JOINT COMMITTEE ON ENTERPRISE AND SMALL BUSINESS debate -
Wednesday, 11 Jun 2003

Vol. 1 No. 13

Word Trade Organisation Negotiations: Presentations.

Chairman

Today's presentations take place in the run-up to the World Trade Organisation negotiations in Cancun next September. I am pleased to welcome representatives of Trade Matters and officials from the Department of Enterprise, Trade and Employment who will make presentations on this very important issue. Trade Matters is an umbrella group encompassing a number of organisations such as Trócaire, Christian Aid and Oxfam, with which we are familiar, as well as others with which we may have had less contact. Copies of a very informative e-mail sent to the clerk to the committee last week have been circulated among members, with the agenda for this meeting. Trade Matters is a highly representative group and the committee is pleased that it showed the initiative to contact it last March, in good time to arrange this meeting, which takes place three months ahead of the Cancun Summit.

Before I ask the representatives of Trade Matters to make their presentation, after which I will invite officials from the Department to speak, I draw witnesses' attention to the fact that while members of the committee have absolute privilege, this privilege does not extend to witnesses appearing before it. While it is generally accepted that they have qualified privilege, the committee is not in a position to guarantee any level of privilege to witnesses appearing before it as they are not Members of the Oireachtas. I also draw the attention of members of the committee to the fact that, if appropriate, they should make declarations of interest, either now or at the start of their contributions. I call on Mr. Colin Roche to commence the delegation's presentation.

Mr. Colin Roche

I thank the Chairman for his introduction and the committee for allowing the delegation to attend this meeting. It is an important occasion because, as the Chairman said, the Cancun ministerial summit will take place in September. Ms Maeve Taylor and I will make a short presentation and we will then have a short discussion with the committee. I trust members have received a copy of the presentation, which is based on a common agenda produced by various organisations, including development NGOs and the Irish Congress of Trade Unions, which have come together under the rubric of Trade Matters and, latterly, the name of Trade Justice Ireland.

Trade Matters is trying to press a common agenda for trade justice. It is keen to encourage people, including those involved in the political system, to get involved in and become aware of the issues faced by developing countries in the area of trade. The importance of trade for development is demonstrated by the fact that trade is worth eight times more than aid flows for the 49 poorest countries in the world. We have had an impressive aid agenda in recent years, but the figures I have outlined indicate that we need to look at trade as a key to development for developing countries. Trade generates 50% of the GDP of developing countries, compared to an OECD average of 25%. This shows that trade is even more critical for developing countries than it is for countries in the north.

It is clear that trade rules matter. The World Trade Organisation promotes progressive trade liberalisation above all. Members of the committee are aware that the WTO is the organisation through which common and global trade rules are agreed. History shows that policy flexibility is the key to growth. International experience shows that promoting policy flexibility and the ability to use different policies and different combinations is important, rather than simply putting forward a menu of liberalisation. It has to be said Ireland has followed the latter approach.

The current rules are biased against developing countries. The 49 poorest countries are losing $600 million per year as a result of the Uruguay Round, the last round of negotiations before the current round, launched in Doha in 2001. Agricultural trade restrictions cost developing countries $100 billion each year. The rules of trade are massively biased against the interests of developing countries. Trade Matters would like to see developing countries develop through trade, as Ireland has.

New negotiations were launched in 2001 in Doha as a follow-up to the Uruguay Round. We have been told that the round being negotiated in Doha will be a development round, in which the needs of developing countries will be addressed and poorer countries given the chance to benefit from a multilateral trading system. The richer countries have resisted progress so far, however, for example in relation to access to medicines. A declaration was made in Doha to ensure developing countries would have access to medicines for the treatment of HIV-AIDS, for example. The deadline for a final agreement to follow up on the declaration was last December, but it has been missed. This is a huge and hot topic in Doha and was seen by developing countries as a crucial issue for their interests. We have not yet seen it resolved, however, particularly as a consequence of the policy of obstruction being pursued by the United States. The European Union has had quite a weak position in this regard in recent years.

Ireland negotiates through the European Union. The key EU collective decision-making body is known as the Article 133 committee. I am sure Mr. Tony Joyce of the Department of Enterprise, Trade and Employment can tell us more about that committee later, as I believe he sits on it. The European Union is dragging its feet on reform, particularly in agriculture and proposing new agreements in the area of investment. These issues are central to the interests of developing countries.

The next ministerial meeting, as part of the negotiation process and the so-called Doha development round, will take place in September in Mexico. The meeting will represent a huge opportunity for the European Union and other rich nations to ensure the interests of developing countries are heard and met. It is time to deliver a true development round, which is limited to issues that actively promote the development of developing countries and does not extend the agenda beyond issues which are of active interest to developing countries. The Cancun meeting is an opportunity to look at policy tools and market opportunities for developing countries.

Ireland's role is unclear. While there is a common EU position, Ireland's input into it is unclear to Trade Matters, which has had extensive engagement with the Department over many years and met many members of the committee as part of the trade lobby at Buswell's Hotel last month. The major problem faced by Trade Matters is to analyse the European position to determine Ireland's exact role in development. It could be the case that its role has been as progressive as its aid policy and that it has been pushing the development agenda. That may not be the case, on the other hand. It is important for democratic accountability to find out what the Irish Government is saying about its trade agenda on behalf of the people.

