Examination of witnesses (Questions (120
- 139)
TUESDAY 7 MARCH 2000
MR MIKE
MOORE and MR
PATRICK LOW
Chairman
120. You are not guilty of providing these large
per diems then?
(Mr Moore) We do not pay any of that. The hosts, other
good organisations and the European Community put a lot of money
up to assist. I do not know how they organised that or how much
they paid. It reminds me of one parliament in my region in the
Pacific which had a similar problem with MPs' overseas travel.
Of course, it would not happen here. They paid the hotel bill
and your costs so you got your hotel bill paid and whatever that
cost you put in your back pocket. The incentive of course was
to go to the flashest, most expensive hotels.
Mr Worthington
121. Turning to institutional reforms, on the
one hand, you have all the very different ideas that may be coming
in about capacity building or negotiating mechanisms or dispute
resolution, but there is the other issue about how those are taken
forward. Pascal Lamy and Stephen Byers suggested there be an eminent
persons group to take those issues forward. Do you support that
or have you other ways in which these ideas are going to become
coherent?
(Mr Moore) I welcome advice and assistance from wherever
we can get it. The ambassadors strongly feel that we will fix
our own shop and do more ourselves. I guess some might even feel
threatened. I do not think you would want the Commons reformed
by people who have never sat in it once. It depends how this work
progresses. I think there is a need to look at the WTO from an
outside perspective. I think there is a need to look at all the
international institutions from an outside perspective. There
is a need for parliaments to get much more involved than they
have for all sorts of reasons. It would be quite useful if somebody
started off with a blank sheet of paper and said if we were starting
again would we have UNCTAD, UEDP, WTO to help us? There is some
very heavy lifting to be done here. What are our relationships
with our parliaments? An eminent persons group, looking at that
heavy work, would be quite useful and we should not feel threatened
by that at all. We must not allow it to be used as an excuse not
to tidy ourselves up.
122. When you have those tensions, attempting
the most desirable may stop you doing anything good at all. You
have to ride that kind of tightrope. How confident are you about
getting a system into capacity building? What we have been doing
so far is appeals have been made; good ideas are being put forward,
but the more you look at capacity building the much bigger an
issue it becomes. It is not just about helping people negotiate;
it is also about implementation and many other dimensions as well.
Do you see progress being made on that?
(Mr Moore) I think we have made progress, yes, but
never enough. A permanent budget would be useful where I can plan
more than six months ahead. This is why I think the work we are
doing on implementation case by case will be extremely good because
it will expose the fundamental problems countries have. We have
a programme called the Integrated Framework. If only it worked.
The idea is quite good. If we did not have it, we would all sit
around and reinvent it. The IF programme is based on the WTO being
the head agency, the bank, the fund, UNCTAD, ITC at a round table,
go to a country and ask the customers what they need; draw up
a list; get all the agencies together and fix it. It is a great
idea. We have had round tables and we produce reports for what
needs to be done but nothing is happening. I have to spend some
time there personally. We are going to grab control of it and
see what work we can do with the bank and the other institutions,
but you are right about capacity building. It could go on for
ever. Who owns what? Capacity building in terms of customer evaluation
becomes training Customs officers, becomes a computer, becomes
having a port. Which part do any of us own? The majority has to
be owned by the Government of the society we are talking to. When
we can only pay for 20 per cent, where only one in five requests
for technical seminars are met — we are not talking huge
amounts of money — I do not think we are doing a good enough
job. How can we see countries are not implementing? They say,
"Send someone down to teach my staff" and we cannot
even do it. In another year's time perhaps I will come and slit
my wrists in front of you but I can report very good relationship
building with the bank and other institutions. I will not be critical
of myself or them yet but in 12 months, if we have not made a
lot more progress, you would be entitled to start throwing a few
pies yourself.
123. The capacity building is not a trade capacity
building; it is an institutional capacity building for those countries,
is it not? It is an interesting idea that you should be trying
to do that through The World Bank and through the major development
agencies in a coherent way rather than on a one-off. That is really
what you are saying?
(Mr Moore) Yes. I keep learning of agencies out there
that I have never heard of.
Chairman
124. If you got your extra £20 million
into your fund that you are building up for capacity building,
would that mean that you would be able to answer two in five requests
for help or how many?
(Mr Moore) I know enough about budgeting. The more
money you put up, you never lower the waiting lists. We can do
a lot more. We would double our capacity.
