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JOINT COMMITTEE ON ENTERPRISE, TRADE AND EMPLOYMENT díospóireacht -
Wednesday, 19 Dec 2007

World Trade Talks: Discussion with Minister of State.

I welcome the Minister of State at the Department of Enterprise, Trade and Employment and his officials. I call on him to make his opening contribution.

I thank the Chairman and members for the invitation to update the committee on the progress made at the World Trade Organisation talks. The latest round of talks, the Doha development agenda round, was launched back in 2001. The ambition at that time was to build on the achievements of the existing agreements on trade in agricultural and industrial goods and in services. Alongside the quest for new market access, there was also the intention of improving customs procedures to facilitate trade and of strengthening the rules to ensure fairness. Most particularly, everybody wanted a strong development dimension whereby the poorest countries would make tangible gains. That level of ambition remains the same. It is more than six years since the launch of the round and it has been a long and rocky path. Most recently, many members will have noted the renewed effort at the start of this year, which followed the suspension of talks in the summer of 2006. Since January talks have continued and I would like to outline the progress made in each of the main topics in that time.

I refer first to the agriculture negotiations in which we have significant interests and a number of ambitions. When it comes to the Doha round, agricultural market access is the main issue for the developing countries. This is a development round and Ireland and the rest of the EU are mindful of the need to secure gains for those countries. That is why the EU has gone a long way to meet them with a generous offer that includes cuts in tariffs of as much as 60% in some cases. Although that offer was made in 2005, it is still the best on the table. Two months later, at the Hong Kong ministerial talks in December 2005, we in the EU promised to go further and eliminate export subsidies by the year 2013. Despite all that, the EU is still being asked to make even more concessions. What seems to be forgotten by our trading partners is that we were able to make such a generous offer because our farmers were prepared to make difficult changes during the reform of the Common Agricultural Policy in 2003. Everyone will recall the move away from trade distorting payments to payments fully decoupled from production. That was a painful exercise but we agreed to it on the basis that we all had obligations to meet in the world trade talks. We cannot be asked to go through such an exercise again, particularly when our partners do not appear willing to do something similar.

It remains our policy to look for a balanced outcome in the agricultural talks, that recognises and respects the great changes that have been made to our CAP, and that protects our legitimate interests. I assure the committee that my fellow Ministers and I will continue to remind the Commission, which negotiates on our behalf in these talks, that the EU cannot be allowed to pay twice.

I am sorry but I must interrupt the Minister of State. The vagaries of the system mean that we are being called to the Dáil again. Unfortunately, we will have to suspend. This is a useful document and we will continue our discussion immediately following the vote.

Sitting suspended at 12.25 p.m. and resumed at 12.45 p.m.

I wish to advise the committee I have a report prepared, arising from the Geneva conference, along with documentation which I will submit through the committee clerk for evaluation.

Thank you, Senator Callely. I welcome the Minister of State again and invite him to continue.

I would like to take this opportunity to digress for a moment. Members will have seen in the newspapers that the Commissioners are expected to discuss proposals today on the import regime for beef from Brazil. As I understand it, these proposals will restrict the number of farms that can export to the EU, and those farms that are designated will be subject to inspection by EU officers from the Food and Veterinary Office. I expect more details on this very soon. In the meantime, I would like to welcome this initiative. The standards used in the farming and production of beef in Brazil have been the subject of debate in this country for some time now. As a result, my colleague, the Minister for Agriculture, Fisheries and Food, has been particularly active on the issue. Without anticipating the Commission's decision in this matter, I believe that the proposals under discussion are on the table, due in no small way to our efforts on this subject.

Returning to the WTO talks, I would like to give a short outline of the process of the agriculture negotiations into next year. The chairman of the agriculture negotiating group, Ambassador Crawford Falconer of New Zealand, issued a paper in July reviewing progress to date and looking to narrow the differences. That paper is now the subject of discussion and the chairman intends to take account of these discussions in a revised paper that he will issue at the end of January 2008. A number of topics remain to be decided, such as market access, the commitments to reduce the level of domestic support and disciplines to apply in the elimination of all forms of export subsidies. Both my Department and the Department of Agriculture, Fisheries and Food continue to actively monitor these negotiations.

Closely connected to agriculture are arrangements for trade with less developed countries in the African, Caribbean and Pacific region. Most of their business with the EU is in primary commodities, of which agriculture products make up a very large part. This is a matter of close interest to many members of this committee, as it is to a large number of people concerned about development matters. Changes in this area are particularly important to the Government because some of the countries concerned are what we call programme countries for Irish Aid. They are the countries that we have selected to be a focus for the development and aid objectives of Irish Aid.

