Select Committee on European Scrutiny Eighth Report


COM(99) 619

Commission Communication on fair trade.

Legal base:
Department: Trade and Industry
Basis of consideration: Opinion of the Trade and Industry Committee of 13 December 2000
Previous Committee Report: HC 23-ix (1999-2000), paragraph 4 (16 February 2000)
To be discussed in Council: No date set
Committee's assessment: Politically important
Committee's decision: Cleared, but relevant to the debate recommended in European Standing Committee C on duty-free access for products originating in the least-developed countries


  16.1  On 16 February 2000 we reported on the Communication on fair trade, which the Commission had produced following an undertaking it had given at the June 1998 European Council and the increasing political interest being shown in the issue within the Community.

  16.2  We concluded that the Communication was a useful piece of research but that it made only a few tentative proposals for what action, if any, should be taken by the Community. We commented that this modest document was not produced until 29 November 1999, on the eve of the WTO meeting in Seattle and nearly 18 months after the Commission's earlier undertaking.

  16.3  We decided not to clear the document, pending receipt of the views of the Trade and Industry Committee, which had published on 9 March 1999 a report on Ethical Trading[35] in which it welcomed the UK Ethical Trading Initiative and discussed a number of issues relevant to this report on fair trade, such as monitoring and verification to inform consumer choice, labelling, trade union and labour rights, and preferential tariffs.

Opinion of the Trade and Industry Committee

  16.4  Following our reference to the Trade and Industry Committee, we received on 13 December 2000 from its Chairman (Mr Martin O'Neill) a letter setting out the Committee's views. The Committee noted that the scale of Community interest or active involvement in fair trade was "lamentably slight", and that the Commission Communication was mainly devoted to a brief account of the present situation. The Committee did, however, refer to one concrete step taken within the Community's trade system which deserved a separate mention. This was the "special incentive scheme" within the Generalised System of Preferences (GSP), which offers small percentage reductions in prevailing rates of duty for countries which are able to demonstrate full compliance with ILO Conventions on freedom of association, collective bargaining and child labour. The Committee said that, when it reported on ethical trading in March 1999, it observed that only Moldova had applied, and that the Department of Trade and Industry had noted in its reply that there would be an annual report on the scheme, and that the UK would press the case for a more generous scheme, not least when it came up for review in 2001.

  16.5  The Committee's letter also referred to the proposal[36] which the Commission had recently put forward for duty and quota free access to the Community for all exports (except arms) from the world's least-developed countries (LLDCs). It suggested that, although the Communication on fair trade on its own was not of sufficient importance to require debate, it might be relevant if we were to recommend a debate on the "everything but arms" proposal, so as to bring in the fair trade or ethical dimension of free trade agreements. In particular, it said that some LLDCs would presumably be more likely than others to qualify for preferential treatment on grounds of observance of international labour conventions, whereas some ACP countries[37] now given preferential access might have difficulty in meeting the criteria. In the Trade and Industry Committee's view, this was a matter which might benefit from a fuller airing.


  16.6  We have noted with interest the views of the Trade and Industry Committee on this subject. Having recommended last week that the "everything but arms" proposal should be debated in European Standing Committee C, we are, in the light of the Trade and Industry Committee's comments, tagging this document to that debate.

35   Ethical Trading: Sixth Report from the Trade and Industry Committee, HC 235 (1998-99). Back

36   (21715) 12335/00; see HC 23-xxxi (1999-2000), paragraph 9 (29 November 2000), HC 28-ii (2000-01), paragraph 3 (10 January 2001) and HC 28-vii (2000-01), paragraph 2 (28 February 2001). Back

37  African, Caribbean and Pacific. Back

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2001
Prepared 28 March 2001