I hope members noticed that fair trade coffee and tea were served during the break. Fair trade coffee and tea are also served in our Parliament in Leinster House, should members have occasion to go there. The coffee is quite enjoyable.
Chairing this session will be my colleague, Senator Micheál Kitt, who is Chairman of our Sub-committee on Development Co-operation.
I join the Chairm an in welcoming members to St. Patrick's Hall in Dublin Castle. During this session we will be discussing aid, trade and debt post Cancún. It is important that we consider these issues. Our first speaker will be the Minister of State with special responsibility for trade and commerce, Deputy Michael Ahern. After the failure of Cancún it is essential that the Doha talks are relaunched, with a commitment that on this occasion the concerns of the developing world will be addressed. It is widely accepted that the effect of other policies such as those relating to agriculture and trade may be of greater importance to developing countries than the assistance they receive in the form of official development aid.
The Minister of State has been involved in politics since 1982 and is an accountant by profession. He comes from County Cork in the south of Ireland. He has been a good colleague and friend of mine for over 20 years. As already stated, he has responsibility for trade and commerce and he attended last year's World Trade Organisation talks in Cancún. He will represent Ireland and the Presidency of the EU at the United Nations Conference on Trade and Development which takes place in Brazil next month. I have great pleasure in introducing the Minister of State, Deputy Michael Ahern.
I welcome members from abroad to Ireland and I hope they enjoy their stay here.
Policies pursued in the context of overseas development aid, trade and debt constitute an important set of cross-cutting measures which underpin economic and social policy objectives. Policies in these core areas are aimed at assisting developing countries, particularly the poorest and most vulnerable, to meet their development goals. My address today will focus on these aspects and, in particular, on recent multilateral trade policy initiatives by the EU in the context of the Doha development agenda and on recent developments in respect of ODA and debt.
Trade and investment commitments offer great opportunities for fostering economic growth, which can be to the benefit of developing countries. The World Bank estimates that the gains from a successful conclusion of the Doha development round of trade negotiations, involving freer access to developed country markets and the removal of price depressing subsidies on developed country products, would be in the order of an additional €350 billion per annum in income for developing countries by 2015. This is equivalent to approximately seven times the current level of total aid flows.
The realisation of these benefits for developing countries is by no means a foregone conclusion. The world's poorest countries have not always been able to benefit fully from the trade opportunities offered by the multilateral trading system. This depends on the way trade liberalisation is undertaken internationally and within developing economies. The focus of the work done by the European Union since the launch of the Doha development agenda has been to ensure that the new round fully supports development objectives.
It is fair to say that developing countries — the G90 in particular — have so far been sceptical of the benefits the DDA can bring to them, notably in terms of market access opening in sectors like agriculture. There has been concern over the impact of further multilateral trade opening on the preferential market access that some developing countries enjoy in a number of developed "northern" markets. Some developing countries have also expressed reservations about engaging in further liberalisation or of adopting stronger multilateral rules. It is against this background that the EU member states have sought to identify clearly what type of outcome will genuinely promote development. This has been determined following a period of internal reflection conducted by the EU member states and the European Parliament, Council and Commission following the failure in Cancún.
It is useful to recap here on the key elements of the conclusions drawn by the EU and the way forward as the EU sees it. These are cited in the basic principles which underpin the EU trade policy approach. First, the WTO must remain the principal forum for trade opening and the strengthening of trade rules and the multilateral approach to co-operation on trade matters remains the most effective and legitimate means to manage globalisation and trade relations between countries.
The first key conclusion was that a more serious focus should be placed on finding solutions to the problems experienced by the most vulnerable members of the WTO, the least developed countries, small economies, landlocked developing countries and any others particularly vulnerable to economic shocks or with particularly weak economies or infrastructure, or who remain highly dependent on preferential access and revenues from tariffs. These members are in the greatest need of flexibility in the application of WTO rules, development aid to remedy supply side weaknesses and of measures to improve their access to markets. Work here should be guided by the principle embodied in the WTO rules, that as members develop they move into a position to assume greater commitments and make a greater contribution to the multilateral system.
These commitments should not be seen merely in terms of mercantilistic exchange with developed countries. There is no reason, for example, that at least the more robust developing economies should not extend to other developing countries tariff preferences, or extend to least developed countries duty and quota free treatment. Thus, the G20 group of countries could be invited to consider what preferences they are ready to extend to the G90 countries. Such improved access, together with support for supply side reforms, will mitigate the impact, if any, of reductions in margins of preference brought about by further multilateral trade liberalisation.
Given that 70% of the trade of developing countries is in industrial products and that they raise the highest barriers between themselves, important trade and development benefits will only be found if there is serious market opening within the developing world, particularly on the part of the more advanced developing economies, who are perfectly able to make a meaningful contribution. The concern of several weaker developing countries about the impact of preference erosion can to a considerable extent be mitigated through the creation of new markets for their goods in the south.
Second, as regards the negotiation of greater flexibility for developing countries in the application of WTO rules, which is the core of the SDT work programme, the EU should only support the principle of permanent waivers or exemptions from basic WTO provisions in exceptional cases, limited to the LDCs and other similarly weak members of the organisation, and where this helps rather than hampers development. It is not enough that the EU and member states re-affirm their strong commitment, political and financial, to trade-related assistance and capacity building in the WTO and elsewhere. This is an obviously necessary condition, but far from a sufficient one. The WTO technical assistance programme has suffered a number of teething problems, from a mismatch between the financial resources committed by WTO members and the organisational and human resources capacity of the WTO itself to implement it, as well as from insufficiently clear political guidance from WTO members as to the strategic direction of the programme.
These are the guiding principles the EU has set itself in the conduct of its DDA negotiations under the current trade round and this is the context for the recent substantial initiative by the EU with the issue on 9 May of a joint letter from Commissioners Lamy and Fischler aimed at the re-launch of the DDA negotiations. In it, the Union sets out what it sees as the key areas where movement is needed in order for the EU, under the stated circumstances, to agree on framework modalities to help re-launch the DDA negotiations. This very important initiative concentrates on a small number of core areas — agriculture, non-agriculture market access, Singapore issues and development.
