Examination of Witnesses (Questions 120
- 131)
MR NICK
MABEY, DR
PAUL JEFFERISS
AND MR
PETER HARDSTAFF
MR DUNCAN
MCLAREN,
MR TIM
RICE AND
MR BARRY
COATES
120. Do you think it is more a scoping exercise,
as the previous witnesses said?
(Mr McLaren) Yes, as the previous witnesses said,
and one thing I would like to add on all of these three things
which is something that is generally missing from such appraisal
mechanisms is that they are about appraisal rather than about
audit afterwards, and if we take a view of something that has
been assessed in advance and we have got some predictions about
what effects it would have, then the rational thing to do is to
audit it afterwards to find out whether they were true and that
would help us make better appraisals in the future. However, they
are saying that the EU is still strongly opposed to doing any
such review of the Uruguay Round which would actually be one of
the best ways of improving its appraisal and assessment of any
future rounds.
121. What would you like the WTO to do at the
centre to ensure that (a) adequate work is done, and that (b)
the results are actually taken into account in the negotiations?
(Mr McLaren) On which particular issues?
122. When they are looking at sustainable impact
studies and the work that is being carried out in Canada, what
do you want them to do at the centre beforehand so that the work
is adequately done?
(Mr Coates) Obviously we have talked about capacity
building as the major priority, and the WTO does not itself have
the capacity to do the capacity building, but it has a role in
ensuring that it happens. A second issue is decent research and,
as was referred to, research that uses modelling in order to derive
predicted outcomes does not actually address the degree to which
the model may not be working. If you look at the framework for
the WTO study on trade and the environment and also the sustainable
impact assessment being undertaken for the EU, both of them are
essentially using modelling exercises to predict what the outcome
would be given different trade policies. The NGOs are saying is
that that is a flawed model itself because it is not looking at
the assumptions behind it, so, for example, it often assumes that
markets work in converting trade policy into impacts on the ground.
By contrast, in most countries market failures are more common
than efficient market successes and in fact what we have to look
at—
123. When is a market successful? Are there
any examples or models of good practice we could point to?
(Mr Coates) Traditionally we are looking at relationships
between small producers and small groups of consumers and you
have an opportunity for ensuring that they have similar information
and similar levels of bargaining power, but as soon as you introduce
some of the reality into the situation where supply chains are
often dominated by a few companies, where producers have relatively
little bargaining power and very little knowledge about what relative
prices are internationally, et cetera, et cetera, you start to
understand that these assumptions do not apply similarly with
regard to the environmental impact.
Mr Robertson
124. You mentioned companies objecting to, for
example, the so-called climate change levy on the grounds of commercial
advantage and I think really the objection is the same that the
motorist would have in the sense that there are no alternatives.
Now, surely only countries which are wealthy develop alternatives
and the Third World countries, because they are poor, will not
develop alternatives and will not develop clean alternatives because
the development of those clean alternatives requires countries
basically to be wealthy. Do you accept that premise?
(Mr McLaren) That is one of the arguments that underlies
the idea that the WTO have used quite dominantly in their Report
that as you get richer, then people take more concern for the
environment and will invest more in environmental protection and
so forth, and they put a lot of weight behind that despite the
analysis saying, "Well, in fact it works in some places and
it does not work in others". I think it is fair to say that
there is a need for investment in alternatives, but that does
not mean that all countries need to go through the damaging processes
that we have undertaken in terms of the over-exploitation of resources
and of people to get to those alternatives. China does not need
to go through a heavy investment in fossil fuel power to exploit
modern technology in photovoltaics, and this is an issue of, if
you like, getting technology transfer going in the right direction
in the interests of developing countries, yet at the moment the
way that the trade and intellectual property rights agreement
works is to attempt to protect those intellectual advances overwhelmingly
in the interests of the companies developing them to the extent
that poorer countries have less opportunity to adopt appropriate
technology, so I am not sure that simply saying that there is
no alternative in the way that companies and countries are objecting
necessarily leads us down the right path.
