Parliamentary Briefing

19 May 2004

Address to the Trade Justice Movement

by Hilary Benn

Introduction

I'm glad to have this opportunity to talk about trade justice and I share your commitment to making the international trade system work for the world's poor. We all recognise that to have a significant impact on global poverty, we have to improve market access for developing countries and create fairer global trade rules.

I also welcome the opportunity for a constructive and frank exchange of views, which moves the debate forward. We need to recognise where we agree and can have more impact by exploring ways of working together. But it's important too to acknowledge where we may differ and how we manage these differences. I welcome the paper "The UK Government and the Trade Justice Movement - why free trade isn't fairer" the Trade Justice Movement produced last year that explores this. I would like to respond to it, not least to point out how things have moved on since then.

We need to deliver on Doha commitments to substantially improve market access; reduce and agree date for ending all forms of export subsidies; and substantially reduce trade-distorting domestic support. The Government will continue to be at the forefront of those pushing for further reform of the CAP. An example of successful Government- NGO cooperation is over the plight of cotton producers in West Africa. Together we have achieved real progress both in CAP reform and in the Doha round. Though of course, we would have liked to go further.

I welcome Pascal Lamy and Franz Fischler's recent letter, which sets out greater flexibility in the EU negotiating position. I am particularly pleased to see the EU offer to eliminate all export subsidies and that while the Commission would like negotiations on more than one Singapore Issue, the EU bottom line is trade facilitation only. Investment and competition, having come off the table at Cancun late in the day, are staying off the table. I welcome that and I congratulate the Trade Justice Movement on their effective campaigning on the Singapore Issues. This highlighted the concerns of developing countries that helped influence UK and EU positions.

We also need to make further progress on increasing access to medicines, in line with the Doha Declaration on TRIPS and Public Health and the recent 30th August WTO Council decision. In this respect we should welcome the recent announcement from the US on the procurement and use of fixed-dose combination drugs for HIV and AIDS. This should be helpful in the broader international effort to secure HIV treatment for 3 million people in the developing world by the end of next year.

The lessons of Asia Much of the debate about trade - and its benefits or costs- has hinged around our interpretation of what has happened to change the economic position of some countries. There is a lot to be learned from the large number of recent success stories in Asia - from Japan, through the first generation of 'Asian tigers' of South Korea and Taiwan, to the phenomenal growth and poverty reduction in China and India today. In my view, those lessons neither bear out the gung-ho free-marketeers, nor the 'trade is bad, protection good' school. What the Asian experience seems to show is that countries can harness trade to growth and poverty reduction with spectacular success, but only if they concentrate on building up local skills and technology. In the initial stages, this may require some form of protection which is why we place such strong emphasis on appropriate Special and Differential Treatment. However, unless protection is phased out, industries fail to innovate and lose competitiveness, as happened in Latin America in the 60s and 70s. This requires governments able to resist pressure from inefficient industries demanding permanent protection - governments can't always pick winners, but losers are brilliant at picking governments!

Above all, Asia's successful integration into the world economy happened because governments worked with the grain of its history, culture and institutions. That is why the Government is working to ensure that trade policy is derived from national poverty reduction strategies, drawn up with the full participation of local organisations and the private sector. Trade Liberalisation In the past you challenged advocates of unfettered liberalisation, citing the experience of recent success stories in Asia, and you were right. Experience has shown that if a country liberalizes without putting in place the right institutions, and ensuring that transport and marketing arrangements for small farmers are in place, the result can be a sudden surge of imports. This can wipe out small farmers, increasing poverty. That is why we have worked with NGOs and developing countries to amend WTO rules to allow extra protection to producers of staple foods and other crops that are produced by poor farmers.

The poorest countries need to be treated differently in the WTO and should not be expected to undergo the same degree of market opening as richer countries. I have said this since I first took on this job and I welcome the recognition by Pascal Lamy of the need for the Least Developed countries and "other weak or vulnerable developing countries" to be treated differently and asked to do less. Lamy's offer that these poorer developing country members should merely sign up to an agreement on trade facilitation and agree to "bind" more of their import tariffs is a step in the right direction.

