Mrs. Caroline Spelman (Meriden): I beg to move,

That this House shares the concerns of the Trade Justice Movement about the plight of the poorest people in the world, and congratulates them on bringing these matters to the attention of the public; notes with great concern the increasing levels of hunger and poverty in many developing nations; further notes that international development targets are not being met in Africa; recognises the depth of public concern on this issue; believes that increasing levels of international trade offer the greatest hope for the alleviation of hunger and poverty in history; further believes that the removal of trade barriers will promote economic growth, trade and investment in poor nations; supports the liberalisation of trade; is concerned that the Common Agricultural Policy is failing both British farmers and consumers, and harming farmers in poor countries; is also concerned at the rising levels of farm subsidies in America; and calls on the Government to use the forthcoming G8 Summit in Canada, the EU Heads of Government Meeting, and future World Trade Organisation meetings to further the liberalisation of international trade to promote the alleviation of poverty and combat hunger and starvation amongst the poorest people on earth.

Before I begin my speech, I should like to welcome the hon. Member for Northampton, North (Ms Keeble) to her new post as Under-Secretary of State for International Development. I very much look forward to debating international development issues with her. I enjoyed my debates with her predecessor, and I am sure that the Under-Secretary's knowledge of South Africa will be a great asset to her.

Given that 10,000 people from every corner of the United Kingdom have come to lobby Parliament today, I am delighted that Her Majesty's official Opposition have chosen to debate an issue that clearly matters to British people. We congratulate the Trade Justice Movement on bringing the matter to the attention of the public. We may not agree with everything for which the movement calls, but we share its concern for the plight of the poorest people in the world. The movement recognises that trade can play an important part in reducing poverty and improving our quality of life. It can generate jobs and wealth.

Conservatives believe that trade could be the greatest force for poverty reduction in history. There is no question but that the opening up of markets and increased trade from developing countries would dwarf any contribution that could be made from overseas aid. That is not idealism, but common sense.

Tariff barriers cost poor countries $100 billion a year-twice as much as they receive in aid. We firmly believe that trade restrictions are the main barrier to development. There is a danger that seeking to impose controls on overseas investment in developing countries may make it less attractive for companies to invest, which would deprive people in the developing world of the jobs and trading opportunities that they desperately need.

Much progress has been made in reducing poverty over the past 50 years, but it has been patchy. A whole continent-Africa-is being left behind. It is the only region in the world that is completely off target when it comes to meeting the millennium development goals on health, education and poverty.

That is why we have called for the debate today. Despite the onward spread of globalisation, the World Bank has found that many of the poorest countries are in danger of becoming marginal to the world economy. As it pointed out in a recent report, incomes in those countries have been falling, poverty has been rising, and those countries participate in trade less today than they did 20 years ago.

This is our challenge: the Government and the whole international community must do more to allow countries currently excluded from international trade to reap the immense benefits that it offers.

Much pressure has been placed on poor countries to open their markets and liberalise trade, but rich countries-including Britain-are reluctant to practise what they preach. Telling poor countries to end subsidies and open their markets is like sitting in a glasshouse throwing stones, and today we want to address such hypocrisy.

We can alleviate world poverty by freeing up trade, and I want to set out how it be done. First, it can be done by market access. If Africa were to increase its share of world exports by just 1 per cent., it would generate $70 billion-approximately five times what the continent receives in aid. Conservatives believe that free trade is the engine of poverty reduction. Several case studies show the beneficial effects of increased global trade. The number of rural poor in China declined from 250 million in 1978 to just 34 million in 1999. The level of absolute poverty in Vietnam has been halved in 10 years. India and Uganda have also enjoyed rapid poverty reduction as they have integrated into the world economy. Poverty in Uganda fell by 40 per cent. in the 1990s, and school enrolment doubled. More has been done to address poverty in the past 50 years than in the past 500, but there is much more to do.

Mr. Harry Barnes (North-East Derbyshire): Will the hon. Lady explain the Conservative position on the Tobin tax, which would raise trillions of pounds a year on international currency speculation? The Chancellor of the Exchequer blows hot and cold about the measure, and is in a cold phase at the moment. It would be nice to know where the Conservatives stood on the matter.