Access to the EU for their goods, mostly agricultural, was governed by a special agreement that, quite a number of years ago, was found not to be compatible with WTO rules. To correct this, the WTO set a deadline of 31 December this year. At the Africa Caribbean Pacific-EU Joint Council of Ministers in May of this year, all six ACP regions, together with the EU, reaffirmed their intention to conclude full economic partnership agreements, EPAs, before the deadline. After that date the current trading arrangements must end if the EU and our ACP partners are to meet our international obligations in the WTO.

However, some of the ACP regions have recently indicated that it will be difficult for them to agree the terms of a full EPA by that deadline. For those cases, the Commission has gone an extra mile and suggested proposals for a new two-step approach. This will put in place new arrangements to deal with trade in goods after this December and to continue with negotiations for all other aspects of a full EPA into next year.

This is a pragmatic, interim solution for those with special difficulties. I am glad to say that, so far, at least 17 ACP partners have secured significantly improved market access opportunities. We should not overlook the important fact that all least developed ACP countries will continue to receive duty free and quota free market access through their inclusion in the Everything But Arms initiative. On the issue of continuing negotiations for full EPAs into 2008, we support the European Union Council's intention to follow a flexible and phased approach.

I am convinced that negotiations must be conducted in a spirit of goodwill, flexibility and understanding. We have always said that any resulting agreements must be supportive of ACP countries' development needs and their poverty reduction strategies. I for one do not want to see any ACP country suffer a diminution in its preferential access to the EU. In these negotiations I want serious consideration given to any proposal that meets Ireland's two objectives in this area. These are to continue preferences for ACP countries, while complying with our WTO obligations which are important to our global trading and employment interests.

On the main subject of our discussions today, the WTO talks, I would now like to turn to the area of industrialised goods, or non-agricultural market access, NAMA. Here too, the chairman of the negotiating group, Ambassador Don Stephenson of Canada, issued a first paper in July 2007. He also intends to prepare a revised draft before the end of January. The two main subjects still at issue here are the level of tariff reductions that countries will make and the operation of flexibility for developing countries.

A third important strand of the negotiations is trade in services, where the focus of the negotiations so far has been on market access to specific sectors and on the level of ambition that can be achieved in comparison with the other areas. As before, the chairman of the services negotiating group, Ambassador De Mateo of Mexico, is consulting on the content of a text. However, talks are slow as many are keeping their cards close to their chests, waiting to see the outcome in agriculture and NAMA. A further difficulty is that many countries remain reluctant to offer any new market access.

Discussions are also continuing on the important areas of rules, covering topics such as anti-dumping procedures and trade facilitation, which can best be described as smoothing the path for goods in transit.

Where does all this take us? We hope to have a series of texts on the table by early February next. Apart from drafts on agriculture, NAMA and services, we expect to see revised texts on trade facilitation and rules around the same time. The aim, from the EU's point of view, is to get as many texts prepared as possible. This will focus the debate on key outstanding issues and will give delegations a clearer indication of the overall state of play. Once the papers have been read and digested, Ministers may come together in Geneva, perhaps as soon as March, with a view to getting a breakthrough and agreement on the framework of a deal. If that comes to fruition, I will be pleased to come back to the committee to discuss both the plans for the ministerial meeting and the outcome of the final negotiations.

Members here today do not need me to tell them that Ireland has a strong interest in the outcome of these talks and in maintaining a strong WTO. It is a well-known fact that Ireland is a small open economy, reliant on a liberal trading regime. We know that opening up trade with other countries stimulates Irish economic growth. Our openness and active encouragement of indigenous enterprise to maximise the opportunities that are presented by globalisation has brought Ireland more employment and a stronger base of exporters. For the longer-term benefit of Irish companies, we also want our trade to be predictable, controlled and smooth. For that to happen, we need a regulated trading environment based on rules that are clear and enforceable. The WTO offers us both, improved market access backed up with international rules.

This is important because our economy will only prosper if we can extend the footprint of indigenous companies in new and developing markets. Global growth is sustained by the expanding trade and investment opportunities clearly evident from the pace at which large developing economies such as China, India, Brazil and Russia are growing. These are new and exciting markets in which Ireland can win profitable niche business. With Enterprise Ireland, we have arranged trade missions to these countries and opened and expanded El offices in them. That is the reason the outcome of the WTO negotiations for all Irish exporters is so important.

As well as a strong independent WTO, a fair deal in the Doha Round is the best way to deliver real benefits to the developing world. These countries stand to gain much from these negotiations, and we would be derelict in our responsibilities to them to let this opportunity go.

