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Symposium on issues confronting the world trading system —
Opening remarks of Pascal Lamy, European Trade Commissioner

7 and 8 July 2001, World Trade Organization, Geneva, Switzerland  

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Ladies and Gentlemen,

Pleasure to be here, and thank you for the opportunity to speak to this symposium, for which I applaud Mike Moore's initiative. I would very much like to stay for the whole thing, but I am being despatched with indecent haste to Brazil, though not on this occasion to Puerto Allegre.

As I was preparing to come here and speak to the participants in this forum, I looked up some facts on the history of the relationship between the WTO and NGOs. For some, it is an institutional novelty borne out of international negotiations themselves, what Sylvia Ostry has described with her usual wit as "conference-building measures". Indeed the way to survive at international conferences is to use Sylvia’s best lines before she gets anywhere near the platform. But in fact, as Sylvia recognises, NGOs and the world trading body go back a long way. Some of you may recall the now defunct plans existed for International Trade Organisation, which contained a section about the involvement of NGOs – almost 40 years before the WTO was launched.

And here we are, in the early years of the new Millennium, trying to find the right way to tackle new questions, such as environmental regulation and consumer protection. One thing is now clear, however, and that is that the so-called new issues are not just deeply embedded in the institutional infrastructure of an economy, but also reflect the collective preferences and moral choices of society. Take the whole debate about trade and core labour standards, for instance: public support for the trading system is becoming frayed. We have to respond constructively to those who fear that core labour standards are being undermined, and to those who want reassurance that they are being properly applied.

These issues cannot, and will not, be left to meetings behind closed doors. We need a broad public debate about the way in which the trading system should develop, and NGOs obviously have a contribution to make to this debate. So, the question is not whether there should be a relationship between the WTO and NGOs, as in this excellent symposium, but how this relationship should be structured.

In terms of future relations between the WTO, its members and the NGOs, we need to recognise that some NGOs want more transparency, participation, and influence on decision-making than some WTO members are willing to accept. But I think we should be able to move forward on the basis of two essentials:

  1. Responsibility. Decisions are made by governments, and responsibility for those decisions rests there, with the peoples' representatives. I have said this before: NGOs should have a voice – but not a vote.

  2. Openness. We must take active steps to look for processes and approaches which enable NGOs to contribute wherever useful.

These considerations are not new, and indeed the EU has put forward ideas along these lines here in Geneva. But these two points allow us to focus on the real questions of WTO-NGO relations. In doing so, remember that transparency does not start and finish with NGOs and the WTO. There are two other points of equal bearing:

  • First, all governments need to assure that transparency also starts, like they used to say about charity, at home. Much better, in fact, to ensure that all parts of society have the chance to put their oar in at the time when each WTO member formulates its negotiating position.

  • Second, we need to a closer involvement of Parliaments in WTO matters, both in capitals and in Geneva.

Without the first, the real value of WTO transparency will be limited. Without the second, legitimacy will suffer. So how is the EU doing ? Not badly, I'd say: on the first point, the Commission now has established a substantive dialogue with civil society at all levels, as indeed have most of our member states; and we have begun to include systematically / in bilateral agreements / explicit provisions for the participation of non-state actors. On the second point, the involvement of parliaments, the recent meetings on trade policy and WTO affairs held by the European Parliament in Brussels and by the Inter-Parliamentary Union here in Geneva are a good basis for future work.

And what is this future work about? To sum it up in one phrase, I'd say: assuring that globalisation is harnessed for the benefit of all. And as you all know, the EU thinks that the best vehicle for achieving this is a new round of global trade negotiations. No surprise, when everyone knows that we have been working very hard on this. So indulge me if I spend a few moments on why we think a round is needed – for all the members and for the trading system.

First, as Kofi Annan said to the recent UN conference in Brussels, a WTO development round, improving market access for developing countries, will be an important element in LDC economic growth, and in the reduction of poverty. That is the ultimate acid test for trade policy. We are certainly prepared in the future to improve access to the European market for the products of developing countries as part of our contribution to their growth, employment, sustainability and stability. In any case, you will have seen what we have done in relation to the Least Developed Countries, called Everything But Arms, to provide for quota free, duty free access to the European market. We are of course extremely proud of this initiative, but I don't think I need to say any more about that this morning.

But market access is necessary but not sufficient. Globalisation has changed the nature of trade and trade policy. We must update and strengthen the WTO rulebook to manage the interface between trade and other policy areas such as health, consumer safety and environment. If not, we risk conflict between trade and other policies. Trade rules must not override the other concerns of society. The important point here is to ensure that compatibility.

And second, we need to help the WTO find its proper role as an organ of international economic governance. What do I mean by this? I mean because transborder issues by definition loom larger, national governments are increasingly struggling to find solutions through action at the national level. This is true not only of areas like environment but also issues such as access to health care, restrictive business practices, monetary and investment policies, transnational crime, and so on. Co-ordinated solutions at the international level – including multilaterally agreed rules in the WTO – will be necessary if government, and not pure market forces, are to set the path of evolution of the world economy.

That is why the Commission has consistently tried to ensure that its agenda for the WTO is both supportive of development and properly harnesses globalisation. That is why we oppose proposals for a Round limited to market access only.

A market access round would also face strong resistance from parts of civil society who rightly want the WTO to take measures to support sustainable development, the environment, health and safety and other areas of trade overlap. A Round to reduce the tariff on widgets might have worked twenty years ago but it won't work now. Trade policy has changed, and we have to change with it.

