EU: Trade Agreement on Banana Imports
(12 years, 3 months ago)
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Baroness Hooper
To ask Her Majesty’s Government what is their assessment of the effects of the European Union trade agreement on banana imports and its impact on African, Caribbean and Pacific banana producers.
Lord Shutt of Greetland
My Lords, before the debate commences, I have two things to say. First, in order to accommodate your Lordships, particularly those who are taking part in this debate, arrangements have been made for the splendid services of the Long Table to be available until 9.05 pm. Secondly, I remind noble Lords that this is a timed debate and that apart from the noble Baronesses, Lady Hooper and Lady Stowell, participants are limited to five minutes, and that when you see the number five it is the time to sit down.
Baroness Hooper
My Lords, when this Question was tabled, it was very topical. Now, almost two years later, having been retabled and having awaited a suitable time slot, I think it is still topical. The point is that bananas are very important to all of us. I am told, and I am quite prepared to accept without further research, that bananas are the most eaten fruit in the world and that the European Union market is the world’s largest consumer of the fruit. It is also well known that bananas provide a very healthy component of our diet, being rich in potassium.
On a personal note, I can well remember as a small child in post-war Britain eating my first banana. They were a rarity then, which seems incredible now, but I have always loved bananas since then and taken an interest in policies affecting them. Imagine my good fortune when the time came for me to take up a postgraduate fellowship in international law and economics at the Universidad Central del Ecuador in Quito, only to discover that Ecuador was a major producer of bananas. To this day, I find Ecuadorian bananas have a special taste, and it is one that I enjoy—with no disrespect, of course, to other producer countries.
As I said at the outset, this Question was tabled in 2010, following the historic Geneva Agreement on Trade in Bananas. The agreement came to be known as “the end of the banana saga”. The long-running trade conflict that preceded it has been described as,
“one of the most technically complex, politically sensitive and commercially meaningful legal disputes ever brought to the WTO”—
the World Trade Organisation. The bone of contention lay in the fact that the big American companies like Chiquita and Dole, the “dollar banana” producers, which farmed large plantations in Ecuador, Venezuela, Colombia and elsewhere in Latin America, were able to undercut the prices of the smaller banana producers, which were covered by the ACP—African, Caribbean and Pacific—policies of the European Union, which gave preferential trade terms to these small countries and imposed high tariffs on the Latin American exporters.
In talking of the ACP countries, I am referring to the 10 main banana-exporting countries: Belize, Cameroon, Côte d’Ivoire, Dominica, the Dominican Republic, Ghana, Jamaica, St Lucia, St Vincent and the Grenadines, and Suriname. It is an exotic roll call, and I know that in this short debate we shall hear in more detail about specific countries.
The deal between the European Union, Latin American banana producers and the United States aimed to comply with WTO policies and settled the 15 years of banana disputes. It cut the tariff that applied to Latin American banana imports to the EU countries and led to measures to help ACP countries to adjust to this new trading environment by providing financial support for investments in the improvement of competitiveness, economic diversification policies and broader social, economic and environmental impacts. In addition, it has to be said, ACP banana countries continued to enjoy duty- and quota-free access to the European Union under economic partnership agreements, which are separate trade and development agreements.
I believe that it is fairer to have a policy of social support for poor producing countries than to introduce a system of quotas, which encourages everyone to have a go. I am in favour of that policy. My main question to the Government and the Minister is on whether these arrangements are working. Is there fair and free access to European Union markets for Latin American bananas and the ACP product? Have the ACP countries been able to keep up the viability of their small-scale production without the preferences that they previously enjoyed? Have the special measures intended to help the ACP countries adapt to the effects of changes in the EU import regime really worked?
Given that the integration of all developing countries into the multilateral trading system and the global economy is a key European Union development objective, have the banana accompanying measures, which are known as BAM, been adequate? Has the €190 million budget been enough to meet the needs? These measures were due to last for four years from 2010 to 2013. Perhaps this is a good moment to ask whether there is an intention to review and renew these measures.
In considering these issues, it must always be remembered that bananas are crucial to the livelihoods of millions of people and a major source of export revenue for many developing countries—not only for the small countries, but also for the people working in the large plantations who are equally dependent on bananas as a source of livelihood. However, I recognise that the Caribbean countries have a special case. In particular, many of these small island nations previously produced sugar cane but, as a result of European Economic Community—as it was then known—policies which supported the production of sugar beet, they had to diversify. Because of climate and other weather conditions, bananas took over as the only suitable alternative crop.