The central decision that will be made in Cancun is whether to start negotiations on new issues such as investment, competition, government, procurement and trade facilitation. These issues are known as the Singapore issues, about which Trade Matters wishes to make a number of points. We believe placing performance requirements on investors is a legitimate development tool for developing countries to use. We also believe, however, that an international investment agreement would work to prevent developing countries from using crucial tools to their advantage. Government procurement can aid the development of developing countries. It allows them to spend their national budgets in a way that aids their national development. A multilateral agreement focused on sanctions will act against the interests of developing countries and their ability to develop themselves. Some limits on competition can result in an effective development policy. The joint agenda document that has been circulated to members contains more information on this matter.

I will now discuss the issue of trade facilitation. The WTO's sanction system is not the best way to encourage poorer countries to engage in this expensive task, which may also drain skilled public workers from education and other development areas. A multilateral system, whereby developing countries could be subject to sanctions through the WTO's international dispute settlement mechanism, may force developing countries to spend their money in a place which is not the best place to do so in terms of development. They may be forced to spend it on building up customs facilities, for example, rather than on vital development matters such as health and education. Above all, capacity limitations on developing countries mean they cannot gain from negotiations. We have already seen how developing countries lost out as a result of the Uruguay Round. Many such countries do not have representation in Geneva, which is where the negotiations take place. Thousands of meetings take place every year across various sectors, which developing countries cannot attend. Nor can they keep track of the agenda. They are, therefore, unable to meet their development needs through the Geneva negotiations. This makes it impossible for developing countries to make sure their needs are met in the so-called new development round.

To recap, the World Trade Organisation, with its sanction system and so forth, is not the right forum for these kinds of negotiations and should only negotiate in areas in which all its members can meaningfully participate. These topics should balance the rights and responsibilities of all parties. For example, an international agreement on investment, as proposed through the World Trade Organisation, would only impose responsibilities on host nations. We already see the problems associated with international investment in the south, for example, in labour and gender standards. We need to go beyond this and consider vesting companies and agents. As well as being unsuitable for such negotiations, the World Trade Organisation does not have the wherewithal to achieve a balance of rights and responsibilities.

Ms Maeve Taylor

I will take up some of Mr. Roche's points and, in particular, examine the agriculture sector which displays some of the specific vulnerabilities of developing countries compared to rich countries. I will also consider some of the overarching international frameworks in terms of labour standards and human rights mechanisms. I will then make some proposals on what we envisage the committee should pursue in terms of seeking a trade agenda which would be positive on the needs of developing countries.

With 73% of the workforce in least developed countries employed in agriculture, dependence on the sector is widespread. Women are central to farming subsistence and food production in the countries of the south. Agriculture is one area in which developing countries could have a strong comparative advantage because they have considerable expertise in the sector, a large work force and lower costs. It should be an area in which developing countries could expand. In fact, it is perhaps the area in which the double standards and injustices of trade policy are most visible.

Although the policies of trade liberalisation demand free trade and the removal of barriers to trade, the richest countries spend seven times as much annually on agricultural subsidies as on aid. Rather than subsidies acting to benefit the weaker and poorer countries, they operate to create more barriers to them engaging in international trade. In addition, producers in developing countries are faced with millions of livelihoods being destroyed by export dumping. In other words, due to heavily subsidised agriculture in the richest countries, producers in developing countries are faced with competition from low priced goods produced in stronger countries. The price of these heavily subsidised goods does not reflect the true price of production. Developing countries are caught in a double bind in agriculture in that they cannot export competitively because of subsidies in the richer countries, nor can they produce for the local market because these are increasingly dominated by cheaper imports.

Agriculture is a sensitive area for Ireland and obviously policymakers here want to protect our agriculture sector. It must be possible to introduce mechanisms to ensure protection for the Irish rural and agriculture sector that do not cost the livelihoods and well-being of people in developing countries, which should not bear the costs of such protection. One mechanism, suggested by President Jacques Chirac, would be to apply a moratorium on export subsidies for the duration of trade negotiations. This is a positive proposal which should be promoted.

Trade agreements impose a particular economic model on developing countries, namely, the opening up and liberalisation of markets. The argument of neo-liberal economists that this is the only way to eradicate poverty is not borne out by economic evidence. As Mr. Roche pointed out, none of the powerful trading countries or blocs has operated a free trade and pure trade liberalisation model in its development. All the wealthier countries have operated subsidies and other protections in order to nurture their own production while it was expanding.

The United Nations has estimated that during the current era of rapid trade liberalisation sub-Saharan Africa is losing some €400 million per year due to the free trade measures introduced in the 1995 Uruguay Round. Hunger in Africa has increased despite more liberalisation. Countries such as Haiti, Mali, Zambia and Peru have had a negative experience of rapid liberalisation. One example of this has been rice growing in Haiti, which has been an exporter of high quality rice. The rice growing sector on the island has gone out of business because of cheaper imports of subsidised rice from the United States. Countries such as China, Indonesia and Vietnam have fared better by liberalising more gradually and selectively. Unbridled trade liberalisation does not bring about economic growth and development.

It is also important to note that trade policy is part of an intermeshing system of international standards. The same countries which are members of the World Trade Organisation are also members of the International Labour Organisation and the United Nations and have signed up to international agreements respecting human rights, gender equality, labour and environmental standards. We have seen in recent years that unbridled free trade has exacerbated inequalities between and within countries and has failed to take social and environmental considerations into account.