125. That sounds like two in five.
(Mr Moore) But there are other things we should be
doing. We have training courses. These are very good. We keep
meeting ambassadors from developing countries who have done one
of the courses ten or five years ago. It works. We should be able
to double the number there. Technical capacity building for China,
not an insignificant place, is coming in. We offer them one trainee
every two years. I think we should do a bit better.
Ms King
126. The last time we saw you, you had just
stepped off a plane and you said you had not had time to unpack
the bags under your eyes. I liked that but I really want to look
at the baggage from the Uruguay Round. You will know there has
not been any comprehensive impact assessment based on empirical
evidence to look at the perceived benefits for developing countries.
You mentioned earlier the case of Bangladesh, a country that I
take a very great interest in, where their exports in textiles
have increased from one million to four billion, but you will
know that, despite what developed countries say, there are many,
many developing countries who are saying their experience from
the Uruguay Round is the opposite and it simply has not benefited
them in the way they are told it has. Given that, what measures
is the WTO going to take to map out empirically the benefits and
costs associated with Uruguay?
(Mr Moore) We do not have the resources to even think
about doing a country by country analysis of what has happened
since Uruguay. We have four economists in our research team. There
have been some papers and reports but if you have a look at those
countries that have perhaps done the worst the question is: is
that because of the Uruguay Round? There are issues of commodity
prices, oil prices, agricultural prices that have had a far bigger
impact than the Uruguay Round upon those countries. Also, if countries
choose to have a civil war or to spend more money on defence and
armaments than they are prepared to spend on implementation, there
is not a hell of a lot we can do about it.
127. Has not there been an acceptance of the
point that if developing countries and northern governments cannot
show to developing countries that they have benefited when many
of them say they have not, how will they be encouraged to embark
on a new Round?
(Mr Low) The first thing is how do we assess what
the impact has been. There have been these so-called general equilibrium
simulation models of the gains from liberalisation under the Uruguay
Round. They were ex-ante assessments and they came up with quite
big figures, 300 billion and 400 billion, quite small if you put
it in terms of a percentage of national income but still quite
big and not unreasonably some developing country ambassadors have
started to ask, "Show us the 400 billion. Where is it?"
The truth is these are only simulations. Causality questions are
extremely complex to deal with. To the extent that one could try
to get closer to an approximation, one would find one reason why
developing countries have not benefited as much as those simulations
suggest is because not much has happened in agriculture and textiles.
There is certainly some truth to that. If we were to try to do
assessments that were more targeted, they would be more precise
but they would also be more partial. For example, The World Bank
has tried to do some estimates of what it would cost a developing
country to implement its commitments under the Customs Valuation
Agreement. They have come up with very big numbers. The reason
those numbers are so large is because they have been estimating
not just what it would cost administratively to put this thing
in place; they have also costed computerisation, training, a whole
range of things that would make it easier to benefit from an agreement
like the Customs Valuation Agreement. Not much research has been
done, frankly. There is certainly room for more.
128. Are you asking for research to be done
by UNCTAD, say, or FAO? Who is pushing? Is anyone pushing for
this research to be done?
(Mr Low) The World Bank has done more than anyone
else, I think. We are not actively pursuing an agenda of asking
other people to do research.
129. Let us look for a second at the research
the World Bank has done. A recent study that the World Bank did
suggested that the implementation of three of the measures of
the Uruguay Round — Customs, Sanitary and TRIPs —
would cost developing countries more than one year's worth of
their development assistance budget to implement. Can this possibly
be a good use or justifiable use of scarce resources?
(Mr Low) Those estimates are not the estimates. Think
of the intellectual property agreement. What are we estimating
here? We have to put some laws on the book. We have to make sure
that there are certain obligations we have to meet, but in order
to give it some meaning you have to set up all sorts of administrative
machinery; you have to train people. Those are the areas where
there are costs. It is not the formality of signing on to the
agreement. It is a question of what you are costing and what you
are attributing. It is easy to show that just about anything you
want to do is solidly based in development. Progress will be costly.
(Mr Moore) That World Bank report just picked on one
or two countries too. It was not a huge survey. Maybe we should
do some more work in that area but Patrick's view is right. You
could add $1 billion to so many developing countries on customs
assistance if you take port reform into that equation as well
as training a customs officer or getting a computer up. When we
talk about implementation and infrastructure, if someone wants
to throw the word "education" into that, there is no
end. I do not think it is the WTO's job to run education systems.
I would like to say that governments would be prepared to spend
slightly more there than in some other more unsavoury areas.
130. You think that on those studies the implications
of the World Bank report are exaggerated?
(Mr Low) You have to look at exactly what has been
costed out. If you do look at that, you will find there are all
sorts of supplementary benefits that would flow from expenditure
of that dimension.