As I have a few moments left, perhaps I may mention a couple of somewhat unrelated points. There may be other ways to use bananas in order to increase the size of the market—for example, as an alternative energy source. The foliage and fibre, which comes at the end of the production of the fruit, could be used to create biomass energy rather than simply being burnt off as it is currently. Research would have to be initiated to analyse its viability. Perhaps the University of the West Indies could consider doing something on those lines.
Most bananas carry a country-of-origin label and you know whether you are buying Colombian, Costa Rican or Ecuadorian bananas. But fair trade bananas carry only a fair trade label. Is there an explanation for that? It is possible that some other speakers may have the answer, as well as my noble friend.
As a postscript, I say that over the years your Lordships’ House has had many opportunities to debate the subject of bananas, largely because of the long-running trade dispute. That situation may happily have changed and the future may not hold so many banana debates. I cannot resist mentioning the last occasion on which we had such a debate—I think it was in 2006—which the noble Viscount, Lord Montgomery of Alamein, introduced. It is good that he is here today to give continuity.
I also remember a much earlier debate when the late Lord Pitt of Hampstead participated. He spoke on behalf of the producers in Grenada. Therefore, I am very happy to see his noble kinswoman, the noble Baroness, Lady Howells of St Davids, will be lending her voice to today’s proceedings. I thank all of your Lordships who are joining in the debate and I look forward to listening and learning from all the contributions, and from the Minister’s reply.
Lord Foulkes of Cumnock
My Lords, I congratulate the noble Baroness, Lady Hooper, on obtaining this debate at last and on her eloquent introduction. I declare a non-pecuniary interest as president of the Caribbean Council. Bananas are still a very important source of income and employment in many parts of the Caribbean, particularly the eastern Caribbean. St Lucia, for example, has 1,500 farmers in the banana sector but it has seen a huge decline. In its heyday, 30,000 people worked in the banana sector.
We have seen rapid liberalisation of long-standing preferential trade agreements taking place. When that happens, they need to be replaced by financial support and capacity-building measures to make sure that people whose livelihoods are being swept away are able to become more competitive or to find employment in other sectors. The banana accompanying measures, which were agreed by the European Commission, will go some way to achieving that by extending the earlier banana support programme with an additional €190 million. While that money is of assistance it covers support only until 2013 whereas, depending on the progress with the Doha round, we expect tariff reductions to continue until 2020. Therefore, there is a gap.
It is particularly scandalous that, due to a stand-off between the EU institutions, there has been a delay between the agreement to dramatically lower the preferential tariffs and agreeing the funding mechanism. In fact, the Geneva agreement on bananas, to which the noble Baroness referred, was signed in December 2009. Now, more than two years later, the European Parliament has only just passed a resolution allowing the banana accompanying measures to proceed and the funding has not even started to flow yet. In her reply, will the Minister give us an assurance that our Government will do everything in their power to ensure that the European Commission gets this money flowing as quickly as possible?
Turning to other sectors, although there has been a lot of discussion on bananas because of the dispute, which remains an important element, we need in the Caribbean to see a movement away from sugar and bananas into higher value-added goods and services where it has a unique advantage. That has already been demonstrated, for example, in developing a massively successful, globally competitive tourist industry, which is based on those beautiful white sandy beaches and the turquoise seas that we all dream about, particularly in the middle of this London winter. Incidentally, the decision by the Government on air passenger duty was particularly unhelpful to the Caribbean in developing the tourist market.
It is vital that everything possible is done to help to protect these success stories. Industries such as Caribbean rum are already heading in this direction. It is of the highest quality and now is entering a wide range of markets around the world through improved branding and the use of a quality market. Other industries, such as creative and cultural industries, financial services and high-quality cocoa and coffee, all have the potential with the right support to be globally competitive and successful contributors to the economies and employment across the Caribbean region.
I urge the Minister to ensure that her Government and the European Commission continue to promote the ongoing diversification of the Caribbean economy, and to support this very encouraging trend of developing and growing new and existing industries where the value-added element stays in the Caribbean rather than elsewhere.
Finally, the economic partnership agreement was signed in October 2008 in good faith by the Caribbean Governments, who understood that they would be locked in for the long term. Many of the preferential benefits in terms of market access and development support were going. Those previous certainties now seem to be disappearing before their eyes. The EU has opened negotiations in quick succession, making bilateral agreements with countries in Central America, South America and now with India in products that are of key importance to the Caribbean. In these negotiations, many of the special concessions that were granted to the Caribbean in the EPA are being watered down or nullified as greater market access is granted to producers in other parts of the world. Some assistance is being provided, but much of it still exists only in theory. Several years down the line, Caribbean Governments are now beginning to have to reduce their duties against European products without the benefit of the aid-for-trade assistance which was promised.