The World Bank, the European Union, through its development policy, and other international institutions are all in agreement that respect for core labour standards and positive measures towards gender equality are prerequisites for poverty eradication and development, yet measures which reflect those policies are often regarded as barriers to trade under strict WTO rules and strict trade liberalisation. An example of this was a case in Guatemala a couple of years ago when a highly successful Government publicity campaign advocating breast feeding over the use of powdered milk formula had to be ended because it was regarded under WTO rules as discrimination against Gerber, a producer of powdered formula milk. Measures which promote the development agendas of the European Union and countries such as Ireland can, therefore, be treated as barriers to trade.

Respect for core labour standards is crucial to achieving sustainable, equitable and democratic economic development. Although jobs and employment may result from trade, the current model has led to an undermining of workers' rights by removing all obstacles to companies shifting production to countries or sectors where workers' rights are weakest. This operates in two ways in that it puts pressure on countries with strong labour legislation to weaken it to attract investment, while also putting pressure on developing countries not to develop standards and regulations which respect workers' rights in order to attract investment. Workers are losing out in the fight for competitiveness. This is exemplified in countries such as Mexico where the free trade zones consist of factories in which workers' rights are routinely abused.

I turn now to our view of the potential role of the committee. As Mr. Roche pointed out, it is difficult to find out what Ireland's position is on trade negotiations. We advocate that the committee engages in parliamentary monitoring of our position in the current trade talks and requests the Government to hold a follow-up Dáil debate after the Cancun ministerial meeting to allow the issues to be discussed afterwards. We ask the committee to take a lead on proposing a multilateral binding code of conduct for all World Trade Organisation members, aimed at ensuring the ongoing World Trade Organisation negotiations, the preparatory process and the ministerial conference in Cancun are pursued in a democratic, transparent and participative model. The EU Trade Commissioner, Pascal Lamy, has indicated that he will support such a multilateral code.

We also recommend that the Minister of State, Deputy Michael Ahern, who has responsibility for Ireland's participation in the World Trade Organisation, push for the Government to publish an annual report on the position it has taken at international level, specifically addressing how it matches our development commitments and undertakings under international human rights agreements.

We request written reports from the Dáil on the activities, policy positions and decisions of our representatives at the Article 133 Committee and Government positions at Council of Ministers meetings. We hope it will be possible to have a further meeting with this committee after the Cancun ministerial meeting in order to reiterate our points and evaluate the success of that meeting.

Chairman

I thank Ms Taylor for her presentation. Mr. Tony Joyce and Ms Gráinne O'Carroll are officials of the Department of Enterprise, Trade and Employment.

Mr. Tony Joyce

We have submitted a document to the committee which gives a relatively brief picture of the state of play regarding the negotiations and places some emphasis on the development aspects of the negotiations, given the type of discussion and presentation we are giving this morning.

The committee will be aware that there is a much wider perspective on these negotiations, the primary purpose of which is to negotiate and put in place new multilateral trade routes. Ireland's interest in the negotiations is to ensure we continue to have a multilateral trading framework which is fairly strong. We have a strong and certain World Trade Organisation. We participate in these negotiations as part of the European Union delegation. We are required to co-ordinate our position with the other soon to be 24 member states of the European Union. There is obviously a wide range of interests involved which must be taken into account in deciding on the approach we adopt in the negotiations. These include business and development interests and interests from all sides of the economic sectors. In deciding on the approach taken by the Government, it is necessary to consult very widely with all the interests involved and arrive at a balanced approach to the various issues under negotiation.

The meeting in Cancun in September is a regular WTO ministerial meeting and intended to review the state of play in the negotiation process and try to give some political impetus to the negotiations which are not progressing very well. It is also tasked with the job of taking a decision on whether to begin negotiations on a number of other issues which have already been referred to and which are called the Singapore issues. The meeting in Cancun will take a decision on whether to launch negotiations on these four topics.

The meeting in Cancun is a step in the process and will be a way of seeing how to move the negotiations along, to clear log jams and to start making progress. The Irish delegation will be led by the Minister of State, Deputy Michael Ahern. We expect the Minister for Agriculture and Food and the Minister of State with responsibility for development will also participate, supported by officials from those three Departments. We will also be accompanied by representatives of the Trade Matters group who also participated in previous WTO ministerial meetings.

Our document describes in brief the state of play across the range of negotiations. There are still some very serious issues which need to be tackled. Agriculture, in particular, is proving to be a difficult issue on which to deliver on the sort of commitments we made in the Doha Declaration. The discussions are ongoing. The European Union has made several submissions to the WTO and is engaged in discussions on review and reform of the Common Agricultural Policy which will have an impact in terms of the type of approach the European Union will adopt in the WTO negotiations.

There are other issues mentioned in the document such as non-agricultural market access, in other words, tariff reductions, which from our point of view, is one of the most important issues being discussed. We anticipate that we will make very good progress on the reduction and elimination of non-tariff barriers and improvements in the tariff levels and in trade facilitation. We are particularly interested in seeing those negotiations proceed.

We attach great importance to the area of services. We wish to see continued liberalisation and access to markets in terms of providing development opportunities for our service industries. Those are the three primary topics occupying the attention of the negotiators. We regard the commitment to respond properly to the concerns of the developing countries as central to our approach and that of the European Union. Those concerns were seen as an essential part of the Doha agreement. Good progress has been made in developing the necessary rules and aspects of current rules and putting new rules in place to take account of the need for developing countries to be treated in a special and differentiated manner within the WTO. This is an area to which we pay particular attention, not only in devising the rules but also in proposing and supporting efforts to provide financial assistance and trade-related technical assistance for developing countries in order that they can participate strongly in the operations of the WTO.

