House of Commons - Environmental Audit

Select Committee on Environmental Audit Second Report

A COMPREHENSIVE ROUND AND SINGLE UNDERTAKING

The demand for further liberalisation

10. The UK and the EU are committed to a new comprehensive Round of trade negotiations lasting three years and based on a single undertaking which the Government hopes will be launched at the WTO Ministerial meeting in Seattle which commences at the end of November 1999.[19] The Trade Minister, Mr Richard Caborn, told us that at Seattle 'only' the agenda was being negotiated and "the EU and the UK, are asking for a comprehensive Round effectively ruling nothing in and ruling nothing out."[20] Both Trade and Environment Ministers described the unequivocal support of the Government for progress with liberalisation of trade and its extension into new areas.[21] The European Commission describes the demand for progress saying "in view of the pressures the international economy is now under, there is a risk of slipping backwards [into protectionism]."[22] The RSPB said this as an overstatement of the case in view of the existence of already rigorous rules on trade and Mr Nick Mabey, WWF UK said that "I see no great move to protectionism out there. We have gone through the worst financial crisis for the last 60 years and, apart from some muttering in the United States, there is no ground swell of protectionism out there."[23]

Strategy -trade-offs

11. The Government's memorandum states that "a comprehensive approach, allowing negotiations across a wide range of areas, will be important to building up a broad political consensus for further liberalisation, particularly in more sensitive areas. It should also allow greater flexibility to reflect other WTO Members priorities.[24] The European Commission's communication describes a comprehensive Round and single undertaking as "the only guarantee of benefits of the Round to all members and the best means to ensure an end result acceptable to all."[25] The strategy therefore is of a range of negotiations on various existing and new agreements providing the opportunity for perceived losses in one area to be balanced by gains in others for all negotiating parties. The Commission goes on to assert in its communication that without a 'single undertaking', by which all WTO members agree to the eventual package or nobody gets anything, "it will be difficult, indeed virtually impossible, to strike a generally advantageous balance of rights and obligations."[26]

12. The Environment Minister, Mr Michael Meacher, suggested that this strategy and therefore a comprehensive Round was necessary for securing progress on the environmental agenda. He said "The key issue from the environmental point of view I think we are concerned with in this round is trying to resolve this fraught issue of the interface between the multilateral environmental agreements and the WTO system. An attempt was made to resolve this with the WTO Committee on Trade and Environment (CTE) at Singapore in 1996 but it failed. I think this comprehensive Round with the opportunity for cross-cutting deals, provided there is a measure of flexibility, is the best way of resolving this."[27] Mr Meacher rejected any suggestion that the strategy would act in reverse, he said "There certainly will not be any horse trading on [environmental principles] at Seattle, I can assure you...There is a clear EU position on this about the involvement of trade in the environment...There is no question of just regarding the environment as a convenient negotiating ploy. It is central to this."[28]

13. However, this strategy would appear to encourage developing countries in turn to treat environmental protection as a bargaining chip to lever economic concessions out of the developed countries. This rather goes against the efforts previously described to us by Clare Short, Secretary of State for International Development, to persuade developing countries to engage in the sustainable development agenda and avoid the available historical models of environmentally-damaging growth.[29]

Green protectionism

14. We heard a lot from Government about the suspicions harboured by developing countries that concern for the environment was a mask for further protectionist barriers to trade.[30] The WWF described the position as not so clear-cut with India holding that position very vocally but with African countries, for instance, softening their positions.[31] The NGOs, particularly the World Development Movement, were clear that stress on green or eco-protectionism was a chimera. The problem was one of simple protectionism in the form of the abuse by developed countries of certain WTO provisions to maintain barriers to trade and of the failure of the system as a whole to secure real benefits for the developing world. There was a fundamental lack of trust between developed and developing participants over mainstream issues and this had to be rebuilt if the environmental agenda was to be progressed.[32]

Capacity of developing countries to negotiate

15. The prospect of a comprehensive Round involving new issues and cross-cutting deals raises at this stage the issue of the capacity of developing countries to participate effectively, let alone manage the implementation of any agreements. NGO witnesses described the existing built-in agenda alone as representing more than enough to be getting on with.[33] The Government has accepted, in the context of the OECD negotiations on investment, that a major failing of that process was the limited forum.[34] However, despite the WTO's broader membership, there appears to be an acute imbalance between the negotiating capacities of developed and developing countries. For instance The US has a permanent WTO delegation of over 250 people. In comparison up to 30 developing countries have no permanent delegation at all.[35] This suggests that, despite a seat at the table, developing countries may not be able to participate on anything like a level playing field. The equity of the trade-off strategy for a comprehensive Round, however, would appear to depend on participants having the ability to keep track of extremely complex negotiations and to analyse effectively likely outcomes.

