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I congratulate John Whitworth and his team of supporters from York who have joined the lobby today and whom I have had the benefit of meeting. I do not say that simply as a courtesy, although I am glad to see constituents coming all the way from York to Westminster. We all needthis includes Parliament and the Governmenta grass-roots campaign that backs our actions. The Secretary of State made it clear that we have to argue our corner in international institutions such as the EU and the WTO. It is important to show that a fan club exists for development and the actions of the Secretary of State and other members of the Government.
Until recently, trade policy was one of those dry-as-dust subjects that interested only a few underpaid development agency workers and a few extremely overpaid international lawyers who argued disputes at the World Trade Organisation. In recent years, however, it has become a battlefield. The Secretary of State is right to say that there has been a sea change since Seattle, which was quite literally a battlefield, but there is still conflict between pro and anti-globalisers. We must ensure that the world's poor are not crushed by those contending forces.
Trade is not a panacea, but it is true that the countries with the smallest share of world tradea share that is still decliningare those with the largest proportion of their population living in absolute poverty. Trade can lift people out of poverty, but it will succeed in doing so only if trade growth is supported and complemented by good pro-poor development policies.
I want to emphasise three things to the House. First, trade creates wealth; it makes people richer. It increases production and, therefore, consumption; for most people living on the breadline, consumption is a measure of their disposable income and their standard of living. The World Bank showed, in its publication "Can Africa reclaim the 21st century?", that if Africa had the same proportion of world trade now that it had at the time of decolonisation in the 1960s, it would have an income of some $70 billion a year more. In other words, its income would be about 20 per cent. higher. One of the things that we need to achieve, therefore, is an increase in the volume of trade with the poorest countries.
Secondly, trade does not necessarily result in a reduction of inequality, even in the regions where the volume of trade is increasing. The benefits of trade do not necessarily trickle down to the poor. That is why we need to change the terms of trade, as hon. Members have already mentioned. That requires policy change in developed countries such as oursmost notably a change in the common agricultural policy, in the case of Europeand in developing countries.
Thirdly, I would like to remind the House that trade takes place not between countries but between companies. Trade policy must encourage investment in private companies and entrepreneurship, and must recognise the role of the private sector in international trade.
Why has Africa lost some of its share of world trade in the decades since the 1960s? As hon. Members have stated, it is in part because the rich worldthe developed countrieshas been far from generous in its trade relations. We have been protectionistabove all, in relation to the commodities that the poorest people in the poorest countries have some possibility of exporting to us, particularly in agriculture.
Also, many sub-Saharan African countries have followed poor policies themselves, which helps to explain why their trade performance has been poorer than those of some other developing countries, such as those in east Asia. Our policies need to change, and their policies need to change. That is why I am so excited by the New Partnership for Africa's Development, which recognises that if we both change things, life will change for the poorest people in the poorest countries.
One of the things that the developing countries in Africa got wrong in the past was setting fixed exchange rates that overvalued their currencies. When I visited Uganda in the early 1980s, the official exchange rate was 120 Ugandan shillings to the pound, but the real market exchange rate on the street was 600 or 650. What did that mean in practice? The Ugandan elite could import Scotch whisky for a quarter of its real cost, and Ugandan farmers had to export bananas or any other agricultural products at four times their real value. It is therefore not surprising that it was difficult for the poor to export from Uganda and other such countries.
There were further problems with fixed interest rates. They were fixed by African Governments for the good reason that, in their view, setting a low interest rate made borrowing more affordable. However, borrowing is assisted only if a rate is set that encourages people to invest. Many African countries had an interest rate that was lower than the inflation rate. The resulting real-terms negative interest rates meant that no money was put into banks, or that it was put into banks in the developed world, rather than into African banks. Those economic policies need to change. Such failures reduced exports, squeezed out investment, and fuelled the growth of corruption as people tried to get round the policies enforced by their Governments.
Hon. Members have spoken eloquently about the contradiction between what we in the west preach on free trade, and our practice of agricultural protectionism. If we are to make the Doha trade round a development round, we certainly need to reduce the level of subsidy for
In many ways, it was the events of 11 September that brought the world together to agree a deal at Doha. Compromises were made on all sides. France agreed for the first time to negotiate on the elimination of farm subsidies; India backed off from outright opposition to negotiations on public procurement and investment; and the United States agreed to consider negotiating the anti-dumping rules that were used in recent weeks in relation to steel. Those compromises made the Doha round a development round, but to keep it that way, it is essential that the WTO sign up to the millennium development goals. Target 12 of those goals calls for
Tony Baldry (Banbury): I want to make three brief points. First, considerable consensus exists in the UK on these matters, and we should build on it. Given that we all agree on the motion before us, it seems a little crazy that the rules of the House require us to divide on it. However, that is something for the usual channels to work out.
The European Commission is scheduled to produce proposals under the CAP mid-term review in late June or early July. I think that the latest date for that is 10 July. That will not be easy. Many hon. Members present represent agricultural constituencies. We know from discussions with others that it will be difficult to persuade colleagues from other EU states that have been bribing farmers for votes even longer than we have that there needs to be substantial CAP reform.
I hope that, in the process of the CAP reform and World Trade Organisation negotiations, we will be able to do some work on the development box in the WTO agreement on agriculture. Little reference has been made to that this afternoon. I suspect that a lot of work at official level is still needed to determine whether a development box on agriculture in the WTO agreement would work to protect farmers in developing countries.
When the hon. Members for Clydebank and Milngavie (Tony Worthington) and for City of York (Hugh Bayley), and my hon. Friend the Member for Blaby (Mr. Robathan) and I were in Ghana and Nigeria recently we were struck by the fact that, in Ghanaa country that produces huge numbers of fantastic tomatoesall the tomatoes in the supermarkets are tinned tomatoes from Italy. That is completely crazy. When one asks people whether there is not a tomato processing plant in Ghana, they say that there used to be one but that it fell into disrepair and that no one has been prepared to invest in it.
We need to see whether more can be done within the WTO rules to protect countries like Ghana from the dumping of EU agricultural surplus. I am agnostic as to whether that should be done through a development box in the WTO agreement, but I hope that more work can be done on the matter by officials. When the Under-Secretary of State for International Development winds up the debate, I hope that she will tell us what the Government line is on the subject. It is important that we have some understanding of whether such a course of action could help and protect people.
My third point is that we need to support reformers in developing countries. We hear a lot about the bad guys, and we hear incessantly about Mugabe. It is quite right that we should, but there are also some good guys. I make no apologies, in the remaining couple of minutes, for reading a piece that I saw when several of us were in Washington the week before last to lobby members of the US Senate and Congress to do more on international development.
For too long, Africans and their partners in the West have looked to international aid as the answer to the poverty and economic challenges confronting developing countries . . . While well- intentioned, this over-emphasis on aid has actually handicapped Africa by promoting a dependency mentality and the impression that African countries could not compete in the global economy.
By itself, aid cannot transform societies. Only trade can foster the sustained economic growth necessary for such a transformation . . . Africa does need development assistance, just as it needs debt relief from its crushing international debt burden. But aid and debt relief can only go so far . . . We Africans are no longer looking for handouts. Rather, we are asking for the opportunity to compete, to sell our goods in Western markets, to be considered for private investment funds, and to participate more fully in the global trading system. In short, we want to trade our way out of poverty".