The issues that have been mentioned in the submission from the Trade Matters group include reference to the Singapore issues which come up for consideration in Cancun. We support the European Union position on these issues which are investment, trade facilitation, competition and Government procurement. We agree with the European Union that these issues are very important in the context of how one regulates international trade and in the context of the multilateral trade framework. During those negotiations we have insisted that the way in which the European Union tries to include these topics is not in such a way as to place undue burdens upon the delegations from developing countries, nor to place developing countries in a situation where they are obliged to take on new commitments which would hamper their development.

The purpose of the European Union in trying to begin negotiations on the issue of investment is towards recognising that investment, in particular foreign direct investment, in the economies of developing countries is very important for their development and any efforts on a multilateral level which would assist developing countries in attracting investment should be strongly supported as being of assistance to their development. Similarly, in relation to trade facilitation, we are not looking to see developing countries take on obligations which would hamper their own operation but rather put in place multilateral rules which will assist developing countries in involving themselves in world trade and playing a particular role in the development of the multilateral trade framework.

The issue of access to medicines was mentioned. This is an area in which we have played a very strong role within the European Union in seeking to amend the TRIPs agreement and enable developing countries to have access to medicines more cheaply than heretofore. The European Union has made a number of submissions in this area. Over recent weeks it has put in place a new regulation which intends to assist in the delivery of medicines to developing countries by ensuring a proper system of control, one of the issues with which the pharmaceutical companies had difficulties. This has now been put in place by the European Union and will assist in facilitating agreement on the question of access to medicines.

As I said, we try to engage in the widest possible consultation. Given the wide range of issues involved, a mighty amount of consultation is necessary. We have met the Trade Matters group on numerous occasions, most recently in April, when the Minister of State, Deputy Michael Ahern, met representatives to the discuss the group's position paper. We have also responded positively to its request that the Article 133 Committee's agenda during our Presidency be published and available to the Trade Matters group for any observations it wishes to make. I understand there will also be a discussion of this matter in the Dáil on 27 June. We are considering in a positive way some other proposals such as an annual report and the wish of the Trade Matters group for written reports to the Dáil.

Chairman

I thank Mr. Joyce for his presentation. He has certainly gone to the heart of the issues about which we are concerned. While the European Union has been consistently attacked for subsidising its agriculture sector to the detriment of the Third World, is it not the case that the United States has been given and continues to give a much greater element of subsidy to its agricultural community? Should the emphasis not, therefore, be on persuading the USA to level the playing field?

Mr. Roche

What we see from our partners and people on the ground is livelihoods being destroyed. It is in our interests, whether this is caused by cheap imports coming into a developing country or whether it is in west or southern Africa, that it is tackled. Looking across the multilateral system of agricultural exports and subsidies one can see that EU producers receive huge subsidies - we spend €40 billion per annum on the CAP - but also that there is extensive use of subsidies in the USA, for example, in the cotton sector. In a recent report on the impact that cotton subsidies have on west Africa it was estimated that a number of west African countries had lost €361 million in revenue as a result of subsidised cotton exports from the USA.

The recommendations under the heading of agriculture in our joint report are that we should consider the various systems of support and the ways in which rich countries end up exporting and dumping products on southern countries. For example, the USA has a system of export credits. We feel very strongly that these credits should not be used to dump produce on the south. We need a balanced approach and will be very persistent in seeking this right across the developing world. Systems of support resulting in the export of goods to the south must be tackled. This is obviously a sensitive issue for Ireland. We are aware of the negotiations going on in Europe involving the Minister for Agriculture and Food, Deputy Walsh. However, when we on the ground see livelihoods being destroyed as a result of dumped exports, we know the problem needs to be tackled, whether it arises from the European Union, the USA or Canada.

Chairman

I have just returned from a trade mission to South Africa with the Minister of State at the Department of Enterprise, Trade and Employment, Deputy Michael Ahern. Appreciation of what the Irish religious are doing in the Third World is lacking in Ireland. I do not think anybody really understands what goes on. An unbelievable contribution is made by these Irish people who are assisting in places such as Soweto. It was an eye-opener for me. I have read about it many times but unless one actually sees what is going on, one cannot appreciate the wonderful work being done in the most underprivileged, deprived part of the world. I have read many articles which were not in support of the religious, but our missionaries are working above and beyond the call of duty. I acknowledge this as the Chairman of this committee in starting off a new Dáil term.

Deputy Hogan

I am happy to see the representatives of the various organisations under the umbrella of the Trade Matters group here today. Quite a professional approach has been adopted and it is helpful to all of us that the organisations in question have come together. Over the years various Members of Parliament have been quite confused from time to time about the difference in emphasis among them. The fact that they have co-ordinated their positions is very helpful and likely to yield some results.

I never cease to be amazed, in the context of world trade talks, that there can be food surpluses in one part of the world and food deficits in another. I understand there are vested interests and barriers to liberalisation to the extent that the starving people of Africa and other parts of the world are still very much an issue to anyone who has any Christian understanding. The European Union is trying to come to some conclusions on agriculture. There has been some movement in recent times to resolve the issue of surpluses and deficits and bring them more into balance. Are there any issues arising from the enlargement of the European Union in this respect?

Mr. Joyce mentioned that there had been some progress in the area of access to food and medicine. Could we have some more details? What are the problem issues identified and how could these be resolved? As the Chairman has said, we only see some aspects of this from time to time; we do not see the reality. Ms Taylor mentioned that 73% of all the people were engaged in agriculture in developing countries. That is a huge number involved in one sector. I had not realised it was so large. This makes it even more important that the negotiations on agriculture are concluded satisfactorily in order that progress may be made.

