Examination of Witnesses (Questions 24-38)
28 OCTOBER 2003
DR MATTHEW
LOCKWOOD, MR
JOHN HILARY,
MR DUNCAN
GREEN AND
MS CLAIRE
MELAMED
Q24 Chairman: Thank you very much
for coming and giving evidence on Cancún. As you know,
the Committee did a report pre-Cancún and it is our intention
to do a further report now post-Cancún. We have a debate
in Westminster Hall on Thursday afternoon, on our report pre Cancún
and it will enable us to talk about anything relating to WTO and
Cancún. I think what might be helpful is if I ask you two
questions and it may be easiest if we go down the line and back
again. The starting question is—and perhaps we start with
Claire, these do not need to be very long answers, they are really
just a peg for you to give any policy thoughts that you might
have that are relevant for the future—what is your assessment
of the failure of Cancún? Was a good deal for developing
countries within reach? What we are really seeking to ask you
from that is—were your impressions that if the conference
had gone any longer a deal was within sight or were the differences
between the various players so huge that frankly if they had negotiated
another five days they would still have been at it? Claire, would
you like to start from your perspective. So you can be thinking
about the second question, because John Hilary is going to be
finishing and starting, what are the key lessons which should
be learned in particular by the United Kingdom and the European
Commission from the failure of Cancún? Claire, what is
your assessment, the failure of Cancún? Was a good deal
for developing countries within reach?
Ms Melamed: I think to a large
extent the assessment of Cancún is perhaps a bit premature,
it depends on what happens next. Certainly the deal that WTO members
as a whole seemed to be being offered on the Saturday, the draft
text that appeared on the Saturday, was on balance probably not
a good deal from the point of view of developing countries, so
in a sense, that that was not the final agreement is probably
a good thing. Clearly if the rejection of that agreement now means
that the big powers such as the US and the EU walk away from the
WTO and the whole thing falls apart then that is a bad outcome.
I think it really depends on what happens next. I think in terms
of whether a good deal is possible I am not sure that we can answer
that. Certainly it is the assessment of lots of people who are
directly involved in the negotiations that positions were very
far apart, on the other hand we all know that positions have been
very far apart in Ministerials before and deals have been done.
I am not sure it is possible to speculate at this point about
what might have happened if.
Mr Green: I think one of the lessons
is do not make promises you cannot keep, and I am talking about
Doha rather than Cancún. They really upped the rhetoric
in Doha when they made a lot of promises in terms of special and
differential treatment and in terms of the down payment that would
be made before the next Ministerial to give proof of good intention
and good offices, and so on, and they completely failed to deliver
that, which meant that people went into Cancún, especially
developing countries, quite frustrated and ready to be annoyed.
I think the problems really began with the development spin in
Doha. In terms of, was a good deal within reach? No, I do not
think a good deal was within reach. The question was, was a deal
within reach? Maybe an old-style, pre-development round kind of
deal might have been thrashed out but from what we saw of the
3 September text it would not have been a good deal. I think on
balance no deal is better than a bad deal.
Dr Lockwood: I agree with what
my colleagues have said broadly. I think it would have been touch
and go whether a deal would have been possible. Some of the larger
developing countries were saying they would have been ready to
do a deal on agriculture, and so on, but I am not convinced that
would be the case for all developing countries. We saw the situation
with Singapore issues and I think some of that mistrust of the
whole process and a feeling that they simply were not getting
what they needed to get out of the Ministerial might have applied
to agriculture as well. This idea that a good deal would have
been within reach—I do not buy that.
Mr Hilary: Just adding to those
comments, what is absolutely without question is that it was a
positive outcome in the end that the text of 13 September was
not accepted. That, without any doubt, for development purposes
was a positive result. Had we had a situation as in Doha where
we did see a negative, damaging text pushed through despite the
opposition of developing countries that would have been a dramatic
mistake. The problem for us is that we have been prepared to give
the WTO the benefit of the doubt and to go along with the idea
that it can deliver something for development. It has been very
interesting seeing some of the diagnosis coming out of the European
Union immediately after Cancún, for example the statement
made by their Geneva office that African countries have more to
fear than to gain from the Doha round. If the European Union is
saying that about the round as a whole it brings into sharp relief
the question as to whether or not the WTO can actually deliver
on a development agenda. In terms of the key lessons, if you would
like me to start sending the questions back again, the first one
I think is for the WTO as an institution. The key problem here
is that despite all of the very vocal comments made by developing
countries in the run up to Cancún and at the text which
came out on 13 September was an absolute travesty. You will have
seen the comments by various developing countries, they beheld
this as a slap in the face. How is it possible that the WTO can
so dramatically ride over the views of the majority of its membership?