I conclude by asking the Minister and the noble Lord, Lord Shutt of Greetland, to tell us the extent of the aid-for-trade support that has been provided by the United Kingdom and the European Commission to the Caribbean since the EPA was signed; and whether she agrees that more needs to be done to help the Caribbean, and that it needs to be done quickly.
Baroness Benjamin
My Lords, I, too, thank my noble friend for securing this debate. We must never forget the vast wealth that the Caribbean provided for Europe, yet EU agreements and those that will be negotiated in years to come will further erode the benefits that the Caribbean has enjoyed as a preferential trading partner of the UK and Europe because of these historic and cultural ties.
This leaves one wondering whether the UK and Europe actually care about the Caribbean any more. Policy decisions taken in recent times on sugar, bananas and more recently on tourism in the form of the unfair UK air passenger duty, seem to reflect a lack of understanding or perhaps interest in the impact of UK and European policies on Caribbean economies and Caribbean people. That is what seems to be happening once again with the new EU trade deals involving bananas. There is a real threat facing the banana growers of the Caribbean who are desperately trying to make an honest living for themselves and their families. The agreements already in place are harming small island states in the Caribbean, especially the Windward Islands, which in the 1990s provided around 40 per cent of the UK’s bananas, but now only 8 per cent. The figure has gradually been whittled away by the import of lower-cost bananas from Latin America, picked by low-paid workers. This will only be made worse with the new EU trade deals with Columbia and Peru.
While the EU has not stood by its commitment to protect the region’s banana growers, the organisation Fairtrade has helped thousands of farmers to protect their livelihoods by securing a market for their bananas. This market has grown from 30 per cent in 2004 to over 90 per cent in 2009. The challenge now is to maintain sales to the UK’s Fairtrade banana market as well as developing additional markets for other fruit products from the islands. But there are now only around 3,500 farmers compared with 27,000 in 1992. High unemployment, youth unrest and poverty are real threats now facing the island communities. The islands have also been hit by a series of natural disasters, but the resilience of the farmers has meant that banana production could continue because they were able to turn to the Windward Islands Farmers’ Association and use the disaster fund they had put aside as a result of Fairtrade premiums. Thanks to Fairtrade, farmers have been given a lifeline and are now empowered. They also receive more money for their bananas, helping them to diversify and develop sustainable livelihoods for themselves and their children in the future. It is morally wrong for us to be part of a regime that takes all this away from them. It has been a struggle for survival. Income has declined from just over £1.5 million in 2009 to £150,000 in 2011. So the key to helping their survival is for companies, retailers and the public to buy Fairtrade Windward Island bananas. We can all make a difference in our own way.
What can the UK Government do to help? It was good to hear Foreign Secretary William Hague hint at the 2012 UK Caribbean Forum that he wants a new era promoting prosperity, growth and development between the UK and the Caribbean, but this will be difficult for Caribbean banana farmers as the EU has offered just €190 million to all banana farmers across three continents to be shared between nine countries as compensation for going back on commitments. This is clearly insufficient to cover the costs of adjustment. And astonishingly, almost two years after the money was promised, there is still no sign of it. Also, the banana accompanying measures resources are now being given directly to Caribbean Governments, which means that small farmers in the Windward Islands who are in desperate need are not able to access the BAM directly. This is another blow to Caribbean banana growers.
The Caribbean needs sustainable economic development to create the jobs and growth that will assist the transition from developing to developed countries. They want a hand up and not a hand out. Let us not take away with one hand and give aid funding with the other. People need to retain their dignity, pride and self-worth. Therefore we need to consider what can be done to support the Caribbean in adapting to new trade regimes. I would like to ask my noble friend the Minister what action the Government have taken, first, to ensure rapid payment of the elusive banana accompanying measures. Secondly, they should support the transfer of BAM funds directly to producers in the Windward Islands. Finally, they should top up the outstanding amounts from unallocated money from other EU funding programmes.
Bananas were first brought to the Caribbean by the Europeans to feed the enslaved workers—my ancestors—500 years ago. Today they are a source of income for the Caribbean people, so let us show some compassion and consideration for our long-term loyal Caribbean friends and supporters by continuing to buy their bananas.