Mr. Roche

The enlargement of the European Union will not have a huge impact on the WTO. We have not considered this very closely, but the accession countries will take on the Community acquis and become part of the joint negotiation process in the Community. There is one domestic issue, which is being dealt with in Europe: the effect of enlargement on the Common Agricultural Policy. Beyond this I do not see major issues. We hope as the Community enlarges the applicant states will take on the development outlook of the European Union in terms of spending a proportion of their national budgets on development aid, and that they will take development into account as they look at their international trading relationships. I do not have much to say on enlargement; perhaps someone else on the panel is an expert in this field.

As for access to medicines, this is a key issue and test for the WTO. Following the TRIPs agreement, launched with the WTO in 1995, it became gradually clear that patenting medicines in the developing world would restrict access and that the price of patented medicines would be too high for developing countries' health budgets to meet. At the same time countries such as India which have domestic production capacities produced generic versions of these medicines. However, it looked as if the TRIPs agreement would restrict these, and their ability to manufacture and export generic medicines, for example, treatments for HIV-AIDS to southern Africa. This became a major issue leading up to the Doha talks where the WTO made a declaration on access to medicines and set a deadline of September to resolve these issues, particularly that of generic medicines being exported from manufacturing countries to developing countries without manufacturing bases. We have missed the deadline.

The European Union rejected an agreed compromise text drawn up in December. We have many problems with the text in that it restricts access to the treatment for a number of diseases and does not tackle the problem of other diseases which will also require treatment. We are in limbo and the European Union has not pushed a strong version of this text to the maximum in negotiations. We are waiting for the United States to come on board with the agreed text. We will urge the European Union to push it forward and make sure this is resolved and that the United States does not use it as another bargaining chip in Cancun to achieve more concessions from developing countries. It is important now to ensure a solution is found and we urge the Government to act through the European Union to make sure that this happens.

Mr. T. Joyce

On the two points that Deputy Hogan raised on enlargement, obviously the addition of ten new member states makes much more difficult the process of coming to a common position on this wide range of issues. It does not necessarily bring in too many changes of view on multilateral trade but creates new elements on agriculture and non-agricultural market access. While the acceding member states have not formally become members, they are operating according to acquis communitaire, and in committees, as if they were full members which is working satisfactorily.

Regarding access to medicines, the point I made was that the European Union had recently agreed a directive on tiered pricing which would allow controls to be put in place and facilitate the delivery of cheaper medicines to developing countries. It will address a problem that the pharmaceutical companies raised about these medicines finding their way back onto the markets of the developed world. On the wider issue of amendment of the TRIPs agreement, and dealing with the question of the availability of generic medicines to the developing world, discussion and negotiation are continuing between the United States and the European Union in order to arrive at an agreed view. I am fairly optimistic that the discussions will be successful.

Mr. Oisín Ó Coghlan

The net political point is that in Doha the rich countries admitted that the TRIPs agreement had not balanced humanitarian and development concerns with the needs of enterprise for patent protection, and that there needed to be rebalancing. The promise was to do this before we got entangled in negotiations on services, and on the TRIPs agreement more generally in this new round, and on the likelihood of new issues being added to the agenda, yet even now in the run-up to the meeting in Cancun that has not happened. The rich countries have not kept their promise. That is the reason we, as a development community, and southern countries, are sceptical of the European Union pressing for new issues to be added to the agenda when the problems caused by agreements in the past have not yet been cleared up.

Deputy T. Dempsey

It is intolerable to have surpluses in one place and starvation in another place. It surely cannot be beyond the political imagination of world leaders to sort this out. Today's discussion is about exports because of world trade but I have yet to hear organisations such as Trócaire which are doing wonderful work talking about developing home markets as the "Buy Irish" campaign did a few years ago. Perhaps this does happen. While I am new to politics, I have never heard it mentioned at this committee.

The other thing that amazes me is that there is about €20 billion of European funds available to the developing world which does not seem to be able to develop alone the proper criteria or strategy to avail of them. Is it possible that Trócaire, for example, could develop a strategy to enable the developing countries concerned to fulfil the criteria that would release this mountain of money?

Mr. Michael O’Brien

Trócaire's mandate is as the Irish Catholic organisation for overseas development. There are many other sister national Catholic agencies which specifically address issues of social justice as they relate to Ireland. It is not in our mandate strictly to speak about the domestic market conditions.

Deputy T. Dempsey

Can this be changed? Surely we should do what is good for the developing countries rather than fulfilling our local strategies?

Mr. O’Brien

Trócaire's approach to the WTO and the upcoming ministerial meetings is to articulate an agenda for trade justice. We endorse what Mr. Joyce said in support of a strong multilateral trading framework. The problem is that the multilateral trading framework in place is not fair to the needs of developing countries. As my colleague, Oisín Ó Coghlan from Christian Aid has indicated, the development agenda which was supposedly unfolding at Doha, has not been honoured. The development promises and the very specific commitment made around the TRIPs agreement on access to medicines have not been met. We are concerned that if the ongoing trade negotiations fail to recognise the very real and pertinent needs of developing countries, the system of multilateral trade rules will be undermined. It is in the interests of the multilateral trading system, Ireland and developing countries that we have such a strong system but we can have it only if the promises which have been made and not been met are honoured. Developing countries cannot expect to engage in any new issues unless previous commitments are met. That is the Trócaire position.

