Draft Advisory Centre on WTO Law (Immunities and Privileges) Order 2001

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Dr. Vincent Cable (Twickenham): I am sorry that I missed the introduction, but I would like to welcome the steps to strengthen the WTO and to make it more accessible to its smaller and poorer members. The WTO's essence is its provision of the rule of law in international trade, which helps smaller and poorer countries to defend themselves in international litigation over related matters. Without the WTO, it is difficult to conceive how, for example, Costa Rica could have pursued an important trade dispute with the United States of America.

There has been a patchwork of advisory bodies and institutions to help poor countries with preparations for international trade negotiations. The World Bank, the Commonwealth Secretariat and the UN Conference on Trade and Development have all had a role. Is the measure before us intended to replace those or to supplement them? In the last round of international trade negotiations, I was involved, in another capacity, in such a process—a very messy one. Is this an attempt to rationalise the situation, or to create another institution to give advice to developing countries?

I want to ask about the origins of the financing formula. From a quick glance, there appears to be rough justice about it, but, when one looks in detail, the question that springs to mind is what contribution small states will make. Countries such as Antigua, St. Kitts and St. Lucia, from my recollection, have populations smaller than that of my constituency—about one five hundredth of the UK population—and a gross national product of about one ten thousandth of ours. They are levied, however, at an amount that is about 10 per cent. of that which applies to the United States of America. That is slightly odd and rather regressive. Has the particular problem of small states been taken into account in assessing the funding formula?

What will the remit of the advisory body be? Will it cover the full range of WTO activities, including the general agreements on tariffs and trade? That has become a highly contentious area. Many of us receive postbags full of complaints about the GATTs' workings, many of which are informed by disinformation or misinformation, but the issue has become important. Will the advisory body cover all the WTO's activities, including its intellectual property arm and its services arm?

My final question is related to my previous one. In what capacity will the UK ratify the agreement? I am a little confused about the sovereignty issues. On trade policy, I thought that the European Union negotiated on our behalf. Until recently, there was a distinction between trade negotiations about products, an EU competence, and trade negotiations about services, a national competence. Does that matter in relation to this ratification? Are we ratifying independently of the EU, or as part of its ratification process?

4.47 pm

Mr. Battle: I thank hon. Members on both sides of the Committee who have taken part in the debate. It is rare that we have a decent debate on a statutory instrument, especially one on immunities and privileges. The legislation is important because it enables something else to happen. If we agree to the order, we will give Parliament the authority to give the body a legal personality.

The body will be an advice centre. Some of us are aware of legal advice centres, for example in urban neighbourhoods, that enable people with no access to, or money for lawyers to get some justice. What came out of the Seattle discussions was that tackling poverty is not just about aid, but about fair trade. My right hon. Friend the Secretary of State for International Development was one of the proposers of that idea and it is in tune with the White Paper on eliminating world poverty. How can trade be fair if one side in a trade dispute can buy all the best lawyers and the other cannot even afford a delegation to get to the court?

In setting up the body in Geneva, the idea was to give it some purchase in respect of fairness in trade disputes. I hope that I have reassured the hon. Member for Chesham and Amersham that we are not going against the grain of the House's decisions on international development. It is a question not simply of paying lawyers and administrators, but of paying good lawyers and administrators to help give developing countries a fair crack at trading rules and regulations under the WTO.

Twenty-eight founding members signed the agreement establishing the centre and a further three joined before March 2000. In total, membership comprises nine developed countries, 22 developing countries and one country with an economy in transition. The hon. Lady asked about ratification. As I said, ratification of the agreement will allow DFID to release funds—$1.2 million over five years—allocated to support the centre. Ratification is critical to the agreement's coming into force. Twenty signatories are required to deposit their legal instruments of ratification and acceptance, along with $12 million to fund the centre's operation. That sum consists of $6 million worth of multi-year contributions from developed country members to fund start-up and running costs in the first five years, and $6 million for the centre's long-term endowment fund. So far, 18 members have deposited their instruments of ratification. The UK will be the last of the developed country multi-year donors to do so. It is expected that the 20-member threshold will be passed before the end of May, allowing the agreement to come into force 30 days later.