Lord Palmer
My Lords, gosh, what an act to follow. We have heard a very emotional speech from the noble Baroness, Lady Benjamin. I thank the noble Baroness, Lady Hooper, for introducing so succinctly this incredibly important subject. She has asked several very important questions, and I was most interested in her ideas for biomass in terms of renewable energy, something that is close to my heart. As usual I have to declare an interest as a residual beneficiary of a banana plantation on the Caribbean island of St Lucia, and my comments are going to be strongly related to that island. I am very grateful indeed for the help I have had from the St Lucian High Commissioner.
All noble Lords taking part in the debate are by and large singing from exactly the same hymn sheet. Some 100 years ago, there were over 6,000 banana plantations on St Lucia, while today there are fewer than 2,000, which is a dramatic drop. Twenty years ago, the island produced a massive 135,000 tonnes of bananas, which has dwindled to a mere 6,000 tonnes today. This has been caused mainly by the new European Union trade regimes coupled with the huge increase from Latin American producers who, with their geographical terrains, can harvest their crops at a fraction of the cost of the ACP countries, and this is due especially to the much cheaper labour and the size of their farms/plantations. As such, the lovely island of Grenada, which I have been lucky enough to visit, has ceased exporting altogether. This has caused great hardship to those who live in the countryside and who are not involved in the slowly developing tourism industry, which, of course, is being hampered by the grossly unfair APD—the noble Lord, Lord Foulkes, made this point particularly forcefully. It really is madness that to fly to Hawaii is cheaper in APD than to fly to the Caribbean, particularly given that Hawaii is slightly more than double the distance of the Caribbean from London.
I have one very serious point to make on diversification for the small producers, many of whom live on our property in St Lucia. They need to earn a living. Their easiest option is to turn to growing the likes of cannabis, which is dead easy to grow in such a lovely climate and all of which will make its way to the nearest port in the United States of America. This surely cannot be a sensible state of affairs. It would encourage an increase in drug trafficking, which in turn would lead to a huge increase in organised crime. I urge Her Majesty's Government to do all they can to avoid this ghastly scenario.
Baroness Howells of St Davids
My Lords, I, too, thank the noble Baroness, Lady Hooper, for raising this debate. I feel sure that Lord Pitt, wherever he is, will be pleased to know that the noble Baroness remembered his contribution on this topic some years ago. I know that his wife and family will be very pleased, too. I am unclear as to whether I should declare an interest. My grandfather was fortunate enough to purchase the estate on which his great-great grandfather was enslaved. Our family became growers and exporters of bananas.
Despite the lack of landmass and the loss of markets in spices and sugar cane, with its by-products of rum, sugar and molasses which had brought wealth to the islands, bananas remained the only real export after the islands became independent nation states. It is our belief that Caribbean bananas are the best in the world, but their history has been well told this evening.
Since the formation of the common market, meeting upon meeting has been held to decide what is to happen to the banana. Most of those meetings have done one important thing—not so important to us, but important to Europe: weakening the sale of bananas and, in some cases, the obliteration of their position in the Caribbean as a wealth-producing entity.
For well over five decades, bananas became the main source of revenue in the Caribbean. They kept the islanders in employment and were to some extent the mainstay of political stability. The growing of cannabis in the islands has already been referred to. What else can they do? Illegal it may be, but everything else has been taken away. I urge the British Government, in their meetings with the EU, to look one more time at this issue.
Small farmers could depend on the Geest boats coming in to collect bananas, which not only maintained their living standards but kept whole villages in employment. Wholesale love and care was lavished on bananas to get them ready for export, so that Britain would get the best quality.
At that time, preferential treatment was given to all the ACP countries. That treatment was in recognition of the relationship which the United Kingdom had with those small island states when they were colonies. During the past 20 years, the Latin-American countries, spurred on by their US-based companies, have made complaints to the World Trade Organisation about what they describe as preferential treatment for ACP countries. In 1996, Guatemala, Honduras, the USA and Ecuador issued a legal complaint citing three areas of dispute. They talked about the discriminatory tariff allocation and unfair licensing procedures—countries were expected at that time to import ACP/EU bananas in order to export bananas from Latin America into Europe. The procedures were said to contravene the most-favoured nation rule.
There began a series of meetings, got together to discuss bananas. Most of this was done without the input of the Caribbean or even the African countries. We heard of the imposed deadlines for exploration of preferences, ending with the EU adopting a two-stage approach to what they saw as a problem. At the end of those lengthy discussions, the Caribbean was forced to agree to an economic partnership.
Other Members have mentioned the various conventions that we have. Then came the Doha ministerial meetings and the creation of the ACP group, which signed up to a comprehensive EPA covering goods, services, trade-related rules and development co-operation. Throughout those years of negotiations, ACP Governments and campaigners expressed serious concerns about the feasibility of free trade between an established, wealthy trading bloc like the EU and the poor economies of the smaller nations. They were right to point that out.
