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EU Trade Policy: EUC Report

The Lisbon treaty entered into force this morning. Previous speakers have made that point in tones of great gravity, but I think a little levity is in order; even a touch of enthusiasm might be allowed to creep in. I propose three cheers. Cheer one, and here I join the noble Lord, Lord Roper, is for the noble Baroness, Lady Ashton of Upholland, who guided our exhausting and exhaustive scrutiny of the ratification Bill on the treaty with such skill. Today she starts making history as the first double-hatted vice-president of the Commission who is also president of the Council of Ministers, meeting as the Foreign Affairs Council, and high representative for common foreign and security policy. That is a very big portfolio. She carries, I am sure, the good wishes of the whole House. Secondly, I cheer the Opposition because they decided after all that it would after all be best to "let the matter rest". It was a wise decision. To campaign against a treaty already in force would be a little quixotic. But I am not sure whether it is wise, or good politics, to signal to potential European Council partners that one intends a five-year campaign to reopen matters settled in three previous treaties—the Amsterdam treaty, the Maastricht treaty and the Single European Act. It is an odd way to win friends and influence policy. Still, I have no doubt that there will be active discussion on that with the party’s new friends in the European Parliament; unfortunately, none of them is in the European Council. The third cheer is for the press, for the wonderful skill with which they changed gear. Having spent six years denouncing the proposal for a full-time fixed-term president of the European Council—a new Napoleon, a Charlemagne, a Colossus who would dominate Europe and destroy our island liberties—within 24 hours they were denouncing the modest, consensual, collegiate prime minister given the job as quite unsuited to the tasks in hand, as if the tasks in hand were indeed the tasks of a Charlemagne rather than those described in the treaty. The switch was done with skill, and one has to applaud the effrontery. Our task today is more mundane. We are considering the excellent report produced by the committee chaired by the noble Baroness, Lady Cohen, and completed exactly one year ago, on the Doha round and other trade matters. Alas, it is out of date in no respects. The Doha round remains virtually exactly where it was when the EU Select Committee stopped looking at it, and I do not think it is even on the agenda of the trade ministers’ meeting in Geneva today. So multilateral trade liberalisation has not moved forward, though one should applaud the efforts that Commissioners Mandelson and Ashton have made; I think Commissioner Mandelson did all that he possibly could have done but was defeated by events. One should also note that there have been advances bilaterally. If the EU-Korea free trade area negotiation is successfully completed, a lot of congratulation is owed to Commissioner Mandelson and Commissioner Ashton. The noble Baroness, Lady Cohen, conducted the inquiry with great skill. One of her greatest skills was in controlling the recalcitrant members of the committee. We disagreed on almost everything en route. In that spirit, I would like to disagree with what the noble Lord, Lord Trimble, said today about adding financial stability to the remit of the WTO. One of the reasons why WTO negotiation has become progressively less successful is that too many issues not directly related to trade are thrown into the pot. Although I believe in development, it was not a good idea to make it a "development round". Free trade is a better generator of economic development than aid, and to throw in an aid dossier was not a good idea. Some would now throw in an environment dossier, but the argument that those who emit a lot of carbon should pay a trade price for it, such as a tariff or tax on their imports into other countries, is extraordinarily self-defeating. Some say that labour standards should he thrown into the WTO. I do not agree: that is for the ILO. It is often a disguised form of protectionism to demand a trade price if you consider somebody else's labour standards inadequate. I would try to keep things simple if possible. If we are ever to see this round completed, that will happen because extraneous issues are pushed to one side. I have three questions for the Minister. First, as has been mentioned, it is exactly a year since the heads of Government of the G20 promised to, ""refrain from raising new barriers to investment or to trade in goods and services, imposing new import restrictions, or implementing WTO inconsistent measures to stimulate exports"." That is a key pledge, because it was not the Wall Street crash that caused the great depression but the Smoot-Hawley tariffs subsequently introduced by the Americans, and the round of trade restrictions that they touched off. Cynics last autumn pointed out that within 36 hours the Russians broke the pledge with tariffs on imports of motor cars. But I do not feel cynical about it. I cannot sense a protectionist spiral yet, either in the world trading system as a whole, or in the EU’s internal market where the Commission seems to be enforcing competition policy with sensitivity and skill, as a more recent example also involving cars, with which the Minister will be very familiar, perhaps shows. We have a rather liberal single market. Think of the contrast with the United States. How would the American Congress have reacted had an American car manufacturer been told that it could not close a Mexican or Canadian factory and subsidise a US plant unless the US plant was the more efficient one? There would have been uproar in Congress. We have to hang on to that liberal core of the single market. In a recession it is under pressure, but I think we are doing so. Therefore, my question to the Minister is how are we doing? How is the G20 performing against its pledge; and am I right in thinking that the European Union's record has so far been pretty good? Secondly, despite all that the Minister did from Brussels and all that Pascal Lamy did in Geneva, the round is stuck. The Select Committee’s call for further work on how best to breathe life into the process is getting more and more pertinent. As the noble Baroness, Lady Cohen, reminded us, the committee said that 10 countries represent 80 per cent of world trade, and 50 countries represent in excess of 90 per cent of world trade, which raises the question of why the other 100 WTO members have a veto, jointly or severally. The committee said: ""The consensual approach to agreement should remain a fundamental tenet of the WTO, but it is no longer appropriate however that the Organisation should move at the speed of the slowest … We therefore support an extension of the plurilateral approach to negotiations. If groups of WTO members wish to negotiate agreements on particular subjects, within the consensual approach and on terms which they then make open to all WTO members, they should be allowed to do so"." The Government’s reaction to this recommendation has so far been slightly "Sir Humphrey" in character. They responded: ""The Government would also support consideration of increased use of plurilateral negotiations in the WTO, to allow groups of members who wish to negotiate agreements on particular subjects … on terms which they then make open to all WTO members. However, it is important to give further consideration to how this would work in practice and how to mitigate potential risks, including the capacity of the WTO to negotiate plurilateral agreements"." I would like to know from the Minister how that consideration is getting on. I would also like to know whether he thinks, as I do, that the emergence of the trade G7—the new group made up of Australia, Brazil, China, India, Japan, the EU and the US—is a positive development, and one which might provide the key to unlock the round. Finally, and much more speculatively, has the Minister been struck, as I have, by some of the new thinking coming from the new Government in Japan on the issues that we are talking about, particularly on how best Japan should handle its trade and economic relations with China? Mr Hatoyama has issued a number of calls for regional, rules-based economic co-operation. He has talked about the possibility of establishing in the longer term a common east Asian currency, and has pointed out more than once that, ""the experience of the European Union shows us how regional integration can defuse territorial disputes"." Does the Minister share my view that such thinking makes a refreshing contrast to the more negative views of China that one hears in the United States and parts of the European Union; and that the right response to the recession, as Mr Hatoyama seems to be saying, is more, not less economic, interdependence and more, not less, trade?