Examination of witnesses (Questions 1
WEDNESDAY 20 DECEMBER 2000
BROWN and MS
1. Order, order. May I welcome you, Ministers,
to this very unique occasion? This is a first for Committees to
have a joint meeting. We have the European Scrutiny Committee,
the International Development Committee and the Agriculture Committee
and we are looking forward to your evidence. Could your advisers
briefly introduce themselves?
(Mr Walmsley) I am David Walmsley, I am the Head of
the Trade and Development Policy Unit in DTI.
(Mr Carden) I am Richard Carden, Director General
for Trade Policy in DTI.
(Mr Brown) Henry Brown, Head of New Crops and Sugar
Division in MAFF.
(Ms Baxter) Christine Baxter, Head of Sugar Branch
2. My first question is to both Ministers. Could
you set out the division of responsibilities between your two
departments in relation to the proposals on least-developed countries
(LDCs) and the sugar regime?
(Mr Caborn) Thank you very much for inviting the two
Ministers here this afternoon. May I say I think we put that very
clearly in our EM on Com (2000)561 (final) document which we submitted
to you? That laid out very clearly where the Government is coming
from. It is a decision of the Cabinet Committee so it is across
Government and we act on the trade side in Europe from my department
and on agriculture through the Minister for Agriculture.
(Ms Quin) Let me add that in terms of what is known
as the "everything but arms" (EBA) proposal, that is
a proposal which the Department of Trade and Industry take the
lead on. In terms of the parallel proposal that the Commission
has put forward for the reform of the sugar regime, that is a
MAFF responsibility and discussed by Agriculture Ministers in
the Agriculture Council.
3. What steps have you taken to ensure that
the UK Government has a coherent approach on access for least-developed
countries and the future of the sugar regime?
(Mr Caborn) We were very clear on this, from the statement
made by our Prime Minister in a Mansion House speech a year last
November, that we are very supportive of the LDCs having access
to the developed world's markets. You probably know that this
was a major issue at the World Trade Organisation meeting in Seattle.
One has to see this particular discussion this afternoon in the
bigger picture of what we are trying to achieve as a Government
and indeed what we are trying to achieve in Europe. As I said,
the access for LDCs into the developed world's market is very
important, as seen from the announcement that Gordon Brown made
in terms of restructuring third world debt and what my colleague
Clare Short said in the White Paper which she presented, and we
believe this is all part of the managing of globalisation of trade
which is very important indeed. One has to remember that since
1993, what we have been able to do from Uruguay to where we are
now with the WTO, world trade has actually increased by round
about 26 per cent. We think it is that type of management of trade
in a way which can engage the 140 countries within the World Trade
Organisation which is very important indeed. There will be problems
in managing that type of liberalisation. We are discussing some
of those today and I hope the proposals which are before you from
the Commission do actually give the safeguards to the industry,
such as the safety valves which are in in terms of surges of imports
which would not take place in terms of sugar, and that we shall
be able to make sure that we can control that in a fairly effective
way. I also hope that the type of representation we have been
making inside Europe will at least give some comfort to those
who may well be affected by this change in arrangements.
4. What role is the Department for International
(Mr Caborn) A very big one. If one looks at the White
Paper which has just been produced by my colleague Clare Short,
then you will see very clearly that we are for assisting in the
write-down of debt, and Gordon Brown has been chairing the IMF
committee on that. We have taken a lead very clearly internationally
to restructure debt for those LDCs, although we do believe that
they now have to have access to developed world markets for their
goods and services and we are only talking of the 40 or so countries,
0.5 per cent of world trade in its totality. I think DFID have
been involved in a very, very positive way in developing that,
along with the DTI, along with Agriculture, along with the Treasury.
5. The question was about coherence and D-G
VI has a sugar reform under way and then, cutting across this
and taking everybody by surpriseI think it is fair to saywe
had Mr Lamy's proposals for the "everything but arms"
imports and DFID tells us that the Government supports the proposal.
