I should like to commence the debate with three preliminary points. First, I think that everyone generally supports free trade. However, if free trade alone could bring prosperity to the world, we would have no difficulties. The reason why the international community described the present World Trade Organisation negotiation round as the Doha development round was that there was a clear recognition among that community that a free market mercantilist approach—the sort of Gladstonian, laissez-faire, liberal approach to which the Liberal party used to subscribe—simply does not work. The international community has to intervene in trade policy to protect the weak. In considering trade policy, therefore, it is not good enough to say that the marketplace should determine everything.
Secondly, I want to make two apologies to the House. It is impossible in a debate of this kind to do justice to the many millions of people in developing countries whose livelihoods depend on the various trade arrangements that now exist, and I acknowledge that in the time available I cannot give pen portrait descriptions of all the flower growers in Kenya or small farmers in other parts of the world whose livelihoods are at serious risk, although I am sure that examples of the threats to such people will be mentioned during the debate. Nevertheless, I do not want the somewhat dry and technical nature of the debate to allow us in any way to lose track of the fact that the livelihoods of millions upon millions of the poorest people in the world are at stake.
My second apology to the House and to anyone who reads my speech in Hansard concerns the fact that this area of policy consists of almost impenetrable collections of initials, names, acronyms and other terms. I shall try to explain them as I proceed, but I am afraid that there is no way of making this debate an exciting read, because there are some quite technical interactions of various bits of trade policy.
It is to the great credit of the former Prime Minister, Tony Blair, that, when he convened the G8 leaders at Gleneagles in 2005 under his leadership, the world made a series of commitments that has the potential, by 2015, to “make poverty history”. Obviously, the leaders of the G8 could not on their own agree a pro-trade package; that required the international community as a whole. However, the G8 signalled the importance to sustainable development of a genuinely pro-poor trade deal. To ensure that pro-poor trade deal, there was going to be a huge frontloading of aid—about $50 billion by 2010—of which half was earmarked for sub-Saharan Africa, so as to have a lasting effect. The chairman of the G8 summit concluded that the G8 must
“make trade work for Africa”,
and the communiqué to help Africa was signed by several EU leaders, including leaders from France and Germany as well as Britain. However, the Governments of those other member states have been noticeably almost silent during the EU trade negotiations.
In anticipation of the debate, the Minister asked me whether I was going to have a crack at the UK Government. In light of what I have said it is not particularly my purpose to do that. However, we are in this together. The Minister will know from past campaigns such as the millennium debt campaign and others that trade is of great concern to hundreds of thousands of people in the country, including many of our constituents. They rightly put pressure on us; we put pressure on the Minister; and the Minister has to put pressure on Peter Mandelson. Unless we shout at the Minister, when he shouts at Peter Mandelson his protests do not carry the same conviction. I hope that the debate will therefore enable him to say in discussions with Peter Mandelson at the EU Commission that trade is a matter of real concern to colleagues in the House of Commons.
The Gleneagles communiqué was supported by an extensive and detailed report from the Commission for Africa. It was an impressive document and I hope that people do not forget about it. It made clear that trade is the key to long-term prosperity in Africa. Sadly, after the G8 summit, at the last WTO ministerial meeting in Hong Kong at the end of 2005, there was a comprehensive failure to agree on the Doha round, and there has been no WTO ministerial meeting since then, despite the obligation to hold one every two years, which means that there should be one by the end of this year. An attempt was made to resurrect Doha at Potsdam earlier this year but I suggest that, in reality, Doha is dead. If it is not, perhaps the Minister will tell us which bits of it are still stirring.
Where does that all leave us? In the United States, there is the temporary African Growth and Opportunity Act, and in the EU there is the failing attempt to agree economic partnership agreements for the group of African, Caribbean and Pacific countries. Mostly, those countries are in areas of former French, British or other European colonies.
Africa is where the negotiations are failing most. In 2005, the EU Commission was barely talking about the EPA agreements; it had reached an agreement with South Africa, but there did not seem to be any sense of urgency. Now, however, the clock is at five to midnight, because the WTO deadline for agreeing EPAs expires on 31 December this year—in just over a month.
It is highly unlikely that the deadline will be met for all regions. At best, the agreement on east Africa might proceed now that Kenya has signalled willingness to sign up to it, although the elections in that country mean that even that deal is uncertain. Moreover, last week, the Financial Times reported that east African countries will be forced rapidly to open their markets under the terms of a draft agreement that it had seen. That agreement will require east African countries to cut import tariffs on two-thirds of goods within two years. The agreement is reported to have a 25-year transition period for goods liberalisation, but the period will apply to just 5 per cent. of trade, which I suggest is unacceptable.
Before my hon. Friend moves on, does he agree that it is only pressure on Kenya’s horticultural industries, which could be put out of business overnight if they have to move to a system of generalised tariffs, that is forcing the conclusion of the east African agreement? East Africa contains some of the poorest and least-developed countries on the planet, such as Ethiopia and Somalia, and they, too, will have to open up their markets.
My hon. Friend makes a good point, and I am sure that we shall hear similar points many times in the debate. The developing countries have been put in an impossible position. Either they sign up to something that they do not want, or they end up in the even worse scenario of having nothing at all. They really are between a rock and a hard place. My hon. Friend’s description of what is happening in Kenya, including in the flower industry, is absolutely correct.
I recognise that the hon. Gentleman is raising an entirely reasonable concern about the negotiations on east Africa. By way of early reassurance to him, might I read the quote from Dr. Richard Sindiga, who is the Kenyan Ministry of Trade and Industry’s deputy chief economist and one of Kenya’s trade negotiators? He said:
“We have almost entirely protected those products by the most vulnerable people especially agricultural products. We will remove import duty on EU products in stages with an ultimate 80 per cent. by 2033”.
I hope that that offers the hon. Gentleman some reassurance that what people were worried about—at the end of last week in particular, I received representations from a number of civil society organisations—has not turned out to be the reality.
I have two points. First, in a previous incarnation I was the UK fisheries Minister, and it was always incumbent on Ministers to go back and explain that they had done as good a deal as they possibly could, so one sometimes has to accept that there may be a degree of special pleading from Ministers overseas when they have negotiated and concluded a deal. Obviously, they will put the best gloss on it.
Secondly and as I said, the aim of the debate is not to have a crack at the Government but to enable us to share information with one another. If the Minister feels that my information, which is drawn from people working closely on this issue, including policy advisers, many non-governmental organisations and my own team, is in some way not entirely up to date, I am sure that the House will be extremely interested to hear in due course what he has to say. However, listening to the EU Commissioner himself, Peter Mandelson, on “The World This Weekend” on Sunday, one got the distinct impression that the position was that the Commission had been negotiating for seven years and that it was now up to the ACP countries to take it or leave it. For reasons that I shall explain, that is unacceptable.
My understanding—again, the Minister may be able to help us on this—is that negotiations have broken down completely in west Africa and are stalling in the Caribbean, so what will we get? I think that we will get a fudge, which raises several questions that I hope we can address during this debate. First, does the failure to agree a package by consent and agreement reflect the fact that the package is inappropriate for the ACP countries and sub-Saharan Africa in particular, or does it reflect the way in which the negotiations have been conducted? I suspect that the answer is both, and that a number of countries will allege that the European Commission on occasion has substituted bullying for negotiation.