That is one of the key lessons about the whole process by which
that text was put together. It is one of the most important lessons
to come out of Cancún. In terms of your question, what
must the United Kingdom and the EU take from this? The central
message for them is they must learn to negotiate at the WTO. Until
now they have had a lot of opportunities to show good faith which
they have not taken. I think for us, and indeed for your Committee,
you told them in advance that if they continued to push for the
Singapore issues despite developing country opposition they risked
overloading Cancún. They continued to press for them and
indeed Cancún did come down. The WTO failure at Cancún
is a real wake up call for the EU and for its Member States, including
the United Kingdom, that they have to negotiate at the WTO, not
just push their own views through.
Dr Lockwood: Just picking up on
that theme, it is certainly the case that the WTO today is very
different from the GATT when it started off, it is now 146 countries.
The majority of those members are developing countries. The first
thing this means is that any round, not just the Doha Round, has
to have some developmental interest in it for Member States to
have the carrot to make the institution work, whether it is in
Geneva or at Ministerials. I think the contrast with the European
Union is very instructive because the European Union countries
no matter how difficult the issues are do stick through it and
come to some sort of agreement, because they all think there is
something in it for them. A lot of developing countries, especially
the smaller ones, are not convinced of that at the moment. What
the WTO lacks as an institution at the moment, and it is something
that developing countries have been asking for, is some form of
assessment of proposals for agreements so that they can make a
more informed decision about what they might be signing up to
or not. Obviously this has to be something which is sufficiently
jointly owned by all of the members but it also has to be independent
because it has to be trusted. Moving from the WTO to talk about
the UK and the EC, what struck me certainly was this is a bit
of a problematic relationship at the moment in terms of how things
worked out at the Ministerial. The impression that I got was that
the United Kingdom as a delegation was kept really at arm's length
by the European Commission, was not really given that much information
and was not particularly happy about that relationship. I also
think there is a real problem about the negotiating mandate. At
the moment we have a situation where the mandate was given before
the Ministerial starts, which may make sense, but then at the
Ministerial itself things begin to happen very quickly. As we
saw Pascal Lamy had to make a decision to change the position
before he got the mandate changed. I think the whole mandate relationship
should be rethought in terms of how it works during the Ministerials
as opposed to beforehand. Finally, on this issue, there is the
issue of style and negotiating culture. A lot of the things that
were said both by European Commissioners and by the US in the
early stages of the negotiations were very counterproductive because
the larger developing countries that came together, like the G20,
were under pressure and in a way the worst thing was to put them
under more pressure with these very, very strong statements from
Fischler, and so on. I do not think you can mandate for the negotiating
style but I do think that this should be really carefully looked
at. Finally on the United Kingdom, one point really, I think,
the United Kingdom Government, unlike a lot of other Member States,
unlike the US I think both says and to some extent does what it
can do to put development interests at the core, especially at
this round. If it really wants to be a leader in this area I think
it does have to make more of an effort than it is doing at the
moment or than it did at Cancún to really be very much
more in touch with the mood of developing country delegations.
We have come a long way since Seattle, when there was very little
knowledge of what developing countries were thinking, but from
what I saw was a series of very formal bilateral meetings early
on which did not do what you need later on when things begin to
move very fast, which is you need to have your finger constantly
on the pulse. I think that was not the case and maybe something
can be learned from that.
Mr Green: I am trying to think
if there is anything left. Stepping back a bit, one of the things
that struck me is the WTO and the negotiators have a huge problem
with the idea of non-reciprocity. The whole of the WTO functions
on an eye for an eye trade negotiating. At various points during
Cancún I wondered whether trade was too important to be
left to trade negotiators because they seem to be incapable of
rising above that horse trading relationship to do something like
the debt relief deal, that would be inconceivable in the WTO mind
set. There was a problem about that whole question of whether
non-reciprocity can be squared and is compatible with the way
that the WTO is structured. Going back to the style, there is
an issue about the old style of brinkmanship and 3 am ambushes
does not work when you have clunkier, multi-polar groups of negotiators.