Unfortunately, I cannot assure the committee that a new agreement is a certainty; many issues remain to be agreed. The EU's generous offer on agriculture, made in 2005, has yet to be met by our partners. In industrialised goods, the EU is prepared to make significant cuts in tariffs, but only if there is improved market access in return. The situation in services is difficult to assess until we move into the final phase. There are possible achievements on trade facilitation.

At this stage all members of the WTO must be willing to make moves if a successful round is to be achieved. Without a genuine contribution from each according to their abilities we will fail to attain any of those ambitions we had all those years ago at the start of the round.

It is clear that negotiations are reaching a critical phase. If we miss this opportunity, it could be some time before we are in this position again. Without a deal, the development agenda may be lost and countries could be tempted to revert to more protectionist policies. This would make it more difficult for Irish exporters. Clearly, one set of rules for a multitude of trading partners is much easier to work with than a plethora of systems put in place by a variety of agreements.

In spite of the difficulties, we will continue to press for an agreement that is balanced and takes into account the vital interests of all countries, especially the developing countries. It is incumbent on all of us to make every effort to come to an agreement that builds on the progress made so far and delivers real benefits to the poorest trading nations.

I thank the Minister of State for a useful, comprehensive and very informative address and I apologise for the various interruptions. The Minister of State has indicated he is prepared to return to the committee as further progress is made and more texts will be available towards the end of January. I will allow one question from a member.

Is it in order for me to ask a question?

As a senior member of the committee, the Deputy is well in order.

I welcome the Minister of State, Deputy McGuinness, and congratulate him on the great progress he is making in the area of trade. I wish him well and I have no doubt he has a bright future in that position and perhaps even in a higher position.

I find it difficult to tolerate and understand the WTO because I do not think there is much to be gained for Ireland in any liberalisation of trade. I refer to low wage rates in Malaysia, Bangladesh, India, China. We are losing our industrial base to those countries because we have a higher-cost economy and we are a bit too generous in that regard. Mr. Mandelson is walking the world and saying we must accept this. Ireland is paying a big price. There is a big job of work to be done in facing down much of what is being said.

The Minister of State referred to agriculture. Were it not for the difficulties of the disease problem in Brazil, the whole future of European beef would be at risk, as I see it. The Minister, Deputy Mary Coughlan, has made significant progress on the beef issue in the past few hours in Brussels. She has fought very hard against a lot of criticism over the past five or six months on this issue which is also a trade issue. We are dealing with all low-cost countries to the disadvantage of ourselves. I ask the Minister of State to protect us because liberalisation is not good for us. The ACP countries have lost out heavily as they are small countries across the world who grow sugar cane, such as the Caribbean countries and some of the African countries. The major countries, such as Brazil and Australia, have all made successful progress in the area of sugar cane production while the smaller countries are now poorer than they were when this started.

I am a little concerned that the drift of the WTO and the IMC seems to be to penalise the economies of smaller developing countries by forcing down taxes. This can sometimes be presented as being a pro-employment measure but the consequences are that these countries are at a massive loss in terms of the social economy. Education is undermined and the funding is not in place to develop their health services. They are encouraged to import significant amounts of goods which, on the face of it, seems fine but undermines their real economy. There is not the time to tease out this point but I hope we can return to it at a later date and see how some social protections can be put in place in those developing countries. This is the key element of my concern.

I thank the Minister of State for his helpful address. There is much work to be done such as background work and shuttle diplomacy. I suggest the Minister of State might return to the committee towards the middle of February to provide the committee with an update on whatever progress has been made.

I wish to concur with the comments made by previous speakers. I too would be very eager for the Minister of State to focus on some of the countries referred to and I agree with Deputy Morgan on the need for social protection as, very often, this can be tantamount to a race to the bottom in order to sell goods. The Minister of State is a businessman and would be acutely aware that the bottom line in economics is not everything and there are many other intermediate steps.

I was my party's spokesperson on agriculture. We debated this subject for many hours in committee and Deputy O'Keeffe was Minister of State at the time. This country took steps. The ACP countries will be the ones to suffer because, as Deputy O'Keeffe said, they have particular products. However, we also have particular products. Our farming community has made significant changes even though I acknowledge European money has ensured that farmers are now some of the best in Europe when it comes to protection of the environment. Ireland has comparative advantages and we do not want to see them washed away by myriad concessions.

The Minister of State's presentation has been one of the best presentations to the committee for a while. He referred to Enterprise Ireland. This committee has an invigilatory role. It would be no harm for the committee to visit Enterprise Ireland on site and it would be very useful for examining in situ the impact a decision made in the midst of these talks has on the ground. I hope Enterprise Ireland might facilitate a visit by some members of the committee as part of the round table discussions with their various partners. I ask the Minister of State to use his ministerial office to keep us informed of any developments.