Secondly, if we do not have EPAs, what do we have, and where will the alternatives leave ACP countries? Is there a plan B or simply a void? The third, and in the long term perhaps most important, question is this. If EPAs are unworkable and the general system of preferences—known as GSP—is only temporary, what sort of trade deal should low-income countries have? What should the Commission be calling for? One thing is very clear: EPAs do not meet the aims of the Gleneagles communiqué, and the EU Governments who signed the declaration should be making that clear to the Commission.
How did we reach this position? As we all know, the current system of Cotonou agreement preferences, which provides ACP exporters with preferential access to the EU market, expires at the end of 2007. The Cotonou agreement legally requires the EU to leave no ACP country worse off after the expiry of the Cotonou agreement preferences, in ways that are compatible with WTO rules. The European Commission maintains that there is only one means to fulfil its obligation—EPAs.
I share the hon. Gentleman’s concerns about the general rush to sign EPAs in December. When I asked the Secretary of State for International Development about that in the previous debate that we had on the issue on the Floor of the House, he said that EPAs had to be signed because of WTO obligations, but surely there are other solutions. We could have an extension of the WTO waiver, or we could look at the GSPs and avoid the raising of tariffs by January. There are legal ways in which we can avoid rushing into EPAs and work in the best interests of developing countries.
The hon. Gentleman makes an extremely good point. I shall come to the issue of waivers and GSPs in greater detail. It is a perfectly valid point that we should not be put in a position in which we are told that it is either EPAs by 31 December or nothing at all.
EPAs pose a serious threat to ACP economies, because we are now moving to a reciprocal relationship with ACP countries in which all trading partners have to liberalise. That is fine over time, but ACP countries need policy space. The EU is the largest trading partner for most ACP countries, but as an advanced industrialised collective economy, the EU is also one of the most powerful competitors in the world. Although it is possible to design an economic relationship with the EU that benefits ACP countries, the Commission’s current EPA proposals threaten to do the opposite. I submit that the proposals go far beyond anything that has ever been asked or that is required by the WTO and could have a serious negative impact on ACP countries.
There are three big concerns about EPAs. First, every developed country, including Britain and the United States, has used tariff protection during its history to develop industry. Indeed, every advanced economy has used tariff protection at various times during its history, but EPAs restrict that capability for ACP countries and could unleash a surge in European imports that would wipe out fledgling industries, such as Kenya’s dairy and flower sectors, as well as undercut the prices of agricultural products. Threats from the Trade Commissioner, Peter Mandelson, mean that there could be a rise in tariffs that would equally devastate African countries. That puts at stake millions of jobs and thousands of companies in 76 of the poorest countries in the world, which depend on exports to the EU.
An example is Kenya’s horticultural industry. The sector is worth $700 million in foreign exchange to Kenya, but come January, Kenya could face a 10 to 20 per cent. hike in tariffs on all its exports to the EU, which could be sufficient to bankrupt some of its most successful export companies, which have been carefully nurtured through development aid programmes, including those of the UK. That is one of the real ironies. Many of the fledgling industries that face being seriously undermined are industries, occupations and trades that we have helped to build up with development aid over the past couple of decades. This story could be replicated across the globe from Lesotho to Namibia, from Papua New Guinea to the Pacific island of Vanuatu and from the Caribbean to Mozambique.
My second serious concern is that Governments of developing countries themselves stand to lose a major chunk of their revenue from tariffs. For instance, Zambia would lose $15.8 million—the equivalent of its annual HIV/AIDS budget. EU assurances that there would be aid to compensate only underline how this slightly crazy merry-go-round would increase dependency on aid.
The third and possibly most complex and important issue of all is how EPAs will affect regional trade. If people can get cheap widgets from the EU, why would they bother importing them from their neighbour in Africa or the Pacific? UN studies have indicated that EPAs could lead to contraction in exactly those low and medium-technology industries that are the basis for successful job creation and enterprise in Africa and elsewhere. Pitting African countries against one another is one of the most destabilising and disturbing aspects of EPAs. High tariffs between African countries have often discouraged trade between near neighbours. We should be encouraging trade between African countries. That, it appears, is what African countries want. The African Union has talked of a pan-African trade area, and the new East African legislative assembly is attempting to build a common market similar to the EU. If that is what African Governments want, we should support it, not destabilise it with EPAs.
EPA negotiations are at a critical stage. Detailed draft texts are belatedly on the table in all regions, and the Commission has set out its core negotiating parameters in all six ACP EPA regions. ACP countries are being placed under immense pressure to make major concessions. The Commission has refused many constructive offers that they have placed on the table and has failed or delayed in responding to other requests. A number of ACP regions have made it clear that more time is needed to reach pre-development trade agreements. As the deadline draws close, exporters are becoming alarmed at the prospect of high tariffs into the EU market.
The EU appears to be watching the clock. In his interview on Sunday on “The World This Weekend”, Peter Mandelson gave the impression that all trade negotiations tend to conclude at the last moment and that everyone plays it to the wire. I suspect that he is hoping that, as pressure mounts, ACP countries will have no option but to accept the Commission’s proposals. Many who have been involved in the matter, including many non-governmental organisations, are deeply concerned to hear from the negotiating room that the Commission is manipulating the prospect of development aid as well as that of the loss of market access to pressure ACP countries to agree to proposals with damaging implications for their development.
With the clear omission of a development component and an aggressive EU trade agenda, EPAs threaten the achievement of the millennium development goals. Part of the problem is that the Commission insists on including issues that are not required and were strongly opposed by the ACP at the WTO, including intellectual property, competition and public procurement. For example, the African Union’s collective position that
“except for trade facilitation, the other three Singapore issues of investment, competition policy and transparency in government procurement should remain outside the ambit of the WTO Doha work programme and EPA negotiations”
was stated in an AU Trade Ministers’ declaration of June 2005 in Cairo and reaffirmed in April 2006 in Nairobi and in January this year in Addis Ababa. On all occasions, it was simply ignored. The Select Committee on International Development, which I chaired during the last Parliament, strongly criticised the EU recently for forcing the issues on the ACP:
“the EU is abusing its position in the partnership to persuade the African, Caribbean and Pacific (ACP) countries that the New or Singapore Issues are essential for development and by implying that there may be penalties if they reject them.”
So what will happen? It is now too late for credible, negotiated and detailed agreements to be established by 31 December this year. Judging from past precedents, such as the EU-South Africa trade agreement, negotiations still have two to three years to run. The available options are to agree without negotiation detailed schedules prepared by one party to the EPA talks; to agree EPA agreements that establish the key principles but leave the details to further negotiation; to replace Cotonou in January 2008 with the EU’s “next best” trade regime while negotiations continue; to create a better fall-back or interim regime for the ACP than exists at present; or to seek an extension of the WTO waiver.