Is the WTO part of the problem or part of the solution? Some believe the WTO is flawed by the 'great imbalances of power between countries'. My view, to misquote Winston Churchill on democracy, is that 'there is only one thing worse than the WTO, and that is all the alternatives'. In Cancun we saw just how much power the WTO gives to small poor countries that would normally be on the margins of global politics - they helped persuade the EU to drop investment and competition from the round; more importantly, they helped push the EU towards agreeing an end date to export subsidies - people have complained for years about dumping of EC surpluses via export subsidies, but now something is actually happening, thanks to the WTO. The recent ruling in favour of Brazil over US cotton subsidies again shows how the WTO can work for poorer countries. If we don't work to strengthen the international rules governing trade, we abandon weaker countries to the rule of the jungle.

Liberalisation needs to be complemented by fairer trade rules and other policies to help maximise economic opportunities for all and minimise short-term costs and their adverse effects on the poor. We recognise there will be winners and losers in the short & medium term. So we need to ensure that; - Trade liberalisation proceeds at a pace appropriate to countries at very different levels of development; - Governments retain the right to pace and sequence reforms in line with their development and poverty reduction strategies; - And potential losers receive timely transitional assistance.

This is why we are supporting: - Developing countries in integrating trade more firmly into their poverty reduction strategies; - Programmes to develop capacity of developing countries and poor producers to participate in national, regional and international markets; - Are researching how trade policies and agreements can most effectively combat poverty; influencing EU negotiating positions and assisting developing countries participate more effectively in trade negotiations; - Welcome announcement by the World Bank and IMF that they will work more closely with the WTO, to find ways of helping those developing countries likely to be most severely affected with transition to more open markets.

Once the right institutions and policies are in place, the Government believes that trade liberalisation works for the poor. Trade liberalisation reduces prices for poor consumers, helps farmers by lowering the costs of imported fertilisers and farm machinery, and generally helps developing countries concentrate their efforts on producing what they are good at.

One example of the benefits is South-south trade, that now accounts for more than one third of developing country exports- about $650 billion. The World Bank has suggested that looking at the last 15 years or so, developing countries' own liberalisation has been the primary channel through which trade reform has expanded developing countries' export growth.

For example the establishment of the East African Customs Union shows that countries in Africa are keen to reap the benefits of greater regional economic integration. The Protocol has created new opportunities for trade between Kenya, Tanzania and Uganda, and the great thing is that they didn't have to wait for the WTO to make it happen.

Where Next? Finally, We we will need to focus on trade and development during UK Presidencies of the EU and G8 in 2005 and work closely with Dutch and forthcoming Presidencies. The UK presidency of the G8 will provide us with an opportunity to make progress on a range of development issues with our G8 partners. There will also be the review of the Millennium Declaration to be discussed at the UN General Assembly in September 2005. This will be a major event for the international community, presenting an opportunity to review progress towards the targets agreed in 2000, and to discuss what to do to increase the currently disappointing rate of progress towards those targets. One of the UK's aims will be to see that the international community agree to make real change to the international trading system in order to give developing countries a better deal in the international trading system.

These give us real opportunity to achieve more open markets and fairer trade rules at a key time for moving WTO negotiations forward. I hope that we will be able to work with you during this period to keep the public focused on trade issues.

We are also working to ensure that the EU's Economic Partnership Agreements (EPAs) with the ACP are used as "instruments of development" as set out in the Commission's negotiating mandate and do not result in trade liberalisation at a pace that harms ACP countries.

We are entering a crucial few months for the round. Now a prospect that we could achieve what should have in Cancun in the brief window before the change of EU Commission and the US elections. Frameworks for Agriculture and Non-Agricultural Market Access (NAMA) need to be agreed by the end of the WTO General Council meeting in July. For this to happen we need real progress at this month's Geneva Meetings.

We will continue to work with the Commission and other Member States to move the negotiations forward and ensure developing country views are fully taken into consideration. We need to keep the pressure on the Commission and OECD members if we are to live up to the promises we made at Doha.

Above all, we need to Work Together There is more common ground between us than may meet the eye. I hope we can work more with you in the Trade Justice Movement - for example on shifting attitudes and policies in other EU & OECD member states in your case through effective NGO networks and in building evidence base for pro-poor trade policies.

There is much agreement on this subject in Parliament too. As Tony Baldry stressed in the House of Commons during the recent Opposition Debate on trade we need to engage with fellow parliamentarians in the EU and US to encourage debate on these issues.

But above all this must be a global debate. This is a big test for the world. Did we mean it? Yes. Can we do it? Yes. Will we do it? With your support, the answer will be yes as well. So lets get on and make this happen.

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