Chairman
131. Is it your view that in fact, although
the Uruguay Round attempted to reduce tariff barriers, the developing
countries are finding that the developed countries, having done
what they said they would do under Uruguay more or less, have
invented new methods of getting protectionist measures in place?
We were complained to in South Africa that they keep changing
the goal posts which, as you know in rugby, from New Zealand,
you would object to very strongly. The South Africans in particular,
in relation to the European Union, say they are changing the standards
necessary for the preparation, for example, of beef from South
Africa and from Botswana for export to the European Union. They
are still faced with serious trading difficulties of a protectionist
nature. Then we get the European Union saying, "We have come
to an agreement but what about making certain that you do not
export grappa or use the word `grappa' on the bottle or `ouzo'
on the bottle? We are not signing your trade agreement unless
we have what is fundamentally a protectionist system in place."
Is the developed world behaving as badly as those two examples
suggest?
(Mr Moore) I could get a good headline here. You could
say what I could not possibly say. I think the developing countries
have a case where they say in agriculture, since Uruguay, the
amount of money put into subsidies has gone up, not down. They
have a case where they say how is it that, whenever we get competitive,
whether it is textiles or agriculture, why is that? We know why
it is.
132. What about tinned peaches which South Africa
used to sell to Japan? Now they cannot because they have got dumped
European produced tinned peaches on the market in Japan. That
is disgraceful, is it not?
(Mr Moore) It is just peachy.
Chairman: We want to move on to TRIPs
and TRIMs, Trade-Related aspects of Intellectual Property rights,
and Trade-Related Investment Measures.
Mr Rowe
133. These are two of the great issues because
they are, among other things, the kinds of activities in which
countries with weak infrastructures and so on can actually hope
to make some progress. We have here, meeting your Council on Goods
in January, heard requests from eight developing countries for
an extension to the deadline of the TRIMs agreement and the EU,
the US and Japan continue to insist that extension requests be
considered on a case by case basis. To what extent is the WTO
open to considering a blanket extension to the agreements, such
as TRIPs and TRIMs, which many countries are going to find very
difficult to implement in the time allotted?
(Mr Moore) I do not think we will get agreement for
a general waiver. I do think it is possible to get an understanding
that there will be sensitivity shown while these discussions are
going on because some people want a waiver for five months; some
people want a waiver for five years. The idea that a general waiver
would make life a lot easier for us I do not think will flow but
so far the Europeans, the Americans and the big players have shown
sensitivity. I cannot see a huge problem in getting extensions
for at least developed countries.
(Mr Low) I know of one intellectual property related
case that industry is pushing for very hard in Washington. The
Administration has not responded yet. It is a case of patent infringement
against a particular country. I do not know how that is going
to play out. It could go either way. We could find our disputes
settlement system hopelessly clogged with cases which are about
non-implementation within set time frames. On the other hand,
if we can have a positive environment in which to move ahead,
with any luck, we will get a situation where there is understanding
and where we do not get into disputes but get into a situation
where we can actually negotiate.
134. Is there any recognition that there are
two different types of country? There is the country that has
the capacity to make use of their expertise to mount a serious
challenge to the pre-eminence of the north, as it were, and those
who have no such opportunity at all. I was thinking that India
is a clear case of a country that is desperately and rather successfully
trying to develop a lot of its industrial muscle in these particular
fields; whereas some of the countries in southern Africa that
we have just been to, for example, will not have that capacity
for a long time. Is there any capacity within the WTO for arguing
for flexibility and generosity?
(Mr Moore) There is flexibility inside those rules.
There was a problem in South Africa with parallel importing. I
think that has been resolved. This is again one of the great contradictions,
is it not? You want systems to encourage investment into certain
areas. We all want that. When you are sitting on as many people
as you can to invest in a cure for your illness, once the cure
is established, you want it as cheaply as you can get it. That
is the basic contradiction. We are not going to help people in
India or South Africa in terms of the crisis they have with, for
example, AIDS if we strangle investment into AIDS. The solution
there will be found in laboratories everywhere. It would be a
nice thought that the cure would be discovered in India or South
Africa, but you would be a brave person to wait for it.
Mr Jones
135. You mentioned earlier that agriculture
is not that easy and there are enormous differences, but you also
said you think we can make some progress. How confident are you
that an agreement can be reached on agriculture that will provide
real benefits for developing countries and reduce not just tariffs
and other forms of subsidisation but tariff escalation and non-tariff
barriers, such as seasonal import restrictions?
