Examination of Witnesses (Questions 340
- 342)
WEDNESDAY 7 MAY 2003
DR SUPACHAI
PANITCHPADKI and MR
STUART HARBINSON
Q340 Mr Walter: It is a move in the
right direction, and you made the distinction there when you said
"less trade-distorting". When you listen to Commissioners,
they sometimes talk about "non-trade-distorting", and
I would question that. I would agree with your terminology.
Mr Harbinson: The green box is
supposed to be non-distorting or only minimally distorting. I
suppose it would be argued that a fully decoupled subsidy is probably
more "green"; it might be much less trade-distorting
than the current way in which subsidies are designed.
Dr Supachai: It might be useful
for all of us, including Europe, if we shifted our debate in the
area of agriculture away from purely a production-based debate.
The whole thing should be in balance if you are looking at the
production side and the consumption side. Consumers' welfare should
be brought more into the picture than it has been. The things
that we are doing here are not actually to benefit the producers.
The ultimate benefit should fall to the consumers. When we talk
about subsidies, they not only distort the price level—which
would be an indicator to prevent fluctuations in production—but
if they know that the price mechanism works well, then people
can plan ahead and avoid the kind of excessive production or falls
in production which would create a problem for them. The welfare
of consumers could be enhanced. They do not have to be taxed twice.
Taxed first so that countries can gain revenue to be put into
subsidies; then taxed a second time, because food prices in heavily
subsidised countries will be quite a few percentage points higher
than in the other countries. If the debate could shift to the
area of increasing the welfare of consumers, it might be more
easily understandable.
Q341 Chairman: This whole area takes
on a jargon and language of its own. I am not quite sure how many
boxes we will have in the end! I am sure that, somewhere out there,
there must be a pink box and a purple box.
Mr Harbinson: There have been
proposals for that!
Q342 Chairman: One of the buzz phrases
which has developed is "policy space". We have heard
quite a lot from various representatives of the UNDP, and clearly
collective government does not apply to the UN family in the same
way as it does to Her Majesty's Government because the UNDP seems
to have a slightly different policy approach from other parts
of the UN family. The UNDP approach, as I understand it, is that
the WTO should function to manage the interface between different
national systems, including more or less liberalised trade policies—rather
than to reduce national institutional differences. I wonder what
you think about that?
Dr Supachai: I know which publication
you mean and I have read through some of the UNDP publications.
I would not agree if people say that we have been trying to change
the interface in such a way that we are trying to twist and turn
the system. I would accept that we are trying to create a multilateral
system within which countries can handle their trade activities
as smoothly as possible and in the fairest manner, being treated
equally and on a non-discriminatory basis. But you are right on
one count, in that the more we move away from the core issues
of our trade negotiations, which normally would be market access,
and the more we move into areas like services, or TRIPS, or even
TRIMS, which is an investment measure—and maybe some of
the new issues we have been talking about, investment and competition—the
more there will be implications for the domestic regime of rules
and regulations. There is a "but" here, however. In
all of these exercises, members can come into our negotiations
and help to determine how far they would like to see the whole
collective agreement go. In an area in which there have been a
lot of misconceptions—the area of service negotiation—people
sometimes accuse us of trying to damage economies by allowing
multinationals to make inroads, to do the waterworks, the education—everything.
It is not true at all. We can do nothing about that which belongs
in the area of internal domestic priorities—except that
which the countries themselves would deem to be appropriate, in
terms of their going along the privatisation route, because it
would turn out to be more efficient for them to be running their
affairs. We never ask countries to privatise. Government services
are excluded from the GATS coverage. There may have been some
misunderstanding in areas like this: that people think we are
just trying to go in and change them, instead of trying to work
with different systems. We do work with different systems, and
if they do not want to be part of the agreement then they can
step back and say, "On education, we do not want to be part
of it", or "For our higher education we would like to
see more involvement of the private sector or foreign investors".
That is up to the national government to determine. However, in
spite of the fact that they allow foreign investors into their
country, they are not required to change their domestic rules
and regulations. The requirement is that if they have the rules,
the rules will have to be equally applied to all concerned.
Chairman: Thank you very much for seeing us
at what must be a very busy time for you. We are very grateful
to you also, Mr Harbinson, for coming to answer our questions.
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