16. This is recognised to an extent by the Government. Mr Caborn told us "I think there are some doubts as to whether [developing countries] could handle that comprehensive Round. One of the things that has to be clearly put at the Seattle meeting is: how do we assist developing countries to have the capacity to be able to do that. The one thing which will undermine both the negotiation and the institution itself is if people believe they are not getting a reasonable and fair deal out of it. It is very important that at Seattle we do resolve this problem" (emphasis added).[36] Mr Meacher also said that capacity-building was important, that the UK had a good record in this regard but "can and should do more".[37] The NGOs laid a great deal of stress on this issue criticising the not only the level of commitment and resources going into capacity-building in developing countries but also the lack of any real linkage between the outcomes of the various capacity-building programmes and the proposed timetable for further negotiations. Mr Mabey, WWF UK, put to us that "It is not that they are not putting money into the countries, but the World Bank has not come up with a positive programme that is sufficient to increase capacity in time for the Seattle Round...We should be measuring the outputs and not just saying, 'we're capacity-building, therefore we can move ahead'."[38]

17. We conclude that assistance to build the negotiating capacity of developing countries to enable their effective participation at the WTO is as important as their presence at the table. The scope and progress of negotiations should therefore be linked in a concrete way to achievements in capacity-building programmes for developing countries rather than simply relying on the provision of inputs to the process.

Lessons from the Uruguay Round

18. NGOs argued that the impacts of the last round of trade negotiations had not yet been fully assessed and understood and that what evidence existed, from OECD and UNCTAD studies, revealed that developing countries had lost out. The RSPB quoted the UNCTAD General Secretary, Rubens Ricupero, as saying that "whatever the theoretical benefits of trade liberalisation, the empirical record is otherwise".[39] This raises a question over the validity of the argument that a comprehensive Round and a single-undertaking is an effective way of securing equitable benefits for all participants. Mr Meacher said "If this [a Millennium Round] was another stitch-up between the US, EU and Japan and the Asian countries and some of the poorer Southern countries were missed out I would be more hesitant, but I do not believe that that is so. I think a comprehensive Round can have real benefit for all parties in a manner that the Uruguay Round did not."[40]

19. We fail to see from our evidence what has changed since the Uruguay Round that rules out the danger of another 'stitch-up' by developed countries as described by the Environment Minister.

Review, repair and reform

20. Criticisms of the last Round, including assessments of the sheer scale of the costs of implementation of the agreements, many parts of which have yet to be completed in developing countries despite longer transitional periods, provides the basis for an alternative agenda for future WTO efforts termed "review, repair and reform".[41] Developing countries and NGOs have argued that what is needed is a period of consolidation and review so that the benefits of trade liberalisation can be maximised and the implications of existing agreements can be understood and amended where necessary. Both Trade and Environment Ministers argued that there was a 'clock' that could not be stopped and that assessment was a continual process.[42] Mr Peter Hardstaff, RSPB, asserted that "a review procedure is not...'stopping progress'; it is actually making progress. It is a different kind of progress from that which is perhaps perceived by some trade negotiators, but the trade system has to progress towards being more accountable to the needs of people and the environment."[43] Mr Mabey, WWF, argued that looking at the operation of existing agreements, dismissed by some as 'review', could actually yield real benefits to very poor communities—just those people whom developed country WTO members were committed to assisting under national and international policy objectives.[44]

