Verbatim report of proceedings

Monday, 19 May 2008 - Strasbourg

22. Trade in raw materials and commodities (debate)

  President. − The next item is the report (A6-0134/2008) by Mr Holm, on behalf of the Committee on International Trade, on trade in raw materials and commodities (2008/2051(INI)).

  Jens Holm, rapporteur. − (SV) Ladies and gentlemen, first a big thank you to all the shadow rapporteurs for their close cooperation.

We have all seen pictures of the scenes precipitated by the recent food shortages. Agricultural prices, not least for foods, have shot up over a very short period. This has come as a mortal blow to many developing countries which are heavily dependent on food imports and were already living on the margins. Let us hope that this report on international trade in raw materials will help to remedy some of these problems. After all we have committed ourselves to eradicating hunger and poverty in signing up to the so-called Millennium Goals. United Nations Secretary-General Ban Ki-moon recently warned that the increased food prices were jeopardising the most important objective of the Millennium Goals, namely to halve poverty in the world. So it is high time that urgent measures were taken.

In particular, the recent food crisis has shown that food is not just any raw material. If such an elementary requirement as to ensure that people are fed cannot even be met, the rhetoric on development is not worth much. We should therefore be careful in making food an international trade commodity like any other. The world’s developing countries have even been forced to deregulate their food policy and switch from production for national needs to export production. This is the policy of the IMF, the World Bank, the USA and the EU as well, which have all imposed these demands. By abolishing protective tariffs and subsidies many developing countries have become extremely vulnerable to heavy fluctuations in food and raw material prices. Take Haiti, for example, which was previously self-sufficient in rice. In 1995 the International Monetary Fund forced that country to reduce its rice tariffs. State-subsidised rice from the USA flooded in, and local production collapsed. Today three quarters of all rice consumed in Haiti is imported from the USA.

I hope that this report can give us tools to deal with the problems and challenges posed by the uncertain trade in raw materials. The matters we focus on in the report include support to the developing countries in diversifying their economies, so that they can break free from a situation in which they only export one or two raw materials and move towards more advanced production patterns involving more highly processed products. We also highlight the importance of flexibility in development policy. It must allow scope for these countries to develop possibilities and economic policy instruments, for example, to support the development of their domestic agriculture. We also demand that the European Commission review the finance scheme FLEX, the purpose of which is to stabilise prices of raw materials. We also address the equality dimension in raw materials trade, or rather the lack of one. It is immensely important that we always take account of the gender issue in the negotiation of international trade agreements.

This report also takes account of fair trade. Fair trade can be used as a tool in supporting small-scale producers in developing countries and in stepping up pressure for the raising of social and environmental standards in these countries. We call on all the EU’s institutions to apply the principle of fair trade in their public tenders and purchasing policies.

We also take issue with the growing consumption of animal products, i.e. increasing demand for meat and dairy products, which is in turn boosting demand for grain to feed animals instead of human beings.

A great many other matters are also covered. Finally I have to say that this work has exposed the true face of the EU. While on our side we have sought to address the needs and circumstances of the developing countries, European industry, with help from its representatives in the European Parliament, has endeavoured to switch the focus to the short-term commercial interest of business organisations in having stable access to cheap raw materials.

I urge everyone to approve the amendments tabled by the Left, Socialist and Green Groups. Amendments 20 and 21 are particularly important. In that way we can balance the report so that we get a stronger development dimension.

  Janez Potočnik, Member of the Commission. − Mr President, I should like to thank Parliament for giving us the opportunity to discuss access to raw materials, which is an issue that is high on the European Union agenda, especially in the light of our competitiveness agenda. Let me first thank the rapporteur and the shadow rapporteurs for the report, which embraces numerous areas such as climate change, poverty alleviation and development.

Development is indeed a key issue in this context. I will therefore briefly touch on development issues, before addressing our concerns and actions regarding the proliferation of measures restricting access to raw materials.

The fight for poverty alleviation and development, as well as food security, is high on the Commission’s agenda. You are well aware that the European Union is the world’s largest donor of development funding. Also in the specific field of raw materials, the Commission has undertaken several development-oriented programmes: for instance, through FLEX, the Commission supports developing countries’ national budgets, where there has been a drop in export-related fiscal revenue.

The Commission also promotes the transparent management of tax revenues generated by the exploitation of raw materials and natural resources through several initiatives such as EITI, the Kimberley Process and the FLEGT programme. Let me also refer to our Everything But Arms programme, which grants duty-free access to imports of all products from least developed countries (except arms), allowing them to diversify their exports.