This initiative underpins the reality that the EU is committed to work hard to secure genuinely pro-development outcomes in all areas of the Doha work programme. In terms of a focus on development, the EU proposes that on the basis of an overall balance within and between the three main pillars in agriculture, the EU is ready to move on the elimination of the most trade-distorting supports with its proposal to eliminate exports supports in respect of all agricultural products. In addition, the least developed countries and other weak or vulnerable developing countries in a similar situation should not have to open their markets beyond their existing commitments and should be able to benefit from increased market access offered by both developed and advanced developing countries. This cannot be regarded as a unilateral and free gesture on the part of the EU. As already stated by Commissioners Lamy and Fischler, movement on the EU's part must be accompanied by strong reciprocal action by other WTO partners if we are to maintain the positive momentum now in place and to build to a successful conclusion of the DDA negotiations.
This initiative shows the flexibility inherent in the EU approach, which aims to kick-start the DDA negotiations while at the same time protecting the interests of developing countries, particularly the poorest and least developed. The EU is working hard to secure genuinely pro-development outcomes in all areas of the Doha work programme in line with the stress placed on this aspect in recent Council of Ministers conclusions.
However, we must be clear that the EU must ensure that the concept of less than full reciprocity does not equate to non-participation of developing country members in the liberalisation process but reflects the genuine capacity of members at different levels of development to contribute. While there is no easy solution to the question of erosion of preferences, developed WTO members should at the very least pursue some of the EU examples, such as duty and quota-free access for least developed countries' exports or at least minimum overall access for developing countries' exports.
I acknowledge the positive impact of the highly indebted poor countries initiative in reducing the debt burden of some of the poorest countries. The EU has been a strong supporter of this initiative through the full participation of the Commission and member states in funding HIPC multilateral debt relief and in providing bilateral debt relief within the terms of the initiative. Many member states have also provided additional support by cancelling 100% of their bilateral debt to countries involved in the HIPC initiative.
It is clear now, however, that the HIPC initiative will not provide the sustainable exit from debt overhang that was its objective. A number of countries that have completed the HIPC process and obtained the prescribed levels of relief are still encountering problems of rapid growth in debt, both external and internal. Many countries still in the initiative are facing similar problems. Ireland believes that the HIPC process is inadequate and that its definition of debt sustainability should be reviewed.
We have also supported the objective of total debt cancellation for HIPC initiative countries committed to good governance and sound economic management. We have, however, emphasised that such debt cancellation should be funded through additional donor funding and would require a sharp increase in current levels of overseas development aid from the major economies.
The experience of the HIPC initiative has taught us that it is not only the amount of debt relief that is important, but also the way in which it is delivered and funded. A significant proportion of the funding of recent debt relief, including some HIPC relief, has not been funded in addition to existing aid and in some cases the funding of debt relief to HIPC countries has been at the cost of reducing aid flows to the same countries so while relief has been made available, other resource flows have not been maintained. This has meant that the debt relief granted has not in all cases resulted in an increase in resources for poverty reducing public expenditure. As a result, governments may well feel constrained to try to contract new borrowing in order to meet the expectations created around the HIPC initiative.
Long-term debt sustainability will continue to be an issue and a challenge long after the HIPC process has been completed. The work on developing a framework for long-term debt sustainability currently being undertaken by the World Bank and IMF is very welcome. It is appropriate that these institutions and other multilateral development banks should develop systems and procedures to protect their portfolios and to ensure the prudent nature of their lending. After all, the debt crisis that we have witnessed was not the result exclusively of inappropriate borrowing and expenditure. Nevertheless, debt sustainability in a given country must be the primary responsibility of that country. In addition, therefore, to what is already being done we need to work with borrowing countries to help them develop and implement appropriate policies and strategies at country level for the prudent and sustainable management of debt and development financing in general.
Debt sustainability obviously is linked to overall financing for development. The IFIs have been unequivocal in stating that for many poor countries debt sustainability and any significant progress towards the millennium development goals can only be achieved if there are significant real increases in ODA grants. The World Bank, last September in Dubai, also stated that due to progress in developing countries on policy and institutional reform, the environment for development expenditure has never been more favourable. The bank estimates that an immediate 30% increase in aid flows could be absorbed by developing countries without any significant drop in effectiveness.
Ireland has increased its ODA sharply over the past four years. We feel that this is the most important way to help developing countries meet the challenges of reaching the MDGs and of achieving debt sustainability. It is also an important part of fulfilling our commitment to the global partnership for development and a recognition of our developing country partners need to do the same. We urge other donor countries to concentrate their efforts on finding ways to deliver real and sustained increases in development assistance.
The General Affairs and External Relations Council held a recent debate, chaired by my colleague, the Minister of State, Deputy Tom Kitt, on the implementation of the eight commitments made by member states in preparation for the 2005 Monterrey conference on international financing for development, particularly in the area of aid volumes and the harmonisation of aid practices. The Council noted that the Union was on track to exceed its commitment to achieve the collective target for increasing the volume of ODA by 2006 and underlined the importance of increasing ODA volumes in order to meet the MDGs. The Council also agreed on the need to take further concrete steps to improve donor co-ordination and harmonisation.
Along with the assessment of the Monterrey commitments, the Council agreed to an Irish Presidency initiative to give the Commission a mandate to co-ordinate an EU input to the 2005 review of the MDGs. In this way, the EU intends to give a lead in international stocktaking of the MDGs and to push this vital exercise to the top of the international agenda.
The format of the national MDG reports which will be used as the basis for the EU's input to the 2005 event is still under discussion. The Commission has prepared a draft which is being worked on. The national reports will be heavily, but not exclusively, focused on MDG 8 — global partnership for sustainable development — which is the MDG most relevant to donors.
