World poverty. Third opposition day debate

- Wednesday, 19th June 2002

 

World poverty. Third opposition day debate

Mr. Peter Lilley (Hitchin and Harpenden): I congratulate my right hon. and hon. Friends on recognising the importance of the issue by devoting the debate to it. I congratulate also the 10,000 people who have emphasised their concerns by coming to London and demonstrating on the streets of London. Somewhat unusually in an Opposition day debate, I congratulate the Secretary of State on a constructive and, in some ways, brave contribution, and one which I welcome.

I was keen to participate in the debate because before I was elected to the House, when as my mother puts it, I had a proper job, I was for the best part of a decade involved in working on aid programmes in developing countries. I have always been concerned about these issues. I reached one conclusion overall as a result of those years of experience that was rather unfashionable at the time. That was that peoples in developing countries?I worked primarily in Africa, but also in Asia?can and will become prosperous in due course, as other countries have before them, by their own efforts and not as the result of aid provided for them by others. Aid has an important humanitarian role in dealing with famine and in supporting health and other infrastructure, but ultimately countries can and will develop through their own efforts.

I had experience in developing countries and I was unable to identify an industrial project that could not be financed privately and that needed aid finance. Indeed, I undertook a study for the United Nations Economic Commission for Africa. It was welcomed by that body, and it was so keen that it wanted to provide support for it. Such is the speed of bureaucracy that by the time it got round to it, every project that I had identified in countries that allowed free enterprise to operate had spontaneously been put into operation by local entrepreneurs, using local savings or employing outside investment.

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These countries can develop themselves, but the speed and ease with which they do so will depend on the opportunities open to them, and above all the opportunities to trade with the already prosperous and developed countries.

As the Oxfam report suggests, trade is far more important than aid in quantitative terms for the growth of developing countries. That is why the hypocrisy of the developed world, which pretends to be in favour of the development of less developed countries but reserves its most severe protectionist measures for the poorest countries and the poorest people in them, is so tragic. It is shameful to us as members of the European Union that the Oxfam report, in its double-standards index, singles out the EU as the worst hypocrite in that respect. Our tariffs and protectionist measures tend to focus on areas that are most important to the third world, such as agriculture, labour-intensive manufacturing and anti-dumping measures. They are focused on the products that are in the most competitive markets. There are about 145 EU anti-dumping measures against products from developing countries. There are a further 80 from the United States and 22 from Canada.

I believe that such shameful hypocrisy is sustained by three fallacies. The first is the belief that trade is a zero sum game. It is thought that if someone does well, that is at the expense of someone doing badly. It so happens that a benign providence has ordained that both parties benefit from trade. We need to convince our colleagues, including our French colleagues, who are perhaps less familiar with this concept, as my right hon. Friend the Member for Skipton and Ripon (Mr. Curry) said, that it is possible for both us and the developing world to benefit from opening our markets to them.

The converse is that both sides suffer from protection. Protection is much the same as imposing an embargo on a country. I think that it was Winston Churchill who said that prohibiting access to imports is what we do to our enemies in times of war and to ourselves in times of peace. We must convince our colleagues in the EU that preventing our people having access to the products and services that those in developing countries can competitively provide us with is damaging to us as well as being cruelly damaging to them, and utterly indefensible morally.

The second fallacy is the patronising belief that less developed countries cannot compete. That leads to a sort of new liberal imperialism, to a view that developed countries should be kept outside the global market, to be sustained by aid and hand-outs unless and until the rules can be changed to bias the system in their favour so that they can compete.

That is often expressed in calls that contrast free trade with fair or just trade. That is an unwise mistake. For the developing countries, free trade in the sense of free access to our markets is what is fair and just and what they need. We must not offer an excuse to those who wish to delay the dismantling of protection by saying, "We cannot do that until we have fair trade, or just trade. Free trade is a wicked, dangerous liberal Anglo-Saxon invention."

That approach is also dangerous in that it is used to justify the contrast between free trade and fair or just trade. It is used to justify the restrictions that are often upheld by the third fallacy that I wish to mention, which is almost the opposite of the second. It is the belief that

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far from developing countries being unable to compete, they are able to compete with our industries unfairly because they are willing to accept subsistence or poverty wages, which are said to be an unfair means of competition that will have the effect of driving down pay in Europe to levels elsewhere.

That argument is often used to justify anti-dumping restrictions on trade from countries where pay is extremely low, where employment conditions are inadequate or where environment standards are low. However, it is ultimately an absurd argument. It condemns people in developing countries who at least have minimal or dreadfully low rates of pay to have no pay, and no access to our markets until somehow, miraculously, they are in a position to receive higher pay.

Pay reflects productivity. No one can charge more than the value of what he produces because he will price himself out of the market. Pay is low in developing countries because productivity is low. It is not because people are incompetent or inefficient. It is because they have not had time to accumulate the capital, both physical and intellectual, which works alongside the labour of developed countries and enables an individual to produce perhaps 10 times as much in value as those in developing countries.

As developing countries are allowed access to our markets and build up and acquire capital?especially the intellectual capital of experience?they will increase their productivity and their pay will rise. The idea that they willingly accept low or subsistence wages and are prepared to continue doing so until they have driven us all out of business is nonsense and defies the experience of countries that have satisfactorily entered the world market, built up export markets and built up their own economies.

We must fight these fallacies if we are to overcome the hypocrisy that unfortunately means that we impoverish the third world at the same time as diminishing our own well-being. We can convince the people of Europe, as of our own country, that it is in our interests as well as being our moral obligation to those in poor countries to open our markets to their goods, and that we shall benefit as they benefit. We can then do ourselves a good turn as well as fulfilling our obligation to the poor and needy of the world.

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