The first three options are undesirable, and the latter two face problems. To agree EPAs either in principle or in detail without full negotiations with the ACP would be absurd. It would also raise questions of legitimacy. EPAs should be ratified as mixed agreements. They should certainly be ratified within the developing country agreeing them, usually—obviously, it depends on the constitution—by a vote in Parliament. That is what happened when South Africa reached an agreement on an EPA in 2002; it was ratified by the South African Parliament. Legal opinions—the most recent was secured by Oxfam—suggest that Parliaments in EU member states should also ratify such agreements. It is therefore undesirable that agreements should be reached without clarification or ratification in Parliament and without debate or details. Will the Minister confirm that the UK Parliament will have the opportunity to ratify or debate the EPAs? I understand that a European Scrutiny Committee meets on Monday. It would be helpful for the House to know what its scope will be in relation to the EPAs.
The third option is the default option, which would result in perhaps the least desirable outcome—the total void option. Even the Commission accepts that that would be a bad outcome. Officials say that, unless positive action is taken to avoid it, from January 2008, the EU will apply to imports from ACP countries the generalised system of preferences, the tariff regime applying to all developing countries.
The standard GSP regime—I stress that it is distinct from GSP+—is much less favourable than Cotonou for many ACP exports. ACP states without least developed country status will experience a jump in the EU tariff applied to some of their exports. Although many of the increases will be relatively small, 267 of the goods that they export will experience a tariff jump of at least 10 per cent. Nearly two thirds of non-LDC ACP states will see a tariff jump of more than 25 per cent. by value on their current exports to the EU; for just over one quarter of states, the proportion of goods affected will be more than 50 per cent. The figures and the impact are quite serious. The most seriously affected countries will be those that export a relatively high proportion of the products facing the steepest tariff jumps. All ACP countries will be affected, but 20 countries—including Belize, Kenya, Namibia, Suriname and Swaziland—will be hit particularly hard.
Any new tariff results in the payment of taxes to the EU, notionally by the importer but in practice, through a cut in the price paid, by the ACP. The Overseas Development Institute calculates that new tariffs of 10 per cent. or less would result in a transfer from the ACP states to European treasuries of some €156 million a year, more than 2.5 times EuropeAid’s commitment to health projects in all APC states in 2005. If tariffs of more than 10 per cent. and specific duties are included, the calculated EU tax take is much greater. Namibia, for example, could find itself paying four times as much in taxes to the EU each year as it receives from EuropeAid. However, such high taxes often will not be paid, for the simple reason that ACP exports will collapse.
The next option is a better fall-back regime, meaning GSP+. According to Cotonou, EPAs are not the only option; they are only the first to be investigated. Article 37(6) of the Cotonou agreement commits the EU to consider providing states that do not join an EPA with
“a new framework for trade which is equivalent to their existing situation and in conformity with WTO rules.”
The EU’s problem is that it has agreed to an obligation that it cannot easily fulfil. For eight years, it has failed to come up with a solution, but one regime comes close—the GSP+, available to the 15 countries that applied by December 2005.
To be an effective fall-back, the GSP+ must be accorded temporarily to all non-LDC ACP states from January 2008 and extended, at least for them, to improve its provisions covering the limited number of goods for which Cotonou is better. If the EU did so, it would avoid short-term disruption to trade, while giving all parties a breathing space in which to finalise an EPA or ratify and implement the remaining conventions needed to establish permanent eligibility. They are wholly autonomous actions that the EU can decide to take—the EU just has to do it. Otherwise, the only other option is for the Commission to introduce waivers under WTO rules. I shall return to that point.
Unlike the WTO waiver option, the solution is entirely in the hands of the EU. However, as with the waiver, the problem lies in the EU’s unwillingness to act. The casualty will be the EU 27’s credibility as a liberalising force. So far, the Commission has set its face against either of the changes to the GSP+, which the Commission alone can initiate, so we would be left with the waiver.
Waivers have traditionally been the response of choice from Organisation for Economic Co-operation and Development states that wish to ensure the multilateral legality of their preferential accords. It is a favoured option for some in the ACP and the European Parliament. It is not without its problems, but there is a precedent that could be useful: the waiver for Cotonou that expires in 2007 was delayed for two years while the EU negotiated with objectors. Although that shows that obtaining a waiver is difficult, it also shows that the EU considers it legitimate to continue with Cotonou preferences while a waiver is being negotiated, as it did from 2000 to 2002.
The key obstacle, therefore, is EU reluctance to seek a new waiver. That leaves us in a complete mess—one that was totally predictable, as we have known for years that the EU needed to agree a trade deal before the end of this year. It would be highly irresponsible to put in place agreements that are either forced on ACP countries without adequate negotiation or agreed without the details. It would also undermine accountability through the ratification process. It would be a disaster for development if we went back to GSP, but the Commission is pushing the default line that higher tariffs will be the consequence for the blocs that fail to agree to EPAs.
That leaves us either with GSP+, which is the least nuclear option but only a temporary measure, or with the EU seeking a waiver. It appears to be doing little about that. Indeed, it is doing little about progressing towards an alternative agreement on GSP+. One thing is clear: the ACP, and Africa in particular, will not get the trade deal that they desperately need. The think-tank Open Europe put forward a list of proposals in a recent paper on how EPAs should be negotiated if they are agreed. It is a pragmatic list and includes
“a longer time frame for liberalisation”—
of up to 20 years—
“as much room for discretion as possible within WTO rules in terms of the scope of liberalisation”
“allowing individual country timetables for liberalisation, rather than a single schedule for EPA regions, to allow regional integration to proceed at its own pace.”
Other recommendations include the EU taking the threat of higher tariffs off the table, spelling out how it will allocate short-term aid to support tariff reductions and coming up with an integrated deal on preferences for developing countries with liberal rules of origin to be taken up by all low-income countries and, ideally, also harmonised through WTO agreements. That would be good, and it would also offset the trade-diverting effects of EPAs. I am sceptical that that will now happen as there are only four weeks of negotiations left.
So what is going wrong? Of course, there is no single simple solution. Removing the barriers that stand in the way of equitable global economic development requires action on multiple fronts: effective aid, debt relief, disease prevention and conflict resolution. However, world trade rules are currently a significant part of the poverty problem and fundamental reforms are needed to make them part of the solution. The capacity to trade, both among African neighbours and with the rest of the world, is the key to unlocking Africa’s prosperity. Effective world trade can and should be a powerful force for good. The numbers stack up. According to Oxfam, if the developing world were to increase its share of world exports by just 1 per cent., the resulting gains in income could lift 128 million people out of poverty. In Africa alone, that would generate $70 billion—approximately five times what the continent receives in aid. A mere 1 per cent. movement in Africa’s share of world exports would lead Africa to receive more than five times what it receives in aid.
Low-income countries need a comprehensive pro-poor trade deal at the WTO. The deal should mean that EU countries and other major industrialised countries open their markets unilaterally to the products of all low-income countries, liberalise rules of origin to make tariff and quota-free access a reality for low-income countries, offer incentives to encourage low-income countries to reduce trade barriers against their low-income neighbours, abolish all export subsidies and help low-income countries to develop their export capacity. Without a trade deal, there is the danger of going backwards on the Gleneagles declaration. With trade negotiations failing in the EU and the WTO and given the start of a new presidential race for the White House in the United States, it is time for collective action to make those reforms. Now is the time to get real about trade.