The EU, as one of the most significant international players in the area of development assistance, has both a responsibility to help relieve the suffering caused by poverty and the means to promote poverty eradication at a global level. I have highlighted some of the guiding principles that underpin the achievement of the development goals inherent in the conclusion of a successful multilateral trade round to the mutual benefit of all concerned. We are all aware of the important recent initiative of the EU to relaunch the stalled DDA negotiations which is consistent with the overall strategic goal of placing development to the fore in the current round.
I see a future for EU development policy which would involve rising levels of official development assistance, with a greater share going to the poorest countries where it can have most impact and supported by a set of coherent EU policies. We must ensure that the new enlarged EU is a strong and effective player in international fora, capable of facilitating dialogue on key issues on the global economic and social agenda. EU achievements so far have made a very worthwhile contribution towards providing a solid foundation in order that we can reach these goals.
Our next speaker is Mr. Oisín Coghlan, policy officer with Christian Aid Ireland. Christian Aid is the overseas relief and development agency of 40 church denominations in Ireland and Britain and a member of Aprodev, the Association of Development Agencies linked to the World Council of Churches.
Oisín was an NGO representative on the Irish Government delegation at the earth summit in Johannesburg and the WTO ministerial conference in Cancún. Before joining Christian Aid two years ago, he worked for the international alliance of fair trade labelling organisations, FLO, in Bonn. Previously, he was co-ordinator of the Latin American solidarity centre in Dublin and has lived and worked in Mexico and Belize.
I am delighted to have this opportunity to address members of Foreign Affairs and Development Co-operation Committees from across the enlarged European Union. As trade talks pick up again after a post Cancún re-grouping it is timely to discuss these issues now. It is also an appropriate topic with which this conference should deal. The more national parliaments, and parliamentarians with an interest in development in particular, engage in trade issues the more likely we are to achieve international trade rules that enable developing countries to work their way out of poverty, something that is often not the case at present.
In this context there are three questions I want to address. Why does trade matter to development? What has changed since Cancún? What can parliamentarians do now? We all know that aid is the central plank of any development co-operation programme. The issue of debt cancellation came to the top of the agenda during the 1990s, but why does trade matter to development? The 49 least developed countries, LDCs, already earn eight times more from trade than they receive in aid. They also depend more on trade than rich countries. Half their GDP comes from trade, more than twice the average trade dependence of OECD members.
However, trade is not contributing what it could to poverty reduction. The LDCs share of world trade halved between 1980 and 1999 and Africa's share fell from 3% to 2% during the 1990s. While global aid flows in 2002 stood at approximately US$50 billion, trade restrictions in rich countries cost developing countries an estimated US$100 billion. That annual loss is the same as the total one-off debt relief promised by the G8 in 1999. The G8 and the rest of the international community has delivered only one third of the promised debt relief. One can see how trade could make the real difference in meeting the MDGs of which we have been hearing so much.
Christian Aid believes that pro-poor trade policy is not simply, or even primarily, about access to rich country markets. Its priority is establishing the right of developing countries to choose the trade polices that best suit their level of development and the particular needs of their economy and society. Common sense one might think, but not common practice. One of the most striking examples we have come across recently is in Ghana. It has 400,000 chicken farmers who until recently supplied most of the local market. However, they are now being squeezed out of the market by an influx of imported chicken parts, more than 23,000 tonnes in 2002.
Last year, Ghana's Minister for Finance announced tariff increases in his budget programme of 20% on poultry and 5% on rice to protect local farmers from cheap subsidised imports and to allow breathing space for modernisation. The tariffs were well within the limits allowed under WTO rules and were approved by the Ghanaian parliament. However, they were never implemented as the International Monetary Fund, IMF, advised the government against proceeding. Ghana took the advice because a previous disagreement with the IMF in 2002 led to that country being labelled off-track, resulting in the suspension of direct assistance from the IMF and World Bank until April 2003. Most other donors followed suit.
For us, a pro-poor international trade regime must include policy space for countries like Ghana to choose those policies which it believes best advances progress in that country. Christian Aid believes it is about more than a level playing field. One of our Ghanaian partners suggests that even if it had a level playing field, trade between it and Europe is like a giraffe and a gazelle competing for leaves from the tree. It does not make for trade justice because it will lose out time and again. To really contribute to global poverty reduction, we need trade rules that are biased in favour of developing countries to give them the opportunity to work their way out of poverty. It is not easy to achieve such an outcome in trade talks, more often described as pitting foxes against chickens.
What has changed since Cancún? Watching the talks unfold and then collapse in Cancún it was clear that we were seeing the end of business as usual in international trade talks. For five decades world trade deals were essentially hammered out between the major trading blocs, primarily the US and Europe. At the end of the Uruguay Round in 1994, the agreement on agriculture was based on a bilateral deal between the EU and the US to which everyone else signed up. It was clear in Cancún that developing countries were not going to sign up to a deal that was not in their interests no matter how much pressure the richer countries put them under. The bullying which occurred in Doha two years earlier is well documented with threats to cut aid, a favoured tactic to help produce consensus.
This new determination on the part of developing countries was accompanied by a shift in the balance of power within the WTO that helped convert this position of principle into negotiating muscle. China's accession to the WTO and the election of President Lula in Brazil were important factors in this regard. The crucial development, however, was the formation of its alliance with India, South Africa and Indonesia at the heart of a new group of 20 countries representing more than half the world's population and two thirds of the world's farmers. Then, the least development countries and the African, Caribbean and Pacific countries formed a group of 90. The emergence of these two groupings radically altered the dynamic of the negotiations — one group represented potential markets too large to ignore and the other grouped countries too deserving to dismiss. Cancún was about progressing the Doha development agenda.
Cancún also revealed that the agreement in Doha to launch a new round of multilateral talks was based on a fudge. In Doha developing countries agreed to new negotiations which would see them further liberalise the trade in goods and services in return for a promise that the EU would reform its agricultural subsidies which so damage the markets and livelihoods of the world's rural poor. In Cancún it transpired that the EU's understanding was that its promise of agricultural reform was conditional on developing countries agreeing to negotiations on four new and controversial issues first tabled in Singapore in 1996. Developing countries were not prepared to pay twice for the same promise.
