Jo Swinson

Westminster Hall Debate on Trade with Developing Countries

Jo Swinson (East Dunbartonshire) (LD): I am pleased to introduce the debate on this important topic. It is particularly timely, given the World Trade Organisation ministerial meeting scheduled for next month in Hong Kong.

I am sure hon. Members will agree that the international issues of poverty, aid, debt relief and trade justice captured the public's imagination in 2005. The high-profile Make Poverty History campaign has rightly been successful in catapulting the issues up the political agenda. In February, 22,000 people flocked to Trafalgar square to hear Nelson Mandela give an inspiring address, urging world leaders to use 2005 to make poverty history. The campaign focused on three objectives: more and better aid, debt relief and trade justice.

In July, I marched in Edinburgh with almost 250,000 people, including some hon. Members in the Chamber. Just days before, the G8 leaders met at Gleneagles. That summit brought positive news on the first two objectives. On debt relief, the deal agreed means that every year $1 billion will be saved by the 18 countries eligible for debt relief. Many non-governmental organisations and campaigners have complained that that does not go far enough, as it represents only 10 per cent. of the debt that needs to be cancelled. I agree with that, but it is a welcome start and should be applauded.

The additional $50 billion in aid a year is also a great achievement, and I am glad to hear the Prime Minister talk of moving towards spending 0.7 per cent. of gross national income on aid. The United Kingdom should be proud of leading the way among Organisation for Economic Co-operation and Development countries on the percentage of GNI that it spends on aid, but we must remember that the commitment is 35 years old. Call me impatient, but I think that that is too slow. I was interested to hear the Prime Minister, in his speech on Monday, pledge to treble aid for trade. I hope that the Minister will clarify the effect of that on the UK reaching the 0.7 per cent. target.

The third objective of the Make Poverty History campaign was trade justice. More than 250 Members of Parliament have signed up to early-day motion 679 on making poverty history through trade justice. More than 8,000 members of the public lobbied more than 300 MPs at the trade justice lobby on 2 November. I am sure that many hon. Members were lobbied by constituents. Two days ago, in his speech on global trade, the Prime Minister set out his support for cutting trade barriers while implementing measures to help developing countries benefit from trade at their own pace. It is clear that the subject is regarded as highly important.

It is also worth noting the particular interest of young people in these issues. Whether it was at the July march, the April vigils or the lobby a couple of weeks ago, one thing that struck me was the number of young faces in the crowd. That is just as well. One of my constituents, Sahir Hamid, was lucky enough to attend the World Youth Congress, which was held in Scotland in the summer. A statistic that came out of that is quite shocking. It emerged that 51 per cent. of the world's population is under 25. Given that statistic, it is just as well that young people are interested in the issues because we shall certainly not solve them without the active engagement of young people around the world.

I want to focus my comments and questions on the difficulties faced by developing countries with the current trade system, including trade barriers and the prospect of forced market liberalisation. I also want to highlight the problems with the trade-related aspects of intellectual property rights. I shall then turn to some possible solutions, with reference to steps at the local and global level, including the forthcoming WTO talks in Hong Kong and beyond.

On the problems with trade barriers, production support and export subsidies by the developed world can have a devastating effect on developing countries. This is particularly apparent in the agriculture industry. When EU production is subsidised and there are additional subsidies on exports, farmers in developing countries cannot compete. Rich countries spend $279 billion a year on farm support, which is three times more than they spend on aid. It is well acknowledged that a key sticking point, which makes it difficult to envisage a positive outcome to next month's WTO negotiations, is the EU's intransigence on protectionist agricultural policies. We know that France, in particular, is opposed to any concessions on that. What discussions have the Minister, the Prime Minister and others in government had with President Chirac on the reform of the common agricultural policy? What tangible outcomes came from the discussions?

It is not just about agriculture. Tariffs on other industries, such as textiles, also harm developing countries. For example, in 2001, Bangladesh's exports generated $331 million in tariff revenue for the US Treasury. In that year, the net US aid to Bangladesh was just $87 million. The EU spends €4 million each year subsidising milk powder to Jamaica. The impact of dumping our excess milk powder on Jamaica has been a sharp drop in Jamaican milk production of 35 per cent. in the past two years. That makes it difficult for countries to continue to run their own agriculture industries and to produce their own food, which would obviously be a more sustainable way forward.

In the EU, the average cow now receives $2.2 a day in support, which is more than the daily income of the half the world's population. It is absolutely crazy. The EU is exporting sugar and beef at respectively 44 and 47 per cent. of their internal cost of production. No wonder sugar producers and cattle farmers in developing countries are losing out.

Global trade has the potential to lift millions of people out of poverty, but liberalising markets too soon can stifle fledgling industries in developing countries. Christian Aid estimates that trade liberalisation has cost sub-Saharan Africa $272 billion over the past 20 years, which would be enough to pay off the region's debt and pay to vaccinate and educate every child in the region. Developing countries must be allowed the space to set their own timetable for liberalisation.

Let us consider the example of rice. In 1995, the International Monetary Fund forced the Haitian Government to cut their rice tariffs from 35 per cent. to 3 per cent. As a result, imports increased by 150 per cent. in nine years, and today three out of every four plates of rice in Haiti are produced in the US. The impact of that is that local farmers' livelihoods have been devastated and rice-growing areas now have the highest levels of malnutrition and poverty. At the same time, profits for Riceland Foods Inc. of Arkansas, the world's biggest rice mill, rose by $123 million from 2002 to 2003, thanks in large part to a 50 per cent. increase in its exports, many of them to Haiti. We can see the inequality of the system.