I know I am running short of time. Although the homelands have made lots of strides, one thing that has happened is the new tax on air travel. That has brought the countries down.
Viscount Montgomery of Alamein
My Lords, I join others in congratulating the noble Baroness, Lady Hooper, on introducing the debate. I opened the previous one in 2006 and it is a pleasure to follow the noble Baroness in this great saga of the banana. I seem to have been in the banana debate for many years. In fact, the noble Baroness, Lady Howells, who I follow, mentioned Lord Pitt. He was a great friend of mine. We had many discussions about bananas together in the bar from time to time. I am glad that she mentioned him. We certainly owe him a great debt. He and I were together in that activity.
The problem is that I am once again a lone voice in speaking about Latin American bananas as opposed to ACP bananas. Latin American bananas are unsubsidised and are grown on a much bigger scale. They are of just as good quality as any other bananas, as the noble Baroness, Lady Hooper, pointed out from her experience in Ecuador. I, too, have lived in certain banana-producing countries. I was a resident of El Salvador for some years. Central American republics produce bananas on a very big scale and enjoy a tariff system that is reducing all the time. It will eventually be reduced by 2020 to 75 euros a tonne.
It is understandable that Latin American bananas are voluminous because they are grown on a plantation scale. It is not correct, as has been alleged, that the workers are persecuted and hard done by. For instance, in Colombia the banana plantation workers average 75 per cent above the minimum wage. They are well paid and not a persecuted minority. It is important that we realise that Latin American bananas, which are very good quality, should be allowed to arrive here in reasonable quantities. The central American republics have agreed to a system of tariff reductions over a scale approved by the World Trade Organisation. The World Trade Organisation was set up to encourage a proper system of free trade wherever possible. I like to think that we will be able to get this problem solved. I doubt whether that will happen in the short term because these problems are considered intractable.
I appreciate that the Caribbean countries have special problems. As has been pointed out, they need to diversify their economies and exploit their rights in tourism. As the noble Lord, Lord Foulkes, pointed out, the Caribbean beaches are of fantastic quality. Tourism is surely a method of improving their quality of life and providing equal numbers in employment. Hotels are built continuously and require large labour forces to service them. I think the future of the Caribbean lies more in tourism than in producing bananas on small-scale, family-owned smallholdings which inevitably cannot be of the same quality as those produced on a large scale in Latin America.
I welcome a newcomer to this debate, in the shape of the noble Baroness, Lady Stowell. I wish her well in her endeavours to take up the banana cause. I have no doubt that it will not be the last time that we hear about it.
The Earl of Sandwich
My Lords, once upon a time, only 12 years ago, the UK among 15 European Union states signed the Cotonou agreement with the 78 ACP countries, which was designed to guarantee former colonies access to EU markets for their primary products. I well remember the preamble—I expect that the noble Lord, Lord Foulkes, will remember it from his time—solemnly committing Europe not only to meet its trade obligations but to eradicate poverty and to ensure continued development, including alternative forms of livelihood. Then came globalisation and liberalisation, the free trade winds blew through the WTO, and a series of interim economic partnership agreements were signed with a number of countries towards the end of 2007. A more comprehensive EPA with the Caribbean countries was signed in October 2008 but, as we have heard, it has been watered down since.
Meanwhile, the WTO, led by the US—let us not forget—on behalf of Latin American banana exporters such as Ecuador, has long complained to the EU that the old preferences were still there and discriminating against them. So two years ago, Europe caved in and let them in. But, as the noble Baroness, Lady Benjamin, and others have asked, what has happened to the protection for growers in the smaller, vulnerable states in the Windward Islands, so carefully established for them in the Cotonou treaty? The answer is that the UK, the EU and the whole world have let them down.
While UK sales of bananas have risen dramatically, the increased volume entering from other sources last year has driven down prices in the supermarkets, with a devastating effect on growers. As the noble Baroness, Lady Benjamin, said, the only bright future lies with the producers linked with the Fairtrade movement. I was pleased to see the familiar blue and yellow logo on the bananas in the Bishops’ Bar today. Fairtrade accounts for at least a quarter of UK banana sales. Through the Fairtrade Foundation, which I remember began with the backing of several leading aid agencies a generation ago, and the support of Waitrose and Sainsbury’s, thousands of producers and banana workers in the Caribbean are now getting a living wage. But it is not enough.