The fact that the EC carried on with its usual negotiating tactics
and tried to do a last minute climb down was partly not responding
to the new structures of the WTO. I think the new structures and
the new power groups within the WTO were extremely interesting
in Cancún and raised a real challenge. I have to say that
I do not think that the EC or the US rose to the challenge very
well, they could not really understand why India and Brazil were
in the same group, they kept saying "it is about to collapse,
it is about to collapse, it is about to collapse" and when
it did not collapse they got very peeved. There has to be a bit
more political awareness from the developed countries in terms
of how they relate to these big new groupings from the south.
If they can start a new relationship with the G20 minus, as it
is now, and the other big groupings then I think the WTO could
become a very interesting place.
Ms Melamed: There is not really
very much left. I agree with most of what has been said. The only
thing I would add is perhaps a more mundane point about the process
of Ministerials themselves, that two out of the last three have
collapsed and to some extent this was due to political reasons
that are beyond the scope of this process to overcome. Perhaps
it is worth taking this opportunity to look at how Ministerials
are run, the degree of centralisation of decision-making versus
decisions made in larger groups, the organisation of agendas,
the amount of work that has to be done beforehand, and so on,
to think if there are any ways of making those political problems
easier to overcome.
Q25 Mr Battle: Could I follow up
on Claire's last point, accepting John's point about the need
for the EU to negotiate, that is coming through very strongly,
rather than simply saying "deal" and the need for the
negotiating mandate relationship to be looked at, as Matthew has
put it. What about the process itself? What aspects of the WTO's
organisation and operation need to be reformed? Before Cancún
there were comments about not meeting deadlines for months in
advance, the whole process looked shambolic, including the operation
of Ministerials themselves, what kind of timetable would you even
attempt to do that kind of reform in and then to put it into practice.
Are there some reforms we could get on with now and others that
could be for the longer and medium term, perhaps at the conclusion
of the development round to restructure the whole lot? What would
be your views on tackling the process? Is it an imperative? Would
it help?
Ms Melamed: I think if it is not
an imperative, it is certainly something that might transform
the process of the WTO into something which facilitates difficult
decisions being made rather than being something that sometimes
prevents them or makes it harder to make decisions, that would
be an improvement. I do not think there is a magic process which
will transform what are essentially difficult political issues
into technical problems to be overcome. One can separate the process
into two issues, there is the process of Ministerials, there are
certain specific issues there, and there is the process of what
happens in the day-to-day negotiations in Geneva. Perhaps the
process of Ministerial decision-making is relatively easier to
overcome because you are dealing with a more circumscribed issue
there. In answer to your question about timetable it may be, we
have not tried it yet, that that would be a more straightforward
issue or it may be that would be opening up a whole new can of
worms that we have not yet thought of. In terms of process, I
am talking about what happened in Geneva, it clearly is a problem.
As you say deadlines keep being missed, there is a lot of unhappiness
expressed by WTO delegations themselves about the process, so
there is clearly a perception of a problem even if the degree
to which it is a problem we do not quite know. Certainly given
that deadlines keep being missed, promises keep being broken we
can say that the WTO does not seem to be working particularly
efficiently and given that lots of delegations are expressing
frustrations with the process it does not seem to be working particularly
transparently either. It seems to me that we are falling between
a number of different stools. We do not have a nice set of proposals
that we think would overcome all of these problems. I do think
perhaps there are two sets of issues to consider in looking at
a process, the first is a possible trade-off between the degree
to which the WTO works efficiently in terms of making decisions
quickly and the degree to which decision-making is fair and seen
to be fair. In any kind of process of reform those two issues
need to be put side by side and considered. Secondly, there is
an issue of the extent to which if one is talking about some kind
of system of representation within the WTO so that larger groups
of countries are represented by one or two individuals in smaller
negotiating groups one has to balance the need to have a good
system of representation with the need in a WTO context to have
a flexible structure of negotiation so that alliances can change,
positions can change, and so on. I would highlight those as the
two issues that need to be overcome although I do not have any
signposts necessarily of how to do that.
Mr Hilary: There are some concrete
proposals already on the table that would take us some way to
dealing with at least the nuts and bolts of how the WTO should
work. You may be aware that in about April last year, April 2002,
the Like-Minded Group of developing countries put forward some
fairly comprehensive suggestions for possible ways in which the
day-to-day workings of the WTO could be improved. Prior to Cancún
a group of NGOs issued what we called the Cancún Democracy
Challenge, which is picking up on some of those concrete proposals,
and they include basic things which are standard across any sort
of organisation, whether it is your local bowls club, your choir,
or whatever it might be, that you have meetings that are properly
recorded with minutes, and meetings which are open so that at
least people know about them. That does not mean that all 148
members of the WTO have to sit round one table, but just to have
slightly more transparency in that respect. Texts, how do texts
come about? At the moment we have a situation where they are all
done on the chair's own responsibility and that makes it very
difficult for countries to feel confident in that process. Similarly
the appointment of chairs at Ministerials, how does that take
place? What about the procedure to ensure that there can be a
continuation of a Ministerial if it is felt that is a worthwhile
thing by the membership as a whole? All of these basic rules can
be discussed and worked over but a rules-based organisation will
ultimately work better because the rules give all of the members
confidence and that confidence allows them to be more flexible.
