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World Trade (Doha Development Agenda)

I fully accept the hon. Gentleman’s argument. However, the west will lose a major political battle in these talks, not an economic one, because if we do not hold to the virtue of multilateral talks, we set an unwelcome precedent in terms of the entire politics of global security as well as global economy. As I said, the fact that we failed to emphasise the win-win situation entrenched the lack of political momentum. As my right hon. Friend the Member for Leeds, West (John Battle) mentioned, we might be talking only about 3 per cent. of our economy being adversely affected by these talks. If we are simply to be seen as losers and not necessarily net gainers, where is the apparent incentive for politicians to trudge through long years of hard negotiation to come out with not very much to produce to their citizens and electorate? We must reassess on which basis we look forward to these talks in the future. There needs to be much more talk about creating more jobs in the global economy as a whole, rather than trying to rectify a trade imbalance between north and south, if we are to give that incentive. The hon. Gentleman appropriately discussed the moral argument, and I agree that a strong moral imperative exists, but the realpolitik is that we have to produce the incentive to encourage members of the international community to reassess their positions at these talks. In the past 30 years, there has been a growing disconnect between employment rates on the one hand, and economic growth on the other. That inevitably leads to a rise in protectionist sentiments if unemployment levels remain high or the perception is that further liberalisation may increase unemployment. The rise of the Chinese economy in particular has helped to increase those fears. We must give a much higher priority to policy coherence between trade and labour sectors of government, so that more aid for trade is directed at labour market preparedness and providing greater social protection for emerging economies. If people are being asked to take the risk of moving from one sector of employment, such as subsistence agriculture, to industrial production of agriculture or to industry, for example, we are asking them to take a great risk in their own lives and those of their families. If there is no form of social protection at a basic level, the political reality is that people will be strongly opposed to taking that risk in the first place because they know the consequences of something going wrong. There is growing evidence that the use of cash transfers as a part of a comprehensive social protection system can play a key role in reducing absolute poverty and the vulnerability and risk element in rapidly changing economies. Yesterday, the hon. Member for Boston and Skegness (Mark Simmonds) attended a meeting of the all-party group on debt, aid and trade, which I chaired. We took part in a briefing arranged by Oxfam on the next round of the European Union economic partnership agreements. We cannot see them in isolation from what is going on in the World Trade Organisation negotiations. I want to summarise the interesting remarks made by the Rwandan ambassador, who said that what they need to develop their economies is investment in infrastructure—transport, energy supplies, water, research and so on, but under poverty reduction strategy paper rules they are severely limited in taking on additional borrowing. He said:"““We can’t get grants, and aid money””" from western donors"““is focused on hospitals and schools. If we don’t have the infrastructure, we can’t compete against richer nations or cope with further liberalisation.””" The Committee has just produced its own report on private sector development. It has become increasingly important that the sequencing of any trade liberalisation for the least developed countries must be accompanied by the opportunities for genuine improvement in economic infrastructure. We also need to focus on creating viable alternative streams of Government income to replace that lost by reductions in tariffs. I know that the Department for International Development is already carrying out work in the countries in which it operates and is helping in terms of customs and revenue reforms, but this needs to be done at a much greater level by all the international donors. The international community must take a robust approach both nationally and at an international level on issues that severely restrict fair trading at a global level, and, as a result, employment creation, be they capital flight, tax avoidance or, in particular, the widespread and pernicious mispricing of exports and imports to shift profits out of a country. It is estimated that the aid flow of $25 billion, mostly to sub-Saharan Africa, is dwarfed by the $50 billion that the region loses in capital flight. We need to reassess where the money is going and where it is escaping from if we are to give the LDCs the chance to trade on fair terms. It is understandable that many of those countries are cautious given their past experiences of forced liberalisation and the one-size-fits-all policies imposed by the World Bank and International Monetary Fund in the mid-1980s and 1990s. As recommended in the report, the Government need to press for the WTO to promote a system of independent, impartial and publicly available economic analysis of the effect of different proposals on different countries and groups, so that decisions can be made on the basis of the fullest information being available to all parties at the negotiations, regardless of their wealth or size. The reluctance of western nations, including the EU and the USA, to reduce substantially their trade barriers remains the biggest negotiating hurdle. Those protectionist sentiments run deep; we need only witness debates in the US Congress and Senate to see that such sentiments are increasing, rather than decreasing as the years go by. That promotes the pessimism about any hope of a realistic settlement in the next few months. We should not speak about having an ambitious development-oriented agenda while offering only a small fraction of our own markets. We need to be much bolder and braver if we are to create a fairer global economic market and one in which we can all form a part. The WTO has a lot of faults, some of which we mentioned in our report and in our comments today, but it is a unique international structure because it is based on one member, one vote. It is quite different from the World Bank, the IMF and the permanent United Nations Security Council. The growing shift in power to the new and emerging world economies as the talks have progressed has changed the nature of the negotiations as they have gone along. The G20, consisting of India, China, Brazil and some of the middle-income developing nations—if I can put it that way—has emerged. I remember that at Cancun everyone thought it was a temporary phenomenon that would last only for a few months and that it was simply a case of nations getting together on a very informal basis, but it has formed a resilient trade negotiating bloc within the WTO. It represents the shift in economic power from the north to the south, and that is inescapable; it will happen. It is about time that western nations faced up to that fact economically and came to terms with it. It has been mentioned that the G20’s priority might be different from that of the G90, although it must be remembered that there are more people in absolute poverty in India than in the whole of Africa. So the G20 has considerable problems with which to deal, but a new political economic order is developing in the world. We must be able to reach out and accommodate and to work with such countries to achieve fairer trade for all. In the short term, it would be helpful if larger member states could avoid sniping at each other. If they could concentrate on getting at least some of the agreed negotiations on giving better access to LDCs—the aid-for-trade package has been mentioned—that would at least keep the multilateral concept on the road. That is important politically, if not economically in the short term, if we are to reach a better agreement that more fully represents the needs of developing nations, although that might be two to three years down the line.