EU Trade Commissioner Peter Mandelson

EU Trade commissioner Peter Mandelson, said today in a speech in Brussels that further to the agreement last summer by rich countries on the the phasing out of export subsidies and all their equivalents, the EU stands ready to flesh out its plans on agriculture and to negotiate for real improvements in market access to its  markets for agricultural exporters.

In return, to achieve success in the current Doha trade talks, Mandelson said that there is a need from the more advanced developing countries to show a new willingness to make a commitment in principle to cut their industrial tariffs from the rates they currently apply. He said that one statistic is striking: 70% of the tariffs currently paid by developing countries are to other developing countries.

The following is an extract from Peter Mandleson's speech:

We signed up to a text in Geneva that committed us to far reaching agricultural reforms, including the phasing out of export subsidies and all their equivalents. We stand ready to flesh out our plans on agriculture and to negotiate for real improvements in market access to our markets for agricultural exporters, but this can only be done on the basis of fair reciprocity.

In particular, to make the Round a success we now need from the more advanced developing countries a new willingness to make a commitment in principle to cut their industrial tariffs from the rates they currently apply, not theoretical upper limits – and genuinely to open up their markets in services in business sectors that are critical to their future successful development. One single statistics captures it all: 70% of the tariffs currently paid by developing countries are to other developing countries.

Fair reciprocity does not require equal and precisely balanced reciprocity from all developing countries alike. We are not asking for concessions to be made by the poorest developing countries or those vulnerable economies that have special problems, as a result for example of preference erosion in commodities on which they are critically dependent. I accept the argument for special and differential treatment.

But let’s be clear here: pro development outcomes require an ambitious result of the DDA. Poor countries’ benefits will be commensurate with the depth of liberalisation that will be agreed. And they will only benefit if they sign up to international trade rules, not if they shy away from them.

But of course these rules have to be crafted with a development purpose.

Take intellectual property. On access to medicines, we will try to broker a deal to implement the agreement that had been reached in 2003 in the TRIPs. Developing countries are right to ask for this to be done now urgently.

Or take those issues known in the WTO as “trade facilitation”, - mainly border and customs procedures. It will benefit, by definition, the smaller, more vulnerable exporters, many of them in the developing world. We will push, ahead of Hong Kong, for an ambitious international agreement in this area, but one which provides for flexibility and assistance in the implementation, tailored to the development needs of each member of the WTO.

The WTO will deliver more for development for the poorer and vulnerable countries if we use all the tools to ensure a progressive integration in the global economy. This is where our bilateral trade and development agreement with the ACP family of nations, the Economic Partnership Agreements, have a critical role to play.

They are not just a means to secure our preferential relationship under WTO rules; they are a stepping stone for the ACP’s further integration in the multilateral trading system. They are not hard nosed, off the peg FTAs. First, they will stimulate regional integration among ACP countries, and that critical South-South linkage that I was referring to earlier. Second, they will enable us to put our development cooperation at the service of trade integration strategies that are defined by the ACP themselves, for their needs and individual situations. Third, they will be asymmetrical in nature, and they will allow for all the transitions that will prove necessary to make market opening in ACP countries a success.

I inherited these agreements, embedded in the Cotonou agreement. But I am wedded to them.

At the end of the day, the opportunities that trade policy can create – in the DDA, through EBA, via the future EPAs – will not really deliver growth and a reduction of poverty if they are not matched by the capacity to effectively tap in to opportunities.

Our trade policy is, incontestably, a generous one. I have recently submitted the first edition of what will now be a yearly report of the European Parliament on developing countries access to our markets and the take up of our trade preferences.

Its findings can be summarized in one sentence: the European Union is giving developing countries a chance, through trade.

We have been steadily and progressively opening up our markets to poor countries, through preferential trade arrangements, for the last 30 years. In 2003, 40% of our imports came from developing countries.

Our policy is particularly effective in favour of the poorer and more vulnerable exporters. 63% of LDC exports (excluding petrol) to the US, EU, Canada, and Japan went to the EU in 2003. This makes Europe, by far, the most open market for the world’s poorer countries.

Our preferences are really used. The proportion of goods entering the EU at zero tariff or at reduced rates of duty steadily increased between 1999 and 2003 – the reporting period for my report – from 71% to 79%. Only 3% of goods imported from the ACP family of nations charged full duties in 2003. And LDCs benefit, of course, from EBA.

And frankly, we compare well with the large industrialised trading nations, even though these issues are too serious to be reduced to a beauty contest. The data shows that we take in close to 70% of LDC agricultural exports, against around 17% for the United States.

Should this make us complacent? Certainly not.

We can do more to increase the take up of our preference programmes. Primarily through a review of the rules of origin regimes that underpin these preferences. My colleague Lazlo Kovacs and I will continue to push through this agenda, starting with a review of rules of origin for the GSP, but reviewing them across all our preferential trade agreements and arrangements, with the purpose of not only simplifying them, but also, where appropriate, measurably relaxing them.

Finally – and this is, in my view, the biggest priority – we need to step up – sizeably - our effort at capacity building and supply side development, through “aid for trade”. The Commission has recognised the needs in this area in our recent communications on the review of the Millenium Development Goals. I am now confident that President Barroso will forcefully bring proposals on this to the table at the G8 Summit in Gleneagles.

So my message is simple. Trade does support development, but the link is not automatic. It needs supporting action. For both the developing world and the developed world, the time has come to focus on innovative policies to facilitate trade integration and trade adjustment.

I have set out in my remarks today what these policies entail for developing countries in current trade talks: fresh market opportunities from both the North and the South, new tools to effectively benefit from these opportunities.

But I will also have to focus on the home turf. Trade adjustment also affects workers here in Europe, and I think a sharper focus on the problems of the “losers” from globalisation and trade shocks is needed, if we are to successfully fend off a renewed bout of protectionism.