Mrs. Spelman: I thank the hon. Gentleman for his intervention, but I do not think that one measure will fix the problems of global poverty. The underlying problem that the measure seeks to address is currency instability, to which many factors contribute. That is the key point.
How does globalisation work to reduce poverty? It increases inward investment and drives economic growth. It has meant that, for the first time, poor countries have been able to harness the potential of their abundant labour to break into global markets for manufactured goods and services. In fact, manufactured goods amounted to less than a quarter of developing countries' exports in 1980, but by 1998 they had soared to 80 per cent.

Poor countries' comparative advantages can be realised when they are able to export freely without unnecessary hindrance. For many people-indeed, for an entire continent-the picture seems less rosy. Many billions of people remain excluded from the process of globalisation, for which a number of factors are responsible, including conflict, sickness and poor government. However, many of them are excluded from trade by the prevailing trade systems. As Kofi Annan pointed out last year, poor countries are caught in a vicious circle-they need foreign investment but can offer little to attract it. In order to break out of that cycle, poor countries need to export and to open markets in which their goods can compete.

Here is the authentic voice of business. The chairman of Unilever wrote in the Financial Times last week:

"For all their talk of development, western nations in effect exclude many African exports from their markets."

That is from the chairman of a company that has been in Africa for more than a century.
Rich countries continue to impose barriers to trade on their poor neighbours. The most obvious are the punitive tariffs imposed on imported goods. Possibly the most well-known example is the recent decision by the United States to raise tariffs against steel imports, but the USA is not the only culprit. According to an Oxfam report published on 11 April this year, the European Union is more protectionist in respect of poor countries than are the United States, Japan or Canada. In fact, only New Zealand has fully opened its markets to products exported by least developed countries.

The least developed countries lose an estimated $2.5 billion a year in potential export earnings as a result of high levels of tariff protection in Canada, the EU, the United States and Japan. Without tariffs and quotas, poor countries could generate an 11 per cent. increase in their exports.

Hugh Bayley (City of York): Does the hon. Lady welcome the European Union's everything but arms initiative, which removes tariffs from everything but arms for the poorest countries? Does she think that that is at least a move in the right direction and will she explain why it did not happen while the Conservative party was in power?

Mrs. Spelman: I will discuss in some detail what the European Union has done to help and where it could do more. When the Conservative party was in power that initiative had not been proposed, but there is no doubt that it represents progress and I shall say so.
It is difficult to quantify the benefits that would accrue to developing countries if there were total import liberalisation. Some estimates have predicted gains of more than $3 billion each for India, China and Brazil and more than $14 billion for Latin America in total. The Government have pledged a number of times to reduce the import tariffs that face poor countries. Progress has been made. The initiative to which the hon. Member for City of York (Hugh Bayley) referred made a start in providing that free access to poorer countries, but the EU still maintains some of its highest tariff peaks on a large number of imported goods. Canada is another example, as 30 per cent. of poor countries' exports to Canada face peak tariffs.
On a slightly different note, another injustice is that typical exports from developing countries, such as agricultural and labour-intensive products, face far higher tariff barriers when they enter major northern markets than industrial products. The Prime Minister announced in his speech to the Labour party conference that we would offer Africa access to our markets, to practise the free trade that we are so fond of preaching. Are we extending free access to Africa? Perhaps the Secretary of State will clarify how market access is to be extended to Africa. What are the tangible steps to better market access? Which countries do we want to help? What objectives have we set and how will we measure success?

At the EU Heads of Government meeting-

Tony Worthington (Clydebank and Milngavie): Does the hon. Lady agree that sugar should have been included under the everything but arms initiative?

Mrs. Spelman: If the hon. Gentleman will forgive me, he has questioned me on a subject about which I know quite a lot as I worked for sugar beet growers for more than 15 years. I wish to give him an informed reply and not a simple yes or no. It is not a simple question. Perhaps he is not aware that, under the protocol signed by African, Caribbean and Pacific countries, many developing countries benefit from the same price as that received by farmers in this country. Automatically removing those preferential terms would create very real problems in the sugar industry of those countries. While I am sure that reform is needed in that area, we must be very careful that it does not hurt our farmers-we must find reforms that will work for them-or have damaging consequences for the most vulnerable farmers.

The Secretary of State for International Development (Clare Short): Everyone is in favour of free and fair trade until it comes to specifics. The hon. Lady has worked in sugar and sugar beet, where there are quotas that privilege certain of the poorest countries. The sugar beet farmers of the United Kingdom and farmers in some of those countries ran a campaign to weaken the everything but arms initiative and access for sugar from the least developed countries, and they succeeded to a degree. The hon. Lady is telling us that we should open our markets to the poorest countries, but she wants a position for the sector in which she has worked that is not as good as the one that she proposes overall. The Government's position was that we should have opened the markets fully to the least developed countries. The compromise was reached because, with the help of many Tory Members, who lobbied-

Mr. Speaker: Order. The Secretary of State will wait her turn.