At the moment they have no confidence and therefore they are constantly
in the dark.
Chairman: Tony Colman represented us
at Cancún.
Q26 Mr Colman : I think I need to
put on the record that the four ministers held a very large number
of bilateral meetings with developing countries and with groupings
of developing countries where those developing countries had asked
to be met as groups and as representatives and those meetings
took place not just at the beginning of the period in Cancún
but right through and including the Sunday. It is very important
to put that on the record. The United Kingdom delegation made
an enormous effort to listen to and to work with and encourage
the position of many of the developing country delegations that
were there. I think it is important that is put on the record.
Can I also say the same developing countries were very surprised
when the negotiations came to a halt when they did. The basis
was very much that they would remain on beyond the Sunday, possibly
for the Monday, Tuesday or Wednesday and there was a WTO fund
available to ensure that they could remain and their hotel bills
and their air fares would be paid. It has been put out by some
NGOs that whatever happened it had to come to an end on that Sunday
evening, which was not true. Can I take us on to the Derbez text.
All of our four witnesses have condemned this as not being a good
deal for developing countries. Would the witnesses agree that
in a sense this was a staging post, this was a framework, a structure,
the numbers were to be put in subsequently, the size of the tariff
cuts and the basis on which it would work? This was very much,
if you like, a staging post in delivering the Doha round and that
areas such as NAMA, Non Agricultural Manufactured Goods, the text
related to that was largely agreed, that on SDT, Special Differential
Treatment, while people wanted more what was in the text was basically
developing country friendly, the agriculture text was very much
seen as being up for negotiations, every one condemned the cotton
clause, bar the United States, there was new text due to come
on that, but that is only one clause in a very long document,
and therefore there was a great deal to work from in terms of
that text that could be seen as developing country friendly. If
we are not going to start from that text as a starting point where
do we now start from on 15/16 December at the next meeting?
Mr Green: Staging posts are on
the road to somewhere. The question is, what was the road on which
the Derbez text was a staging post? In my view on agriculture
there was a lot of good stuff in there and it is a shame that
good stuff was lost. There was some bad stuff in there as well,
it is all in our submission and I will not go through the detail.
On NAMA we were quite worried because of the level of rapid tariff
reductions that would be foreseen in some of the tariff lines
where they were going to have zero for zero arrangements. SDT
was a very weak reflection of the original worries of developing
countries, Claire has done much more on that than me. The thing
you did not mention which was in the Derbez text was three out
of four of the Singapore issues, that with the cotton were the
two really bombs in the text which really soured the atmosphere.
Q27 Mr Colman : We withdrew that
on the basis that that was something Pascal Lamy withdrew support
for on the Sunday morning. The rest of the text, other than cotton,
was a good negotiating framework to go forward on.
Mr Green: That is a curious way
to put it, mildly.
Dr Lockwood: I would just like
to add a little bit which links the Derbez text to this issue
of the developing countries' mood. Basically, from what I observed,
my interpretation was developing countries were surprised by the
pulling of the plug at the end but I think a lot of them were
also surprised by the Derbez text when it came out on the Saturday.
We had this process on the Thursday and the Friday of open sessions
where developing countries were able to come along and say what
they wanted in the five different negotiating committees. Of course,
they said what they had said before in Geneva, which was criticised
as a waste of time, but, on the other hand, it created an expectation
as far as I could see that they were going to be listened to.
I think a lot of them, not the big G20 players but a lot of the
ACP countries, were shocked—surprised and shocked—that
the new issues were in the text, that a lot of what they wanted
on agriculture was not in the Derbez text. If you compare the
ACP/LDC/AU position with the Derbez text, there was a lot of stuff
that was not there, that was not represented. I think that they
were very shocked at that stage, let alone at the end. That was
very important and it was that shift in view that I alluded to
earlier. Probably the UK was aware of it to some extent but from
what I could see in the reaction of the UK, especially on the
Sunday, maybe the realisation was not there of how profound the
problem was. That is my interpretation of it.