I congratulate the hon. Member for Banbury (Tony Baldry) on securing this timely debate about an important issue that is worthy of discussion. I am looking forward to the Minister’s response—[Interruption.] I fully understand his need to disappear briefly while I am speaking, and I have not taken it personally. He will be back momentarily.
This is not about Government-bashing. We have some criticisms of the direction that the negotiations are taking, but we welcome the progress on aid and development that has been made over the past decade or so. However, a lot of that good could be undone by some of the examples given during the hon. Gentleman’s speech. For example, all the aid programmes in Kenya could be undone by the 10 per cent. tariff. That shows how ridiculous the situation has become.
Like the hon. Gentleman, I want to focus on the need to ensure that the EPA negotiations, if they have to be concluded so quickly—we can question that—put development at the top of the agenda. Development should be at the heart of such negotiations. It became clear—I wrote it down—during the meeting of the all-party group on debt, aid and trade last week, which many hon. Members attended, that this is all about the people. It is about the individual farmers whom we have met in their countries. It is about the farmers who, more recently, have visited us to ask that we campaign on their behalf. Sometimes we can get lost in the jargon, with EPAs and GSP+. Those people do not understand that. They understand the impact on their individual lives and the negative impact that the process could have.
I accept that it is necessary to replace EPAs, but I want to hear from the Minister how necessary it is to reach the deadline of 31 December without considering the alternatives of waivers. I probably do not need to go into much detail, as the hon. Gentleman has made a compelling case for the alternatives to heading at such speed to the deadline of 31 December.
The Minister will have heard many of the concerns. However, it is worth re-emphasising some of them. Instead of being pro-development and using the opportunity to push Europe forward as an area that prioritises development, we seem to be producing an open free market economy through the EPAs. Instead of offering a protective environment, in which those countries can develop in the short term, they are being opened up to the rigors of free trade. The policy sets developed against developing and opens markets up to competition before they are ready.
Those who were present at the meeting of the all-party group a couple of weeks ago were fascinated to hear some of the evidence about whether free trade and liberalisation is a good thing. We tend to have a mantra that says that we are all in favour of free trade and liberalisation, but some economists are producing a lot of work that demonstrates that there is not an automatic link between the two. Many other parts of liberalisation, including some tariff protection, are an important part of the mix.
We need to look more deeply at some of the work that is available on how unreliable free trade and liberalisation can be. We need to be critical of merely joining a train that is headed in a particular direction and we must question some of the fundamentals. I hope that we can consider that today and see what benefits people believe will come out of the headlong rush into free trade.
I am concerned that the agreements will not help local produce to develop in its own country. We have heard examples of companies that will be pushed out and products that may flood in from EU countries—subsidised products that will damage the development of value-added goods that offer a way for a developing country to make more money from its resources through sectors such as agroprocessing, clothing and textiles. I am sure that the hon. Member for Cotswold (Mr. Clifton-Brown) will talk about his experience in the Seychelles. Those producers and others who know the potential impact of the EPAs have genuine concerns. I am sure that he will want to talk about that in more detail.
The hon. Member for Banbury rightly mentioned that regional trading between countries would be reduced because of the blocs, and other countries could or would lose out to increased goods coming in from the EU. The blocs cut across the regional groups, which should not be broken up. In fact, we should be helping to strengthen those groups, so that we set up the African free trade equivalent of the European Union. Allowing that flood could damage many of those fledgling industries, which need support, rather than total exposure.
The danger is that social spending could be cut as Government tax revenues are impacted and Governments lose valuable money. The figure of $15 million has been quoted, and it is equivalent to the expenditure on Malawi’s HIV programme. It does not sound a lot to us, but $15.8 million has a significant impact on the work that Governments do in such countries. Furthermore, such black holes in Government revenue must be filled with—guess what—EU aid and aid commitments. That is contradictory, and it needs to be sorted out, because it is ridiculous for us to rush headlong into agreeing EPAs, only to end up picking up the bill for their impact. We therefore need to do a little more joined-up thinking about the impact of EPAs.
We have been promised that any opening up of markets that results in the Governments that will be particularly affected losing revenue would be dealt with through aid, but I do not think that we should be giving that reassurance. I would much prefer us to go back to first base and reassure countries that they will not need our aid because we will sort out the tariff problems in the first place.
Does the hon. Gentleman not agree that the difficulty for many ACP countries in these negotiations is that the EU is not only their largest trading partner, but their largest development assistance donor? They are therefore between a rock and a hard place if they do not sign these agreements.
I accept that, and the term “bullying” has been used on numerous occasions in various articles and briefings. There is a real difficulty for such countries, and although we often hear reassuring words at Government level—we would, would we not?—individual Members of Parliament in some countries feel a little less secure about the direction that is being taken. The hon. Gentleman is right that the EU is the biggest donor and that there is pressure to be seen to be of some assistance in trying to hit the deadline, but there is a contradiction there.
The hon. Gentleman’s remarks also raise the issue of capacity—the number of people with the expertise to negotiate on behalf of such countries. Again, we need to take the issue seriously. It was taken up seriously in the Doha round, and capacity building was a welcome part of what the UK Government did; indeed, I am sure that the Minister will tell us of other examples of where we have tried to assist with capacity building. However, it is still difficult for small countries to face negotiating teams from the EU or individual Governments in bilateral discussions. We therefore need to ensure that there is a level playing field in the negotiations.
We must accept that the Government have come a long way, and that is particularly true of 2005, when the Prime Minister and the documents that this country produced put us in the right place—all the words were there and the intentions were good. To return to the first comments by the hon. Member for Banbury, the debate is about giving the Minister extra grist to his mill, so that he can go to Brussels and say, “Look, we are cognisant of the problems that will arise.” We know that the Government want to get the best deal for the poor and the development agenda, but we need to ensure that that is delivered at EU level.
Producers in ACP countries are voicing concerns, and industrialists are worried—this is not only about NGOs and civil society, but about a large group of people across society. As the hon. Gentleman knows, parliamentarians recently held a couple of events to raise such issues, and a Ugandan MP, the hon. Joseph Mugambe, expressed concerns about the way in which EPAs were being forced on his country, with Parliament given no time to scrutinise and vote on them. He was worried for his country and lamented the lack of responses and understanding from the European Commission. He felt that EPAs were a bad deal for his country, but he was resigned to the fact that Uganda would sign up because the pressure applied to senior Government figures was so heavy, which goes back to the hon. Gentleman’s point.
Ghana is also under pressure to sign agreements, with British officials using their influence to ensure that countries sign. In a way, that is quite welcome, but the question is whether the negotiations have been fair all the way through, and I would like to hear whether the Minister is confident that that has been the case.
NGOs and the trade justice movement have rightly been upfront on the issue. As the hon. Gentleman said, just a small increase in trade would lift hundreds of millions of people out of poverty—far more than increases in aid spending or some of the work that we have done on debt cancellation would achieve. Trade is the real key, and if we get things wrong this time, we could increase poverty, rather than reduce it, which would be a terrible step backwards when so much progress has been made recently.