The hon. Lady is right to say that a number of WTO members have no delegations in Geneva. The centre will help those that cannot afford to pay rent and rates, as it were, to maintain a presence. That is the purpose of the provision. I am more than happy to provide members of the Committee with a list—I shall not read it out now—of the centre's membership. The key is the setting up of an endowment fund through voluntary contributions. As the hon. Lady and the hon. Member for Twickenham (Dr. Cable) said, contributions vary. As far as I can gather, the endowment fund was started not through a levy but through voluntary subscriptions.

Mrs. Gillan: The Minister said that the amounts differed, but I thought that the eight countries contributing to the endowment fund each paid the same amount—$1 million. Why did those countries alone contribute to the fund? Why did not the United States and EC countries such as France pay a penny?

Mr. Battle: Contribution was voluntary. Eight members of the WTO—Canada, Denmark, Finland, Ireland, Italy, the Netherlands, Norway and Sweden—signed up and paid $1 million each, and we hope to do the same. There were further categories for developing countries and countries with economies in transition. I think that Hong Kong signed up to category A.

Mrs. Gillan: Will the Minister give way?

Mr. Battle: Will the hon. Lady let me finish describing the categories? Colombia, Egypt, India, Pakistan, the Philippines, Thailand, Uruguay and Venezuela signed up to category to B, and Bolivia signed up to category C. Those are the current commitments to contributions, but hopefully there will be others.

Mrs. Gillan: I may have misheard the Minister, but it is surely wrong to say that we are members of the endowment fund. We are merely giving $1.25 million, which will be paid in instalments over five years. When are the instalments due and how will they be paid?

Mr. Battle: That is a good question. The order does not constitute ratification—we need to deposit our instrument of ratification before 30 September 2002. I shall read out the conditions that must be met because they relate to our debate. Article 13 of the agreement states:

    ``This Agreement shall enter into force on the 30th day following the date upon which all the following conditions are met:

    The twentieth instrument of ratification, acceptance or approval or signature not subject to ratification, acceptance or approval had been deposited;

    The total of the one-time contributions to the Centre's endowment fund that the States or custom territories which have accepted this Agreement are obliged to make in accordance with paragraph 2 of Article 6 of this Agreement and Annexes I and II to this Agreement exceeds six million US dollars''.

Therefore, when the contributions reach that critical point, it can happen. It is a voluntary contribution to an endowment fund with the purpose of trying to get the process moving. The article concludes:

    ``The total of the annual contributions that the States or custom territories which have accepted this Agreement are obliged to make in accordance with paragraph 2 of Article 6 of this Agreement and Annex I to this Agreement exceeds''

the critical figure of

    ``six million US dollars.''

Those are the conditions that must be met.

The hon. Lady asked why DFID and the Foreign Office were involved. In a sense, it is six of one and half a dozen of the other. The Foreign Office is responsible for the implementation of all treaties. A similar measure dealt with the international rubber agreement, which, in terms of detail, fell more under the auspices of the Department of Trade and Industry than of the Foreign Office. DFID has been, and will be, involved because there are substantive matters that concern the international development budget. It will therefore lie with that Department to carry the matter through. The hon. Lady asked when the payments would be made. That concerns the budget of DFID and it is for DFID to decide.

Mrs. Gillan: Two points arise from the Minister's comments. First, if the instrument of ratification will not be lodged until September 2002, does not the order put the cart before the horse? It is designed to give immunities and privileges to members of an organisation that may not come into existence. We will not know whether that has happened until September 2002, so the order should rightly have been introduced after that.

Secondly, given that this is all about trade, why is the Department of Trade and Industry not bearing the cost? Why is it coming out of an overstretched and under-resourced aid budget? The DTI should have been the sponsoring Department: it should be paying the money instead of its having to come out of our aid budget.

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