Mrs. Spelman: It should be remembered, Mr. Speaker, that 50 per cent. of the UK market for sugar is supplied from developing countries, which is unique among the member states of the EU. The Government have a lot of work to do with other EU member states that do not have such an accepting compromise with the developing world and do not allow free trade both from and to such countries.

Simon Hughes (Southwark, North and Bermondsey): Will the hon. Lady give way?

Mrs. Spelman: I want to proceed on this point. We have had an exchange on sugar, and I do not wish to be accused of allowing the issue to dominate the debate. This is a short debate, a number of Members want to contribute, and I am sure that the hon. Gentleman will be successful later in catching Mr. Speaker's eye.

At the EU Heads of Government meeting in Seville later this week, the Prime Minister should promote the agenda of furthering free market access for poor countries. Could he make public the list of EU negotiating demands on the general agreement on trade in services, which have to be decided before the end of this month? Hon. Members have a real interest in that. Promoting genuinely free trade should also be high on the agenda in Canada later this month, when G8 countries meet. They have the greatest influence in changing trade rules. At the moment, the World Trade Organisation seems remarkably impotent at tackling human ingenuity in avoiding rules that are designed to free up trade. Reform is needed of the WTO so that it is even more effective. We could do more to tackle the scepticism among developing nations, however, as the WTO does not appear to serve them well.

Here is a practical suggestion for the Secretary of State-could we not provide a panel of lawyers and advisers to help developing nations make the rules of the WTO work better for them?

Roger Casale (Wimbledon): The hon. Lady is making the case for free trade as a motor for development, on which we can agree. Does she repudiate the experience of the previous Conservative Government, however, in tying trade to aid? That left a situation in which developing countries, far from being free to trade, were forced to import goods and services, and, often, arms from this country, which they did not want and did not need.

Mrs. Spelman: I am not here to repudiate and analyse history. The important thing is that we gave our support to the International Development Bill-now the International Development Act 2002-which untied aid. As part of that, we recognised the important focus of poverty reduction. I hope that, in everything I have said today, I have made it perfectly clear how committed the Conservative party is to reducing global poverty. I hope that the hon. Gentleman is left in no doubt about that.

Simon Hughes rose-

Mr. Simon Thomas (Ceredigion) rose-

Mrs. Spelman: I will give way to the hon. Member for Southwark, North and Bermondsey (Simon Hughes), if his contribution is on a wider point. I know that this is a short debate, Mr. Speaker.

Simon Hughes: On the wider issue of trade barriers, will the hon. Lady first tell us for the record whether the Conservative party is in favour of majority voting in the WTO? Secondly, is it in favour of majority voting in the European Union? One of the reasons that subsidy and trade barriers in agriculture have continued is that the veto in the European Union has kept them in place.

Mrs. Spelman: The hon. Gentleman may know that I spent a great deal of time working with different member states of the European Union on agricultural policy. I discovered that it is very difficult to make headway in negotiations when member states lack the good will to work together for the best result internationally, for Europe as a trading bloc, and, as I hope that I have made clear today, for poorer nations. All too easily, national interest can be over-used. I have seen it used and abused. There are times, however, when the national interest is an issue and when Governments would be expected to argue for the national interest of their country. In the past, the trouble has been that it has been used injudiciously, not by our country specifically, but by a number of other countries that have strong vested agricultural interests. That has led to the use of the national interest to defend a country's position being brought into disrepute. I am therefore wary of making a sweeping generalisation about whether it should or should not be used.

I want to move on to reform of the subsidies, which is a very important area. It is another matter that the Prime Minister should discuss in Seville later this week. Some of the worst distortions of trade are caused by the subsidy systems used by countries to bolster their domestic production. When it comes to subsidy, there is no way in which poor countries are able to compete with the power of wealthier nations.

In dollar terms, agricultural subsidies in countries in the Organisation for Economic Co-operation and Development are more than two thirds of Africa's total GDP. They account for more than a quarter of farm output in the United States, rising to 40 per cent. in the European Union and to more than 60 per cent. in Japan.