If previous agreements have seen developing countries bow to a fait accompli presented to them by the major trading blocs, the period since Cancún has seen the EU adapt to the new realpolitik of trade talks. Throughout the talks in Cancún the EU repeatedly predicted the demise of the G20, suggesting it would break up before the week was out. Eight months on the G20 remains a force to be reckoned with and Commissioner Lamy has devoted considerable time to engaging it. In the immediate aftermath of the collapse in Cancún, Commissioner Lamy called for a complete overhaul of WTO decision-making procedures, perhaps because Europe had not got its way. Now, the spotlight is back on the outline of a substantive deal. Last week the chair of the WTO general council expressed his understanding that three of the four Singapore issues are off the table for the duration of the Doha Round. It is only fair to note that in January the General Affairs Council of the European Union concluded that to revive the Doha development agenda the real priority must be on achieving benefits for the least developed countries. That is a welcome statement.
While there is now renewed energy in Geneva and the real possibility of progress before the end of July, the time since Cancún has also seen a growing focus on the trade talks which the EU is pursuing with African, Caribbean and Pacific countries under the auspices of the Cotonou Agreement. The Cotonou Agreement is of particular relevance to all of us gathered here today because, while it now includes trade and political co-operation, its origins are as a development co-operation instrument and it retains the overarching objective of poverty reduction by which everything else is to be measured.
As the EU opens talks on economic partnership agreements, EPAs, with various regional groupings of the ACP we all have a role in making sure those representing us in the talks remember that point. It is our trade officials who are in the room, not our development officials. EU trade officials are trained to negotiate deals, not to support development. Perhaps that is the reason the EU is seeking to introduce the Singapore issues, so firmly opposed at the WTO, into the talks with the regional groups of the ACP. I understand the World Bank's analysis is that if the EU is serious about the EPAs having a positive development impact, then it must subordinate commercial advantage to poverty reduction. The EU can make a start by clarifying that it will not push the Singapore issues in the EPA talks.
What can parliamentarians do now? The principal role of parliamentarians is to bring democratic transparency and accountability to the actions our governments take on these issues in Brussels, Geneva, New York and Washington, far from the streets and televisions of our populaces, and to ensure that the fine words of the conference halls translate into good deals at the negotiating tables.
Each EU member state has promised to reach aid spending of 0.33% of gross national product by 2006. However, if we are to meet the millennium development goals, rich countries must move quickly to reach the UN target of 0.7% and aid spending must become more targeted on poverty reduction, not less. Four EU member states, Denmark, Netherlands, Sweden and Luxembourg, have reached the target. Three more have stated a year by which they plan to meet it, Ireland by 2007, Belgium by 2010 and France by 2012. The Council of EU Foreign Ministers in April encouraged all countries that have not yet set a timeframe to do so. I understand the new Spanish Government has already spoken about a date.
For those representing new member states who are only setting up development co-operation programmes, it is worth noting that before Ireland joined the EEC in 1973, we had no aid programme either. However, in the intervening period, our programme has become one of the best known and most admired elements of our foreign policy profile.
If any new member state's government has not set out a timetable, the foreign affairs committee should ask it to do so. More importantly, once a government sets targets, the committee should monitor progress closely. It should invite not only the foreign and development Ministers to speak to the committee, but also the finance Minister and ask how the government will implement its decision. The committee should push for multi-annual budgeting to increase predictability and facilitate good planning.
As we know in Ireland, it is not the promise that counts but the delivery. Ireland was showered with international praise for making the announcement at the millennium summit that we would reach 0.7% aid spending by 2007. It helped us secure election to the UN Security Council. Four years later, progress has stalled at 0.41%, and unless we make up the lost ground quickly, we risk international embarrassment.
I have a couple of straightforward questions and proposals on the issue of trade. When did each member state's trade minister last appear before its foreign affairs committee? I am delighted to be able to report that, after some NGO prompting, the Irish Ministers for both trade and development recently appeared together for the first time before the committee on development co-operation to discuss the links between trade policy and development.
Our Government is about to publish a national statement on trade policy with a substantial chapter on the development agenda, which is welcome. NGOs have proposed that once a year a joint sitting of the trade committee and the development committee should discuss progress in implementing that policy with both relevant Ministers. That may offer a model for other parliaments also.
The longer trade policy remains the preserve of EU Commission officials and the 133 Committee in Brussels, the less responsive it will be to development concerns. The more the trade Ministers who approve the Commission's negotiating mandate know that they will have to account back home for the content and conduct of trade negotiations, the more assiduous they will be in ensuring trade policy supports broader foreign policy goals such as poverty reduction.
I would argue that one of the reasons Cancún failed was because trade Ministers did not reign in their chief negotiator enough. Commissioner Lamy misread the balance of the meeting and overplayed the EU's hand. Perhaps also, the accountability mechanisms were not robust enough to enable Ministers to take an informed decision soon enough. One national trade official commented to me in Cancún that the 133 Committee was great for finding out what happened yesterday but not so good for finding out what the EU was going to do today.
This brings me to my next question. How many of the delegates here or their colleagues were in Cancún last September? I saw very few parliamentarians from Europe there and they were certainly outnumbered by European NGOs. Parliamentarians and NGOs share a common interest here. In an important area of policy which is formulated and implemented collectively within the EU, both NGOs and parliamentarians have a role in enhancing public understanding and government accountability. However, it is not ideal if committees have to rely exclusively on NGOs for first-hand testimony of the conduct of WTO negotiations. My advice would be to plan now for representatives of committees to attend the next ministerial conference of the WTO, in Hong Kong next year, and do not go empty handed.
