HL Deb 13 October 2003 vol 653 cc681-97

7.32 p.m.

Lord Dubs

rose to ask Her Majesty's Government what action they propose to take following the outcome of the World Trade Organisation talks in Cancun.

The noble Lord said: My Lords, those present at Cancun said that the outcome was somewhere between a setback and a disaster. Clearly, the key issue is not to have a detailed post mortem but to move forward. However, unless we understand what went wrong at Cancun, it is not easy to see what the next steps should be.

Let me say at the outset that I am grateful to CAFOD, Oxfam and other development agencies for the help that they have given in providing me with background information for this debate. I should like to discuss the issues under four headings: agriculture, what are called the Singapore issues, the processes of the World Trade Organisation and how we move forward, particularly with reference to discussions that are due to take place in Geneva and terminate by the middle of December.

It is perfectly clear that agriculture was the most difficult and most important issue that faced the negotiations in Cancun. I give a few figures: 97 per cent of people in the developing world are engaged in agriculture yet large western subsidies to western agriculture undermine the livelihood of many people in poor countries. I give an example. Since 1994 the United States has doubled its subsidies rather than phasing them out as was agreed at Doha. As regards cotton, which I put under the broad heading of agriculture, the United States refused to tackle the problem of cotton subsidies. Twenty-five thousand United States farmers get 3 billion dollars a year in support yet 10 million people in Africa depend on the cultivation of cotton. Cotton is one of three cash crops for a large section of the rural population of west Africa.

As regards the CAP, European Union farmers get more subsidies in 12 days than the rich countries give in aid to Africa in a whole year. The average European Union cow gets in total 2.20 dollars' support per day. That is more than the income of half the world's population. As if that were not enough, European Union and United States' agricultural export subsidies amount to 60 times their aid to developing countries. It is quite clear that from the point of view of the future of the developing world, what we do about agriculture in the affluent West is crucial. Those are the issues that should have come up at Cancun and been dealt with before new issues were raised. The case for them is absolutely clear-cut.

I turn to the new issues that were raised which come under the title of the Singapore issues. They concern investment and competition, transparency in government procurement and trade facilitation. As the Cancun discussions developed, the developing countries were faced with being asked to make concessions on the Singapore issues with nothing being given in return despite the fact that many people warned the EU that that would happen. Many people told the EU that it was not right to proceed with the Singapore issues in the way envisaged.

I fully understand that Pascal Lamy, the European Union trade commissioner, was mandated by the European Union to take the line he did but it was a pity that it was not until 14th September that he dropped his insistence on dealing with those issues. By then it was too late and the talks collapsed. It is very clear that by asking the developing countries to accept the Singapore issues, they were asked to make concessions before they got anything in return through the trade negotiations, particularly on agriculture. That surely was neither a sensible nor a principled and ethical way of proceeding. I know that the United Kingdom Government's position was not in favour of the Singapore issues being pushed. On the other hand, I wonder how robust we were in urging that that should be the case. I look forward to my noble friend's response. The issue was badly handled by the European Union and led directly to the breakdown of the talks.

My next point concerns the processes of the World Trade Organisation itself. There are 148 countries in the WTO. It was Pascal Lamy, the EU trade commissioner, who said that the organisation of the World Trade Organisation was medieval but suggested that neolithic might be a more apt way of describing it. It is difficult to organise 148 countries in terms of negotiations at the best of times, but the way they were handled was not very sensible. For example, the director-general has no power of initiative. On the first day of the discussions in Cancun the whole time was taken up with non-substantial matters such as the appointment of facilitators of the working group. That occurred at a time when 148 countries had a large number of representatives present to take part in urgent negotiations.

I also note that at least 300 parliamentarians were present. Normally I would welcome that but some people have put it to me that their presence made for less flexibility in the negotiations. Frankly, I do not think that is a point of great substance and I do not put it forward. What I am putting forward is that we have to look differently at the way in which the WTO organises itself. It was simply not satisfactory at Cancun.

But the most important part of this debate has to be how we move forward. It is absolutely crucial that progress is made, particularly if we bear in mind that the United States' elections are getting closer and therefore it will be harder to persuade Washington to make concessions given the electoral implications of some of the issues that I mentioned earlier, such as the cotton subsidies. The difficulty is that there may now be a temptation for Washington, the EU and other rich western countries to say that a bilateral or regional approach might be the way forward given the breakdown at Cancun. I suggest that that is an undesirable way of proceeding. I say that for the following reason: a bilateral negotiation between the United States and a poor country or between the EU and a poor country tips the balance very much in favour of either the United States or the EU. It is an unfair way of negotiating because the developing countries simply do not have the necessary bargaining power. They are in a better position and can argue more effectively when allied with a number of other developing countries. Indeed, even regional negotiations would still tip the balance against the developing countries, although I note that that is the approach that the United States seems to want.