Mr. T. Joyce

We are pursuing the objective of having a substantial development package in this round which comes up in four areas: special differential treatment for developing countries - decisions within the WTO applicable only to developing countries which means giving them special status in how they operate the rules; market access, which is extremely important; commitments in sectors of interest to developing countries within the European Union and the WTO; and strong WTO rules that are pro-development and financial and trade related technical aid to developing countries to provide them with the means to help them trade and integrate within the multilateral framework, and trade among themselves - an important aspect of the trading framework.

Deputy Howlin

I welcome the delegations. The meeting is a useful interaction. I am delighted also that we have representatives of the Department of Enterprise, Trade and Employment as well as those campaigning very effectively to advance the issue of fair trade. We have received a great deal of documentation and presentations. Therefore, there are several issues I would like to address.

The first matter I will address is the presentation from the fair trade group. One of the issues argues against the expansion of the talks in Cancun into what are called the Singapore issues on the basis of lack of capacity. As one who has been interested in development issues for a long time and worked in Africa on a number of projects, I note a First World arrogance about the notion that somehow developing countries do not have the capacity to participate in a structured way. That is not my experience. When I was Minister for the Environment, I worked with all that flowed from the Rio process and the G77 group. I co-chaired the preparatory conference for the Kyoto Protocol with the then Zimbabwe an Environment Minister. At the time there was no lack of capacity in the G77's ability to argue its case and persuade.

This was put in the most recent parliamentary questions to the Minister for Enterprise, Trade and Employment, Deputy Harney, and she responded that Ireland was among the first countries to put in place resources to provide developing countries with technical expertise to participate effectively in the negotiations. Should we not take this approach rather than exclude them? If we see that there is a system for establishing fairer trade systems, should we not consider giving the capacity to all to participate on an equal basis rather than saying the people concerned are not capable of involving themselves and, therefore, we should exclude them? It is possible from a moral perspective that through trade negotiations we can improve matters rather than restrict the agenda items in this way. By and large, the European Union has a good track record. I would be interested in the delegation's response to this point.

Everyone refers to the agricultural issue, a major one for Ireland, as if what is happening in Brussels this week is not of fundamental importance, rather like Members in the Dáil referring to discussions "in another House". The Minister for Agriculture and Food, Deputy Walsh, has said this is perhaps the most important week for Irish agriculture ever which may be overstating the position. At stake is a fundamental shift in EU supports away from product to income supports. It is a significant shift. Commissioner Fischler is driving an agenda that should be recognised. It is not as if these shifts are not happening in parallel to the trade negotiations.

I am concerned that the perspective of the trade groups sees trade issues as almost a sectoral way of tackling inequality in the developing world to the exclusion of all others. Surely, in order that the liberalisation of trade is not a negative, there must be integration as long as the commitments made at other fora such as resource and technology transfers, affordable medicines and technologies are kept. At the Rio summit firm commitments were made to developing countries that access to First World technology would be provided at affordable rates and development aid support increased.

The third element which we recognise increasingly is the requirement to establish democratic processes in developing countries. We should not be shy about this because a great deal of good work is undone when democracy is overturned. We should be critical when good democracies like that in Zimbabwe are overturned by a megalomaniac. All the investment and infrastructure and trade agreements in the world cannot overcome bad governance. We need to factor this into the debate. The objectives set cannot be achieved by trade reforms alone.

There is much that I would like to say but labour standards are extremely important, a point for Mr. Joyce. If we are to liberalise trade, we have to have a parallel monitoring of standards of production and conditions of employment in developing countries in order that it is not a purely exploitative arrangement. What are the inputs of Mr. Joyce's Department into this, for example, in the relationship between the WTO and ILO? What are the inputs in terms of ensuring, on a monitored level, that where trade is liberalised and products are manufactured, standards and human rights, child labour and all the issues of abuse are dealt with?

My final comment to Mr. Joyce concerns the document which I read and for which I thank him. It is a difficult one to understand. For example, the section on agriculture does not clarify Ireland's position. It is extraordinarily well crafted without giving much information. That is a personal observation. I note that it is produced by the market access unit of the Department of Enterprise, Trade and Employment. It is interesting that the documentation for this debate and the supports to our ministerial team were provided by this unit, not the fair trade unit. I am not suggesting that we need to have this but there should be——

Chairman

Perhaps this is a new unit since the Deputy was in the Department.

Deputy Howlin

I was never in that Department. I am sure it has always existed but it is a sign of Ireland's perspective, that is, to have access to markets, as opposed to reforming world trade in a fair and objective manner. Perhaps that is unfair, but I make the point nonetheless.

Ehe final point I wish to make is about the issue of access, for example, to affordable drugs. There are tiered issues to which Mr. Joyce has referred. Major research in financial terms is involved in producing a new drug. As such there has to be a system to allow those who will perform that research to get their money back. How do we do this and yet have affordable access for countries that need it without ensuring a black market is not created to filter products back into the First World?

On a related issue——

Chairman

I thought that was the final point.

Deputy Howlin

It is the same issue. Everyone is talking about this matter in connection with treatments for HIV-AIDS. I am involved in a programme in sub-Saharan Africa. The research and products available for treatment are not particularly suitable to Africa where there is a huge problem. It is not simply a matter of making a First World product available at generic prices, it is about ensuring there is research, which is extremely costly, into a product that has unique application in a developed context. That is true, for example, of anti-malaria drugs. We still do not have vaccines against malaria which is a huge killer in sub-Saharan Africa. I venture to suggest that if it was a killer in the First World, we would have vaccines by now.