Last week saw the draft East African Community-EC EPA—unfortunately, as the hon. Gentleman said, this is one of those issues that uses a lot of acronyms. Although the term “draft EAC-EC EPA” rolls easily of the tongue, it is in direct contradiction with the UK’s policy on EPAs because it will undermine regional integration and impose rapid liberalisation, with the EAC opening up 63 per cent. of its trade by 2010, while access to the EU might be reduced because of stricter EU safeguards. The 10-year timing on the 63 per cent. is important, given that most countries understood that there would be a longer lead-in time of 25 years.
As the comments by my hon. Friend and the hon. Member for Banbury about the EAC negotiations show, there has been considerable concern about the issue. On the 63 per cent., let me reassure my hon. Friend that 63 per cent. of goods in the EAC already have no tariffs in respect of the EU. What has happened so far is that that has been written into the agreement. There is no fundamental change as regards the 63 per cent. I hope that that gives him, the hon. Gentleman and civil society groups that have followed the issue closely some reassurance.
I am grateful for that intervention because the shifting sands of this process mean that things are changing almost from day to day even though the deadline is tight. As regards the 10-year or 25-year period, I hope that the Minister will bear in mind the progress that is being made on the remaining 37 per cent. of goods and continue to bring pressure to bear. We hold debates such as this precisely to tease out some of the more detailed points, which are fundamental to the overall way in which the policy is developing.
As I was saying, such issues have been raised not by a minority of commentators, but by a wide range of people in civil society. At last week’s meeting, my colleagues and I met Aissata from the Agency for Co-operation and Research Development, a Kenya-based charity. To return to a point that I made earlier, she talked about the effects on individual farmers of the issues that we are discussing—her charity is one of those that looks after individual farmers in parts of Kenya. So often, discussions about development issues deal with numbers, facts, figures and legal arguments, and we forget that it is the people on the ground whom we are trying to help.
Aissata spoke very movingly about the small-scale subsistence farmers—usually women—who grow tea and flowers. They have had really poor experiences with previous programmes and have lost out in any new agreements, so they are worried about what will happen this time around. They have heard of EPAs because they know that the negotiations are going on. They are genuinely worried about the impact on their livelihoods and about whether they will, literally, be able to feed their families if changes suddenly take place over the next year or so.
The Commission is proposing a two-step approach, with countries signing interim EPAs by the end of this year and full EPAs by the end of next year. As we have heard, however, there are alternatives, and I urge the Minister to look at them to see whether there are other ways to deal with the process. I know that such negotiations always go to the wire and that time pressure usually means that we get a deal, but the pressure to introduce legislation quickly in the House often means that it is poor legislation. Although there is pressure to negotiate—without it, the negotiations could go on for ever—I urge the Minister to find a middle way and a timetable that allows us to have full negotiations and capacity building in the meantime.
To quote a recent statement from the Network of African Trade Unions:
“the deal that has now been presented to a number of regions, which has been dubbed ‘EPAs light’, will still have dire consequences for our economies and jobs. The fact that the liberalisation of tariffs on goods, including agriculture, will happen at such a level and rate as to threaten our small farmers and infant industries could spell disaster for some of the most fragile economies in the world. On top of this, the rapid loss of government revenue will paralyse our governments’ abilities to invest in education, health and decent jobs, all of which are crucial to sustainable development.”
This is how people on the ground, rather than those engaged in the highfalutin discussions that are a part of the process, rightly see the EPAs and negotiations.
Given the fact that the agreements are felt to threaten and undermine regional integration and could lead to extensive loss of jobs, livelihoods, revenue and policy space, is it possible that the Government should be doing more to ensure at EU level that more time is available for truly pro-development agreements to be reached? I look forward to hearing what the Minister has to say. I know that he has made great progress in many of the matters that we have discussed. We all, however, need to be convinced that the EPAs can be made to work for the poorest in the world, and deliver a development agenda that we all want.
When more than 200,000 people marched through my Edinburgh constituency in 2005 at the time of the Gleneagles summit, as part of the “make poverty history” protest, one of the key demands was for a fairer trading regime with developing countries. It is now almost universally accepted that fair trade, more than anything else, is the key that will ultimately unlock the poorest countries from the chains of mass poverty. I, too, congratulate the hon. Member for Banbury (Tony Baldry) on securing today’s debate at what is certainly an opportune time. As he said, the debate is in part necessarily a dry one, but what is at stake is a matter of life and death for many people.
I doubt whether there is anyone who does not agree that we need to replace existing trade agreements between the EU and African, Caribbean and Pacific countries. Where I would challenge the EC is on whether the economic partnership agreements, as they currently stand, are the best way to do that, whether the timetable that the EC has outlined is realistic, and whether the process has been fair. It is also important to remember that the EPA talks are taking place in the context of the latest floundering World Trade Organisation talks. Indeed, the long shadow of the failure to reach substantive agreements in the Doha round hangs heavily over the current negotiations. The irony is that the EU is pressing ACP countries to agree a deal by the December deadline to comply with WTO rules that in all probability would no longer be in the WTO rule book had there been a successful outcome to the Doha development talks.
Before I move on, I want to stress that although I have several criticisms to make of the EC on a number of points, I genuinely commend the Department for International Development and the Under-Secretary, particularly for his work in this area and the successes that he has had in securing changes. I only wish that there had been more of them.
I, like many others, was hopeful that the latest trade negotiations between the EU and the ACP countries would aim to deliver an agreement that was development-focused. I had hoped, initially at least, that the talks would deal with the interests of the poorest countries, rather than being concerned just with protecting narrow domestic interests. Instead, today the European Commission is on the verge of becoming the first Commission in 50 years to impose a wide-ranging increase of European Union tariffs on some of the poorest countries in the world. Let us make no mistake: if that happens it will be by choice, and not by legal compulsion, as has been claimed by Trade Commissioner Mandelson, among others.
I am sure that we are all familiar with the argument: the EU claims that a deal must be done by December to ensure WTO compliance. It says that failure to agree the EPAs by then will give the EU no choice but to
“fall back on our default preferences scheme”—
meaning higher tariffs for ACP countries—as
“there is no credible alternative”.
The issue of the deadline is the first point that I want to raise. The December date, although useful in the past for focusing minds, must now be recognised as a major obstacle to the securing of an acceptable deal. It is not necessary for me to point out that trade agreements on such a scale are hugely complicated, and anyone who thinks that the agreements in question can realistically be concluded in the next month is mistaken.
The current Trade Commissioner has said:
“The EU is not threatening to raise tariffs for these countries, but is doing all it can to avoid this.”
However, it is not true to suggest that there are no legal alternatives or that the December deadline is non-negotiable. It is not options that are lacking, but the political will to exercise them. As hon. Members have said, the EU could seek to extend its WTO waiver or to fine-tune the enhanced general system of preferences—the GSP+ that has been mentioned already—to allow all ACP countries to retain market access equivalent to what they have now. Forcing the pace of negotiations, as the EC appears content to do, can only disadvantage the weakest players, and makes a mockery of the EU’s development credentials. I ask the Minister again to take up the issue of the deadline with the EC, and to urge a rethink on what seems at present to be a red line issue for the Trade Commissioner.