There are other ways forward. One suggestion is that we go back to the method used in the earlier Tokyo round; namely, that the 30 key countries—the rich countries—should get together and decide how they wish to move forward without demanding any reciprocal concessions from the smaller and poorer countries. Let us, the richer countries of the world, take it as a responsibility that we have to resolve the matter. Let us not spend our time trying to get concessions from some smaller countries, but say how we approach it in the light of Cancun. It worked in the Tokyo round and could work this time.

I welcome the fact that the British Government support a multilateral approach. I hope that they will persist in that and use all our influence on the other key countries. It is absolutely crucial that the United States and EU make a better agricultural offer, perhaps on the basis of the type of approach that I have mentioned. I also think it crucial to look again at the World Trade Organisation's processes and procedures. It simply is not good enough to build up the hopes of the poor countries of this world, and then see them dashed through cumbersome, bureaucratic and ineffective methods.

I wish to raise one other matter, that of EU trade policy. I have criticised the United States Government once or twice, so let me criticise the EU as well. There is a need for a thorough look at the way EU trade policy is developed. I do not think that the Cancun outcome reflects well on how the EU went into the discussions, as I have said. Some EU trade-policy discussions seem to take place in a less transparent manner than one would wish. The suspicion has been put to me that even the British Government had only a hazy idea of what the Commission was up to in developing its stance for Cancun. That is not desirable.

It is crucial that we make progress. The high-level talks in Geneva are an opportunity for making such progress and learning from Cancun. Above all, we need political will. I look to the British Government to persuade other EU countries and the United States that it is time to exercise that political will and provide the poor countries in the world with a fairer deal than they have got up to now.

7.42 p.m.

Lord Judd

My Lords, I am sure that we are all grateful to my noble friend for having introduced the debate, just as we are to the organisations that he mentioned for their assiduous monitoring of the situation. I am particularly glad that my noble friend the Leader of the House will reply to the debate. It is significant that the Leader of this House takes the issue as central to her own agenda. She brings a lot of ministerial experience to the debate.

From having listened to my noble friend Lord Dubs, I want to put some specific questions to my noble friend Lady Amos for when she replies. Will she reassure the House on exactly how we monitor the development of Commission policy in the European Union, and are we really satisfied that the policy totally reflects what we believe should be put forward? Secondly, will she also reassure the House on the matrix dimension of the development of policy in this country? When we are preparing for the likes of Cancun, how far do departments that have a very significant interest in what is happening have an opportunity to take part in devising the strategies that we will advocate? The Treasury speaks for itself and the Department of Trade and Industry is obvious, but the Department for Environment, Food and Rural Affairs and the Department for International Development are relevant, as are the Foreign Office and the Ministry of Defence in terms of international security.

Cancun is, of course, central to the issue of global stability and our fight against global terrorism. I have argued before in this House, and I am sure that I will argue again, that very often I reflect that the world is in a classic pre-revolutionary situation. We have the many millions of utterly deprived and excluded, but also some very bright and well-educated people around the world who may, in personal terms, not be materially badly off but feel excluded from access to the decision-making processes in the world. If we are to have stability and security, we have to address not only economic and social justice, but the redistribution of power. Cancun demonstrates that very clearly. Whose was the agenda at Cancun? Was it the agenda of the international community, or was it still, however refined and presented, the agenda of the powerful in the world, to which the rest were asked to respond or on which they were asked to comment?

The matter is very well illustrated by the difference between the Singapore issues and the agricultural issues to which my noble friend referred. The Singapore issues—competition, trade facilitation, investment, transparency in government procurement—are all very worthwhile objectives. However, they are not central to the agenda of poor countries desperately endeavouring to survive. For them, the contradiction in the subsidies to cotton or our own iniquitous common agricultural policy, the distortions that those introduce into their economies, and the punishment that they mete out to their own people are much higher priorities.

The issue that goes alongside who owns the agenda, if we are talking about fairness, is the resources available in preparation and in the negotiations themselves, particularly when it comes to the small hours in the morning. Some of us who have participated in such negotiations know the game of brinkmanship right up to the last moment. Some of our delegations have immense resources at their disposal to handle that situation. Others dealing with desperately poor people in the world and their needs have virtually no such resources at their disposal to keep up with the game.

We are faced with the breakdown of Cancun. As my noble friend argued, we could see a threat to the commitment to multilateralism. I was recently in the States and heard people arguing that, in a sense, there had been emancipation and we could now get on with the job on a piecemeal basis, country by country or region by region. Divide and rule would, of course, be disastrous for the poor. We have to help the World Trade Organisation to overcome its difficulties and become more effective. Reform of the World Trade Organisation and its methods of operation is therefore crucial. My noble friend referred to that. It is not an either/or situation. That will take time.