Mr. Conall Ó Caoimh

In regard to not adding new issues to the WTO's agenda, one of the reasons we put forward, among others, was lack of capacity. With regard to the arrogance to which Deputy Howlin refers, we plead not guilty, given that it is a significant number of developing countries' governments which have made these arguments. We have heard it from them and our partners in civil society groups in the south. One example is that at Doha where the European Union had 500 delegates present there were five from Sri Lanka which has a complex set of interests, at least as complex as Ireland's interests in the trade area. Many countries had just two delegates and a few had none. In the GATT negotiations currently under way there was a deadline in March. We found that, while Europe sought liberalisation in the services area from 109 members, only 25 had made requests of the European Union, only two of which were from sub-Saharan Africa which comprises more than 30 countries. Just two had the capacity to identify interests, articulate and submit them to the WTO.

When a government dedicates existing capacity to these issues, it neglects a whole set of others. Technical assistance in valuable and essential. However, realistically, one is probably talking about a 15 year timescale before such assistance can have any impact upon the outcomes of negotiations.

The other reason new issues would not be suggested is that while some of them might make good sense, locating them within the WTO, with its dispute settlement mechanism, would mean that if a developing country found itself unable to renew its customs procedures because it had to attend to other matters, it would face the possibility of sanctions on its products as part of dispute settlement disciplines.

In regard to agriculture, developing country producers cannot find a market for many of their products because they are being undermined by agricultural subsidies and the dumping of products. Agriculture has long been recognised as the generator of developing counties. Therefore, the agriculture sector should be the one to develop. However, a farmer in Namibia, for example, has no economic rationale to invest in his farm and increase his output without the possibility of access to markets. Europe needs to stop interference in local markets and increase their access to European markets in order that such farmers have good economic rationale to invest and develop.

Mr. T. Joyce

In regard to the Singapore issues, as I said, the way in which the European Union has proposed them for negotiation is strictly on the basis that the issues involved are fundamental to the way in which multilateral trade operates. They also have within them the capacity to deliver some great benefits to the developing world in terms of attracting investment and trade facilitation. The way in which we are proposing they be tackled is not to place additional burdens on developing countries but to pay particular attention within the negotiations to be certain we are not overburdening the capacity of developing countries to deal with them. The reason for raising them at the WTO is that it is one of the most meaningful organisations in terms of applying and implementing rules in regard to the areas it covers.

Deputy Howlin mentioned labour standards. Since the WTO ministerial meeting in Seattle, we have consistently pushed the issue within the European Union and proposed that all of the elements which the Deputy mentioned be taken into account in the development of multilateral trade rules. Unfortunately, we have not been able to have this position taken on board as an EU approach because of the attitude of certain other members states. In addition, it has proved almost impossible to have the issue of labour standards taken on board as a real negotiating topic within the round we now have under negotiation. We continue to approach it from the point of view of trying to develop the relationship between the ILO and the WTO. We have proposed and it has been agreed that there be fairly regular meetings between the secretariats of both organisations and that the ILO should continue to participate as an observer in WTO discussions. However, we are disappointed with the progress made in the area.

I am sorry the section on agriculture proved difficult to penetrate. However, it reflects the current situation in so far as the EU submissions to the WTO are concerned.

Chairman

Perhaps Mr. Joyce could resubmit the section in a more explanatory format.

Mr. T. Joyce

Subsequent to the current discussions in Luxembourg, perhaps we will have other elements to include. It reflects exactly what the European Union has proposed to the WTO.

Deputy Howlin

Mr. Joyce has already said:

Ireland fully supports the current modalities which have been approved by the EU and its member states. These are currently the subject of detailed consideration and discussion alongside those submitted by other WTO members, the relevant WTO fora. It has not yet been possible for the chairperson of the WTO agriculture committee to finalise modalities in order to commence the next stage of WTO negotiations.

Mr. T. Joyce

That fully covers the situation.

Deputy Callanan

I welcome the Trade Matters group and compliment Mr. Joyce on the great work he has been doing in Third World countries.

I come from an agricultural background - I am a farmer in the west. Someone said getting the balance right was the key issue. I agree. If we do not get it right, we could find ourselves as the poor country, particularly in the west. We have come a long way since we joined the EEC. We were producing cheap food——

Chairman

The Order of Business is due to commence at 11.30 a.m. and there is a vote in the Seanad. I do not wish to interrupt the Deputy but we must conclude by 11.30 a.m. It is now11.19 a.m. Therefore, I would appreciate if the Deputy would ask a question, appreciating his background in agriculture. I should have mentioned the time constraint before I called him.

Deputy Callanan

I will be brief as I always am.

As Deputy Howlin said, there is a huge change and, as the Minister for Agriculture and Food, Deputy Walsh, said, this is one of the biggest changes that will ever take place in agriculture. From a trade point of view, is Mr. Joyce in favour of the Fischler proposals and the idea of giving subsidies to the person or paying them by acre? Some of the delegates said that by our production of beef or other produce, we are distorting competition in Third World countries. I thought that by producing food I was helping people to stay alive. I cannot understand that type of response. I cannot understand that one part of the world is starving and another is producing food. It does not seem to be able to be distributed correctly. I understand there are domestic problems in many of the countries in question, some of which may have oil supplies and be rich in one corner and very poor in another. Will the delegates elaborate and tell me straight out the reason, if I produce goods, I am distorting the market and I am not helping to keep people alive?

Deputy C. Lenihan

Deputy Howlin asked some of the questions I wished to ask. Therefore, I will be brief.