Certifying bananas as Fairtrade ensures that banana farmers in Africa and the Caribbean receive a decent price, but this is undermined by supermarkets engaging in banana price wars. A few years ago the price of loose bananas fell below 84 pence a kilo, down to as low as 67 pence a kilo. That was low enough. Last year, Asda cut the price of its loose bananas to 38 pence a kilo, its sixth cut in six weeks and a move that placed acute pressure on rivals to follow suit.
Since 1992, some 20,000 of the 24,000 farmers in Dominica, St Vincent, St Lucia and Grenada have gone out of business altogether, and the future for its remaining farmers looks bleak. I am not sure that the suggestions of the noble Lord, Lord Foulkes, and my noble friend Lord Montgomery will be enough for those growers.
So what are our Government doing at this end to stop the banana price wars that are so harmful, especially to growers least able to cope with squeezed margins in the supply chain? What happened to the decision to appoint a groceries code adjudicator, which they were once so keen about, but which seems to have got stuck in the system? Finally, what happened to the development objectives in the Cotonou agreement? Have they been jettisoned in the name of the WTO and free trade? The agreement states:
“The partnership shall be centred on the objective of reducing and eventually eradicating poverty consistent with the objectives of sustainable development”.
As a consolation prize, I am hoping that the noble Baroness will tell us how many banana-producing ACP countries who are not LDCs benefit from other arrangements, such as the “Everything But Arms” agreement and any titbits left over from the generalised system of preferences and other forms of concessional trade.
I conclude by thanking the noble Baroness, Lady Hooper, for introducing the debate and I dedicate these last few words to the late Lord Walston, a Labour Peer and personal friend who was a farmer in Cambridgeshire and St Lucia and who would most certainly have joined in this debate.
Lord Liddle
My Lords, on behalf of the Opposition, I thank the noble Baroness, Lady Hooper, for bringing forward this debate and for the charm and conviction with which she introduced it. In the debate, we have had many notable contributions. My noble friend Lord Foulkes made me dream of the white beaches and turquoise oceans, but he also spoke with great knowledge and experience from his time as a Minister at international development. We had the passion of the noble Baroness, Lady Benjamin, while other noble Lords, including the noble Viscount, Lord Montgomery, the noble Lord, Lord Palmer, the noble Earl, Lord Sandwich, and my noble friend Lady Howells were speaking from personal knowledge.
Regarding my own knowledge of this issue, I suppose I should declare an interest. The part of my life in which I came across this was while I was in my noble friend Lord Mandelson's cabinet when, as Peter Mandelson, he was Commissioner for trade. This was one of the issues that came across one's desk then, and it is one of the longest running trade sagas in the history of the European Union. Its origins go right back to the start, when the French won preferences for their colonies against the resistance of Germany. When we joined the Common Market, we were able to get preferences for our colonies, which led to the formation of the ACP group. Since then, however, the brutal facts and realities of free trade have caused great difficulty for the vulnerable communities that have depended on these preferences.
There is an irony here. It is a tragedy that some of the general policies for which we, as a country and as the Labour Party, have fought—for instance, the idea that there be multilateral, supranational jurisdiction on trade issues—are good things but that is what, since 1993, has led to the EU having to abandon its preferences. Similarly, we want a general liberalisation of agriculture. We want to break down the protectionism of the common agricultural policy. So while we want liberalisation of agricultural trade, again, the harsh facts in this case mean very great difficulties for people to whom we owe a moral obligation.
This has been going on a long time. The EU fought a valiant battle to prevent this happening. The first case by the United States was brought in 1993 and the Geneva agreement was reached only in 2010. We stalled for years, first by fighting the idea that we had to give up on the preferences in Europe and then by saying that we proposed a tariff that was quite high in terms of protecting the Caribbean and other producers. Ultimately, because of the pressure from the WTO jurisdiction system, we have had to give way.
I turn to my questions for the Minister. First, what is her assessment of the banana market? What has the impact been? How serious is it in the countries that are affected? What is the Government’s view of what can be done to help? Secondly, the papers refer to the safeguard clauses that are allowed into the EU/Andean association agreement. How have they been implemented? Have they helped to protect the vulnerable producers? Thirdly, as many noble Lords have mentioned, what are we doing to ensure that the €190 million of special support is being wisely and properly spent? How can we ensure that that help is speeded up? What additional help will we be fighting for beyond 2013? I hope that we will regard this as a priority for the EU budget. Lastly, on a point that the noble Earl, Lord Sandwich, made, what pressures are we putting on our supermarkets to try to support fair trade standards in the retailing of bananas, which would help the most vulnerable producers?