We need to be clear about it. I take it that is not an issue,
that the Government does support the proposals. My question is:
what advice is the Ministry of Agriculture giving Mr Fischler
about the progress of the sugar reform proposals. Is he telling
him to stop them, to put them on ice? Are they advising him to
tell Mr Lamy to take sugar out of his proposals? What action is
the Government taking to achieve coherence in Brussels?
(Ms Quin) The question was in fact about coherence.
6. Yes, but the answer was not.
(Ms Quin) There has been coherence between Government
Ministers in the UK Government about this and for that reason
we have been pointing out to the Commission the inconsistencies
between what they were originally proposing on the "everything
but arms" agreement and the proposals which Commissioner
Fischler put forward in terms of reforms of the sugar regime.
We believe that it is necessary for the Commission to be coherent
in its approach and we have argued that line strongly in the Agriculture
Council. For that reason we have argued in the Agriculture Council
that simply seeking to extend the existing sugar regime for five
years, which many member countries wanted, was inconsistent with
the "everything but arms" proposal and therefore it
made sense for both sugar reform and the "everything but
arms" proposal to go hand in hand.
7. What reform of the sugar regime would render
it compatible with the "everything but arms" proposal?
(Ms Quin) Obviously a phased transition. The "everything
but arms" proposal has a transition built into it and the
specific arrangements concerning that transition are still being
discussed. In terms of the Commission's proposal on the sugar
regime, the Commission's proposal was for no change by and large
for two years and the majority of Member States seem to favour
no change for five years. Obviously that is not consistent with
"everything but arms" and therefore we have been pushing
for changes to the sugar regime proposal which are consistent
with the "everything but arms" approach.
8. As MAFF, when you see DFID saying it supports
a proposal as an important concession to the world's poorest countries
and a confidence-building initiative for a new round of trade
talks, when it says that it ensures that the concerns of the non-LDC/ACP
countries are addressed but merely states that it is aware of
the views of British sugar producers and the sugar industry in
Britain, does that cause you a certain anxiety as to the sort
of balance of the response?
(Ms Quin) The Government has been very clear that
we want, as far as the UK sugar market is concerned, to continue
the balance we have had between beet and cane and indeed our evaluation
of all Commission proposals has very much kept that balance in
mind. We believe that we can achieve it both through managed change
of the Community sugar regime and through the introduction of
the "everything but arms" proposal.
Chairman: We have questions later on the sugar
regime and any points you may wish to make to the Committee then,
you will be welcome to do so.
9. Can you take us through the steps which now
have to be gone through with regard to this proposal? What stage
has the Council reached in considering this proposal? Is there
a likelihood of an early agreement on this?
(Mr Caborn) That is a good question. As we understand
it there have been discussions at a very high political level
in Germany and they have suggested to the Commission that they
would want to be helpful for the most "liberal possible"
proposal; they are the words which have been passed into the Commission.
We understand the Commission are meeting tomorrow. Whether it
is actually going to be on the agenda, we are not absolutely sure.
What one can be absolutely clear about is that there will not
be any principal changes to what is proposed at the moment. There
may well be changes at the margins but I cannot give you a clear
indication. The question would be whether it becomes operational
on 1 January 2001 and the answer is that I could not give that
assurance at this stage. There is a Commission meeting tomorrow;
which is unusual because it normally meets on a Wednesday. Whether
it is going to be on the agenda then I am not absolutely sure.
I cannot actually answer your question.
10. What steps does it have to go through?
(Mr Caborn) It has to go back to Council.
11. There is this great conflict between this
trade liberalisation which is proposed by Commissioner Lamy and
what has been a highly protected regime. One would anticipate
that there would be opposition from somewhere for it. How quickly
are we going to get a decision? What are the steps the thing has
to go through?
(Mr Caborn) It has to go back to the Commission and
it then goes to Council. Once it has been to Council, that will
be the final stage. One is hopeful that the Commission can come
to a decision in as short a time as possible and that is what
we have been saying. What the Germans have been saying could well
be helpful in moving that agenda forward.
12. You have alluded in part to Germany but
what views do other Member States have on this issue?