In the meantime, there is the issue of will and commitment. If we want to see a stable world, we have to take the issue of power and justice very seriously. It is no good talking about level playing fields when, for many countries, the question is how one gets fit enough to be on the playing field and start playing. It is no good talking about environmental responsibility when we are telling people to do as we say and not as we do. It is no good being preoccupied, as we are, with migration and barriers that we must put up to the movement of people if we are not looking at what causes migration.

I simply argue that we must reform the World Trade Organisation. However, much more important in the immediate setting is a will to see justice for the poor.

Lord Davies of Oldham

My Lords, I am sorry to say that Back-Benchers have only four minutes each this evening.

7.47 p.m.

Lord Hannay of Chiswick

My Lords, it is good that the House is discussing the issue while the failure of Cancun is fresh in our minds. Let us be clear. The failure was a major setback which will damage all concerned, developed and developing countries alike, although I fear that developing countries, which are so much less well placed to ride out such setbacks, will be the more damaged. It could undermine the fabric of world trade rules, on the maintenance of and respect for which the prosperity of all of us depends. Let us not delude ourselves with talk of clouds with silver linings and possible simple ways back on to the high road that leads to freer and fairer world trade. It will take a good deal of statesmanship and much hard work to achieve that. Success is far from a foregone conclusion.

I do not intend to dwell much on apportioning blame for the fiasco at Cancun. The air is already thick with the protagonists allocating blame to everyone but themselves. There are lessons to be learned, but playing the blame game does not get one very far, and it cuts across and undermines the effort to get back to the negotiating table and on with the matter in hand, which is bringing the Doha round of world trade negotiations to a successful conclusion, by which I mean a conclusion that brings clear, early and measurable benefits to the developing countries to which the round is dedicated.

I have just one complaint to air. Countries which invite large international gatherings of this sort and those who organise them must be prepared for them to overrun, and for the last days to be spent in a marathon of late-night meetings and efforts to reconcile conflicting positions, as the noble Lord, Lord Judd, said. There is no other way to come to closure. Cutting short negotiations prematurely and giving way to impatience is a recipe for failure. It must not be repeated.

Where do we go from here? One must clearly start with the problem of the developing countries, which came to Cancun in an angry and determined mood. They had, in my view, a good deal of justification for that anger. Previous trade rounds had failed to bring them benefits proportionate to those gained by the developed countries. They had watched paper concessions on the matters that really counted for them—trade in agriculture and in textiles—fail to materialise, and be finessed away by the developed countries. They had been on the receiving end of cheap, subsidised exports of agricultural goods which damaged their own domestic agriculture and their prospects of winning external markets. So they came to Cancun with their blood up. Unfortunately, most of the blood they shed at Cancun was their own, by setting back the cause of agricultural policy reform in the three key players—the European Union, the United States and Japan—and by delaying the date on which any concessions agreed in the Doha round begin to bite. However, that is no cause for satisfaction.

We should be thinking now—by we, I mean the European Union, since the United States will be hampered by the run-up to next year's presidential election—of some significant ways of demonstrating up front our commitment to ensuring that developing countries do benefit from this round: more funds and more expertise to help them participate effectively in negotiations; perhaps some unilateral moves to give them better access to our markets already; perhaps some proposals for the accelerated phasing-in of concessions in the round which particularly benefit developing countries. I hope that the noble Baroness the Leader of the House can address that.

Evidently, if this round is to succeed, the European Union will have to put more on the table with respect to agricultural trade than it did at Cancun. I am not one who criticises what the European Union offered at Cancun in that respect. The meeting was only a staging post on the way to a conclusion by the end of 2004. It is naive to suppose that all the cards would be played at Cancun, but now that alibi has gone. The next time, it will be the finishing post. The European Union needs now to dig deeper into its capacity and will to reform and to build on the foundations laid by the worthwhile decisions taken last summer. The de-coupling of subsidisation from the level of production should be taken further, and the scope that such de-coupling offers for further liberalising trade rules should be taken much further.

I note that there has been a good deal of complaint about the cumbersomeness of WTO procedures; the difficulty of reaching consensus in such large organisations; the need for slimming down and speeding up decision-making. I am sure that all those points are well taken, but it would surely be suicidal to try to solve all that as a prelude to, or even as part of, finishing the round. Do we really believe that developing countries, who have only just felt their strength, are going to see it diluted as part of a deal that gives them what they want on trade? Of course not. The sensible way to proceed is to give the WTO a remit to examine possible institutional reforms after the conclusion of this round, and not as part of it.