It was already mentioned today that the British international development select committee published a report after Cancún on the lessons learned on how to revive a genuine development round. I understand also there is now a parliamentary commission on globalisation in Belgium. Now is the time for committees to commission research or compile materials to inform their discussions. The autumn parliamentary session is the time to hold hearings to thrash out the various perspectives. Perhaps committees can produce a report in time to influence their governments' approach to a final deal.
I have outlined why trade matters to development. It generates so much more revenue for developing countries than either aid or debt relief. However, current trade rules do not favour poverty reduction. The LDC's share of world trade has been dropping. Moreover, the livelihoods of millions of poor farmers are threatened by subsidised imports from rich countries. Reform of trade rules must give developing countries the flexibility to choose the trade policies that work for them.
Cancún saw the end of business as usual in international trade talks with the emergence of the two groupings already mentioned, the G20 and G90. There has been a new emphasis on bilateral and regional trade negotiations since Cancún and in the case of the EU the Cotonou EPAs have come centre stage. EPAs are supposed to be a development co-operation instrument but all the signs are that the EU is looking to drive a hard bargain. Back in Geneva, the outlines of a workable framework for the WTO talks on the Doha development agenda have recently emerged. There is a real role for European parliamentarians to monitor and influence these trade talks to ensure their conduct and content are in line with the fine pro-development rhetoric that accompanies them.
I urge all here to return home and get to grips with their national trade policy, to invite their trade and development Ministers to address them regularly and to prepare to push the development agenda in advance of the next WTO ministerial conference. I look forward to seeing all the delegates present today next year in Hong Kong.
Our next speaker is Mr. Colin Roche. He is currently campaigns and advocacy executive at Oxfam Ireland, one of a network of 12 Oxfams which work together, including campaigning on issues of trade through the Oxfam fair trade campaign. Mr. Roche attended the WTO ministerial conference in Cancún as a member of the Irish delegation. He has a masters degree in international politics from the University of Wales, Aberystwywth. I have great pleasure in inviting him to make his contribution.
I am delighted to have the opportunity to address the conference this afternoon. Oxfam has campaigned on the issues of aid, trade and debt for many years. I am sure many here have been harassed by my colleagues in their home countries on these issues over the years. Mr. Coghlan has outlined the broad framework we need to address. I will try to outline some of the key issues facing us now, particularly with regard to trade.
When trade Ministers from the 147 members of the World Trade Organisation last got together at their ministerial meeting in Mexico, they had the opportunity to help make trade fair. They missed that opportunity. Fortunately, that does not necessarily mean the end for this round of trade talks. The Doha development round still has a chance to become a reality and we must put in the effort to make that happen.
Following the collapse of the talks the EU trade commissioner, Mr. Pascal Lamy, said: "The EU remains committed to a strong rules-based multilateral trading system and will continue to work in this direction within the WTO". This commitment to multilateralism is welcome. However, we must make this statement a reality. It is crucial at this point to avoid the temptation to put our energies into regional and bilateral deals. Multilateralism is the best chance to make a fair rules based international trading system and we must continue to support this multilateral approach to trade talks. Developed countries should not fall into the trap of seeking through other talks what they failed to get from developing countries at Cancún.
The United States, for example, must not use the free trade area of the Americas as a tool to force open the markets of developing countries in Latin America. As for the European Union, it must resist the temptation to use the negotiations on Mercosur, in particular those of economic partnership agreements with ACP countries which form part of the Cotonou Agreement, to push forward the Singapore issues.
There have been some efforts to get the Doha Round going again. Two weeks ago in Paris at the OECD, many of the world's trade Ministers met to seek a way forward in the negotiations. In advance of this, the EU commissioners for trade and agriculture wrote to the other members of the WTO setting out the position of the European Union.
Oxfam welcomed this initiative and, in particular, the expressed willingness of the European Union to move on export subsidies. These subsidies are the most blatant mechanism of the European Union for dumping high cost agricultural produce on world markets, depressing prices and destroying livelihoods across the developing world. Now the European Union has to live up to this and must set a date for the elimination of export subsidies. The Paris meeting appears to have given some new impetus to the trade talks, at least in the short term, to achieve something during this summer. This is welcome, but we must be vigilant to ensure that, in the rush to agree a deal, the interests of developing countries are heard and addressed.
The key area where progress is required is in agricultural trade. In the developing world, 2.5 billion people depend on agriculture for a living and for basic subsistence. In the least developed countries, 73% of the workforce are employed in agriculture. The cash earned from agricultural trade is often the money used for school fees, clothes, extra food and the basic necessities of life. This dependency is particularly prevalent in the poorest countries. In Tanzania, for example, which is a partner in Ireland's development co-operation programme, agriculture provides livelihoods for about 80% of the population. Thus the future of agriculture and agricultural trade is vital for the chances of development of the poorest countries and this is reflected in the priority given to it by developing countries at the WTO.
The end of export subsidies, when it happens, will help to reduce agricultural dumping but it will not eliminate it. The EU will continue to support domestic agriculture with tens of billions of euro in subsidies. This structure of support allows it to export produce at below the cost of production, continuing to damage employment and food security in the developing world. The European Union must address these other forms of support. Without going into the arcane language of amber, blue and green boxes, it is clear that the Union must continue to reform its agricultural policies to remove its negative effects on developing countries. The Union has just completed a reform of its cotton sector and now has an opportunity to reform its sugar sector.
Although the European Union has undertaken positive initiatives regarding market access to the European Union for sugar from developing countries through the Cotonou Agreement and the Everything But Arms initiative, unfortunately, these are counterbalanced by the massive dumping of subsidised sugar on developing country markets. Oxfam estimates this costs developing countries hundreds of millions of dollars in lost income while restricted access to the European market has cost countries such as Ethiopia, Malawi and Mozambique $238 million since 2001. The EU can make a real contribution to development by ending the dumping of EU sugar on developing country markets. It must reform its sugar regime by ending the export of subsidised sugar and widening access for the poorest countries.