Let me now turn to our key concern, which is from the trade perspective. It takes two to trade. We need to import and we need to export. It is therefore critical to ensure that access to raw materials in third countries is free from unjustified distortions such as quotas, export duties and export bans.

Today, unfortunately, this is not the case. On the contrary, third countries’ appetite to impose export restrictions is increasing. Our specific concerns are those imposed by some key emerging economies as part of their aggressive industrial policy objectives. Let me underline that we are not focusing on poorer developing economies but rather on large emerging economies.

Measures imposed by these countries result in distorted competition at global level which damages European industry. Unfortunately, the size of the problem is growing. By now at least 20 countries have put in place measures affecting exports of importance to the European Union. We have counted over 450 restrictions affecting various raw materials. Most, if not all, European industrial sectors are concerned, directly or indirectly.

What can be done? The work carried out so far shows that there is no quick-fix solution even if the elimination of export restrictions is high on our agenda already, be it in bilateral free trade agreements or in the World Trade Organisation, but we will do more.

First, it will be important to develop an overall strategy for access to raw materials. In this respect, the Commission is working on a communication which will include an important trade component. Any such strategy evidently should fully and coherently take up all policy areas, including critical issues such as food security, development and the environment.

All means will have to be used to their maximum. A sustainable and coherent policy on access to raw materials would therefore combine: firstly, negotiations securing international commitments in the WTO and bilateral context; secondly, enforcement of WTO rules and existing agreements; and thirdly soft measures such as dialogue and alliance-building. While none of these elements is new, it is their combination and their coherent use which will determine their strength. This will be discussed at a conference with stakeholders later this year.

Considering the importance of access to raw materials, the Commission welcomes the discussions in Parliament on this issue. The Commission particularly welcomes the amendments to the first draft of the report. The report now highlights more clearly the significance of this issue. It proposes ways to tackle this issue in a constructive manner, such as enforcement of agreements and negotiations with partner countries. We stand ready to fully cooperate with Parliament in designing and implementing our further strategy.

  Daniel Caspary, on behalf of the PPE-DE Group. – (DE) Mr President, Commissioner, I am pleased that you have made yourself available today, Mr Potočnik. Commissioner Mandelson, we note, has once again opted to travel to some important conference in another part of the world instead of discussing key issues for European industry policy with us in Parliament. Imagine my delight, then, at hearing you present the subject far better and with far greater clarity and vision than our Trade Commissioner could ever have done.

I am very pleased with the outcome of our deliberations in committee, for I am afraid that the rapporteur, in his original draft, for all the good points he made about the developing countries, entirely lost sight of the interests of European industry. In the Committee on International Trade we inserted a new first part of the report dealing with the interests of our industry policy. The nature of those interests, indeed, has become crystal-clear. We must focus sharply on securing the supply of raw materials to European industry. As the Commissioner rightly said, we are experiencing major difficulties in this respect.

In the WTO framework we urgently need better rules designed to outlaw, as far as possible, trade-distorting measures such as export duties. We need free access to raw materials in the world market. It is intolerable that countries such as China should misuse raw materials as a political tool.

We must do everything possible, not only in multilateral negotiations but also in our bilateral negotiations, to safeguard genuine open access to markets in raw materials. The fact that the Commission gave way in the talks on Ukraine’s accession to the WTO and accepted a degree of leeway for the imposition of export duties is intolerable and sets a bad example. Our acceptance of dual pricing in connection with Saudi Arabia’s accession to the WTO, an arrangement that has caused severe difficulties for our European petrochemical industry, was also intolerable. Nor am I very hopeful when I see what is happening at the present time with regard to Russia’s accession to the WTO, and I would like the Commission to take great care to ensure that no more trade-distorting measures are introduced.

May I reiterate my sincere thanks to all my fellow committee members for this report. I hope that we do not change it too much in tomorrow’s plenary vote.

IN THE CHAIR: MRS MORGANTINI
Vice-President

  Francisco Assis, on behalf of the PSE Group. – (PT) I would like to begin by congratulating the rapporteur. The problems currently arising in access to raw materials are largely a result of a structural change in their respective markets which is related to changes in the international economy.

The raw materials market used to develop in a cyclical manner, going from periods of extreme shortage to periods of scarcity, and sometimes achieving a balance. We now seem to be facing a new situation of structural shortage which is largely the result of a sudden increase in demand triggered by rapid progress in industrialisation and urbanisation in several emerging countries.

