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Dr. Ian Gibson (Norwich, North): Scare tactics by the Liberals.
Mr. Chidgey: I see that some genetically modified Members have entered the Chamber, but perhaps we can keep them under control until the end of the debate.
It cannot be right for America to use WTO rules against trade discrimination to force those products on to the European market; our farmers are banned by law from competing with such products. We are faced with growing conflict between regulation of biodiversity in environmental science and commercial exploitation of modified food. There is a conflict between harnessing the benefits of science, maintaining public safety and reassuring public opinion. It is clear that present international structures for regulating trade and the environment are not able to respond adequately to those new environmental and social challenges.
The World Trade Organisation's rules are designed to be flexible and not prescriptive, but fears are growing that the WTO seems to be incapable of enforcing its own rules, and that could prove to be a fatal flaw. If countries feel that the WTO does not work, more and more will be tempted to bypass and ignore it. The major trading
powers--America and the European Union--will be tempted to act unilaterally. Already, there are worrying signs that America is negotiating a bilateral trade agreement with China, shutting the door on the European Union and on established convention.
We are in danger of losing a predictable and fair rules-based system under the WTO, and gaining instead arbitrary arrangements based on power. That can lead only to more protection, more trade wars and, eventually, trade anarchy, which would inevitably stifle any response to the global, environmental and social challenges that we face. We must change the WTO's commitment to untrammelled, purist free trade to embrace the wider goals of achieving a sensible balance between free, fair and sustainable trade. We need to build mechanisms to resolve free trade and environmental arrangements--mechanisms that simply do not exist at present.
If anything, the process is moving into reverse. The collapse of the recent talks in Colombia, aimed at establishing a biosafety protocol, is a serious setback. The implications for trade, the environment and food safety are of major concern. It is now becoming clear that America and Canada are attempting to present us with a fait accompli on genetically modified organisms, first, by overriding legitimate concerns in the European Union about the environmental health aspects of genetically modified crops and food products and, secondly, by preventing consumer choice through the segregation of supplies and comprehensive labelling.
Even more alarming is the stance taken by the United States and Colombia that rules to protect the environment must be subordinate to trade rules. That will only heighten fears that trade liberalisation and environmental protection are mutually incompatible--and there is a real fear that the United States will try to overcome EU resistance to GMOs by using WTO dispute processes.
There is clearly a political conflict between the rights and obligations of the WTO and those arising from multilateral environmental agreements. It is vital for all WTO members to reach binding understandings, both political and legal, that will ensure that the trade provisions of the MEAs are accommodated within WTO rules.
This is where our Government must take a leading role. I am disappointed that their amendment merely "notes the current position". We could have done that before we started; what we want is a commitment, and some action. It is simply not good enough to "note the current position"; nor are the signals being sent by the Prime Minister--signals that he supports the American position--good enough. He appears to be backing the Americans' multi-billion-dollar GM commercial and industrial interests. I hope that he is not, but that is the signal that is sent.
The Government are failing to give a clear lead in suggesting that, while tremendous benefits can be gained from the science of genetic modification, it must be regulated and controlled in the interests of public health and the environment. As a result, we see shock-horror tabloid headlines, and widely conflicting claims about the supposed danger, or benefits, of GM technology. What is needed now is a breathing space for rational public debate. We need to find a sensible way of proceeding that will command widespread public support.
The Minister for Trade (Mr. Brian Wilson):
It is something of a cliche to say that we have had an excellent debate, but, more than usually, it is accurate. There have been some extremely well-informed contributions from hon. Members on both sides of the House. It has been an evening of serious speeches on serious matters.
It is an unusual debate in a sense. It involves some extremely localised issues, which I am obviously expected to--and will seek to--address, but I do not want that to take away from the fact that it also involves global issues and important questions that affect every country and every citizen of this country. I congratulate the Liberal Democrats on raising the matter as a subject for debate.
I welcome the degree of common ground in the House. There has been recognition of the problems, but, as my hon. Friend the Member for Middlesbrough (Mr. Bell) pointed out, there has also been recognition of the scale and importance of the European Union-United States trade relationship. Although there are a number of problems in that relationship, we bear it firmly in mind that such disagreements are the exceptions to the rule and that the vast majority of trade and investment between the EU and United States takes place without difficulty. It is in no one's interest to upset that arrangement unduly. Let us address the problems, but keep a sense of perspective.
Much remains to be done to develop the bilateral relationship and to identify further common objectives for the multilateral trade system, so we must work urgently to enhance the dialogue for better management of disputes that develop between us. That is necessary not only for the better handling of individual disputes, but to avoid those relatively few disagreements that are colouring the wider relationship at such a crucial time for world trade.
