EU wants new round to fend off agriculture?
GENEVA: European Union Trade Commissioner, Sir Leon Brittan, while laying out a programme for accelerated trade liberalization, and for agreement at Singapore on a preparatory work programme for launching a new round of negotiations, ruled out on 1 April European Union (EU) actions such as accelerating the liberalization time-table in areas like Textiles and Clothing.
The EU Commissioner was answering questions at a news conference during his one-day visit to Geneva where he addressed an UNCTAD/EU seminar for European business on investment in Asia and, later in the evening, spoke at the Graduate Institute of International Studies to outline "The WTO Road to Singapore".
While the Singapore Ministerial meeting, he said, was not the moment "to launch a further comprehensive round of negotiations", the further liberalization plans agreed at Marrakesh made it clear to him that "the decision to launch those negotiations cannot be delayed beyond the end of this century" and that this must come within the political horizon of most governments represented at Singapore.
Asked about the inconsistency of calling for a "new round" when the whole idea of a World Trade Organization (WTO) was to make it a permanent forum for negotiations, and for individual items to be pursued within the WTO in its normal work, rather than the periodic multilateral rounds of the old GATT, Brittan said that he had used the "lower case" in calling for a "new round".
The need for a "new round"
But he made clear why Europe wanted a "new round": in six years time, the WTO membership would be taking up again further reform of agriculture and it would not be in the interest of the EU and others to focus then only on agriculture, he said. "We can move further and make more commitments (to cut support and open our markets) on agriculture (to the US and the Cairns group agricultural exporters) only if other things are on the agenda by which we would gain from other developing countries," seemed to be the unstated thrust of his argument.
Sir Leon also spoke of another "strategic challenge" before the Singapore meet, namely, to get support of the voters and their concerns to the WTO and its open trading system, and propounded in this context the need for trading system to meet the concerns of people around the world about exploitation of child labour and of the trade-environment link.
In terms of acceleration of trade liberalization, Sir Leon set out the EU objective of launching such a programme for information technology, pharmaceuticals.
While favouring actions to push the investment issue, Sir Leon showed less enthusiasm for the US drive to put corruption in international trade and government on the new agenda, arguing that while no one could favour corruption and everyone would want to eliminate it, one had to see whether this was the most effective way of achieving the objective.
On the investment issue, Sir Leon told the UNCTAD seminar and arguing for a Multilateral Investment Agreement (MIA) that the fears of free investment flows limiting the ability of a government to shape the economic destiny of a nation was "more notional than real" and in any case these fears were of no consequence alongside benefits of the globalization process.
Referring to what he called "sweat-shop labour" (arising from such FDI), he said that each country was free to set its own domestic laws on minimum wages, safety conditions, working hours, collective bargaining and so on, and overseas investors neither sought nor obtained exemption from such laws. When they came to a country it was for the long-term and they attached as much importance to their reputation as to their short-term profits, Sir Leon claimed. What was needed to overcome such fears was "greater publicity to the already high-standards maintained by good corporate citizens". Those industrialized countries opposing the inclusion of existing Organization for Economic Cooperation and Development (OECD) guidelines into the WTO were adopting a "short-sighted approach".
As an accompanying element to investment liberalization in an MIA, in order to create a level playing field, Sir Leon felt that, "if not as a justiciable element in any deal a code of conduct for good corporate citizens could be useful", he said without explaining why "good conduct" by corporations should not be as justiciable as investment rights as obligations of developing countries.
Opposition to the MIA
An EU paper on an MIA in the WTO, makes clear that the Commission wants an unrestricted investment right, except for a narrow category of security and public order exceptions, and for most favoured nation (MFN) treatment for all foreign investors so that its own investors could derive advantages given to US or Japanese investors.
Brittan was asked about this and the UNCTAD/EU joint report which showed that the Asian countries, while maintaining discretionary powers on authorizing new investments, had no particular discriminatory rules against EU investors. The report also showed that, even in the absence of an MIA, US and Japanese investors were still expanding their investments in Asia while Europe was lagging behind. In the end of March, an OECD workshop in Hong Kong showed that a very large number of Asian countries were opposed, not to rights of investors after they invest, but to an MIA which took away their discretionary right to allow, and under conditions.
Sir Leon dismissed this is as an issue for negotiations on the content of an MIA, and not one about the merits of an MIA itself. On the two pending sectoral service negotiations, Sir Leon was pessimistic over the prospects for a maritime services agreement and said that the US was not only not ready for liberalization, but seemed unwilling even to agree to a standstill. As for basic telecoms, the European Commissioner sought to take the focus away from Europe's inability to improve on its offers (as the US has demanded), and shift it on to the others, particularly in Asia who he said had either not tabled their offers or improved on their earlier offers.
If this was done, he argued, Europe would not be found wanting and the telecoms negotiations could be successfully concluded by 29 April. The US and EU in their own ways were applying pressure on the Asians.
He conceded that the position of some of the EU members on foreign direct investment (FDI) in the telecoms sector was holding up an improved EU offer. He would not answer a question whether the European unwillingness to be transparent in their pricing policies for the telecoms services - one of the elements in a "non-paper" for so-called competitive assurances to be built into the basic telecoms accord. (CR/SUNS3732)
The above article was originally published in the South-North Development Monitor (SUNS) of which Chakravarthi Raghavan is the Chief Editor.