(Mr Caborn) There is now a general consensus; there
are obviously differences between the committees. I think it would
be true to say that there are differences in the Agriculture Committee
as against the Trade Ministers but there is now a proposition
on the table in front of the Commission which is finding favour
and one which has been submitted to this Committee and one is
hopeful thatit will probably change a little at the marginsit
will be the final agreement which could well come out and go to
Council. If it goes to Council then that would be accepted.
13. Has much concern been expressed about what
this means for sugar, rice and bananas?
(Mr Caborn) Very much so. That is why there is the
transitional period for those three commodities. They were singled
out as the more difficult area and one which needed to be managed
more carefully than probably the other areas. That is why the
Commission are suggesting, the proposition they have, for those
three-year phasing-in proposals a 20 per cent import tariff reduction
from 1 January 2001, 50 per cent from 2002, 80 per cent from 2003
and full elimination only from 1 January 2004. I think, rightly
so, that the Commission are giving time to manage the change we
were talking about. May I just put that into some perspective?
We are talking about the LDCs which are exporting. Remember the
LDCs are a major consumer, they actually produce about two million
tonnes and actually consume three million tonnes. They are exporting
around about a quarter of a million tonnes onto the market, compared
with a consumption of 12 million tonnes in the European Union
and a total production of 18 million tonnes. Keeping these things
in some proportion, that is what we are talking about in terms
of potential import. If you just bear in mind what I said a little
earlier, that there is a mechanism inside the proposals of the
Commission, that there is a trigger if there were a surge in imports
on sugar. Therefore there is a mechanism there to safeguard any
distortions which are beyond those foreseen by the Commission.
We can manage the change in a way which is compatible with sustainability.
14. May I pin you down on the actual process
which you are proposing to agree to? Are you saying that you expect
the Agriculture Council to which the Commission has to give agreement
to this proposal for "everything but arms", will meet
before Christmas and that you will implement the first stage of
the reductions on sugar, bananas, rice, and alcohol presumably,
as to a 20 per cent reduction in the tariff, in January 2001?
If that is so, what is the rush? How can you possibly expect and
is it reasonable to expect the countries which have been exporting
these products, and indeed those who process it in this country
and market it, to adjust their programmes in time for this rushed
agreement? Or have I got it wrong?
(Mr Caborn) You have got it wrong. It will not be
the Agriculture Council it will be the General Affairs Council
which will make that decision.
15. Will that meet before Christmas?
(Mr Caborn) I do not know. The first stage is whether
the Commission agree on a joint reference to the General Council.
16. On the assumption that they do.
(Mr Caborn) I am not into the game of answering hypothetical
17. It is not a hypothetical question.
(Mr Caborn) It is a hypothetical question. I cannot
answer whether this subject is going to be on a Commission agenda
tomorrow or not. I honestly do not know that.
18. We are in that kind of chaos, are we?
(Mr Caborn) No, we are not in that type of chaos,
we are just trying to find a sensible solution to difficult problems
and if that takes a few more weeks, then that is reasonable.
19. I should like to carry on this issue of
the transitional timetable which you have just laid down and its
effect on what are known as the ACP states, African, Caribbean
and Pacific states. As you are aware, the Cotonou Agreement was
actually talking about a period of eight to ten years lead time
in order to remove the trade barriers progressively. Those states
have been working to that timetable. If the "everything but
arms" proposal is talking of a lead time of two to three
yearsyou have just laid out the timetable yourselfdo
you not think that we are in grave danger of, particularly the
Caribbean states I understand, whose economies although they are
growing are still pretty fragile, expecting countries to make
crucial decisions in a much shorter length of time than would
reasonably have been expected under the Cotonou Agreement?
(Mr Caborn) Obviously you are briefed by your Clerks
and people, but Article 37 (9) of the Cotonou Agreement, which
was signed last June, specifically states that the EU will begin
the process by the year 2000, which by 2005 at the latest will
grant duty and quota free access to essentially all LDC products.
That was said in the Cotonou Agreement and that was Article 37
(9). The EBA proposal is not out of sync with what Cotonou is
saying and indeed what the Commission are saying and what I have
just quoted to you in terms of that timetable.