I do not want to discuss the merits of the banana dispute. I will follow my advice to the Americans and to anyone else who will listen--await the outcome of the WTO panel arbitration process, which we expect to come to a head by 12 April--so it is not for me to get into the merits of the case tonight and to beat the drum about who is right and who is wrong in the banana dispute. That will not be productive. As the hon. Member for Hertford and Stortford (Mr. Wells) pointed out in his interesting and well-informed speech, the dispute has been going on for more than 50 years, so it is improbable that we will sort it out tonight with another dose of rhetoric.
Having said that, there can be no avoiding the reality that the action that the United States announced on 3 March was wrong. Irrespective of the merits of the dispute, that can be said because it took the resolution of the dispute outside the procedures of the WTO. As many Members recognise--I have had contact with them over
the past few months on the issue--it must be resolved quickly, without causing serious harm to many unrelated industries, particularly cashmere knitwear. That statement lies outside the issue of bananas. First, it is wrong to act before the WTO procedures come to a conclusion. Secondly, it is wrong to take action against unrelated products. I can make both those statements categorically without going into the merits of the dispute itself.
I come to the passage of my speech that will be of particular interest to hon. Members on both sides of the House who represent areas with cashmere interests. On 4 March, the Secretary of State for Trade and Industry announced to the House that he would put in place arrangements to guarantee bonds paid in respect of exports of cashmere knitwear to the United States. I am delighted to be able to announce the details of that scheme.
The scheme will be operated by the Export Credits Guarantee Department. The guarantee will indemnify exporters of United Kingdom-manufactured cashmere knitwear against losses on exports to the United States as a result of conditions arising from the unilateral action of the United States. The scheme will apply to those contracts placed before midnight on the date of the World Trade Organisation panel rulings on the European Union banana regime--expected to be on or before 12 April--under which delivery to the United States is due to be made by 30 November 1999. The Export Credits Guarantee Department will be open for business as soon as a direction can be issued in the light of this announcement.
I make it clear that the decision to set up the scheme was not taken lightly. As I know that hon. Members who have been involved in the matter will realise, it is an exceptional response to a unique set of circumstances. The cashmere knitwear industry is highly specialised and concentrated in areas that face difficult economic challenges. Although the borders area of Scotland is certainly the main centre of the cashmere industry, it is not the only centre of the industry. Cashmere is important in other parts of Britain, and those areas, equally, will benefit from the announcement and welcome it.
The main market for the industry is the United States. Moreover, we are right in the middle of the ordering season. If we had not taken that action, the United Kingdom cashmere knitwear industry, and its upstream suppliers, would have been devastated, and there would have been a very real risk that it would never recover.
Under normal trade conditions, the United Kingdom cashmere knitwear industry can--and does--beat the world. In recent weeks, I have seen that at first hand. It is a superb industry, and we should back it. In the measures that I have just announced, we are doing so. We have had to take that action so that the industry will still be there to compete when trade conditions return to normal.
I look forward with great optimism to the industry's future success. I wish everyone involved in the industry well, and thank them for their forbearance, understanding, and calm and rational negotiation and discussion in the midst of a very difficult time in recent months.
On the wider dispute, the Government will continue to do all that we can to press for alternatives to retaliation and--when we know the result of the rulings from the WTO arbitrator and panel--for immediate and positive action. We must safeguard the WTO's dispute settlement system, as it has served us well in the past, and will continue to do so in the future.
I should like to try to deal with some of the other subjects that have been touched on in the debate. Hormones were the next most topical issue. In that case, as in all cases, we must recognise the importance of sticking to scientific principles. In this case, the WTO found that the risk assessments that the European Union had conducted were deficient. The EU is now conducting new assessments. The view of the United Kingdom Government is that those should have been done well before now, as the WTO itself has said. Meanwhile, however, we must continue to engage in serious dialogue with both the United States and Canada to find a satisfactory way through the dispute.
The United Kingdom is encouraging the United States to discuss compensation--as an alternative to retaliation--and labelling options, taking into account on-going scientific assessments.
Events in the hormone issue have been moving rapidly. Just today, European Union Foreign Ministers agreed in Brussels to negotiate compensation. Meanwhile, the United States has been publishing a list of products for retaliation in the potential dispute. The list--which has just reached me--is rather eclectic, including products such as
"bellies (streaky) and cuts thereof of swine, salted, in brine, dried or smoked".
The list moves on to oats, and
"sugar confectionary cough drops, not containing cocoa".
Then again, it includes "lingonberry and raspberry jam". Prepared mustard also is included. The list on this matter is much longer than it was, the last time around, on the other matter.
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