Is the EU a responsible trade partner?
Tim Abraham, Director International Trade Policy, Department of Trade and Industry
Sheila Page, Group Coordinator, International Economic Development Group, ODI
Baroness Jay, Chair of ODI Council
1. Baroness Jay welcomed the audience and introduced the two speakers.
2. Tim Abraham, Director of International Trade Policy at the DTI, started his remarks with the observation that trade and development issues were inextricably linked. Trade constituted the most important factor for development. Unfortunately, the WTO Ministerial meeting in Cancún had failed to provide the political momentum to move the Doha agenda forward. A combination of several factors explained the failure, including an overburdened agenda, tight deadlines, and perhaps most significantly, a new common voice of developing countries at the meeting that not everyone was able to cope with.
3. However, the Cancún meeting was not a complete failure. It helped to push the reform of the EU's Common Agricultural Policy (CAP) and a TRIPS medicine agreement was concluded just before Cancún. The WTO Secretariat was currently conducting informal negotiations in Geneva, to be concluded by 15 December 2003, in order to propose measures to take up the issues that could not be resolved in Cancún. On the other hand, 2004 would be a difficult year to make progress on the Doha Round agenda due to upcoming major events, such as elections in the US and in India and the inauguration of a new EU Commission.
4. Abraham drew three lessons from the failed Cancún meeting. First, the pressure for bilateralism as opposed to multilateralism increase. The UK government regretted this development and emphasised that priority should be given to multilateralism which offered the prospect of better results for developing countries. Second, the issue of 'special and differential treatment' for developing countries would continue to receive major attention. The question was how long a transition period should be granted to developing countries before they needed to implement all relevant WTO regulations. Third, the united voice with which the developing countries spoke at the Cancún meeting, especially in form of the G-20, would be a substantial force to be reckoned with in future negotiations.
5. With respect to the issue of complementarity between EU and Member States' policies, Abraham reminded us of the fact that trade was now exclusively a community matter. A critical issue, however, was the coherence of the trade agenda with other policies of the EU and its Member States, especially with development. While the WTO had been an important vehicle for reforming the CAP, non-trade agricultural concerns of the EU were difficult to square with WTO regulations as well as vis-à-vis developing countries. In the case of the latter, measures undertaken by the EU aimed at securing food safety for its citizens were often viewed as an expression of protectionism. Nevertheless, Abraham noted a good overall coherence of the EU's trade agenda with other policies.
6. Sheila Page, Group Coordinator of the International Economic Development Group at ODI, questioned the EU's ability to be a responsible trading partner, as the CAP continued to be highly damaging to world track and income. Through its worldwide effect on relative prices for agricultural products, the CAP was especially damaging for food-exporting developing countries. Page criticised the EU for believing that, based on its precautionary principle with respect to food security concerns, it had a right to impose rules on the rest of the world. This represented a non-compliance with WTO rules. In addition, it assumed the EU had to be right to judge compliance and, by not trusting other countries' standards, added a whiff of xenophobia. Furthermore, the EU's pioneering efforts in anti-dumping measures set a negative example and created a problematic instrument in international trade.
7. Moving on to the issue of bilateral relations between the EU and developing countries, Page did not see bilateralism in trade as a useful substitute for multilateral agreements. One reason was that it was unlikely that large developing countries would radically alter the positions they took at Cancún in a bilateral setting. In contrast, small developing countries would find it harder to maintain their positions in bilateral negotiations because of their weak individual bargaining power against larger trade partners in the developed world.
8. Page distinguished between two rationales that underpinned bilateral agreements of the EU with developing countries. On the one hand, rational, purely trade-oriented considerations characterised the free trade agreements with countries such as Mexico and Chile. They worked fairly well, mainly because the trade volume was relatively limited and both sides could decide to walk away at their discretion. On the other hand, the trade agreements with the ACP countries were built upon a development, not a trade, objective. The current negotiations about the establishment of Economic Partnership Agreements (EPAs) were awkward for the ACP countries. The countries were in these regional groups are more accustomed to negotiate as producer groups or based on income levels rather than on the basis of geographical criteria.
9. Page concluded her remarks by observing that there continued to be confusion in the EU as to the difference between trade and development considerations. Clearly, the notion of the EU as a development partner for the ACP countries fell apart at Cancún. Instead, the meeting was shaped by a visible North-South divide not seen in such a forum in a decade or so. The EU was widely regarded as part of the North alongside the US and other industrial countries, not as a special partner for developing countries. According to Page, this might in fact be a healthy process for the EU, as it brought to an end the confusion between trade and development.
10. During the discussion, the following points were raised:
- What constituted a responsible trading partner? Simon Maxwell, Director of ODI, invited the audience to submit relevant points to him in order to come up with a list for an authoritative definition.
- The issue of whether there was a necessary link between trade policy and development policy was intensively discussed. While some members of the audience insisted that both objectives need to be integrated, Sheila Page perceived this to be a rather condescending attitude on part of the EU and other actors in the developed world. In her opinion, it was up to developing countries themselves to decide what is good for them in terms of development objectives when it came to trade agreements.
- The impression was shared that over time the EU has reflected more and more a mercantilist bias thereby moving away from its free trade orientation.
- While the UK government was pleased with the compromise reached on the reform of the CAP, further progress was warranted in order to ensure its coherence with development objectives. However, the UK is only one actor on the EU level and its influence on this issue was hence limited.
- With respect to the current EPA negotiations, the EU's approach was to encourage trade within regions in the ACP group in order to make them viable trading partners in the future. As of now, however, there were very few similarities in economic terms within the existing regional groupings, e.g., SADC. A better approach for the EU might therefore be to deal directly with certain producer groups, e.g., for cotton or sugar.
- It was pointed out that the unanimity rule in the WTO's voting procedure was difficult to apply to an organisation of 148 member states. However, to what extent this issue was and should be given priority was questioned. Tim Abraham saw little room for revisions to the voting procedure in the foreseeable future.
- The united voice of developing countries at the Cancún meeting was by no means a new phenomenon. The G-20 received considerable attention, because, inter alia, China was represented for the first time at a WTO Ministerial and because it proved to be an effective vehicle to convey the interests of middle-sized developing countries. It remained to be seen how much cohesion the group could achieve on policy issues in the future.
This event looked at the European role in trade negotiations, following the WTO Ministerial meeting in Cancún which had failed to provide the political momentum to move the Doha agenda forward.