It is clear that efforts must be made in the appropriate fora, particularly the World Trade Organisation, to achieve consensus with a view to facilitating access to raw materials. This must not allow us to lose sight of another essential issue, however: we now have a new situation in these markets which arises in both foodstuffs and energy. In the European Union, therefore, we major raw materials importers have to view this issue with special concern. On the one hand we have to consider the impact it may have throughout the world, since it could lead to excessive pressure on raw materials consumption with very negative environmental and economic and social organisation consequences in the developing countries, while on the other we also have to look at our own situation and understand our own difficulties.

This raises two seemingly fundamental questions. One is linked to the need for us to review our own economic development model, because it is incompatible with a situation in which raw materials are over-exploited. The other suggests that we should lay greater stress on applied scientific research to ensure greater innovation, to promote the recycling of raw materials and to find new answers for the new problems this structural shortage is creating for us.

  Zbigniew Zaleski (PPE-DE). – (PL) Nature has distributed its riches − the raw materials under the ground, the foodstuffs and trees on the earth’s surface and the fish in the waters − unevenly across the globe. Human needs are the same, but meeting those needs requires solidarity in the exploitation of resources and in their distribution through international trade. The Holm report has much to say on the subject. I wish to stress a few points, following on from Mr Caspary.

First, rational exploitation of limited resources. I repeat: limited resources.

Second, protection of raw materials against confiscation, against the neo-colonial expropriation of poor countries, especially in Africa. We have no transparency regarding the trade in such materials engaged in by China and certain other countries.

Third, the purpose of trade in such raw materials should be the development of poor countries. That is our main aim. The benefits must go to the inhabitants, not just to representatives of the authorities or big international companies.

Fourth, EU raw materials policy must ensure that the Union does not become a hostage, for example, to Russia in the case of gas, and perhaps in future to Brazil in the case of sugar.

Fifth, all partners share absolute responsibility with regard to the exploitation of maritime resources. As we know, several species of fish are threatened with extinction, just like the forests of Asia and Amazonia.

In conclusion, Madam President, the watchword for free and fair trade must be responsibility in the exploitation of limited natural resources, so that future generations can have access to the raw materials necessary for human existence. Similarly, poor countries must be helped to develop the technology required for the production of basic foodstuffs. And in that respect Europe can do a great deal.

  Marusya Ivanova Lyubcheva (PSE). – (BG) Madam President, Commissioner, bearing in mind the role played by trade in our globalizing world, we need to support the efforts to promote fair trade, and all initiatives which contribute to sustainable economic development.

Prices of raw materials affect market developments and in a number of cases have an aggravating effect on economic development, particularly in countries where deposits of raw materials are scarce. This affects the overall market situation, and the availability of raw materials.

The expected high oil and electricity prices can and should be dealt with through effective technologies in both extraction and processing of raw materials. This effectiveness and the implementation of innovations, as well as maintaining a strong research sector determine the level of success in improving the market situation and strength, in enhancing diversification and energy security.

In terms of agricultural trade, attention should focus on relaxing the pressure on producers caused by the imbalance between farmgate purchase prices of agricultural produce and their retail price levels. This distorts the market but it also indicates that the market has its social cost.

  Glyn Ford (PSE). – Madam President, it is a pleasure to speak on Mr Holm’s report on trade in raw materials and commodities. Last month I had the privilege of attending, on behalf of Parliament, the UNCTAD XII Conference in Accra. From that conference there came a cry for help for the world’s poor.

Escalating food prices are increasingly leading to rioting on the streets, and we need a fresh approach if we are to deal with this situation. The new crisis threatens to kill more in a day than have died from terrorism in the six years since 9/11. Politicians and governments may not yet have noticed, but the world’s poor are seeing their children increasingly go hungry. The impact will be particularly acute in Africa, where commodity prices have more than doubled in the last 12 months and continue to soar owing to speculation, shortages and changing patterns of production. The root causes are growing demand from East Asia and the supply consequences of a failure to invest in agriculture. Climate change, written in the language of floods, droughts and record-breaking temperatures, is only making the situation worse, particularly for the world’s poorest. It is therefore my hope that we adopt this resolution.

  Georgios Papastamkos (PPE-DE). – (EL) Madam President, access to raw materials is of truly vital importance for the European economy and competitiveness. This is especially so because the EU depends to a large extent on imports of raw materials from third countries.

Pulling down the barriers that third countries have placed in the way of EU access to raw materials markets must be a priority. This is true of the current WTO negotiations and in those under way for bilateral free-trade agreements.