What, then, are the priorities for the two months which lie ahead before the WTO contracting parties meet again in December to try to put the train back on the rails? That is clearly too short a period for serious, substantive negotiations. However, I would hope that we could secure a political commitment at the highest level to completing the round by a date that is now more practical than the end of 2004. Could not the European Union lead the way when the heads of state and government next meet at the end of this week by pointing in that direction? It is important that the European Union should get on with giving a lead.

I hope that the noble Baroness the Leader of the House, when she replies to our short debate, can tell us something of the Government's thinking on the way ahead. I have been authorised to tell the House that Sub-Committee A of your Lordships' EU Select Committee will be debating its next major report on finding a way through the post-Cancun maze.

Britain has always played a prominent role. Now is the time not to weaken in that support, following what was probably the worst setback in recent decades.

7.53 p.m.

Lord Desai

My Lords, I would like briefly to take an opposite view to that of most people. While Cancun was a failure, it was a better failure than Seattle. The reason for that is that at Cancun, the developing countries found their bargaining muscle much better than was the case at Seattle. At Seattle, they were excluded from Green Room negotiations altogether and the US played a high-handed card in dismissing the concerns of developing countries.

At Cancun, a group of 21 or 22 developing countries emerged which was able to put together a coherent strategy. Those are the more industrialised of the developing countries—the larger developing countries such as China, India, Brazil, South Africa and so on. They were able to put forward a bargaining strategy whereby they would not accept that they had to make concessions until they received something back. The finest aspect of the WTO is that it is the only global institution where all countries bargain on an equal basis. It is much better than the UN, where there are permanent members and veto powers. It is much better than the IMF or the World Bank, where developed countries have the majority of the voting powers.

Therefore, I would be against any of the Tokyo round proposals that my noble friend Lord Dubs put forward. They are basically saying that developed countries will once again run the world. Those days are gone. I do not expect that developed countries meeting by themselves will make concessions that they do not make when developing countries are there bargaining with them.

It is important to note that we should not have expected very much out of Cancun, because only three or four weeks before it started, at a round-table meeting organised by the Commonwealth Business Council, where many Ministers and business leaders spoke, it was quite clear that insufficient preparations or concessions had been made even two or three weeks before Cancun was about to start. We were therefore expecting that even the modalities of further progress would be difficult to agree on at the end of Cancun.

Importantly, it has now been established that there are limits beyond which developing countries will not be pushed. However, among them, there is a division between the 21, who are more industrialised, and the poorer, more agricultural sub-Saharan African countries. It is very important that their interests, especially those affecting cotton subsidy, be regarded as important as those of the 21 that want better access to developed country markets because they have manufacturing exports to sell.

I agree with many noble Lords who have said that we need to look again at WTO procedures. However, we must not change the principle of one country, one vote. We must not have any permanent members or hierarchies. In as much as it is a bargaining forum, the strength that developing countries have is in numbers. It is very important that that strength be maintained.

What must ultimately happen is for WTO bargaining to become an all-year-round session. I know that there are new negotiations starting in December and that within a year we will have to arrive at a decision, but I do believe that negotiations ought to be permanently staged.

7.58 p.m.

Baroness Whitaker

My Lords, I have three, small points to add to this very timely debate. The first follows from the fact that it is also very much in the interests of all the citizens of Europe that subsidies and tariffs protecting European and other Western goods should disappear. Consumers in our part of the world are hit three times over. They pay the tax which cushions uneconomic production; they pay more than they need for goods which without protection would be uncompetitive; and they also pay for surpluses to be dumped on world markets. The Consumers' Association estimates the cost of the lack of fair market access to be over £1,000 per EU citizen per year.

That is not the only citizen interest to be damaged by subsidy. Subsidies for agriculture foster the overloading of croplands and in many places the topsoil is eroded. Everywhere, there can be more pollution from synthetic fertilisers and pesticides and the release of greenhouse gases. Our environment also suffers from subsidies.

So when we think about the interests of the voters in the European Union countries, we should think that while some of them are indeed farmers, all of them are consumers who stand to gain from the market access which would in turn free African fanners to enter our markets.

My question to my noble friend is, therefore: what efforts can our Government make to persuade their colleagues in France, Germany and elsewhere to give due weight to their own consumers' interests in comparison with that of their farmers?

The second point I make is that the emergence of Group 21, or however many it ends up as, under the influence of the distinguished and dynamic Brazilian Foreign Minister, Celso Amorim, while marking an improvement in equality of bargaining power between richer and poorer countries, risks marginalising those much poorer countries which are not included. South Africa and Egypt are, I believe, the only African countries in G21, and some might think that South Africa has to a degree jumped ship to join the richer non-Western group. It is the poorer—particularly sub-Saharan—countries, of course, whose economies could really be transformed by better market access. Can my noble friend use her good offices to ensure that the G21 Ministers remain open to the cause of the poorest countries?