(Mr Coates) I think the question is also to what degree
are those impacts avoidable and to what degree are those impacts
themselves causing a loss of economic growth, so if you look at
the studies in developing countries about issues like deforestation,
soil degradation and pollution, there is an actual economic costs
to those activities which has a detrimental effect on their economic
growth. It is not that they are sacrificing some of the environment
in order to achieve economic growth, but actually economic growth
is reduced because of the scale of the environmental impacts and
I think that that underlines these arguments because many of these
issues can be addressed by more sensible policies.
Joan Walley
125. I think you were each here for our earlier
session and I would really like just to turn to the issue of the
mechanics and the modalities of how we can get the proper input
and the proper account being taken of the input that both NGOs
and perhaps parliamentarians would want to see. First of all,
could I just ask Mr Coates a direct question because it is my
view that in view of the importance of the Performance and Innovation
Unit in the Cabinet Office your organisation should be involved
in that. Have you had any invitation to be involved in it?
(Mr Coates) Yes, we have. We had a meeting with them
last week and the Unit is in relatively early stages of preparation.
We made a number of comments on their terms of reference and basically
thought that the terms of reference were too narrow insofar as
they did not look at many of the international issues, particularly
the effect on developing countries, and they did not give adequate
weighting to some of the social effects of trade policies.
126. I am delighted to hear that and I shall
be interested to see whether or not there is any progress on that
agenda and I hope that we will be able to explore that through
the Committee here. Can I then turn on to a different aspect of
how we get Trade and Environment Ministers both in the UK and
at the European Union level having a kind of common agenda as
far as sustainability is concerned. In terms of the evidence that
has been provided by Friends of the Earth, can I ask how you see
the strength or the weight that the large transnational companies
have and the membership that they have in advisory committees
and how that either does or does not impact upon the ability of
Trade and Environment Ministers to be able to combine the joint
agenda in your view?
(Mr McLaren) I think as a very brief comment, you
have highlighted a serious problem, the influence of corporations
and in particular transnational corporations and in particular
on trade ministries, although I would not say that environment
ministries were immune to that pressure—
127. Can I just stop you there and ask you,
therefore, in terms of the DG trade department at the EU having
the competence and the Trade Ministers here having the competence
for all but the investment part of this, is that a matter of concern
for you?
(Mr McLaren) It is indeed. I do not think it is a
satisfactory situation given the lack of effective integration
measures, despite your admirable efforts on the Greening Government
in the UK and the beginnings of a similar process in the EU with
the integration reports, and, as you heard earlier, the trade
and competition functions have not yet been subjected to any such
integration analysis. I think that in the light of what we were
saying earlier about the lack of capacity in developing countries,
the fact that we clearly do not yet have the capacity in the developed
countries to deal with how one would get a trade round to promote
sustainable development means that there is a long learning curve
to go up.
128. Can I just ask a sort of related, but separate
question which is that everyone is talking about the need for
transparency and it is something which Dr Iddon raised at our
last session, but in terms of getting the sort of joined-up green
ministerial thinking integrated both at EU level and at UK level
and our concerns about full parliamentary scrutiny over what happens,
have you any comments to make as far as a future role for this
Committee is concerned because I think sometimes we feel a little
bit that maybe we might well be informed and we might well have
comments to make, but it is a question of how we can have some
significant input? Do you think there is any need for any new
framework about the role of the parliamentary committees, such
as this, at the institutional level of the WTO?
(Mr McLaren) I think it would be a topic that merits
exploration and we do not have a sort of, "Here's our proposal".
Mike Moore is very keen to emphasise the accountability of the
WTO to national parliaments and I am not sure that Members of
this Committee might feel that Mike Moore is accountable to them.
I think there may be a case in the UK and in similar governments
for some sort of standing oversight committee for WTO matters,
freeing yourselves up perhaps to look at, "Okay, let's audit
the impacts of what that trade agreement did", as perhaps
was more foreseen in your establishment.
Chairman: Quite a few questions we did ask your
predecessors and they are not really relevant in your particular
position on the WTO Round, so we can skip over those and I would
like to move on to questions of transparency and openness.
Dr Iddon
129. Looking at it from an NGO's point of view,
has there been enough openness and transparency in the preparations
leading up to Seattle both at the European and world levels?