These are important questions and this is an important clause. We thank the noble Baroness, Lady Hooper, very much for tabling this debate.
Baroness Stowell of Beeston
My Lords, I have found this debate fascinating, and I congratulate my noble friend Lady Hooper on her patience, as I know she has waited a long time to secure it. Her thoughtful and expert contribution—and indeed those from all noble Lords—clearly demonstrates why, as she says, this topic is still relevant today.
It was clear from the contributions by the noble Baroness, Lady Howells of St Davids, and my noble friend Lady Benjamin that this topic arouses a lot of passion and emotion because of our ties with the part of the world that we are discussing. In my response I will try to do justice to the points that have been raised. I thank the noble Viscount, Lord Montgomery of Alamein, for his welcome to me on this topic, which is one that I know noble Lords in the Chamber today have debated on previous occasions.
As set out in our White Paper, Trade and Investment for Growth, published last year, this Government uphold fully the principles of free and open markets. Free trade reduces the cost of goods and inputs to consumers and manufacturers. It stimulates competitiveness and spurs innovation. Most importantly, free trade, especially at this time, supports sustainable and balanced growth which is, to state the obvious, essential to the global economy. As well as free trade, we believe in non-discrimination between countries at a similar level of development. The European Union’s Geneva Agreement on Trade in Bananas, introduced in 2009, supports both these principles.
Prior to that agreement, the high tariffs placed on bananas imported into the European Union from countries other than the so-called ACP group—Africa, Caribbean and the Pacific—were plainly discriminatory. Not only did that restrict market access and opportunities to banana producers in Latin America and elsewhere, it also raised the price of bananas for consumers in Europe. As I think most noble Lords would agree, those outcomes were not fair, reasonable or economically sensible. By contrast, the Geneva agreement will reduce discriminatory tariffs by 2018, and that reduction will bring considerable benefits.
I shall start with the benefits for the consumer. As my noble friend Lady Hooper has summarised in her remarks, bananas are the most widely bought fruit in the UK. Indeed, in 2010 they accounted for 27 per cent of all fresh fruit purchases. Incidentally, we buy more fair trade bananas than the rest of the world combined. My noble friend asked about the labelling of fair trade bananas and why they did not identify their country of origin. I imagine that the boxes in which the bananas are carried into stores will state their country of origin. I am not sure of the answer to the question about their individual packaging, but I will write to my noble friend. It is true that we are the main source for fair trade bananas. I was interested to hear that earlier today the noble Earl, Lord Sandwich, spotted fair trade bananas in the Bishops’ Bar.
The price of bananas has fallen by around 10 per cent over the past 10 years, due to more efficient production and distribution. Further reductions on tariffs should help maintain this trend. The noble Earl asked what the Government were doing to combat a banana price war. The market will always determine the price of commodities; it is not the role of Governments to seek to control that.
The Geneva agreement will also support the industry, as the more efficient producers will be able to compete more fairly. I will come shortly to support for the Caribbean area, but in the long term, the agreement will support Caribbean and other ACP economies as it will encourage efficient production or diversification into other economic sectors better suited to local conditions.
While removing discriminatory tariffs is the right approach, of course I recognise that adapting to a new set of circumstances brings a number of challenges to producers in Africa and the Caribbean, as has been identified by noble Lords this evening. It is therefore right that countries are given time to adjust, and it is why the Geneva agreement will take up to nine years to be fully implemented.
My noble friend Lady Hooper asked whether the agreement is working. It is too early to assess the full impact of the agreement on both the Latin American and ACP producers. It is worth pointing out that since 2009 when the agreement first came into force, the share of the EU market has in broad terms remained unchanged in that the Latin American countries have retained about 70 per cent of the market. My noble friend Lady Benjamin gave specific statistics regarding individual ACP countries; I am afraid that I do not have them in front of me, but the total figure in terms of region has remained steady. That said, when the agreement was finalised, the Commission clearly assessed its potential impact. It calculated that the tariff changes were unlikely to have any major macroeconomic impact on the ACP group of countries as a whole. However, the Commission’s analysis also concluded that there could be significant loss of export revenue for some, in particular for Dominica and St Vincent. There could be consequences for some individual producers if cost-saving measures were not introduced, leading to job losses and localised social difficulties—in other words, if those producers did not or could not increase their efficiency in order to compete.