Finally, as a subset of this point, NePAD has created a secretariat. Its purpose, of course, is to help African ownership of the development process by enabling peer reviews of the capacity of African states. But the purpose of the development is to lay the foundations for investment and thus economic growth. Investment and growth are both hampered if market access continues to elude the African producers. Could NePAD also develop a capacity for lobbying, so that it could intercede with G21 on behalf of its members? Or is the loose AU/ACP/LDC grouping up to the task? It that one of the capacities which Western assistance could help improve?

8.2 p.m.

Lord Elton

My Lords, the noble Lord, Lord Dubs, has done a great service to the House and the community in demonstrating the acute injustice represented by the present imbalance of trade in the world. The noble Lord, Lord Judd, has made it clear that this is an acutely dangerous situation. I rise only to remind your Lordships and myself of the context in which this takes place. Since I was a child, the world has changed from a challenging globe, much of which had yet to be discovered, to a small fragment floating in space, the whole of which can be sent in the form of a photograph for us to look at in one glance.

We used to comprise a collection of different people—almost different species—but it is becoming clear that we are one people and one species. Yet we are divided by astonishing differences of wealth. As the noble Lord, Lord Dubs, pointed out, an American cow has more spent on it than an African citizen consumes in one year. That is not acceptable. It is spiritually repulsive. It is sinful, in the view of the Christian community.

Furthermore, it is dangerous. The scene was set, quite appropriately, by the demolition of the Twin Towers. The inequalities which exist are so self-evidently unjust that any revolutionary, let alone one inspired by religious dogma, can say that those who wallow in surplus wealth should be dispossessed for the benefit of those who have nothing. Indeed, if one removes oneself from the argument and forgets one's own comfy residence and cushioned bank account, one finds it most difficult to distance oneself from that argument.

The Government returned to office with a clear commitment to doing something about this. However, they had not appreciated the difficulty of doing something. That is not merely the difficulty of the processes of the WTO, which has been expertly revealed by the noble Lord, Lord Hannay, and others, it is the political difficulty at home. If we are going to do something about it, it is going to cost us. If it is going to be effective, it is going to cost us to a degree that we will notice. That will lose governments votes when they propose it. I am pleased to see the noble Baroness, Lady Whitaker, shaking her head and no doubt in a later debate she will give us the magic key which shows how we can do something for free. With only 30 seconds to go, I cannot give way.

I ask the Government to look for friends in this. I cannot speak for my party, but there are many within it who would support such an approach. They would be prepared to recognise that there must be some cross for this country to bear. Responsible people must find a political formula which enables them not to slang it out on the hustings, paring away what we would give to the poor in this world, in order to get one party or the other into power.

In this regard, we all have a moral duty to the human race and I look to the right reverend Prelate for a nod of approval. I am pleased to see a shadow of a nod. With that comfort, I shall sit down.

8.6 p.m.

Lord Brennan

My Lords, we, the rich, have preached the gospel of globalisation for years. But it is not a gospel the poor will accept unless it has a tenet in it that includes justice. If we, the rich, chose the WTO to be our vehicle for expanding world trade, we must make that vehicle have a just base. It does not have that now. It is failing.

Three decisions are needed—two present and one future. First, there must be an agreement now about agriculture. Subsidies in the rich countries for farm produce are grotesque. There is no moral basis for them. The example of what the United States has done with regard to cotton is such an obvious injustice as to make one deeply cynical about the entire process. That the subsidised farmers of a particular state are more important than 10 million people whose lives depend on this product is inexplicable. That agreement must come now.

Secondly, the developed world and we, the rich, must now accept that, whether it is the G22, the G90 or any other combination, the developing world has said, "We have had enough and, with our present unity and strength, we want change". Can we—the rich—justify dumping our excess produce world-wide without limit? Can we justify limiting access to our markets from the developing world? Can we really justify what is called "de-industrialising" the south, producing a type of economic serfdom? Clearly not. Therefore, the second decision is to accept the reality that the developing world will now seek to speak, at least morally, on equal terms.

The third decision is for the future. I do not accept that talk about reform of the WTO must wait. How can one expect the developing countries to come to terms now with there being no prospect of change in the WTO? It was Keynes who, in the Bretton Woods negotiations after the war, very perceptively anticipated that there might well be a need then, as there certainly is now, for a component to be designed in the world trade structure to protect and advance the interests of developing countries. There is no such structure now. There should be, and it should be offered for debate. It is an incentive for the developing world to come to terms with other matters.

