Multilateralism at risk - Beyond Globalisation - 2-3 April 2004, Brussels

Session 6: Trade - an EU perspective - Summary

Brigid Gavin described the current situation in international trade after the failure in Cancun from the point of view of the European Union. The EU was blamed by many observers for being a major obstacle to the advance of the negotiations and for being very intransigent, especially in the area of agriculture. According to Brigid Gavin, the UN Millennium Development Goals should be used as the yardstick for judging the Doha development round and the EU trade position and initiatives in the Doha round must be measured against these commitments. At the same time, it is important to assess whether developing countries are demanding to return to the 1960s and are endorsing the idea that it is good for them to maintain their protectionisms while liberalisations and concessions must now come from developed countries. In her presentation, Brigid Gavin considered three key issues: the EU approach to trade liberalisation, the EU approach to Special and Differential Treatment and the future EU commitments to multilateralism.

Concerning the EU approach to trade liberalisation, agriculture is undoubtedly the key issue. There is a structural imbalance and injustice in the global arena with the EU as exporter of agricultural goods and some developing countries as net importers of food. One way of addressing this structural problem, supported among others by developing countries, would be trade liberalisation and deep cuts in agricultural protectionism. The effects of trade liberalisation of agriculture would not be the same on all developing countries and the distribution of the benefits should be taken into consideration. Large exporting developing countries such as Brazil, Argentina and South Africa would gain but food importing developing countries will pay higher prices for food imports. Trade liberalisation all at once may lead to economic chaos and have a negative effect on food security in a number of least developed countries. Trade liberalisation alone will not solve the problems of rural poverty. Furthermore, even if trade liberalisation in agriculture would be implemented, in the short term food production in dveloping countries will not increase rapidly as most have a low productivity agriculture due to scarce capital investment, inefficient techniques, and absence of scale economies.

In the 1960s developing countries through UNCTAD went on the offensive and demanded preferences as a form of compensation for the damage they had suffered because of protectionism in industrialised countries. As the global trading system today is still inherently unfair to poor countries there must be some form of compensation. However, Special and Differential Treatment for developing countries continues to be one of the most contentious issues for the trade system. Developing countries believe that they have been exploited by the multilateral trade rules while the EU and other industrial countries argue that developing countries have note taken advantage of the opportunities available to them. Brigid Gavin claimed that as the UN ideal consists of a global partnership for development hinging upon a rule-based, predictable, and non-discriminatory trade system, preferences have a corrosive effect on the rules in the WTO. When developing countries demand exemptions from the rules, they lose their moral authority to demand the rich countries to comply. The development dimension of the Doha round will not be achieved through the extension of Special and Differential Treatment but through increased trade-related technical assistance and capacity building.

Brigid Gavin also explained that after Cancun the EU has stated that it will not follow other countries that wish to go down the bilateral path in parallel to the WTO negotiations. The EU considers the bilateral route as a non-viable alternative to the multilateral option. The EU is still committed to multilateralism because regional blocks depend on the multilateral system for their effectiveness and legitimacy. Regional trading blocks are good when they are building blocks to a global multilateral system and they are bad when they are stumbling blocks. At the same time, the EU is moving towards region-to-region agreements. While promoting region-to-region agreements the EU is also fostering intra-regional free trade. Brigid Gavin concluded by saying that the EU is a powerful trading block and this creates a system of asymmetric accountability. What is needed is genuine reciprocal accountability based on new contractual agreements spelling out the rights and obligations of all parties.

Before outlining the official position of the European Commission on the Doha Development Agenda (DDA), Peter van den Heuvel argued that the DDA and the negotiation in Geneva seem to be overshadowed by the idea that trade leads to development. However, trade in itself does not automatically lead to development and if this is not taken into consideration then the negotiations are charged with something that cannot be delivered. Similarly, according to Peter van den Heuvel the importance of agriculture is vastly overstated. The focus should be on the rural poor and agricultural liberalisation will not necessarily benefit them.

The European Commission believes that in Cancun there was no consensus on the Singapore issues and therefore no progress could be expected in other areas of the DDA. However, there were no real negotiations. The European Commission’s assessment is that the process was inappropriate as there were too many declarations and too little substance, too many participants were unwilling to move from their initial position and many WTO members did not have enough negotiating capital. After Cancun the European Commission has been engaged in a process of reflection and consultation with a range of stakeholders (EU member states, European Parliament, NGOs, business and trade unions representatives, developing countries). On 26 November 2003 the European Commission published a Communication titled ‘Reviving the DDA negotiations: the EU perspective’, in which it outlined what the EU could do to re-launch the negotiations. In the Communication was suggested that the EU is ready to explore alternative approaches to the Singapore issues, that it is ready to make concessions in agriculture, and that it is committed to achieve ambitious results concerning market access, subsidies, services, anti-dumping and regional trade agreements.

Peter van den Heuvel explained that there is a window of opportunity up to the end of May, dictated by some major political events (US presidential election, new European Commission, elections in India), to advance the DDA in 2004. As the timeframe is tight, it is important to properly sequence the different steps. This implies that the most pressing issues like agriculture, market access, Singapore issues, Special and Differential Treatment and cotton, should be addressed first; other issues will follow. The intense consultations over the last months have resulted in better understanding on all sides. It is clear to all WTO members that the DDA is about negotiations and that each party has to benefit from the round. To advance the DDA the European Commission is willing to make a number of substantial concessions: eliminate export subsidies on products of interest to developing countries (provided that they finalise a list of products and timeframes and that the US makes equally comprehensive commitments); reduce trade-distorting farm support; drop investment and competition from the single undertaking and negotiate on an intergovernmental basis; overhaul rules concerning anti-subsidy measures and anti-dumping procedures so as to reduce the scope for abuse.

The first discussant, Samar Verma, pointed out that the EU provides market access to products of the LDCs in theory but not in practice because of a whole range of barriers (e.g. technical barriers, safety standards, sanitary and phytosanitary measures). Concerning the argument that developing countries have a higher protectionism in agriculture than developed countries, this is true only if tariff barriers are taken into account. However, protectionism also includes domestic support. Finally, Samar Verma maintained that Special and Differential Treatment should not be considered as a compensation tool but as a development tool. The second discussant, Nora Plaisier, argued that trade-related technical assistance should not be seen as a panacea. Differences between countries should be reflected in WTO rules and cannot be compensated with technical assistance. Referring to an evaluation recently carried out for the Dutch Ministry of Foreign Affairs, she concluded that there is a race in the amount of funding for trade-related technical assistance even though this is not always appropriate and may only contribute to increasing awareness rather than capacity.

During the discussion one participant drew attention to the fact that trade does not automatically lead to development but it stimulates growth, which is a precondition for development. Concerning the EU position, it was argued that there is a case for sidelining and at the same time integrating trade more fully with other EU external policies. Moreover, the EU should be prepared to make further concessions and look beyond trade issues when it enters the negotiating room. In relation to agriculture, this crucial issue cannot be dealt with in the short term and a gradualist approach is needed in the Doha round. Finally, it was also emphasised that trade agreements should be accompanied by internal reforms as the two aspects are strictly interrelated.

Session 6: Speakers

Chair: Errol Humphrey (Embassy of Barbados in Brussels)

Speakers: Brigid Gavin (United Nations University, Bruges), Peter van den Heuvel (European Commission, DG Trade)

Discussants: Samar Verma (Oxfam GB in India), Nora Plaisier (EU-LDC Network Secretariat)

Session 6 - Papers and Presentations All files are downloadable files are Word documents unless specified otherwise.
	European Union Perspective on Trade - Brigid Gavin

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