The Commission’s overall assessment was the rationale for providing further assistance—the banana accompanying measures, or BAMs as they are sometimes known and have been referred to by several noble Lords this evening—on top of the restructuring activities that had been undertaken with EC funding from 1994 until 2008. This assistance package of up to €190 million should be the final tranche of support for banana producers either to increase their international competitiveness for the adoption of new technology or diversify into other economic sectors. Several noble Lords asked what might follow the four-year period. It is worth pointing out that one of the reasons why it has been possible for the European Union to introduce these BAMs and the support is precisely because they are temporary. Had they been a permanent measure, they would not have been compliant with the WTO agreement.
The noble Lord, Lord Foulkes, and my noble friend Lady Benjamin, along with others, expressed disappointment about these funds having yet to reach the producers they are meant to help. We share that disappointment. Initially, as the noble Lord, Lord Foulkes, indicated, the problem was related to internal wrangling over competence between the Commission and the European Parliament. However, noble Lords will be pleased to know that, as the noble Lord, Lord Foulkes, has indicated, this has now been resolved. That resolution means that there are no further excuses for delay. To that end, the head of DfID’s office in the Caribbean has raised the issue of slow disbursement rates with the Commission, most recently on a visit to Brussels last December. We have been lobbying our European partners in Brussels as well. This evening I can at least share with noble Lords that the EC delegation expects approval for disbursement for Jamaica and Belize in summer 2012. We need to keep up the pressure—I will certainly use this evening’s debate as a way of providing ammunition for our representatives in the region—but at the moment that is as much as I can offer.
Lord Foulkes of Cumnock
If I had been as courteous as the noble Viscount, Lord Montgomery, I would have welcomed the Minister to the debate and to the Dispatch Box. She has been very helpful. As I have said on several occasions, I have great respect for our Ministers in DfID, Andrew Mitchell, Alan Duncan and Stephen O’Brien. We have a very good team there. Surely one of them could go over to Brussels, as Clare Short and I used to, to give them a shaking and make sure that this money gets flowing as quickly as possible. That is something that can be done. We have a powerful team there. If the Minister draws attention to the widespread support across every Bench in this Chamber, whichever one of them goes can go with our wholehearted blessing.
Baroness Stowell of Beeston
I think they will hear that message loud and clear from the noble Lord, for which I am grateful.
Despite the setback on BAMs, previous assistance given to banana producers is having some effect. Some countries, namely Cameroon, Belize, Suriname and Ivory Coast, are increasing production and continue to use EC trade assistance funds to increase their competitiveness. I am conscious of the time so I will keep rattling on. However, some countries no longer find it economic to continue in banana production. Other producers have opted to diversify into other sectors such as poultry farming, or on-farm agriprocessing. In Jamaica, 35,000 people have benefited from 15 projects supported by the EC’s special framework programme for banana producers.
Very briefly, there may well be scope in my noble friend’s suggestion of using bananas as a new source of energy. I will certainly inquire and, if there is anything to report, come back to my noble friend.
The noble Baroness, Lady Howells, and the noble Lord, Lord Palmer, raised the serious issue of drugs and whether some banana producers might turn to producing drugs if they go out of business. Obviously the drugs trade is a pernicious problem and requires the international community to work together to tackle it effectively. We are working closely with the Governments of the Caribbean to eradicate this problem. I am not aware of any evidence that ex-banana growers are more likely than others to take up drug production or trade but it is clearly something that we need to watch out for. Indeed, it was raised at the UK-Caribbean Forum last month, as my noble friend Lady Benjamin mentioned.
There is much that I could cover in my closing remarks but I am conscious of the time. However, I should like to say that, separate from our responsibilities via the EU, the UK Government are doing a great deal to support the Caribbean. We have the interests of the people of the Caribbean very close to our hearts. Four British Ministers, including the Foreign Secretary himself, participated in last month’s UK-Caribbean Forum in Grenada, at which agreement was reached on an action plan to co-operate on a series of programmes to promote economic resilience, tackling climate change, the environment and sustainable development. The Minister of State for International Development announced the first grants under our new £10 million contribution to the Compete Caribbean initiative for private sector development and job creation.
Several noble Lords have raised the issue of air passenger duty. There was an Oral Question on this topic only two weeks ago, so I will not repeat the points made at that time. However, at that same event to which I have just referred, the issue was raised and the difficulties were acknowledged by my right honourable friend William Hague.
I conclude by saying that we will continue to monitor closely the impact of the Geneva agreement on the banana industry. Most importantly, we believe the combined effect of increased free trade via the agreement, together with the support we are providing to the ACP countries more generally, should provide economic benefits for the peoples in all the countries directly affected.
It has been a great privilege to respond to the debate today. I thank all noble Lords who have contributed to it.