I wish to make a general comment on what has been said. I am quite happy to return to the committee at a later date relative to this topic which is critical for the development of business in this country and for the protection of those other emerging economies. The social enterprise model in Ireland could perhaps be replicated elsewhere. The work of Enterprise Ireland is enlightening with regard to trade missions. I will raise with Enterprise Ireland today the committee's interest in some form of inclusion in trade missions so that members would see how companies are represented in places such as Moscow and Dubai. These companies are given the opportunity to do business in these places and to exchange views and sell their products, in particular in the area of software. I have seen small Irish companies deal with world banks by providing software to deal with human resource and security management. It is impressive to see such companies perform on the world stage and to win contracts and secure jobs at home. In that context in WTO it is important that we create an environment that allows them to carry out such trade and allows us as a country to move up that value chain. In the area of knowledge based economy, and research and development, it focuses clearly on the food industry. In my constituency, Glanbia has a large research and development section. It works with multinationals and supermarket chains to develop new food products for the market, designed specifically for customers' tastes etc. We need to get into that area which can yield significant gain for Ireland. We do not want to set aside manufacturing, which we need to continually monitor. We rely on the WTO enforcement rules to monitor what is going on to give us the chance we require to move along that value chain.

The EU is keen to protect, and offer direction, advice and support to ACP countries, which were mentioned earlier, and other economies that are weak and are trying to develop. The EU will work within WTO to get them up to WTO standards and to ensure the framework is there for them to develop and enjoy a good lasting and sustainable economy, which in turn will service the whole social need of their economies. That is what WTO is all about. My focus within the talks in Europe is on that agenda. It is clearly also focused on Ireland as it moves on to get a secure footing in the context of that knowledge-based economy, covering research, development and innovation. Most Irish companies on trade missions are selling that type of product. Those companies need to be supported. It would be worthwhile for members of the committee to see at first hand not only how Enterprise Ireland engages with other players in other economies but also to watch how Irish companies do it and how successful they are in securing a foothold in that regard.

The big economies of China and India will demand more food as they become more westernised. The Opposition criticised a comment I made on traffic in Russia. That country has become westernised now and one can see the development taking place and the movement of the consumer in those countries. There are huge niche markets, for the Irish food industry in particular and for every other Irish company. The connection can be made between their requirements for food, services and other products, and how they can be best served by Irish companies. That all comes under WTO. It is a very exciting area and is a very worthwhile piece of work for the committee to be involved in if we can arrange it through Enterprise Ireland.

The Minister of State mentioned research and development, and innovation. We are losing jobs and getting in many high technology jobs. However, we have many people who will never qualify in the high technology area and will want other ordinary jobs. With the downturn in the construction industry, I would like the Minister of State to address the jobs issue for ordinary people with only a standard education. It is fine to bring in Yahoo and other such companies, which I welcome. However, only so many people can qualify for jobs in that area. There are many people who will never have the standard of education necessary to get into that area.

County enterprise boards offer significant supports in terms of training etc. to the SME sector and the micro enterprise sector. Small companies should engage with their local enterprise board. Chambers Ireland engages with Skillsnet. Millions of euro are allocated for this year and in future years to allow companies to engage with Skillsnet to upskill their staff in the context of moving them on in terms of the value of their employment and their contribution within companies. There is flexibility within the market and supports provided by the Government create opportunities for the kind of people about whom the Deputy speaks.

Regarding IDA Ireland, people go into factories, particularly ones that are focused and driven, and Americanised if one likes, and obtain qualifications by way of their upskilling within those companies, which should be recognised by Government, FÁS or some other agency. They often come out of those companies with far greater skills and qualifications, and an entrepreneurial spirit that could lead them into self-employment. We had a debate on the topic in the Seanad last week. There is a significant range of supports within the agencies. Companies that are willing can engage with those agencies and benefit their employees by that engagement thereby protecting the position of the employees about whom the Deputy speaks.

It is a debate for another day. I am in major disagreement with the Minister of State. Upskilling has been happening since the mid-1980s and many people have not been upskilled yet.

The Deputy must await another day. I thank the Minister of State, Deputy McGuinness, and his officials for their attendance and contribution today. We have scheduled our annual Christmas lunch in the Members' Restaurant. If the Minister of State and his officials have time we would be delighted if they could join us. We appreciate they have had an interrupted day and have hardly had time to look around. I thank all the members for their contributions to the proceedings of the committee. I thank the staff of the secretariat for organising our meetings, and providing secretarial support to the committee and its members during 2007. I wish everyone a very happy Christmas and new year. Guím Nollaig shona agus athbhliain faoi mhaise daoibh go léir.

The joint committee adjourned at 1.10 p.m. until 9.30 a.m. on Wednesday, 9 January 2008.
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