisms.
72. May I bring the Minister back to the EU
sugar regime, and in particular that there is great concern in
the farming industry in this country that the proposed reduction
in the life of the new regime is planned to be reduced from the
normal five years to two years. It has been put to me by local
producers that there is a particular problem. I understand that
not everybody owns their own quota and I have one farm at least
where they have had to lease their quota and pay out for it, whereas
I understand that they are not going to be able to plan for this
change in the regime from five to two years. If it is agreed in
that form, great uncertainty will ensue, in particular, in what
is a very capital-intensive and hard-pressed sector, because farmers,
as the Minister will appreciate, have to pay up front for the
crop a year at a time. They feel it is much better if it can revert
to the five-year reform period. What particular advantage does
the Minister see in agreeing to changes in the sugar regime for
two years which flow from her memorandum, paragraph 10?
(Ms Quin) No significant change in quotas is being
proposed. Also, the quotas are given to British Sugar which then
negotiates with individual growers. I cannot comment on the specific
case which she raises. It would perhaps be sensible to write to
me about it if there is a specific problem with the example she
gives. On the other point she makes about the five years as opposed
to the two years, the Commission was proposing basically to start
a process of reform of the sugar regime after two years. The majority
of Member States, as represented in the Agriculture Council, wanted
there to be no change from five years. I have to say that both
this Government and indeed previous Governments have always argued
for sugar reform to come sooner rather than later.
73. May I put it in a slightly different way?
The industry in this country would plead that it should be a five-year
in-the-round proposal which is looked at and it is too short-term
a view just to look at a reform for two years.
(Ms Quin) Are you actually referring to the proposed
reform of the sugar regime or the "everything but arms"
74. The life of the new regime should be foreseen
for five years not for two.
(Ms Quin) If we get a proposal which is agreed for
reform of the sugar regime we would certainly hope that that reform
would last for a long period of time. We have not said that we
only want a reform of the regime to last the two years. What we
have said is that we want reform of the regime to be considered
within the two-year period rather than simply rolling it over
for five years which is what many of the current Member States,
as represented in the Agriculture Council, want.
75. What is the impact upon the processing industry?
Obviously we are talking about farmers here but we also have to
be very wary of an important manufacturing capacity in this country.
I wonder what assessment has been made of us potentially losing
that processing capacity, certainly in terms of the sugar-beet
(Ms Quin) You are referring to sugar-beet processing.
76. Sugar beet, but obviously you have an interesting
relationship within the processing sector where you have two very
large companies who have a balance, one believes this could completely
(Ms Quin) I have to say that both of the main sugar
processing companies in the UK are large companies with a lot
of varied interests, indeed British Sugar is active in eastern
Europe and Tate & Lyle cane sugar is also active in some areas
of eastern Europe; both of them have a lot, quite understandably
given the world in which they are operating, of varied interests.
It is therefore difficult to say that there would be a simple
straightforward effect on those sugar processors. Certainly in
discussing with them, they are very well aware of world trends
and very much, quite understandably, concerned to maximise their
opportunities in that situation. It could be very hard to say
today that the effect on the processing industries would be A,
B and C, particularly since we are talking about changes which
are being phased in and we are also talking about changes to the
internal sugar regime which are still uncertain at this stage.
77. The worry is that if this is wrong, it does
not just impact on the primary end of the process, the secondary
end will have enormous repercussions, because we are talking about
this industry potentially going offshore where it may be cheaper
to process and we have to build that into it. We are not talking
about maybe two years, but certainly within a period of time of
five years then you are seeing a dramatic change in the way in
which the food industry, which does have a very strong base in
this country, could be affected by these changes.
(Ms Quin) If you are talking about a five-year period,
it is certainly right for all interests to try to look ahead and
see in what ways they can best adapt to what is undoubtedly a
trend, even if it has been very slow in the case of sugar, towards
greater liberalisation of trade and also in view of the commitment
that we have to the least-developed countries. Let me say however
that we have a lot of very successful food industries who export
a lot, who nonetheless do have to pay rather high prices for the
sugar they use. There is a large range of interests involved here.
78. For the record, can you summarise what MAFF's
latest representations will be in the context of the reform of
the EU sugar regime?
(Ms Quin) Yes. We want to see sugar treated in a way
which is consistent with our overall reform objectives of the
Common Agricultural Policy and in recent years we have supported
changes, both the previous Government and this, to the Common
Agricultural Policy to move away from high price and production
support towards various forms of direct support for producers.
For example, we have the arable regime which has changed in recent
years and maybe a possible model for the sugar regime to follow.
In terms of sugar, we have also had a long-standing policy which
I certainly am keen to continue, to have a good balance between
beet and cane. We have a strong commitment in negotiating in the
European Union, to ensure that our producers, whether it is our
beet producers or whether it is our cane refiners, do not lose
out in comparison to other European Union interests. Obviously
as British Agriculture Ministers we have a very clear commitment
to get a good deal for British interests within changes, while
at the same time being conscious of our international concerns
and our development concerns which are very much aims and objectives
of the Government as a whole. I believe that MAFF's policy of
reform of the CAP sits in well with the commitments of the Department
for International Development and the Department of Trade and
Industry in trying to ensure a fairer world trading system, but
at the same time ensure that British interests do not lose out
disproportionately in the European market of which we are a part.
79. May I ask you, again for the record, when
the current sugar regime was established what the feeling was
amongst the United Kingdom beet producers at the time, at the
basis upon which the original quotas were allocated?
(Ms Quin) You are now going back a very long time.
Certainly the EU sugar regime has continued largely unreformed
for 15 to 20 years. I have to say that I have not got in my mind
what representations beet producers made when that regime first
came into force and I am not even sure which Government at the
time would have negotiated this. Maybe you are able to enlighten
me on that. However, whatever view was taken at that particular
time, given the situation we are in now, I believe that British
Ministers have a responsibility to ensure that British sugar interests
do not lose out unfairly as against their European Union counterparts.