In making those two present, and one future, decisions here in the rich West, I believe that the United Kingdom has a special role to play. The time has come to tell the United States, "You must change your attitude". First, this morning's article in the Guardian about the volte-face on supplying goods to South Africa for HIV/AIDS is unthinkable. Secondly, we must persuade the European Union to speak for its citizens, not for its Commission. That is a special task which I believe our Government can, and should, achieve if there is to be justice in world trade.

8.10 p.m.

Baroness Northover

My Lords, I, too, thank the noble Lord, Lord Dubs, for introducing this important debate. I congratulate the noble Baroness, Lady Amos, on her appointment as Leader in the Lords, even though the circumstances are so very sad. I am glad that she is keeping her active involvement in international development. I have just returned from a CPA visit to St Vincent and I can tell her that there, as elsewhere around the world, there is enormous admiration and respect for her. It is places like St Vincent that show the need for the WTO talks to succeed.

Trade protection from the EU for Caribbean banana producers, and, in due course, for sugar producers as well, has been removed as part of liberalising world trade. But that looks like hypocrisy when the EU itself is so reluctant to remove protection of its own agriculture. The danger is surely that if people are further impoverished the incentive to escape poverty through, in this case, dealing instead in drugs becomes far greater. Most, of course, do not even have that, albeit terrible, route to prosperity.

Cogent arguments are made that the developed countries' industries grew because they were protected and that the poorest countries must be able to protect their own industries or they will be unable to compete against countries such as China and India with their stronger infrastructure but low costs. Indeed, that must be looked at on an international level, and that is why the failure of the talks is so worrying. The real losers are the poorest countries. As we have heard, there is now a real danger of bilateral agreements, which are likely to benefit the stronger countries.

There was the encouraging emergence at Cancun of the new grouping of G21 or G22 developing countries, but it has been noted that that is as yet an untried grouping and that it did not contain the poorest countries.

As countries now seek to put the WTO talks back on track, can we expect further progress in the EU on farm subsidies? Why were the Singapore issues introduced, and is there any possibility that those might reappear on the agenda? Were the UK Government on the outside as the EU stance was prepared—perhaps because of other international issues? Is it likely that the US will co-operate in new talks or, as it has threatened, go it alone?

Both the US and the EU have made strong statements about the WTO's decision-making structure, indicating that the institution has become too unwieldy to deliver results. Will the US and the EU seek to change that structure and, if so, in what ways, or, instead, will they turn their attention increasingly to bilateral and regional efforts?

It has been said that the Mexican chairman pulled the plug on the talks and out went the bath water. We surely have to ensure that the baby does not go too. Whatever their flaws, it must be through international institutions, such as the WTO, that progress is made if weaker countries are not to lose out in trade to stronger ones. I look forward to hearing what progress the noble Baroness thinks can now be made.

8.14 p.m.

Baroness Rawlings

My Lords, first, I take the opportunity to add my congratulations to the noble Baroness, Lady Amos, on her appointment as Leader of the House, even as we have just heard, in such sad circumstances. I am pleased that she is still covering international development, which she does so well.

I, too, add my thanks to the noble Lord, Lord Dubs, for initiating this debate.

As we have heard from several speakers tonight, the main reasons for the failure at Cancun are complex and complicated. We welcome the comment in the Statement repeated to the House by the noble Baroness on 17th September that the breakdown of the talks was not the end of the Doha trade round but that, we were closer to agreement at the end of the Cancun conference than we were at the beginning".—[Official Report, 17/9/03; col. 939.] However, it left most developing countries concerned and frustrated. It is now 26 days down the road from that Statement and I feel that, although it is early days, the Unstarred Question of the noble Lord, Lord Dubs, is an important one to which the noble Baroness could give the House a more detailed reply. It is especially timely as the first negotiating meeting, a committee on agriculture, was meant to take place last week from 6th to 9th October. Can the noble Baroness confirm that the meeting took place and whether any of our officials attended, and comment on the discussion?

We last heard that Her Majesty's Government were in discussion on how best to take the process forward. Have they decided to support the IMF/World Bank initiative, which aims, among other things, to look at trade issues as part of a development programme, linking it to the priorities of developing countries? If so, can she explain what will be our "substantial input" into it as mentioned in the Statement? When is that initiative planned to start? Will it be before or after the General Council meeting in Geneva on 15th December?

The final ministerial statement from Cancun instructs all 148 members, all with a veto, to continue talks taking fully into account all the views expressed in the conference. There appears to be uncertainty, however, about what that means and about what texts would be acceptable to members. What discussions are planned to iron out that uncertainty, which could only further delay discussions? What conclusions has the noble Baroness, Lady Amos, drawn from the news that countries such as Costa Rica, Peru and Colombia have decided to leave the G21? What are the views of Her Majesty's Government on the US regarding their explicit announcement that they too will move forward bilaterally?