The Trade Justice Movement has provided us today with the example of rice growers in Haiti, who produce rice for local markets. However, as rich countries, notably the US, have subsidised their rice exports, Haiti has been flooded with cheap rice imports so that Haitian farmers are unable to find a market for their crops.

I have worked in agriculture for most of my working life, and I deeply sympathise with the problems that our farmers-particularly dairy farmers-face. The irony is that the common agricultural policy is meant to provide a reasonable standard of living for farmers in the EU, but it does not even provide a living wage for our dairy farmers and directly affects the viability of farmers in the developing world.

Recently, I went to India with Oxfam and Members may not be aware that India is the world's largest producer of milk. However, it cannot compete with subsidised milk surpluses from the EU that are exported to the growth market of the middle east. That is despite the fact that India is the second lowest cost producer in the world after New Zealand.

At the last ministerial meeting of the WTO in Doha, countries agreed to launch a new trade round, including the liberalisation of agricultural subsidies. That was certainly progress, and I hope that it comes to fruition. Nevertheless, the decision came after much foot dragging by the EU, and the scepticism of poor countries results from rich countries' reluctance to keep their side of the bargain in the past.

I am sure that the whole House abhors the decision by the US Congress to vote through an additional $100 million worth of subsidies for American farmers. Total US agricultural subsidies will then amount to $388 dollars per head, which represents a staggering 67 per cent. increase in farm subsidies. However, we should not kid ourselves that those sums get through to poor farmers. Americans may be our staunchest allies in time of war but, on trade, that increase is a retrograde step for the principles of liberty that their nation espouses. The move will cause incalculable damage to the lives of farmers in the developing world as well as to the livelihoods of farmers in this country. I clearly recall the outrage that resulted from the US decision to impose tariffs on its steel imports, but have the Government expressed similar condemnation of the US Farm Bill? When the Prime Minister goes to Canada for the G8 summit, I hope that he will use his good relations with the US President to make plain the damage that the Bill will do.
The US is not the only culprit. EU agricultural subsidies amount to $276 a head-to use the same currency-compared with $338 in the US. The last thing that we want is the equivalent of an arms race in farm subsidies. To prevent that, the CAP must be reformed. Some 1.6 million Africans live on less than $2 a day but every cow in the EU is subsidised to the tune of $2 a day.

Roger Casale: Will the hon. Lady give way?

Mrs. Spelman: I have already given way to the hon. Gentleman.

The Government White Paper on globalisation pledged to push for significant reform of the CAP, but that has not happened. The CAP must be reformed in a way that will ensure a reasonable living for British farmers and reasonable opportunities for their counterparts in poorer nations. Farmers in Britain face huge problems and they are not well served by the CAP. Conservative Members would like the Government to make a far greater effort to reform the CAP. In their White Paper, they said that they would use every opportunity to work for change to the CAP. When the Prime Minister attends the EU summit later this week, will he try to persuade other EU leaders to agree to a timetable for CAP reform?

There also needs to be reform of double standards. Rules that appear to benefit only the rich at the expense of the poor should not be tolerated. Those groups that accuse the developed world of double standards are right. I recognise that people may think that trade liberalisation is a one-way street for richer countries to get richer, but it does not have to be. I see it far more as a two-way street, with trade going both ways. The Government should tackle trade injustice with more vigour. We are calling on them to show leadership. If any poor nation behaved in the way that America recently did in passing its Farm Bill, it would have faced the wrath of the World Bank and the International Monetary Fund. It is one rule for some and another rule for others.
Later this month, the G8 will meet in Alberta, Canada. There has been much rhetoric about it being a development summit. The New Partnership for Africa's Development is high on its agenda. NEPAD is a partnership, and on our side that should mean free and fair market access. Partnership is a two-way process, however. In return for opening our markets, we can press for economic, political and social reform in those countries that want to trade with us. There is no doubt that corruption is one of the greatest impediments to development in such countries. One of the most important things that could be achieved in the summit would be a commitment from the G8 to address the imbalances in the trade system. Some 10,000 people have come to lobby Parliament today on the issue of trade. There can be no doubt that increasing levels of global trade offer hope to millions of people living in poverty. The Secretary of State has strongly defended globalisation in the face of its critics, some of whom are on Labour's Back Benches. The Government's White Paper on globalisation is called "Eliminating World Poverty: Making Globalisation Work for the Poor", but billions of people are still marginalised by the process. The challenge now is to make globalisation work on a global scale.