EU bids to heal wounds left by Seattle

Date: 03/02/2000

As ambassadors from the World Trade Organisation's member countries prepare to meet next week for the first time since the failure of the Seattle talks, Simon Taylor assesses the chances of overcoming the obstacles which blocked agreement on a new round in December

IN THE aftermath of the failure of the Seattle talks to launch a new trade round, the efforts being made to inject new life into the World Trade Organisation are strikingly tentative.

So far, only Trade Commissioner Pascal Lamy has stuck his head above the parapet, floating the idea of a 'mini package' which would tackle the most pressing issues raised by the Seattle debacle without losing sight of the EU's aim of a broad-based round.

But despite the apparent appeal of Lamy's plan, the chances of getting a new round of global trade liberalisation negotiations off the ground before next year are very slim.

International trade negotiators appear to be in a daze following the spectacular collapse of the Seattle talks, not least because they failed for not just one but many different reasons.

One diplomat described next week's meeting of WTO ambassadors to discuss the way forward as "taking the first step after a car crash", and even the normally ebullient WTO Director-General Mike Moore has confessed to being pessimistic about the chances of reaching a deal this year because of "inflexibility" in member countries' negotiating positions.

The problem lies in the range of challenges involved in trying to get agreement on an agenda for the new round.

First, there are serious doubts as to whether the US is sincere about having another stab at launching the talks this year because of the presidential elections in November. To judge by President Bill Clinton's comments at the Davos world economic forum last weekend, he may support a new round on paper but he is not prepared to move on the major issues of labour and environmental standards which contributed to Seattle's failure.

As long as Democrat candidate Al Gore needs the support of US labour unions in his campaign for the White House, Washington is unlikely to withdraw its demand for some form of sanctions to punish trading nations which fail to comply with international labour standards. And while that is the case, developing countries will block a new round, as they did in Seattle, because of fears that the US' stance is motivated by protectionism.

As if it was not difficult enough to close the gap between the EU and the US, the world's two largest trading powers, over key issues such as investment, competition rules and agricultural liberalisation, they have also been forced to recognise that developing countries can no longer be press-ganged into accepting a deal which does not address their needs fully.

Outrage at the big industrialised powers' attempts to stitch up a deal in Seattle led to fierce condemnation of the way the WTO does business and has pushed reform of the organisation to the top of the trade agenda.

In addition, the success of the environmental and labour groups in forcing the organisers to cancel the opening ceremony means the WTO will have to do far more to counter criticism of its lack of openness and transparency, even if that runs counter to efforts to improve its decision-making process.

In the absence of other players prepared to take a lead, Lamy's idea of a mini-package seems eminently sensible. Speaking to the European Parliament this week, the EU trade chief outlined his plan to try to tackle some of the most pressing and digestible issues highlighted by Seattle's failure, with the aim of finding answers to some of the easier questions while leaving the more substantive issues for the real negotiations once a new round is launched. "It is better to test the ability and the will of the organisation rather than launching a new round," he insisted.

Top of the agenda is the need to address the concerns of developing countries. "Developing countries have substantive problems. We want more trade liberalisation and additional conditions which our public feels will not undermine their standard of living but which developing countries see as new barriers," said Lamy.

The Commissioner's 'small but digestible agenda' would address developing countries' problems with implementing the last world trade deal, which involved a number of commitments on issues such as intellectual property rights and investment. Trade experts have warned that many developing countries cannot, for example, meet a requirement to phase out restrictions on foreign car makers to source parts locally rather than importing them from abroad. "We have to send a signal that we are prepared to address these issues," insisted Lamy.

The Commissioner has also stressed the need to answer the complaints from some of the world's poorest countries that they do not have the administrative and legal resources to defend their interests in the WTO.

"We learned from Seattle that developing countries had problems with multilateral negotiations and faced difficulties in trying to handle complex negotiations," he said last week, calling for concrete measures "in the field of capacity building and technical assistance" to improve developing countries' participation in WTO negotiations.

But Lamy warned that embarking on a wholesale reform of the WTO's decision-making process could scupper efforts to launch a new round. "There are questions about WTO procedures and whether they are outdated but if we raise issues about the system as a whole as a prerequisite for a new trade round we will get nowhere," he insisted.

Despite the protests of some of the world's poorest countries in Seattle that they were being excluded from key decisions, Lamy is adamant there should be no wholesale review at this stage of the way the WTO works. "Decision-making questions have to be addressed but not in a way that will block the whole thing," he said.

He believes, however, that a series of measures could be introduced to improve the way ministerial conferences are organised to "facilitate the participation of developing countries and promote greater external transparency".

He also argues that it would be useful to set up an 'expert working group' to look at internal reform issues, although it is not clear if this would amount to the same thing as the 'eminent persons' group called for by UK Prime Minister Tony Blair to produce ideas and recommendations.

Despite the difficulties caused by the US' electoral timetable, Lamy does not rule out making a fresh attempt to get agreement on the agenda for a full round this year. "I do not exclude the launch of a new round this year. There is good will on the US side. Charlene Barshefsky has told me that she is not satisfied with the situation," he said, referring to the US trade representative.

EU member states have reacted cautiously to Lamy's ideas amid concern that, at first sight, the Commissioner appears to be backing away from the Union's demands for a broad-ranging agenda for the next round of negotiations.

But Lamy denies that his new strategy represents any weakening of the Union's position. "It is not a step backwards because the EU's objective of a comprehensive round is still there," he insisted.

The first major test of the Commissioner's plan to "re-energise" the WTO process will come next Monday (7 February) when the organisation holds its first meeting of all 135 member countries' ambassadors since Seattle.

Officials at WTO headquarters in Geneva share Lamy's view that some changes to the organisation's decision-making procedures are needed, although they insist that the current consensus-based approach must not be abandoned. "We cannot get around consensus but we do need new structures like an executive board or more open structures," said one.

But the US' unwillingness to compromise and the reservations of many developing countries about a new round make it unlikely that there will a concerted effort to launch a fresh set of negotiations before the end of this year.

Major feature. As ambassadors from the World Trade Organisation's member countries prepare to meet for the first time since the failure of the Seattle talks, article assesses the chances of overcoming the obstacles which blocked agreement on a new round in December.