In the light of those disturbing plans and a prior statement by the African Union's Commissioner for Trade, Industry and Economic Affairs, Vijay Makhan, that African countries should consider quitting the WTO if it does not deliver, do Her Majesty's Government have any plans to discuss that with members of NePAD, as mentioned by the noble Baroness, Lady Whitaker? Perhaps the WTO structure, as mentioned by the noble Lord, Lord Brennan, needs to be revisited.

Finally, can the noble Baroness the Leader of the House keep noble Lords informed on a regular basis in the run up to the December meeting? There is no more time for rhetoric and missed opportunities, as my noble friend Lord Elton eloquently said. We on these Benches want to see bold changes and the restoration of impetus to help try to solve these critical issues concerning multilateral trade and the Singapore issues, all of which have such a significant impact on rural poverty.

8.18 p.m.

Baroness Amos

My Lords, I am grateful to my noble friend Lord Dubs for securing this debate on an issue of vital significance for developing countries. I agree with the noble Lord, Lord Elton, that the level of inequality in the world cannot persist indefinitely. Reform of the trade rules was a key element of delivering greater equality.

It is a bitter disappointment to the Government that the Cancun ministerial meeting failed to reach agreement. Fortunately, before Cancun there was a breakthrough with agreement on a solution to the longstanding difficulty of helping developing countries without pharmaceutical manufacturing capacity to access more affordable medicine. But at Cancun we failed to deliver outcomes on the Government's three priorities: agriculture, market access for non-agricultural goods, and special and differential treatment for developing countries. As a result, the current imbalances and inequalities within the multilateral trading system will persist to the disadvantage of the world's poor.

Although it is tempting to dwell on the result of Cancun, it is more important to focus on how we go forward. I agree with the noble Lord, Lord Hannay, who said that we should not play the blame game. I also agree with him that Cancun was a staging post. The January 2005 deadline for the conclusion of the Doha round of trade negotiations now seems unachievable, but we must still focus on working for progress.

The agreement reached in late August on Trade-Related Aspects of Intellectual Property Rights (TRIPS) and public health was a significant step forward. The agreement enables developing countries with no or insufficient domestic manufacturing capacity to import generic copies of patented drugs, thereby increasing opportunities to access medicines at a more affordable price. The deal has been welcomed by several developing and least developed countries and shows that the WTO can reach agreement on a difficult issue with their interests in mind.

The noble Baroness, Lady Rawlings, my noble friends Lord Brennan, Lord Dubs and Lord Desai, and the noble Lord, Lord Hannay, all mentioned the WTO's procedures. The failure at Cancun was caused by real differences in positions that were not effectively tackled by the WTO process in the time available. Although some of the WTO's processes need to be improved, I must tell noble Lords that when I was at Cancun talking to representatives of developing countries' Governments, they all welcomed the greater transparency that they saw at Cancun, although they were not sure that that would be reflected in the meeting's outcome. I agree with the noble Lord, Lord Hannay, that the developing countries were determined—although I do not think that they were not necessarily angry—at the meeting.

As my noble friend Lord Dubs pointed out, agriculture was at the forefront of the list of issues for developing countries. The current highly distorted system in which richer countries—here I include the more advanced developing countries—subsidise their producers and deny access to their markets through prohibitive import duties must be addressed. That disadvantages both developed country consumers and producers in developing countries.

However, the EU has made some progress on reducing trade-distorting domestic agricultural subsidies. The deal agreed by EU agriculture Ministers on 26th June this year marks an historic shift in the EU's agricultural policy. The decoupling of subsidies from production should connect European farmers much more closely to the market and have a real impact on reducing excessive production, which produces dumping and harms developing countries.

To the noble Baroness, Lady Northover, who mentioned sugar in particular and also discussed the banana regime, I say that that there are proposals for reform of other EU commodity regimes, including sugar and cotton. Those have been tabled since Cancun and discussions are about to begin. The noble Baroness may recall that the UK Government argued strongly for support for Caribbean banana producers. It is as a result of that that we achieved the phasing out over time of the special treatment for Caribbean bananas. We will work with the Commission and other member states to advance the agenda, especially on cotton and sugar, in the spirit of the Doha agenda.

The EU's June reforms were only ever going to address one element of the agriculture debate: trade-distorting domestic subsidies. The other two key aspects—market access and export subsidies—could and should have been addressed at Cancun. Regrettably, those discussions never really started and we must work to get back on track, as without all three, the real benefits to developing countries cannot be achieved.

Non-agricultural market access is also high on our agenda. Seventy per cent of world trade is in non-agricutural products, so there is the potential for big gains in liberalising there for the benefit of both developing and developed countries. Some progress was made in Cancun for industrial groups. We must continue to work with the Commission to look seriously at areas of particular concern, such as textiles and clothing.