The push towards world prices in agriculture is a positive one which the European Union supports. In regard to the comments made about the Department and Ireland's position, I take it that it is implied criticism of the Department or the Government that Deputy Howlin is saying he cannot determine the Irish position as it inputs into the EU process. It is a problem in other areas too while negotiations are ongoing, how to determine the national position as opposed to the EU position as they mend and blend. Perhaps Mr. Joyce could respond to this because I cannot imagine it is that unclear. Some of the memos reflect bureaucratic and administrative thinking, but I cannot imagine the position is as unclear as Deputy Howlin makes out. It may be just a political point.

I am puzzled and anxious to learn more from Mr. Roche on the reason he would regard Third World countries as benefiting from not opening up government procurement, an area where there has been a notorious record of pilfering, fraud and corruption in regard to the award of contracts for hydro-electric dams or fighter jets. I argue that this area should be opened up to defined rules of competition, as has happened to Ireland in the European context where for contracts over a certain value, there is a greater level of transparency which results in a lower price for the citizens to pay for these infrastructural projects. I am puzzled as to the reason the Singapore issues should be excluded and how that would benefit the countries in question.

Equally, I am as puzzled as Deputy Howlin in regard to the investment issue. I would have thought - again using an Irish paradigm - that the encouragement of investment was the most important thing that could happen in the context of development. If investment is clear and transparent and there are clear rules governing how investment flows should move from the First World to the Third World, that will encourage employment and growth in the countries in question such as we have experienced. I do not agree we were ever a Third World country, even at the time of the Famine. We have benefited directly from investment over hundreds of years and our own economy has built up accordingly.

Mr. David Joyce

I was going to come back to Deputy Howlin in regard to the labour standards question because it was an important one to raise. Confidence in the multilateral trading system will continue to be eroded if the jobs supplied as a result of trade liberalisation - an idea which started in Shannon Airport - such as the millions of jobs in export processing zones, have serious consequences in terms of the conditions which workers experience in those export zones.

The social dimensions of globalisation are the subject of a world commission, housed at the ILO, in which, unfortunately, as Mr. Tony Joyce has indicated, the WTO felt unable to participate. However, the results of the commission will be published before the end of the year and, although we do not yet know the content of the report, we hope it will prove a spur to seriously address the issue of labour standards since the political deadlock is not helping anyone.

Mr. T. Joyce

In regard to the statement of general Government policy towards negotiations, we have this covered in the document in regard to the general position we adopt towards concluding a successful round, towards strengthening the WTO and the development aspect of the negotiations. These elements are the principles by which our policy is followed. On the specific issues, as the negotiations proceed, we have different points of view and must amend our views as the proposals are being made. As I indicated, we have met the Trade Matters group on any occasion it has wished - at official and ministerial level and will continue to do so.

Mr. Ó Caoimh

A farmer producing food is not causing anyone to starve. What causes problems is that the motivation for African farmers to produce their food has been taken away through the provision of subsidies. It is not as simple as the farmers on one side of the world producing food and people on the other starving. The Minister for Agriculture and Food said this morning on "Morning Ireland" that every country had a right to have a strong and sustainable agriculture sector and that includes the African countries. They are being prohibited from having a strong and vibrant agriculture sector because of the export regime we have in place. An Irish farmer producing meat is not causing anyone to starve but the sending of those products with subsidies - when the Governments get involved with it and send the meat with taxpayer's money - causes the damage.

In our initial welcoming of the Fischler proposals we drew attention to the good aspect of an upper limit of €200,000 being put on the maximum any one farmer could receive but that has been taken out. The Fischler proposals are being watered down. We have said it is important that Europe continues to support the rural sector and that the real services which the agriculture sector is providing in the areas of environmental care and tourism and social infrastructure are ones which should be paid for with taxpayer's money. If decoupling enables some of this, we will welcome it. The Fischler proposals go some way to addressing the issue.

On the question of government procurement and corruption, we welcome the increase in transparency which will reduce corruption. However, among the rules is that other countries will have to bid for contracts. It is possible to imagine that a Navan furniture factory would bid to provide the furniture for a school in Tanzania, but it is almost impossible to imagine that a Tanzanian producer would supply computers to Irish schools or build Irish roads. That is our concern.

Deputy Howlin

One would never know.

Chairman

Former Ministers must also take responsibility.

Deputy C. Lenihan

The same argument was made in an EU context about Ireland's inability to trade with Germany, but that has been disproved in a short time. People in Navan are now trading with Germany.

Mr. Ó Caoimh

There is a range of areas such as language, proximity to market, level of education, and other infrastructure which puts Ireland in a completely different set of circumstances. As Deputy Lenihan said, we were not a Third World country. Therefore, the comparability does not apply. If the investment rules were to include responsibilities for investors, one might find us embracing them. However, as proposed through the WTO, if one wants to look at investors' roles, we are happy to discuss the matter but the United Nations is the place to do it, rather than the WTO. At the United Nations there is a balance of rights and responsibilities whereas the WTO comes from the mandate of progressive liberalisation, as Mr. Roche pointed out. It does not say anything about the protection of rights.

Chairman

Let me update members on what Enterprise Ireland is doing in the trade mission which I was on - we are very keen on and interested in partnerships. It will not be long before we have partnerships in places like South Africa which has the same time zone and language, where there are thousands of graduates and labour costs are at a level where we can have valuable partnerships to continue our markets in the United States and other areas.

I thank the delegation from coming and the officials from the Department. It has been a most informative and useful meeting. This is the start of what we hope will be a four year term for this committee. I look forward to meeting the delegation again. I thank members for their contributions.

The joint committee adjourned at 11 a.m. until 11 a.m. on Wednesday, 18 June 2003.