Ms Melamed: I just want to add
that to the things you have mentioned, specifically—
Q28 Mr Colman: If it is not the Derbez
text, what is the new starting point?
Ms Melamed: I was not going to
talk about that. I was just going to mention special and differential
treatment, seeing as you brought it up. I think you are right
that what was in the Derbez text essentially reflected where the
negotiations had got to in Geneva before Cancún and there
was not really any movement on S&D in Cancún. Obviously
there were other issues which were taking up everybody's time
and attention during those few days. Just because it was there
and it happened to have been carried over from Geneva did not
necessarily mean that developing countries were happy with it.
Certainly they were extremely unhappy in Geneva at the time when
that text on special and differential treatment was effectively
presented to them as what they could expect to get out of that
whole process of review. They were extremely unhappy to the point
of writing letters to the Secretariat, and who knows what might
have happened had things proceeded and they just rejected the
whole deal because they thought it was essentially such a poor
return for all of the negotiations that had been going on. I do
not think the fact that it was there and did not seem to have
shifted should lead anyone to think that somehow it was all okay
and we can write that off as another success of the development
round; developing countries certainly do not see it like that.
Mr Hilary: Could I answer on the
specific question of where to go from here. There are various
texts and various proposals which have come along on the way to
Cancún and at Cancún. What we would like to see
is particularly the European Union taking the lead on choosing
from those positions ones which are genuinely development friendly,
and that is not the NAMA text in the Derbez text (the second revision
of the Cancún Declaration), but something going far, far
beyond that in terms of giving much more flexibility to developing
countries. It means also taking the best which has been offered
on agriculture, but particularly it means stripping out all four
new issues, and here what we would like to see is the European
Union as a whole taking up Gordon Brown's suggestion in his article
which he wrote on 21 September in The Independent saying
that all four new issues are a distraction and the WTO must be
focusing on its core agenda and getting away from those. Just
so it does not seem that we are picking that out as one person
who happens to be quite a senior government official—sorry,
government figure—what was stunning to us after Cancún
was the degree of unanimity across a lot of the right-wing publications.
It is astonishing for us to find that we are in agreement with
the Financial Times, the International Herald Tribune
and, believe it or not, even The Economist.
Q29 Mr Colman: And with this Committee.
Mr Hilary: I hope that was much
more natural. Each one of them said that the primary cause—as
well as the US refusal to move on cotton—had been this astonishing,
to quote them, "pigheadedness" on the part of the European
Union to stick with the Singapore issues. To get further and to
put the WTO back on track we have got to get rid of those and
have some leadership from within the European Union to see that
happen.
Dr Lockwood: Could I just very
briefly add a particular concern which came to my attention yesterday
which is from a report on a meeting about the Cotonou economic
partnership agreement framework. From what was reported, the Commission
is seeking to include Singapore issues effectively on the Cotonou
agenda, which to me seems extraordinary and counterproductive
really.
Q30 Hugh Bayley: To what extent do
you think the Green Box will help and to what extent will it hinder
agricultural reform, both within the EU and internationally? To
what extent do you think the EU's current proposal on CAP reform
will be enough to persuade others to close the negotiations on
agriculture? The reason I ask that is most people have said the
EU did not move nearly far enough, but over the weekend I spoke
to Alec Irwin, the South African Trade Minister, who I have known
for many, many years, and he told me that they thought they had
got extremely close, he said within four words, of reaching an
agreement on agriculture. That may have been a bit of an exaggeration
but it sounded like a deal was there for the having.
Mr Green: The Green Box means
a lot of different things to different people. For a start, it
is not green in any environmental sense. I think we get mixed
up as to why the Green Box is green. It is green as in "all
systems are go, please proceed to subsidise". What you have
got in the Green Box is a real mixture of different kinds of permitted
subsidies, some of which I think do lead to changed production
decisions and dumping, some of which may not. What we do welcome
is the proposal from the EU prior to Cancún to have a serious
review of the big Green Box criteria to work out which are leading
to dumping and which are not. The problem for the EU is if that
review comes up with the wrong answer it makes the CAP reform
process agreed earlier this year extremely difficult because the
way they got around the problems in the WTO was to move a large
amount of subsidies from the Blue Box to the Green Box, so they
have to be able to do that. If it turns out that those subsidies
they want to move are, in fact, trade distorting, as we think
they are, then the EU is in a dilemma. You need to distinguish
between what is needed for the negotiations and what is needed
to actually help development in developing countries and I think
they are not always the same thing. The EU is desperate to keep
the Green Box as little changed as possible, possibly include
animal welfare, in order not to derail the CAP reform. From the
developing country point of view an awful lot of that
40 billion a year will lead to increased production
which will lead to depressed world prices and will lead to dumping.