In Cancun, and indeed before, Benin, Burkina Faso, Chad and Mali made a clear and powerful case in the WTO about the need to address the plight of the West African cotton farmers suffering as a result of the low world cotton prices. They argued for both the early removal of production and export subsidies on cotton, as well as compensation for all less developed countries until subsidies are phased out. Due to their efforts, their initiative gained considerable support at Cancun and will no doubt maintain its momentum over the coming months until the issue can be resolved in the ongoing negotiations. We welcome their efforts to use the WTO to meet their trade and development needs. We have provided 50,000 euros in technical assistance to help them to promote their case in the WTO.

My noble friend Lord Judd asked whose agenda it was at Cancun. My noble friend Lord Brennan said that we needed to accept the reality of developing countries speaking on equal terms. Cancun saw the emergence of strengthened developing country groupings, though their interests are far from identical, as my noble friend Lord Desai made clear. The G20, made up predominantly of South American and Asian countries—although, as my noble friend Lady Whitaker mentioned, it also includes South Africa—coalesced around the issue of agricultural liberalisation, and the alliance of the WTO's poorer members, the G90, displayed cohesiveness at the negotiating table. Many countries set aside the differences in their national positions for the sake of a stronger united voice. But if those alliances are to become credible negotiating partners, they and we must engage to explore where the negotiating flexibilities lie on both sides.

My noble friend Lord Judd and the noble Lord, Lord Hannay, asked about the resources available. Increasing the trade-related capacity of developing countries is a key area where we can add value. We have committed since 1998 over £160 million to trade-related capacity building. The money is designed to help developing countries, particularly in Africa, to develop their own trade policies, to participate properly in trade negotiations and then to capture the potential gains from trade.

As I was asked by the noble Baroness, Lady Rawlings, what happens next? The noble Baroness particularly asked about the World Bank and IMF initiative. A plan was announced by the World Bank and IMF to work more closely with the WTO, with a view to helping developing countries with adjustment problems if, for example, they have to lower their tariff barriers. We welcome that as a means to help the poorest countries implement, and benefit from, the commitments they make as the Doha agenda proceeds.

There has been much talk and speculation since Cancun about whether countries will retreat into bilateral deals and shy away from the multilateral system. My noble friends Lord Dubs and Lord Judd raised that issue. That would be a grave mistake. I agree with my noble friend Lord Desai that developing countries stand to get a better deal through multilateral negotiations in the WTO, where they make up two-thirds of the membership and can bargain on an equal basis. They cannot do that through a multitude of regional and bilateral agreements with bigger economic players. That approach also risks marginalising the poorest, excluding those countries, particularly the least developed, whose economy holds little interest for the big trading blocs. A strong, rules-based multilateral system is the best way of ensuring that the interests of the weakest economies are secured.

My noble friend Lord Dubs said that, developing countries were faced with being asked to make concessions on the Singapore issues with nothing being given in return". That was not the case. I cannot agree with my noble friend that the EU position led to a breakdown in the talks. The Singapore issues were not a priority for the Government. My right honourable friend Patricia Hewitt and I made that clear. However, the EU was given a negotiating mandate that included the Singapore issues and it agreed to drop two of those issues in the course of the negotiations. It is really important that we do not engage in a blame culture here.

As the final ministerial statement from Cancun urges, we must now build on those areas of movement made in Mexico. For the European Union, that means accepting that, despite our continuing commitment to encourage and facilitate direct investment in developing countries, WTO agreements on investment and competition are off the EU's agenda. We believe that negotiations on trade facilitation and transparency in government procurement have much to offer all WTO members and we will continue to urge other WTO members to agree to move to active negotiations on these.

The noble Baroness, Lady Rawlings, asked about the agriculture meeting. It did take place and we were present. My noble friend Lord Judd asked me about the development of policy in the UK. There is complete agreement across government departments on the priorities for Cancun. Indeed, the ministerial team and officials reflected that.

NePAD, which was raised by my noble friend Lady Whitaker and the noble Baroness, Lady Rawlings, is a mandated initiative of the African union. It is not a vehicle for lobbying on trade issues. However, we are already supporting existing groups that are best placed to provide a strong voice for Africa in lobbying on trade issues, especially the African group at the WTO.

I will write to those noble Lords if I have not been able to answer specific questions in the time available. In conclusion, all WTO members need to reflect on the lessons learnt at Cancun and commit to renewing political impetus to the round. Many noble Lords mentioned the importance of political will. Senior officials meeting in Geneva on 15th December must take action to move towards a successful and timely conclusion of the negotiations. All 148 WTO member governments have a responsibility to ensure that the officials are mandated to make the tough decisions to progress the range of issues that matter most to developing countries.