(Mr Moore) When I said I thought we were closer on
agriculture, I may have misled you. We were close. If everything
else had fallen into place, we might have got somewhere, but I
do not believe Europe or Japan could have accepted massive changes
in agriculture unless there were major trade-offs in other areas
of investment or anti-dumping. I do not want to mislead you on
that. What was the second part of your question?
136. Non-tariff barriers like seasonal import
restrictions. Was that discussed? Is there any chance of an agreement
on that problem?
(Mr Moore) The interesting thing is that what we were
trying to do at Seattle is not have negotiation but merely set
up the conditions upon which negotiation would be held. We almost
got ourselves into the position where we wanted a four day negotiating
Round. This was a negotiation to set up negotiations. This was
not a negotiation in itself and I think that is where some of
us got ourselves into trouble, including me. If there were to
be a negotiation on agriculture, all those issues would hopefully
be in it.
Chairman
137. What you are saying is that we have to
get into a Round in order to raise these difficult agricultural
issues and make progress on them, providing of course you have
a big enough field for there to be set-offs and trade-offs?
(Mr Moore) That I think is the view of so many countries.
We in Geneva will be working and focusing on agricultural services
anyway, but let us see how far we can get. If I could go back
to Seattle, the lessons of Uruguay, although they took a decade,
weighed heavily on many people's minds in saying there was going
to be a three year Round. Perhaps we tried to be a little too
specific, to report back which month, and maybe we got ourselves
into trouble there because we knew that after Uruguay it took
us five years to even work out what the hell we meant. Maybe the
shortcut ended up taking us longer.
Mr Jones
138. Could you say something about the Marrakesh
decision? A number of NGOs have been calling for the implementation,
which, as I understand it, is designed to help the least developed
and developing countries that are net food importers. If you get
liberalisation of agriculture, food prices could rise and the
Marrakesh decision would address that issue. Could you give us
your thoughts on that?
(Mr Moore) The information I have is the reality that
food prices have not increased for net importing countries, despite
the progress made in agriculture. There is special consideration
given to the unique needs of food importing countries. That is
acknowledged and would be acknowledged in any further negotiation.
(Mr Low) The reason that the net food importers have
not suffered the deterioration in terms of trade that was feared
is pretty much because there has not been a huge amount of agricultural
trade liberalisation which would have brought it about. As the
Director-General said a moment ago, subsidies have actually gone
up. That keeps food prices down on the world markets. One of the
most important measures taken as a direct result of that decision
was the renegotiation of the Food Aid Convention under the International
Grains Council in London. These negotiations were concluded early
last year and took effect in July. It seeks to improve the effectiveness
and impact of food aid transactions in terms of the assessment
of food aid needs, monitoring of aid provided and cooperation
between food aid donors, recipients and others concerned. That
is linked to that decision but action to deal with problems that
were foreseen or anticipated for net food importers has been as
lacking as the supposed impact.
(Mr Moore) We have not had to test this formula to
give special attention because there has not been enough liberalisation
that would cause a threat.
Mr Robathan
139. As you have identified, agriculture is
something on which you concentrate in Geneva. I think it is pretty
critical to the whole subject. Most people in this country accept
that there will need to be a reduction in subsidy and possibly
an end to subsidies. Indeed, New Zealand, as I recall back in
the eighties, withdrew government subsidies without some of the
catastrophes that were alleged might happen. When and if subsidies
are reduced and withdrawn and agricultural product trade is liberalised,
we have already heard from our Government that we think the Marrakesh
decision was ill-conceived. What other position do you think would
be taken other than the Marrakesh decision? What other measures
could be put in place to assist food importing countries, because
it is going to be a big problem if agricultural produce is liberalised.
(Mr Moore) Firstly, I do not believe it is going to
happen. You are not going to see subsidies dramatically withdrawn
under a new Round. It is obviously moving in the right direction.
Not even the most aggressive Member State has ever argued that
you should give no support to farmers. What they argue about is
giving support to farming. I am sure we could find a model to
assist the net food importing countries, but I do not believe
that is going to be tested in the next couple of years.
(Mr Low) Some of the net food importers are countries
which, with increased world prices of agricultural commodities,
might cease to be net food importers themselves. That is an element
that is in there as well which is sometimes ignored.
(Mr Moore) I guess Egypt is a major example. The argument
there might be if there was free trade in textiles they could
put up with freer trade in agriculture. Nobody can quantify that
or say this will happen exactly. That is just the models. We have
to trust the Egyptian Government to put up what it thinks is the
most important issue. They certainly tell us that, more than the
food issue, the textile issue is the most important.
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