Let me focus for a moment on the rule making aspect of the WTO and what we envisage in a new round. Rules are needed first of all to guarantee market access of course, and to guarantee that all members – and particularly the smaller ones – have access that is not frustrated by other means. That is why we have been ready and indeed openly supportive of those who have suggested to strengthen existing WTO rules, in areas like anti dumping, TBT, non-tariff barriers, subsidies and so on, to increase transparency and predictability, to ensure non-discrimination, and to reduce the threat of protectionism.

And we have a particular interest against this background to clarify the rules on trade and environment, and consumer health and safety, so as to put beyond all doubt any misconceptions that the WTO is, or risks being, in the future, inimical to environmental policies or to legitimate consumer safety goals. Of course, we need to avoid in negotiations any outcome which leads to disguised or even blatant protectionism, but if we fail to negotiate, we will simply invite more criticism of the WTO, leave environmental and trade policy makers without guidance, and business without predictability. And we would simply be confirming is that WTO panels, rather than elected governments, make the rules. That is the real test, in terms of governance: whether we leave policy making to the sausage-making machine called the dispute settlement mechanism, or whether governments take the responsibility to make the sausage themselves.

In addition to the strengthening of existing rules, which is supported by most WTO members as a part of the agenda after Doha, we and others have also proposed the extension of WTO rules into new areas, notably investment, competition, and trade facilitation.

Investment was at least until recently a controversial issue especially with the NGO community and even more some developing countries who were concerned that a wholesale opening of their markets to speculative capital movements could swamp domestic development policies, or give too many rights to companies at the expense of governments. I think that recent discussion shows conclusively that this is not, must not and will not be the case. Our idea is to confine negotiations to commitments based on a positive list of sectors, the so-called bottom-up approach, giving all members control over whether and when to allow foreign investment while preserving their right to regulate. Many developing countries of course need foreign direct investment to help their growth, employment, and transfer of capital and technology, and for them, some basic rules in the WTO will, by increasing the predictability for potential investors, lead to more investment with all the benefits it can bring.

Competition is if anything even more important from the systemic viewpoint. It’s about development as much as trade. In cases of under-development, you will always find monopoly rents and cartels, and untransparent procurement regimes which are nests of corruption. But even in trade terms, a level playing field in competition is every bit as pertinent as a tariff cut at the border. For what’s the point in a tariff cut if you can’t have access to distribution outlets or transport networks? If your domestic competitors have stitched up the market? Competition issues have become international issues because anti competitive practices are increasingly international in nature. So it is logical that the WTO to establish a basis on which to tackle them. The WTO must demonstrate that is not, as some of its critics claim, the apologist for the unacceptable face of global capitalism, and that it can help to ensure that the benefits of trade liberalisation are more fairly shared.

We of course recognise the concerns that have been voiced, notably by developing countries, about the competition and the investment agenda. That is why we have tempered our ambition: in both cases we are looking only for a basic framework of rules. Indeed, we are also offering an opt-out card to those countries who are concerned that these negotiations might balloon out of their control. This card, expressed in our willingness to accept, at the end of the day, a plurilateral outcome to negotiations, is the ultimate insurance policy to these countries that our objectives are genuinely limited. And that is also why I am also attracted, frankly, by the views put forward recently by Ambassador Akram that for competition and investment to be acceptable, they must be "trade-related", "necessary", "sufficiently clear" and "balancing costs and benefits". I for one am willing to accept the Akram Challenge: I believe our policies do meet this test, but we need to demonstrate that conclusively.

Finally, trade facilitation – practical measures to reduce red tape that will in particular help small companies to survive and prosper in the international marketplace. This initiative focuses on practical rules to minimise the costs and delays caused by import, export and customs procedures, to help companies compete in the new economy. These barriers are estimated by UNCTAD as wasting seventy billion dollars a year: dead-weight costs borne by small companies, who obviously find it harder to negotiate their way around or through inefficient and bureaucratic procedures.

But simple procedures do not only help traders. They also help governments to save money and to increase their customs revenues. Many developing countries have gained enormously – in terms of revenue collection, better administration and better protection of society from illegal or dangerous goods – by streamlining and modernising customs. If we add a decent technical assistance package to help LDCs set up these systems, and I think the benefits of negotiations in this area are obvious.

So that is our rule making agenda. Far from onerous and ambitious, I hope you agree that is the very minimum that WTO should be doing to address questions being thrown up by the process of globalisation. The fact is that the EU and the US, as Bob Zoellick has said recently, could get along without a Round. I am less sure about developing countries, particularly the poorest. My fear is that without a Round, the world trade system will leave them further behind.

Before concluding, let me say that I think there is a link between this agenda for a new round and what I said earlier in my remarks about the relationship between WTO and civil society. Let’s look at the substance. Not just market access, but new and better rules to govern international trade. I hope that is an aim that we all share: whether we want the WTO to take better care of its developing country members, or we want to secure a more level playing field in the global marketplace; whether we want to make sure that decisions are taken in greater transparency and with more involvement of all actors; or whether we want that assistance to be provided to those who do not currently benefit enough from the world trading system. Whatever our immediate objectives, the common goal must be to make the WTO work better for all members, and for all their citizens.

My contention is that this is the best case for a New Round of negotiations, because any of us here would be hard pressed to argue conclusively that the current rules all work in this direction. Of course, I’m happy to accept that views may differ on how this is to be achieved: that’s after all what negotiations are for. On that, I think we have shown that the EU is ready to listen, and ready to show real flexibility to take account of the views of others.

But let’s keep one thing in mind: without a round, it will all be much, much more difficult, for all concerned, governments, citizens, and NGOs. And difficult for the WTO itself: Mike, you have said rightly that the WTO may go into hibernation if we do not launch the Round in Doha. I agree, but it may be worse than that: sometimes hedgehogs do not survive a long, cold winter.

Thank you. I will have to run to catch a flight, but of course happy to take questions if I am here when they are asked !


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