This summer the European Commission is due to produce recommendations for changing the structure of support. This then will form the basis for discussions by the member states as to what form of reform will be enacted. Now is the chance for us to make sure these reforms actually benefit developing countries. I ask delegates to speak to their agriculture Ministers and officials to see how they propose changing the system so as to give greater benefits to developing countries and end the damage to their sugar industries. Much more needs to be done in agriculture but the end of export subsidies and adequate reform of the EU sugar sector would be two important steps forward.
One of the other major issues at Cancún was that of the Singapore issues, the proposed agreements on investment, competition, government procurement and trade facilitation. On these issues, the European Union was a demandeur but produced no real evidence as to how these agreements would help development. Meanwhile, the beginning of negotiations in these areas was opposed by a large majority of the poorest countries. Fortunately, these did not go forward at Cancún.
The chairman of the general council of the WTO has made clear that three of these four issues are no longer on the agenda of the current round of negotiations. We hope that this will play its part in clearing the way for substantive discussions in other areas to take place. The European Union should now make clear that it does not want to pursue negotiations in these areas either through a multilateral or plurilateral framework during the course of these negotiations.
In addition to removing the Singapore issues from the agenda and making progress on agriculture, the Doha development round must also make provision to ensure that it implements measures to specifically address the needs of developing countries. In WTO language this is called special and differential treatment. One highly significant area of special and differential treatment is that which would allow developing countries to protect their agricultural sectors markets and preserve food security, the continuous access to food by the population. The European Union can afford to be proactive. It should seek to promote the concept of food security at the WTO, including measures to protect developing country agriculture such as the special agricultural safeguard and a definition of what are called special products, which would ensure that developing countries are not bound to low tariff levels on these products.
Members of Parliament should remain vigilant to the process by which developing countries become members of the WTO. At Cancún, Cambodia and Nepal became the first new least developed country members since the WTO began. Cambodia's accession, for example, was a disgraceful example of a country forced to agree to terms of entry higher than those of current members and to terms higher than those expected of least developed countries which are already members of the WTO. For example, following the Doha trade talks, all LDCs have the right to delay the implementation of certain sections of the TRIPS Agreement on intellectual property in relation to pharmaceutical patents until at least 2016. Cambodia asked for a 2009 deadline for TRIPS compliance, including pharmaceuticals, but it was bargained down to 2007. The European Union as a key demandeur in these negotiations must not seek terms which are higher than those normally expected of least developed countries and parliaments of EU member states should be in a position to inquire what is being asked in the name of their electorates and if it is coherent with the developmental objectives of the European Union.
There are other trade issues vital for development which I have not addressed, such as intellectual property and services, both burgeoning fields of international trade rules with huge implications for developing countries. Parliaments need to be vigilant that these agreements are not damaging chances for poverty alleviation by, for example, preventing access to low cost medicines by the poorest countries.
On the issue of aid, in September 2000 the world agreed on the millennium development goals, a set of goals to tackle world poverty including halving the number of people living in poverty by 2015. In order to meet these goals, we must provide the necessary financing. A fairer system of international trade is one way to provide the money to achieve these goals. However, it is unlikely to be enough on its own.
On current trends, most MDGs will not be met by most countries. This was the finding of the Global Monitoring Report 2004: Policies and Action for Achieving the MDGs and Related Outcomes, discussed at the IMF-World Bank spring meetings in April. It is estimated that the world needs to provide an extra $50 billion per annum in overseas development assistance in order to meet the millennium development goals by the agreed date of 2015.
In 2002, the European Union agreed its Barcelona commitments of achieving an EU average of 0.39% of GNP in ODA and 0.33% of GNP in ODA by each member state by 2006. The latest report by the European Commission indicates that the EU will achieve the average figure, but it looks unlikely that each member state will meet the target of 0.33%. In order to make its contribution to the millennium development goals the European Union must achieve the Barcelona commitments and its member states must also draw up national timetables to meet the UN target of 0.7% of GNP in ODA. The European Union foreign Ministers at their meeting in April encouraged all member states which have not yet done so to set a timeframe for achievement of the UN target. I ask delegates to push their governments to implement these pledges.
Unpayable debt is a major factor in preventing countries achieving the millennium development goals. According to the UNDP human development report 2003, many of the countries facing huge obstacles in progressing towards the MDGs are heavily indebted and many will need 100% debt cancellation. This is also the view of the Irish Government. Some debt has been cancelled under the highly indebted poor countries initiative since 2000, with 27 countries benefiting. Some 13 countries have completed the process and received the full amount of debt reduction promised and overall debt servicing has been cut by one third. While this has resulted in increased spending on health and education, it is completely inadequate in terms of countries achieving the millennium development goals and far short of the $100 billion promised by the G8 leaders in Cologne a number of years ago. A new approach is required.
At present, human need is not the basis for assessing how much debt reduction a country needs. Instead inappropriate economic criteria are used. In December, a delegation of European debt campaigns to the European Parliament called for the European Union to support a human development approach to debt sustainability. This would mean that the first call on poor country government resources would be expenditures needed to meet the millennium development goals. For the poorest countries, this will require a total — 100% — cancellation of their debts.
The debt policy, for example, expresses serious concerns about the current criteria for assessing debt reduction and calls for human development indicators to be taken into account in assessing the need for debt reduction. The European Parliament also passed a motion in 2002 calling for debt reduction to be assessed in relation to human need. Development Commissioner Nielson has expressed particular concern about the insufficiency of highly indebted poor countries initiative in terms of meeting the millennium development goals for countries badly affected by HIV and AIDS.
The EU needs to strengthen its position on debt cancellation by using EU voices at the IMF and World Bank to press these bodies to use some of their reserves to cancel debt owed to these bodies by the poorest countries. It must support the principle that human need, including meeting the millennium development goals, should have the first call on a government's resources. Only when resources remain after these needs have been met should debt servicing become due. This could be done by amending the Barcelona commitment on debt. There is a need to separate out the role of creditor and decision-maker currently held by the international financial institutions. A first step could be to ensure that calculations of debt sustainability, currently carried out by the IMF and World Bank, are subjected to a second, independent opinion.