There are those in the EU who have warned that failure to reach a deal on EPAs by December would be a public relations disaster. I am more concerned that by rushing into what as they stand would be unfair EPAs, we shall store up a humanitarian disaster for the future. Developing countries have much to lose from the EPAs, and precious little to gain. In May last year the Prime Minister—the then Chancellor of the Exchequer—said in Abuja, Nigeria, that
“we know even with fair access it will take time for poor countries to compete... instead of forced liberalisation, poor countries must be allowed the flexibility to decide, plan and sequence their own trade reforms.”
The then trade Minister, the right hon. Member for Makerfield (Mr. McCartney), said in June this year:
“We believe that it is the preserve of the ACP to determine their own trade policy.”
I agree entirely. The problem is that the flexibility to decide, plan and sequence their own trade reforms is exactly what developing countries will be denied if the EPAs go ahead. The danger is that the EPAs will unleash a surge of European imports that could wipe out fledgling industries in many countries. Kenya’s horticultural industry has already been mentioned. It is a sector worth $700 million in foreign exchange to Kenya. The danger is that tariff hikes on its exports to the EU could put at risk some of the most successful export companies. Those companies, lest we forget, have been carefully supported through aid programmes, including those of the Department for International Development.
Other hon. Members will, like me, have heard the Commissioner deny claims that EPAs will open up the ACP markets to EU trade at the expense of local businesses and growth. However, it is undeniable that the EU is demanding greater and faster liberalisation than regions are willing to offer. I know that EC representatives have stressed that the changes will be implemented over time, but I am sure that other hon. Members will be as concerned as I am about the seemingly contradictory noises that we hear about the issue. It seems that there is a clear distance between what Trade Commissioners tell the press and perhaps even the Government, and what the negotiators tell the ACP representatives. We need more leeway in the negotiations to allow ACP countries to liberalise in a phased manner and at a pace that does not decimate their industries at a stroke.
Perhaps the most worrying impact of the EPAs in their current form would be their effect on regional integration. In the long term there can be no doubt that building up trade within Africa is more important than exporting to the EU. The EPAs are supposed to encourage regional integration, but as they are drafted they would fatally undermine the long-term prospects for such essential internal trade between ACP countries.
There is also a real problem with the way that the EC is pushing for an interpretation of “substantially all trade” within the EPAs that goes far beyond what ACP countries want, and which is, indeed, beyond what the UN calculates is necessary to foster regional trade. Similarly, even at this very late stage the EC is inconsistent about the percentages of product lines that it says it is willing to accept for liberalisation on the part of the ACP. Eighty per cent. is a figure that has often been quoted by senior EC representatives, but recent reports from negotiations in the Economic and Monetary Community of Central Africa, the East and Southern Africa grouping and the Caribbean regions indicate that the EC has been insisting on liberalisation commitments of up to 90 per cent. in some cases. I should appreciate the Minister’s comments on those points, particularly given that UN research calculates that eventual liberalisation towards the EU would have to be at a level of no more than 60 per cent. of trade; otherwise, regional trade would be undermined, rather than enhanced.
The key point is that the Commission’s approach to regional trade and integration in Africa seems to have no concern for development as a goal itself. The lack of any reliable impact assessments of the introduction of the current EPAs means that we cannot expect ACP states to sign up to them. I seek reassurance from the Minister that under no circumstances will signing up to an EPA ever become a precondition for aid recipients, whose European trading partners are often also their largest donors. It would be fair to say, therefore, that many ACP countries are caught between a rock and a hard place.
We have pursued that with the Commission, which denies that it has ever sought to link signing an economic partnership agreement to offers of aid. Resources might be available for aid for trade in order to help implement the provisions of EPAs, but that is very different from the concern that the hon. Gentleman has raised about conditionality.
I am delighted to hear that reassurance, because that fear exists among ACP countries and a number of non-governmental organisations. I thank the Minister.
It ought to be clear that we need urgent reform of EPAs and a radical rethink of how we approach this matter. I appreciate the concessions and changes secured by the Government and I commend DFID for making this a key issue within the EU. I fear that otherwise, it might not have even registered on many people’s political radar. However, if the EU’s claim to be development-orientated is to have any credibility, it has a long way to go. We ought to remember why we are having trade talks in the first place. Is there not supposed to be a development thread at the heart of these changes? I am struggling to see one. The Prime Minister has said that Africa is one of his great passions. I do not doubt him, but the coming month will be a real test of his commitment.
This is a timely debate because the negotiations are at a critical stage. I pay tribute, therefore, to my hon. Friend the Member for Banbury (Tony Baldry) for securing this debate, and through you, Mr. Cook, to the Speaker for allowing time for it to take place.
Much of the ground that I wish to cover has been touched on already. My hon. Friend covered the subject comprehensively. As he said, although it might be a dry subject, it is incredibly important to the 76 countries involved and to hundreds of millions of some of the world’s poorest people. If we get this wrong, we risk putting them into even greater poverty. I hope, therefore, that the Minister can reassure us some more—he has already begun to do so. Unlike in many debates, in this one we are largely uncritical of the Government. We are having this debate because we fear the consequences of getting it wrong.
I welcome the opportunity to put forward concerns expressed not only by trade negotiators whom I have met in Africa and the Caribbean, but by civil societies, by non-governmental organisations and particularly by Trade Justice Movement, which has supplied me with much useful information and kept me up to date with the state of negotiations. It is a fast-moving situation, and no doubt the Minister can update us further. As my hon. Friend said, we have another chance to address the problem on Monday in the European Scrutiny Committee debate.
Like my hon. Friend, I would like to ask the Minister what steps have been taken to ensure that Parliament will have an opportunity to scrutinise the EPAs, if they are agreed, before they are ratified by the EU, and before the British Government sanction them.
After a complaint from Brazil, which wanted increased access to the EU sugar regime, the World Trade Organisation met and declared that, by 31 December 2007, the preferential trade agreements with the 76 ACP countries must be replaced by EPAs, which should be WTO-compliant. Unfortunately, instead of celebrating a new era of global trade, we are here discussing the potentially harmful consequences. The Minister is obviously aware of the criticisms levelled by NGOs, the World Bank, the International Monetary Fund and by many hon. Members. Through the good offices of my hon. Friend, we are ramping up opposition in Parliament. It is only right that we should do so. It is becoming clear that rather than introducing a new system that will strengthen development within those countries, the EU is aggressively pushing a policy that largely benefits the EU while potentially damaging some of the world’s poorest people and nations.
Tariff protectionism has been a key tool employed by many developed nations, including our own, with reductions coming only when the vital industries affected were strong enough to thrive in a highly-competitive global market. However, it is worth noting the high levels of agricultural protectionism that the EU still employs. Under EPAs, ACP nations will find many fledgling industries forced to close as they face threats from the rest of the world against which they cannot compete.
The hon. Member for Loughborough (Mr. Reed) invites me to use the example of the Seychelles again, where the tuna fishing industry faces closure and the loss of many hundreds of jobs among a population of only 88,000. That industry will go to Thailand or other low-cost producing countries, so the process poses huge dangers. There is another danger: if we are not careful, countries that against all odds are protected by such agreements, might be protected in such a way that they cannot add value to and develop their primary industries because they would have to compete with countries that can add value at a lower cost.