Annette Brooke (Mid-Dorset and North Poole) (LD): I congratulate my hon. Friend on securing the debate at such an appropriate time. That is important. She has made many valuable points, but will she comment on economic partnership agreements? Does she share my worry that in their current form they are causing a great deal of concern? Most people would like the UK Government to take strong action, using their presidency of the EU to encourage other member states to rethink their approach on those agreements.

Jo Swinson : I share many of my hon. Friend's concerns about the economic partnership agreements. Trade with developing countries is obviously not governed only by multilateral agreements. The free-trade deals that are negotiated between the EU and the African, Caribbean and Pacific countries often require countries to liberalise their markets substantially to benefit from trading with the EU. The Government recently said that they have supported the request by the ACP countries to have more time to proceed with liberalisation. However, I agree that the conditionality should be removed from the agreements. Developing countries should be free to choose if, and when, to liberalise. Will the Minister remark on that, in particular the UK's position on economic partnership agreements? Will he also supply a list of the active partnerships?

After the introduction of TRIPS in 1995, patent rights had to be guaranteed protection by WTO member countries. Many of those countries wanted to use the formulas from patented drugs to treat their citizens who were suffering from a variety of diseases, from HIV/AIDS to malaria and tuberculosis. However, many pharmaceutical companies were seen to be putting profits before people. The WTO, after much discussion, agreed that TRIPS "does not and should not prevent Members from taking measures to protect public health."

The reality is different, however, because the only way for many countries to get around TRIPS is to manufacture the drugs in their own country so that they can provide for their population. That does not always run smoothly and not all countries are able to do it. The pharmaceuticals do not always agree that generic drug producers are complying with TRIPS.

I am sure hon. Members remember that in 2001 39 major pharmaceutical companies tried to prosecute the South African Government for passing a law that allowed easy production and importation of generic drugs. There was immense pressure against that from the South African Government, the European Parliament and 300,000 people throughout the world from more than 130 countries who signed a petition. That public international pressure forced the pharmaceuticals to back down.

One company, GlaxoSmithKline, even granted a voluntary licence to a South African generics producer, allowing it to share the rights to GlaxoSmithKline's drugs, as long as 30 per cent. of the net sales went to an NGO fighting HIV and AIDS in South Africa. That continues to this day, and in many ways it was a positive result. However, let us remember that globally only 15 per cent. of the estimated 6.5 million people who need such treatment were receiving it this year.

Given the public health challenges facing many developing countries, from not just HIV and AIDS but malaria, TB, and-most likely at some point-a bird flu pandemic, it is clear that a review of TRIPS is urgently required. Protection must be in place to exempt things that have an impact on the millennium development goals and global disease control. The example of TRIPS demonstrates how the current provisions have proved inadequate.

Global issues require global solutions, but individuals can and do change their behaviour, doing their bit to make trade fairer with developing countries. The Fairtrade Foundation, in accrediting products that are fairly traded, has played a role in enabling consumers to make informed choices. The fact that sales of Fairtrade products have almost doubled during the past two years to more than £140 million shows the rising demand from consumers who take those issues into account when making their buying decisions.

In my constituency, many keen campaigners have got together to take action at a local level. Setting up a steering group, they are working with local businesses and employers to try to become to first fair trade zone in Scotland. I should be delighted if the Minister would agree to meet me and a group of my constituents who are working hard to promote fairer trade with developing countries, so that we can discuss those issues. Perhaps during his remarks he will say whether he is willing to do that.

I should like to share a story from my constituency which sums up many of the problems. There is a local gift and tea shop called the Coach House, which is run on a not-for-profit basis to fund charitable projects at home and abroad. Some 20 years ago, a lady called Angela Gomes came from Bangladesh to the Coach House. She represented 4,000 destitute women who made beautiful embroidery. When she was offered a grant for her organisation, she said, "I don't want handouts. I want you to sell our women's products. That's what gives them their dignity."

Angela Gomes was spot on. The women she represented did not have much and they were destitute, but by being able to ply their trade and have it sold abroad, it helped to lift them out of poverty and they had dignity. That is why, of the three aims of the Make Poverty History campaign, trade justice is the most important. Trade really can help to lift people out of poverty, and it presents a great opportunity for developing countries. However, the balance needs to be evened up between the rich and powerful developed world and the developing countries.

The talks next month in Hong Kong are vital, as are the discussions that follow in 2006 to secure the details for the Doha round in time to take advantage of the US fast-track agreement. We have all read reports of the recent difficulties with the pre-negotiations. Will the Minister say a little about the Government's view of the procedures of the WTO, its institutional set-up and how effective it is in producing outcomes from talks that favour poorer countries, given the experience of previous rounds in Cancun and Seattle?

In conclusion, the UK should be in a strong position to influence events with its presidency of the EU and when the Trade Commissioner is not only a UK nominee to the Commission but, as is well documented, a close personal friend of the Prime Minister. We should be able to use that influence to get a good outcome from Hong Kong. What discussions have the Minister, the Prime Minister and others in government had with Commissioner Mandelson regarding the Doha round in Hong Kong next month? How does he view the potential outcomes and what does he believe can realistically be achieved at those talks?

A fantastic opportunity to make progress on poverty and trade justice has been presented in 2005. I hope that it will not be remembered as a missed opportunity. This week the Prime Minister encouraged many with his comments on trade in developing countries. I hope that he, the Minister and all those involved in the WTO negotiations will remember the words of Nelson Mandela earlier this year when he called on world leaders to recognise that the world is hungry for action, not words.