Finally, there is a very practical way to help to improve the lives of people in developing countries through trade. Delegates have just had fair trade tea and coffee in the lobby and many of them can access these products in their countries. I urge them to ensure that fair trade coffee is used in their parliaments and to encourage their Ministers to use fair trade coffee and tea in their Ministries.
If the world is to reach the millennium development goals it must provide the money necessary. As we have seen, trade, aid and debt cancellation are the key sources of finance to meet these basic benchmarks of human development. If we meet these by 2015, much will remain to be done. Parliament can and should play an important role in ensuring that all our policies contribute to the sustainable development of people across the globe. We in Oxfam Ireland, along with my colleagues in the Oxfam organisation around the world and civil society generally, look forward to working with the delegates to achieve this end.
I thank Mr. Roche. The final speaker is Mr. Uri Dadush. Many of those present today will have heard Mr. Dadush's address last night in the Berkley Court Hotel. He became director of the World Bank's international trade department in July 2002.
I spoke at some length last night and now I am what stands between the delegates and lunch. Rather than giving any kind of prepared intervention, I thought I would pick up briefly on some of the points that have been made by other speakers today.
On the issue of aid, I wanted to underline several of the points made by the Minister of State, Deputy Michael Ahern, Mr. Coghlan and Mr. Roche. On current trends, most countries will not meet most millennium development goals. Despite the enormous progress in the developing world that I highlighted in yesterday's presentation, if one considers the large number of poor countries, particularly in Africa, and these are measured against the millennium development goals, poverty, education, health etc, our assessment is that the overall level of effort both in aid and policies is inadequate at present to bring them to meet these goals.
Should there be a large increase in aid, and people talk of 30% or 50% or doubling aid in different contexts, our assessment is that the policy framework in a large number of these poor countries today has improved to a point where this aid could be absorbed and used effectively. A number of papers, including one that was presented at Dubai last year, go into significant detail to illustrate that point. Obviously, this does not mean that all aid to all countries will be used effectively. It highlights countries where the policy framework has improved sufficiently. In those countries where the policy framework for using aid effectively does not exist in current forms, there are all sorts of ideas about how aid could be channelled through alternative sources such as non-governmental organisations directly to reach the poor.
I underlined the message, which Mr. Coghlan and Mr. Roche also pointed to, that in effect while we are seeing some progress in the direction of increased aid in the past couple of years, this progress does not give us much comfort that we are moving towards the medium-term targets agreed at Monterrey. This is in part because the increase in aid in the past couple of years is more nominal than real. Part of it is due to the depreciation of the US dollar and aid targets are set in dollars rather than in euro. A large part of the increase in aid in the past couple of years has come as a result of an increase in what we call strategic aid to Afghanistan, Pakistan and, in the course of the past year, Iraq. Important as this might be, it does not necessarily go after the development objectives we set ourselves in Monterrey.
As the Minister of State, Deputy Michael Ahern, mentioned, a significant part of the increase in aid has taken the form of debt forgiveness and, again, technically this is money that would not have been paid anyway. The spirit of the debt forgiveness initiative was that the debt forgiveness should represent additional resources. This is why it is debt forgiveness. That is not what we are observing at present. We have a way to go even though at least we are encouraged by the optimistic assessment coming from the Commission with regard to the European Union countries meeting their medium-term commitments.
I turn my attention to trade, on which I spend most of my time these days. As I said yesterday, we welcome very much the narrowing of the focus of the negotiations on the Singapore issues to trade facilitation. It is not that we fail to recognise the importance in a development context of better competition policies, better policies for investment or better policies for government procurement. It is just that our assessment is that there are better vehicles to encourage improvement in those types of policies in developing countries than to link them to market access negotiations in the WTO dispute settlement, etc.
The best, most important and most natural activity for the WTO is in the area of market access. The market access organisations are involved in directly associated issues, such as subsidisation. That is what the organisation was created for and what it is most competent at dealing with.
The negotiations are complicated enough, but they are impossibly complicated when viewed from the standpoint of developing countries with limited capacity. It is better to narrow the focus of the negotiations and to assess some of the other important issues outside the WTO context. This is not the reason I am making this point, but the World Bank, for example, has long-standing programmes in competition policy, improving investment rules and improving government procurement. That is also the case in respect of many other development organisations. It is good news.
I am glad the EU has clearly stated that it is ready to consider the elimination of export subsidies and that it has even provided a date in that regard. As Commissioner Pascal Lamy said in recent weeks, however, it is not about numbers at this point, but about frameworks. He said that a date is just a number, which is fair enough. There is a desire and a willingness to agree to the elimination of export subsidies across the board by a given date. That is welcome news indeed.
There is no doubt about the real effort that is being made in the European Union in respect of the mid-term review of the reforms in the agricultural policy regime. Attempts are increasingly being made to decouple support to farmers from production. This is very positive and definitely represents a step in the right direction.
A big gap remains in the negotiations, however. As far as we are concerned, it is also a big gap with respect to development impact in agriculture. I refer to the area of market access. As the representatives of Oxfam and Christian Aid effectively argued, 70% or 75% of the world's poor make a living from agriculture. Their ability to access global markets is of fundamental importance. The barrier to market access that exists in the EU and across the rich countries is the single most important obstacle that is restraining progress on agricultural reforms, productivity and exports in many developing countries. Market access is a particularly important aspect of the agriculture negotiations. In the OECD's calculations of the value of the different types of support given to farmers — tariffs, quotas, direct subsidies, domestic subsidies and export subsidies — market access emerges as the most important source of support by far.
Market access comes in a form that is not transparent, however. One can measure domestic and export subsidies as items in the budget, but one cannot do so in respect of market access because it involves tariffs. Consumers are paying higher prices, but nobody really sees that fact. It is difficult for European consumers to realise that they are paying three or four times the world price of sugar because of tariffs. It is important to make progress on the market access aspect of agriculture as part of these negotiations because it is the most important distortion. It is non-transparent and it underpins in many ways the subsidy regime that exists.