The loss of revenue from existing tariffs is of equal concern. Although there is an option to introduce VAT or other local taxes, I do not believe that that would cover the losses. Most significantly it would shift the burden of aggressive local taxation on to some of the poorest people in those countries. The IMF estimates that for every $1 lost from the harmonisation of tariffs, only 30 cents will be recovered through VAT or local taxes. In some cases, Governments will face a severe loss of revenue, and there are few mechanisms for replacing that. Inevitably that would mean cuts in public services in some of those countries.
Another concern relates to the effects on regional integration, which was also mentioned by my hon. Friend, and which might be more important than trade with distant global partners. If individual blocs increase trade among themselves, they will be likely to compete on the same basis, which will benefit them hugely. Having said that, some well-established tariffs ought to be abolished. For example, I discovered that the local brewery in Barbados is protected by a 15 per cent. levy imposed by the Government on beer from other Caribbean countries. It just so happens that that brewery belongs to Diageo. Sometimes, therefore, those tariffs protect not the poorest people, but the large, international players.
The behaviour of the EU has been the most disturbing part of the process. The negotiations are about to set in motion the first free trade agreements in which less developed nations have ever entered. However, they do not wish to do so. They have been forced to negotiate with one of the biggest global trading blocs and with, in most cases, the ACP countries’ largest international aid donors. Given the EU’s commitment to development, the keen awareness of other potential problems and the acknowledged and entirely understandable weakness of the ACP trade negotiators, one would have thought that the EU would have offered as much help as possible.
To my consternation, that has not been the case. The 31 December deadline looms and has been used as a battering ram to corral those very small nations into signing a deal out of which the EU appears to be the only winner. I shall give an example of how difficult that process is for some of the smaller countries. In Ghana, just one man is responsible for negotiating EPAs, for negotiating with the WTO, and for negotiating bilateral trade agreements between Ghana and other African countries. The EU will probably have a team of people just dealing with Ghana. That shows the inequality of negotiating power.
The hon. Member for Loughborough said that, in many cases, the Department for International Development has tried to provide the resources and expertise to bolster the negotiating procedure of those countries. I have met representatives from the Caribbean negotiating machinery, and very expert they are too. However, it is still quite difficult to see the parity of those countries’ negotiating positions when compared with the huge teams available in the Commission.
Many of these nations find themselves in negotiations that cover many hundreds of pages of close legal texts. Again, the ability of one man in Ghana—however good he may be—to deal with those negotiations puts such countries in a very difficult position. How are they supposed to assess fully the implications of signing an economic partnership agreement? That responsibility should have been addressed by the EU. In particular, the EU should ensure that proper impact assessments are carried out once the EPAs have been signed, so that their effect in future years can be fully understood and proper measures taken, either through international development assistance or other assistance, to cushion some of the worst effects. The hon. Gentleman clearly illustrated some of those effects through his quotation from the trade unions.
The fear has been raised with me on several occasions that not enough has been done to examine the impact assessments. There is also a need for transitional aid to help some of those industries that will be put out of business. All that has left some of the African, Caribbean and Pacific nations in something of a bind: uncertain of the consequences of not signing the agreements and ill-informed of any alternatives. As my hon. Friend the Member for Banbury and other hon. Members have said, the 31 December deadline is not absolute; there are alternatives, such as GSP+ and extending the waiver. I would be interested to know from the Minister whether he still believes that that deadline is absolute.
I would also like to know from the Minister what he thinks about the ongoing negotiations, for example, whether they need to include the Singapore terms or whether a goods-only agreement would be satisfactory. I ask that because the agreement initialled last Friday in Botswana, Mozambique, Swaziland and Lesotho was, I understand, a deal only for goods. If that agreement is going to be acceptable, what is all the fuss about? Why cannot all those six groupings simply sign goods-only deals, with an agreement to include the Singapore terms at a later date?
I would also like to ask the Minister what provisions there will be in the agreements to review them subsequently, especially if there are dire consequences. Let us face the fact that the EU is not possessed of all the knowledge in this area and there may well be elements of each individual agreement that will need modifying. I would like to ask him what the process for that review will be.
I must comment on what I see as a difference in stance by the EU; others have commented on that issue, although perhaps not as directly as I would like to. Much of the argument about the agreements stems from the percentage of the ACP markets that must be opened; the term “substantially open” is obviously open to interpretation. It used to be thought that the figure was 80 per cent., with 100 per cent. of the EU market being opened, leading to an average of 90 per cent. However, in many cases now the EU seems to be moving towards a 90 per cent. opening.
There also seems to be a difference as to what baskets of special industries can be protected. It was thought that the figure should be 20 per cent., but it is now argued that it should be below 8 per cent. That 8 per cent. figure is very interesting, because it is the figure that the EU was arguing for, in reverse, during the World Trade Organisation negotiations, to try to safeguard its own highly protected agricultural industries. That was one of the key reasons why the Doha round of the WTO negotiations failed. It seems that the EU is using double standards in that respect.
Finally, I would like to issue a plea to the Minister to look very carefully at where the negotiations are going. There is potential for good in them, including potential for trade development, and no doubt some countries will thrive by having their barriers taken down. That is fantastic, it should be the aim, and it should be the aim also to lift these countries out of poverty through trade. My hon. Friend the Member for Banbury cited the fact that a 1 per cent. increase in trade could lift hundreds of millions of people out of poverty. Certainly, in the case of the Caribbean countries and other medium-income countries, it should be perfectly possible, with a little forethought, to lift them out of being medium-income countries and into being fully advanced countries, which are not in need of aid at all. It should be our aim to bolster the poorest of these countries, so that they are able to stand better on their own two feet.
The Minister has heard our concerns today. Those concerns will continue to be expressed, and I ask that, in the negotiations, he deals fairly with those countries, with many of which Britain has strong historic links.
The Parliamentary Under-Secretary of State for International Development (Mr. Gareth Thomas): I, too, congratulate the hon. Member for Banbury (Tony Baldry) on securing the debate. Along with my hon. Friend the Member for Loughborough (Mr. Reed), and the hon. Members for Edinburgh, West (John Barrett) and for Cotswold (Mr. Clifton-Brown), he has, with great rigour, raised in the House the concerns of many people in this country about these economic partnership agreements. I will endeavour to respond in the same way in order to address hon. Members’ concerns.
At the beginning, however, I should add a note of caution, in that this is a very dynamic phase of the negotiations. Things are changing very fast and negotiations are still taking place in a number of regions, so I hope that the House will recognise that I will be unable to give complete clarity in response to every point that has been made.
Nevertheless, let me start with the opening comments by the hon. Member for Banbury. I agree completely that a mercantilist approach to trade will not be enough to deliver the development benefits for the 1 billion people who still live on one dollar a day. We must intervene to ensure that development concerns are prioritised. That has been and will continue to be the Government’s approach, both to these agreements and to the Doha round of discussions.
The hon. Gentleman was absolutely right to say that, although this debate will appear to be very technical to those who read our deliberations, this issue is nevertheless of enormous importance to the citizens of the 76 ACP countries, where there are millions of very poor people whose routes out of poverty depend in no small part on establishing better trade, both between their countries and with the European Union.