The example of TRIPs

21. Repair and reform of existing agreements was not ruled out by Ministers but were placed in the wider context of a comprehensive Round including new areas. In particular NGOs welcomed Mr Caborn's statement that "With TRIPs, or any other area people believe they have a legitimate grievance against, I think it would be foolish to say that it is set on tablets of stone. You cannot leave [a dispute over] agreements unanswered or, if you do, it will always be a source of discontent. What I said before is, we want to try to make sure we re-visit the rules and try to make the WTO more efficient, more effective and, indeed, a more transparent body. To allow part of the decisions made in Uruguay not to be put on to that agenda would be foolish in my view."[45]

22. The agreement on Trade-related Intellectual Property Rights (TRIPs) is an interesting case in point. The EU's position is that the agreement was a "major step forward" and that any initiative for further negotiations should not lead to a lowering of standards or affect the on-going work under the built-in agenda and that "present achievements and the current transitional periods must not be re-opened...".[46] Evidence from FoE suggests that the United States, having taken a similar line to the EU, now wants TRIPs off the agenda in the light of difficult arguments looming with developing countries.[47] These arise over a number of issues relating to the treatment of traditional and indigenous knowledge and husbandry of biological resources by the agreement and its promotion of western-style intellectual property regimes. The relationship between TRIPs and the Convention on Biological Diversity (CBD) is also difficult as the Convention reaffirms national sovereignty over biological resources and introduces an obligation for the fair and equitable sharing of the benefits arising out of their component genetic resources. FoE describes the effect of the TRIPs agreement as 'sanctioned biopiracy'.[48]

23. The British Government Panel on Sustainable Development examined the issue of community and indigenous peoples' intellectual property rights over biological resources in its Fifth Annual Report recommending that the Government seek equitable arrangements to ensure that such rights were acknowledged and rewarded appropriately. This recommendation, to which the Government has yet to respond, was set in the context of negotiations under the CBD but we believe that the Government must apply this advice in the forthcoming review of the agreement on Trade-related Intellectual Property Rights (TRIPs) which is an important issue for developing countries and which should certainly be on the agenda agreed at Seattle.

The built-in agenda

24. NGOs argue that the existing agenda for negotiations amounted to a very large package already which included the key areas of agriculture and textiles, the genuine liberalisation of which, developing countries had been awaiting for 50 years.[49] Mr Barry Coates, WDM, described this agenda as containing sufficient scope for cross-cutting deals as it stood[50] and went on to say that the main areas proposed for new negotiations—investment, government procurement and competition—were not those in which developing countries had significant interest and he therefore questioned the validity of their introduction on the grounds of providing scope for gains for all parties.[51]

25. We note that agriculture and fisheries were also highlighted as perhaps the most significant area where liberalisation could yield environmental and economic 'win-win' benefits by Mr Meacher and he was supported in this by the conclusions of the WTO special study on trade and the environment.[52] Mr Mabey, WWF, described the 'ticking clock' analogy as "disingenuous" and an inappropriate 'threat' by developed countries.[53] We do not believe that there is a 'clock' dictating urgent progress in the manner described by Ministers. Indeed there is a danger of rushing too quickly into new agreements on new areas without taking stock of the effects of existing arrangements.

26. Mr Caborn asserted that "the world is moving on at an ever-increasing pace as we all know. Unless you try to manage that change in a way that is conducive to liberalisation of trade, we think that would be a retrograde step."[54] We would take issue with the Trade Minister and say that the changes in the world should be managed in way that is conducive to promoting sustainable development rather than trade liberalisation per se which may not always amount to the same thing.

27. The case for a comprehensive round has yet to be made convincingly. The existing 'built-in agenda' appears to:

- contain sufficient scope for benefits for all participants;

- constitute an already challenging task for negotiations in the time-scale proposed, particularly for developing countries; and

- cover the key areas in terms of sustainable development.

A more satisfactory approach would be , in our view, to address this agenda with a view to consolidating the achievements of the multilateral trading system, building in environmental and development considerations, to achieve real and lasting promotion of development that is sustainable.

19 Ev p.2, paragraph 6 Back

20 Q3 Back

21 QQ 3 and 133 Back

22 Commission communication, p5. Back

23 Q69 Back

24 Ev p.2, paragraph 6 Back

25 See Ev p.27 Back

26 Commission communication, p 6 Back

27 Q134 Back

28 Q142 Back

29 HC58-II, 1998-99, Q196 Back

30 See Q140 Back