Lastly, Madam President, ladies and gentlemen, I believe that support mechanisms and a transfer of know-how to the developing countries are necessary in order to enable viable, transparent management of the use of raw materials and natural resources.

  Stavros Arnaoutakis (PSE). – (EL) Madam President, Commissioner, it goes without saying that the competitiveness of our European businesses depends to a large extent on the supply of raw materials. We therefore need an integrated strategy today to ensure access to world markets. This will help to secure international cooperation, legitimate competition, fair trade and respect for restrictions based on serious development incentives in less-developed countries. It will also help to promote investment in environmentally friendly technology research and development and in recycling.

Our aim must be the sustainable development of the EU, as well as solidarity with the world’s poorest countries.

  Brian Crowley (UEN). – Madam President, I would like to thank the rapporteur for the work he has done on this report. There are three key elements that I see.

First of all there is global competition for the raw materials and commodities. We have to realise at European level that we have to be better placed to do bilateral agreements and bilateral deals if we want to succeed in getting access to these commodities.

Obviously the issue of the world trade talks is very important with regard to the long-term developments, but further leverage can be gained through our economic partnerships with the developing world. I would also caution that the giving-up of certain rights under the world trade talks for short-term access to raw materials and commodities could be to the detriment of a lot of our industry in the European Union and in particular to our agriculture.

Finally, as our previous colleague said, fairness is the most important consideration of all. We have to invest now in the developing-world countries to allow them to succeed – not just this year and next year because of the high price of oil and gas, but in 20 years’ time. That should be linked to investment in their countries in education and health care for their people, to stop further problems all along the line.

  Janez Potočnik, Member of the Commission. − Madam President, I would like to thank the honourable Members for their interventions. They have been quite clear on the challenges we face. It is also quite clear, on the one hand, that we have to ensure the balanced development of our work, thus focusing especially on the poorer countries and establishing the fairness that Mr Crowley talked about; on the other hand, we also have to secure fair trade rules for access by our industry to raw materials. It is a fact that the European Union is a net importer of raw materials and that it will remain so.

We are now facing stronger competition on our supply markets, as well as rising prices owing to heightened competition from a number of emerging economies. At the same time, those emerging economies are raising barriers to access to their raw materials, thereby distorting competition. Fair access to raw materials under transparent conditions is therefore an essential part of the equation in our global competitiveness strategy.

The Commission’s intention in the years to come is to use all the available instruments to maintain a sustainable supply of raw materials for our industries. In doing so, it will pursue a comprehensive and balanced strategy. As Parliament rightly emphasises, that strategy must take into account not only the interests of our industries and our competitiveness, but also the interests of the poorer countries.

As regards the development angle, we must, and will, make a distinction between, on the one hand, justified measures maintained by poorer developing countries, such as export taxes, which are indispensable for those countries’ budgets and, on the other hand, measures imposed by emerging economies as part of their industrial policy and which distort competition on world markets.

I appreciate Mr Assis’ comment on R&D commitments, which also need to be increased in this connection. I would like to thank Parliament for supporting us on this policy. We will keep you informed on the further implementation of our strategy.

  Jens Holm, rapporteur. − (SV) Commissioner Potočnik, we look forward to the communication from the Commission and the conference. It is good that you intend to take up the issues of food security, development and the environment.

Francisco Assis, I entirely agree with you that we need to review our model of economic development.

Zbigniew Zaleski, I agree that trade must not amount to a kind of neocolonial theft of raw materials from developing countries. I therefore call on Zbigniew Zaleski and everyone else to be sure to back Amendments 20 and 21. Please study them carefully.

Look as well at Amendment 26, which deals with biofuels. In that, we call for environmental and social standards to be imposed in respect of biofuels. It is a major problem that more and more grain is used to produce meat, in other words we are feeding grain to animals, but at the same time more and more grain is being used to produce fuel for our cars.

This is a call to the Commission – we want measures to reduce private motoring and meat consumption so that we have more grain to feed people!

In the report we demand urgent measures to deal with climate change. Trade must also bear its responsibility. We must reduce all unnecessary emissions and reduce transport. A considerable amount of trade involves products which could just as easily be produced locally. We need to facilitate trade in ‘green goods’ and smart environmental technology. If we do not do so and trade does not bear its responsibility, we shall soon have no raw materials left to trade with and we shall then have no food left to eat either. It is immensely important that we take our climate responsibility seriously!

  President. − The debate is closed.

The vote will take place on Tuesday 20 May 2008.