(Mr Coates) We welcome the increased levels of consultation
meetings with the Government. However, I would add to the previous
session that expressed concern about the degree to which those
consultations had led to any kind of change in policy or even
any sense that the NGOs were being listened to, and I particularly
think that is relevant with regard to the issue of investment
and the degree to which the recommendations from this Committee
on investment and the overwhelming numbers of NGOs and civil society
who are involved in the MAI coalition have been reflected in any
change in government policy, and particularly there are a number
of recommendations from the Committee's Report that I believe
have not been acted upon. We see in the investment proposals by
the Government still the objectives of investment liberalisation
and protection for foreign investors as being too dominant objectives.
This does not provide for the kind of balance of rights and obligations
that this Committee called for and that the MAI coalition and
members of civil society have called for. Further, it seems to
us that it calls into question the rationale for the agreement
and this is where we have challenged the Government actually to
provide, through these consultations, some degree of research
that backs up their position on many of these issues. For example,
liberalisation of investment is not perhaps the most important
issue given the fact that 94 per cent of the investment changes
last year were in the direction of liberalisation already. Furthermore,
there is, according to UNCTAD, no relationship that they could
ascertain between increased investment liberalisation and increased
levels of investment. Furthermore, the case for investment protection
has not been made and already foreign investors tend to receive
government incentives, such as tax holidays, derogation from labour
or environmental standards, so I think the case for protection
of foreign investors also has not been made. This is used to illustrate
a concern of ours that the consultations have been held at a level
of the Government wishing to pursue a certain agenda for certain
reasons and NGOs trying to get the conversation into what are
the substantive issues behind the Government's proposals. We have
found it very difficult to do so.
130. And particularly if we look back at the
unsatisfactory way in which the OECD MAI negotiations were carried
out, do you think the WTO has learnt anything from that and is
it setting up its own negotiating machinery to listen to NGOs?
If not, what would you like to see happening?
(Mr McLaren) In a sense I think the lessons of the
MAI in these very sort of procedural terms have not fully been
learnt. In particular, there is still a widespread assumption
that the public misunderstood what the MAI was intending to do
and we hear that again now in and around the trade liberalisation
talks, that the public just do not understand the benefits and
they simply have to be educated about the benefits of further
trade liberalisation. There is a sense in those meetings which
we do get, and there is more openness to NGO input, that "the
door is open, but nobody is home" and nobody is actually
listening to what we are saying, that they are there and sort
of paying no attention. We appreciate that it is not necessarily
going to be the case that our inputs are going to change things,
and governments have the job of balancing different interests,
but we see predominantly other interests, notably those of business,
as was mentioned earlier, reflected in government positions. As
to what could be done further, it is difficult to say in mechanistic
terms because the problem is the commitment of that side of the
process to a dialogue where both sides are listening and learning
from the process. I think there is also some proof yet to be demonstrated
regarding the openness of the WTO itself in how it conducts negotiations
in Seattle with regard to the presence of developing country negotiators
at key negotiations or the amount of information that is provided
about the ongoing debate.
131. So in future if you could leave us with
a key message, what would it be?
(Mr Coates) My key message is that the British Government
should try to persuade its EU partners, which I believe it would
be able to do, to drop the proposal to put new issues on the agenda
at Seattle, particularly the proposals for investment, competition
policy and procurement. Secondly, we believe that international
rules in those areas are very much required, but they need to
be balanced international rules and they need to be rules that
will essentially operate in a forum whereby they can involve in
a meaningful way all the participants. For us, we would like to
see agreements on investment and competition policy in particular
in an international forum that is not the WTO because the WTO
has a mandate for deregulation of government influence, not regulation
in the public interest, which is what we believe is required in
order for essentially these kind of issues to meet a challenge
of sustainable development and equity.
(Mr McLaren) The message that I would leave is that
the pursuit of sustainable development, which this Government
has expressed its commitment to, will not be furthered by an unbalanced
pursuit of the economic objectives of trade liberalisation when
there are failings of that process on all counts as far as sustainable
development is concerned. It has environmental costs in terms
of resource consumption, it has social costs in terms of inequalities
and it has economic costs in terms of monopolies and instabilities
which are encouraged through that process because it is an unbalanced
process and there is a very clear need to invest time and effort
and resources in bringing the process back into balance.
Chairman: Well, thank you very much indeed.
I think that was a very satisfactory conclusion, so thank you
for all you have said and thank you for coming here this morning.
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