I intended to make a couple of other points, but if the conference wants to break for lunch, I am happy to facilitate it. However, I want to take a moment to discuss the issue of policy space because I disagree with all three speakers in that regard. Commissioner Pascal Lamy has referred to providing a "round for free". I mentioned the issue yesterday in response to a question and I wish to repeat my comments briefly. I do not argue that the poorest countries in the world should receive preferential treatment by being given additional market access in the north or receiving more time to implement certain commitments. I do not suggest that their commitments should be made less stringent. We support and recognise the need for such measures.
The problem with interpreting policy space in a wide manner — the "round for free" etc. — is that the poorest countries are not encouraged, in effect, to undertake basic WTO commitments. Large parts of Africa are not binding their tariffs, meaning that no maximum is set on their tariffs. That means, in effect, that WTO disciplines do not apply to such countries. Our view is that such countries will benefit from a reduction in the uncertainty associated with having no caps on their tariffs. Even if the caps are set at relatively high levels and even if they decline very slowly over time, it would be a significant improvement on the current situation.
Part of the reason we have the trading system that is in place, which discriminates, in effect, against poor countries and liberalisation in agriculture, is that the poorest countries in the world have never really participated in the WTO. If one accepts the EU's G90 proposal and the concept of policy space espoused by Christian Aid and Oxfam, one will continue the system as it exists at present. The poorest countries will not be genuine participants in the process and their interests will not be directly reflected in the process. We would like certain basic disciplines to apply to such countries for that reason, even if they are very lenient and are spread over a longer period of time.
I am sorry that we are short of time. I call Mr. Hugh Bayley from the United Kingdom.
When Mahatma Gandhi came to London in his loincloth to negotiate India's independence, he was asked by a journalist what he thought of western civilisation. He replied that he thought it would be a very good idea. The Minister of State, Deputy Tom Kitt, started today's proceedings by stressing the importance of policy coherence. If Gandhi or Mandela were asked what they thought of the EU's policy coherence on development, perhaps they would reply by saying that it would be a good idea. I congratulate the Irish Parliament for serving fair trade tea and coffee, but we should consider why fair trade milk and sugar have not been made available. They have not been offered to us because the EU's dairy and sugar regimes, under the Common Agriculture Policy, make it impossible for Third World producers to export such commodities to the EU.
When I was in Ghana recently, I saw a major EU development project. It comprised an irrigation scheme on a farm and a tomato canning factory. The pumps were silted up and the canning factory was closed, having been put out of business by the export of European tomatoes which do not bear export subsidies. While it is positive that we are moving towards the elimination of EU export subsidies which will help our development policies, we must also set a timetable to eliminate domestic subsidies. If we fail to do this, we will put many more people out of work than will benefit. For every family we benefit with fair trade tea and coffee, we could lift 1,000 families out of poverty if we got rid of our sugar regime. It is a question for our Ministers.
While one might blame Commissioners Pascal Lamy and Franz Fischler for scoring a spectacular own goal for the EU at Cancún, they did so because we chose this course, not them. Our trade Ministers provided the commissioners with their negotiating brief and it is in our power to change that if we wish to make progress in these negotiations. The EU economies would benefit from a new trade deal as would those of developing countries.
On behalf of the Committee on Co-operation and Development of the European Parliament, I thank the Irish Parliament for having taken the initiative in organising this conference. It compels us to reflect upon the political will of our governments in the fight against poverty and is pertinent and timely in the context of the newly enlarged European Union. It should be remembered that the EU is the world's foremost donor of development aid. Of the approximately €30 billion the EU manages yearly, less than €10 billion is administered directly by the Commission. The rest is managed directly by member states. This necessitates a co-ordinated policy of harmonisation which takes into account the need for complementary and coherent moves.
I turn next to conflict prevention which is a global concept entailing security, social, humanitarian, political, economic and human factors. We need a dialogue with our African partners within the framework of the Cotonou Agreement. According to the agreement, we must prevent conflicts, maintain peace and manage crises. As I have heard today, these are difficult to accomplish. We must follow the progress of the Doha agenda and attempt to launch a new round of negotiations within the WTO. The European Union is trying to take the actions it should have taken prior to Cancún. We must hope that the actors in the new negotiations will demonstrate the will to make positions more flexible. A sustainable effort should be made to strengthen the institutions of the multilateral trade system and to foster its integration in developing countries.
It is important to formulate a security and defence policy which recovers the civilian humanitarian space and, thus, responds to principles of universal law. Civilian crisis management should not be intergovernmental but rather depend on a policy of co-operation for development and humanitarian aid which includes NGOs. This is the position the European Parliament supports.
While I admire Oxfam and Christian Aid, their remarks have been somewhat one sided. What do these organisations demand of less developed countries like China, India and Brazil to make the Doha round a success? These organisation are very one sided in looking only at the EU and the United States of America. To make a success of the World Trade Organisation negotiations, one must also be critical of the attitudes of the so-called less developed countries. Do these organisations really believe that a free market in agricultural products will be advantageous to small farmers in Africa? It is a difficult question, but it must be asked.
I should explain that the Minister of State at the Department of Enterprise, Trade and Employment, Deputy Michael Ahern, had to fly to London for a meeting and has not been able to stay. As we are way over time, I will bring the session to a close. We will return at 2.30 p.m. I ask the Chairman to make a statement before we leave and I thank the delegates again.
I remind delegates that tomorrow morning we will discuss globalisation, a subject which provides many opportunities for debate. Many of the issues we are talking about today will arise in that context.
For those of you who have not already received one, copies of the report of the French committee are available in the lobby, where you will also find copies of a draft resolution and action plan circulated by the French delegation. These documents are for consideration and we will examine them tomorrow morning. Lunch will be served next door in the portrait gallery.