If the hon. Gentleman will forgive me, I profoundly disagree with his comment that Doha is dead. I was in Geneva only last week talking to negotiators from many of the countries that will be key to progress. In particular, I met the chair of the agriculture negotiating group, who is very clear that progress is taking place in those negotiations. Agreement there will be key to progress in other parts of the Doha dossier. Progress is taking much longer than we and, I am sure, all parts of the House would like. However, we believe that progress is being made. Despite the political difficulties that the chair of the group described, given the approach of the American primary season, we believe that a deal can still be done, even though we are at a critical point.
By way of providing context, the hon. Gentleman made the very good point—it was also made by other hon. Members—that no amount of aid will halve the proportion of people living in poverty, which is the key headline millennium development goal, without there being progress in other parts of the aid-trade debt relief agenda. For example, it is clear from statistics incorporated into the Commission for Africa report that more and fairer trade will be worth up to three times more to Africa than all the aid that it receives.
I am sure that most Members will agree that open societies that learn from and trade with other societies are enriched materially and culturally, and that trade creates jobs, generates income, gives consumers more choice and greater access to cheaper goods, gives access to cheaper inputs for producers, helps to stimulate competitiveness in an economy, allows technology transfer to take place, and stimulates co-operation and closer ties between countries.
The hon. Member for Cotswold said that it is true that no country has made progress without tariff protection. It is also true to say that no country has developed in the last 40 years in the absence of international trade and without bringing down tariffs at key points. It is for all those reasons that the UK has taken, and will continue to take, a keen interest in the EPAs.
I reassure the House that I have already been active in talking to Commissioner Mandelson, other EU member states and, crucially, many ACP Government Ministers and the lead negotiators from many of the six regions. Interestingly, none of the ACP Ministers to whom I have spoken has not wanted to sign an EPA. They have recognised the huge potential benefits that the agreements could bring their countries. If we can put in place duty and quota-free access to the European Union supported by simple, predictable rules of origin, ensure that the ACP’s own market opening is properly phased, and provide support for enhanced regional integration, economic partnership agreements can offer substantial development benefits to the 76 countries that the hon. Member for Cotswold mentioned.
I have mentioned the fundamental parts of the UK position, which we set out back in March 2005 and for which we have sought to secure the support of other member states and the Commission. In the past two years, we have had a number of robust exchanges about EPAs with other member states and the Commission.
It would be fair to say that the UK Government have not always seen eye to eye with the Commission on its negotiating tactics. For example, we made it clear in the position paper that we published back in March 2005 that we wanted an offer of duty and quota-free access to be put on the table up front at that point. It materialised in March and April this year, although two products were in transition periods. Simpler rules of origin were put on the table, although not until this September. We have made progress on securing the development benefits that we have agitated for in the past two years, but we would have liked the Commission to have gone further and more quickly.
What the Minister has said is helpful, but will he please answer one key question? If any of the six groups, or any individual country, does not sign an EPA by 31 December, is he prepared to stand by and watch the EU increase tariffs on it simply because there is not enough time to negotiate an agreement?
As I have said, we have had disagreements with the Commission over tactics, but it has shown flexibility and brought the other 26 member states with it around to the UK position. We have been making the case strongly that no developing country should have worse market access from 1 January, and we shall continue to do so in the discussions that are under way.
I have indicated that significant development benefits have potentially been secured under EPAs, the most profound of which is duty and quota-free market access. There are also simpler rules of origin and the ability to protect completely up to 20 per cent. of a developing country’s products from market opening. Some countries have actually offered to open up more than 80 per cent. of their markets. The Commission has not asked for up to 90 per cent. to be opened; there may have been some confusion because some countries and regions have wanted to go beyond 80 per cent.
There is still a long period for countries to reach the point of opening up 80 per cent. of their markets—up to 15 years at the moment, and we are pushing for more time beyond that. Written into the agreement is the provision of safeguards to protect particular industries in which there is a surge in imports. For example, food security would be a particular concern. Another development benefit will be regional integration.
To take some of the technical nature out of the debate, I shall give some examples of how countries will be able to secure direct benefits. The hon. Member for Cotswold mentioned the agreement that was signed in the Southern African Development Community region. As a result of that goods-only agreement, Namibia and Botswana, for example, will be able to sell more beef to the European Union market, as there are no quotas on it. The liberalised rules of origin could mean that Lesotho will be able to trade more clothing into the EU market, mirroring what it does in the US market. There are already direct development benefits.
I turn to specific questions that Members have asked. The Cotonou deadline is real; it is in place because the Cotonou agreement was challenged in the World Trade Organisation by other developing countries. I do not believe that a further waiver will be possible, as it would be challenged quickly and it would be difficult to get any sort of agreement. Developing countries such as Malaysia, Thailand, Costa Rica, Ecuador, Honduras, Brazil and Indonesia all grow products for which ACP nations now get much better access into EU markets. It is difficult to conceive of their agreeing to a waiver.
The extension of Cotonou was one of the four alternatives to full EPAs that the Overseas Development Institute referred to in the papers that it produced in the summer. I shall explain why I do not believe that two of the other three alternatives were suitable. I share the House’s concern about the huge increase in tariffs that would follow the GSP, and we do not think that it is acceptable. That is why our position is that no country should have worse market access.
Equally, GSP+ is not a suitable alternative, although we are supporting the Seychelles’ request to move towards it, for example. GSP+ countries would have to ratify some 27 UN conventions on human and labour rights, good governance and the protection of the environment. We would not want to undermine those agreements and give access to GSP+ to the Zimbabweans or the Fijians. The rules of origin under GSP+ are not as good as those under the Cotonou agreement or the proposed EPAs, and there would be a tariff jump for many products. Beef, bananas and oranges are just some of the products that would be hit by GSP+.
The alternative to full EPAs that did have merit was framework EPAs, which are effectively goods-only agreements and put off the need for progress on services and Singapore issues until a later date. We have always been clear that countries should be allowed and encouraged to negotiate on that basis if they wish. If they do not—a number of countries have made clear that they do not—those requirements should be put off. Given the current time scale, we need to concentrate on goods-only agreements. That is the position that we have taken since the Madeira Development Ministers’ council, and will continue to take.
The loss of revenue from tariffs on key products is an issue to consider, but the considerable flexibility on which products will be opened up allows countries better to plan their market opening and to consider matters. I do not downplay the significance of that concern for some regions, but the goods-only agreements that have been negotiated will help to generate a significant increase in regional trade, and we want more regional trade benefits to be secured. The fact that some countries will have to negotiate further details under framework EPAs next year will provide for further regional trading benefits to be opened up.
Any goods-only agreement must be ratified by the Commission through its processes in the EU—that is a clear Commission competence. There will still be scrutiny by the House of Commons through the European scrutiny process, and agreements that go beyond goods-only will have to come through the House for ratification. We have a debate on the matter next week, and I have no doubt that there will be other debates to come.
We have provided funding not only to the Caribbean negotiators but to Economic Community of West African States, Pacific, SADC and Common Market for Eastern and Southern Africa negotiators, to help equalise the imbalance that Members have described between the EU and developing countries.