It is not normal for one NGO to quote another but I think I quoted
Oxfam in my submission saying you can either defend multilateralism
or defend the Common Agricultural Policy, you cannot do both.
It does come down to that.
Dr Lockwood: Although we had CAP
reform in June, there are a number of commodities which are of
particular interest to some of the smaller developing countries
which were not included in that package, sugar being the obvious
one, and negotiations on that are still going on. Again, it is
very important that whatever was done in June, there is still
more that can be done and an effort to get as good a deal there
as much as is possible is very important.
Q31 Hugh Bayley: If this is to be
a development round, is it the agenda of a G20-ish that we should
be following really a pretty strong liberalising agenda or is
it the ACP agenda, which is a pretty strong protectionist agenda
that we should be pushing? How do you reconcile those two? If
you go more for the liberalising agenda, ie cutting of agriculture
subsidies in the north, how long would you need as a transitional
period to allow a sort of monoculture system to restructure so
that they have an economic future without the CAP subsidies? There
is a problem there.
Mr Green: Those are all the most
difficult questions rolled into one. On who speaks for developing
countries, obviously both. The G20 has a view which is not just
about agro-exports, or India would not be in there. The G20 is
a kind of Cairns Group with development characteristics in the
sense that they have taken the northern market access agenda of
the Cairns Group and added much more sensitivity to developing
country concerns, to importing developing countries. I think if
you wanted the best development outcome it would be for the EU
and the US to take a holiday and let the G20 and the G90 and the
G33, the other group who are very worried about the impact on
small farmers, sit down and work out what the agriculture agreement
should look like. To be honest, I have more faith in that process
than I do in the EU saying "Okay, the EU and the US have
0.8% of the world's farmers, the G20 has 63% of the world's farmers
but we actually know what is best for development". That
is not a credible position. It comes back to what we said right
at the beginning, that you had a change in power and representation
within the WTO and the way forward on agriculture is to listen
for a bit and then come back into the dialogue. The issue of preference
erosion is incredibly difficult. I do not think there are any
easy answers on how you do that. All that offends me is when northern
producers hide behind preference erosion to avoid reform. For
example, when sugar producers in Norfolk and Finland say "we
do not want anything put on us because we are worried about the
Caribbean", I just smell a rat. Maybe in terms of looking
at preference erosion you can see about ring-fencing the income
of the preference receiving countries by increasing their quotas
as the price comes down and the people who give up those products
would be the EU producers, that kind of thing. There must be a
way around that but it is a very thorny problem which is going
to take a lot of attention. I do not think throwing a bit of assistance
so that they can diversify into unspecified products is really
enough.
Q32 Tony Worthington: Can I ask you
about TRIPS and Public Health, which got done before Cancún
but is part of the Cancún process. People have not tended
to look at that. Can I ask you what your assessment is of that
process? It is portrayed as a success but is it a success? What
is the next stage? Will it work? What is the reaction of the big
pharmaceutical companies to something that they fought long and
hard about? What actions are they now taking to defend themselves,
like taking over, as I saw, one generic company? Where has TRIPS
got to?
Ms Melamed: The trouble is that
our TRIPS experts are not here. Again, as with special and differential
treatment, there was not very much discussion on TRIPS at Cancún.
Where it has got to seems to be that lots of people are predicting
all kinds of outcomes from this deal, those in favour of it are
saying it has solved the problem and those who are worried about
it are saying—I cannot remember what the exact sound bite
was—something about being bound up in red tape, that effectively
the conditions that have been put on the deal are so onerous as
to make it almost impossible for those developing countries that
are most in need of it to actually take advantage of the new provisions
that have been agreed. To some extent it is a kind of wait and
see question until it is actually tested.
Q33 Tony Worthington: You can see
it is a hugely important issue.
Ms Melamed: It is a hugely important
issue, the question is whether it is—
Q34 Tony Worthington: Who is looking
at it?
Mr Hilary: A lot of the groups
working on the ground are looking very closely at it. For example,
within the South African civil society groups they have been very
strong at saying there already exists flexibility within the TRIPS
agreement for them to be able to push the boundaries back and
to challenge the drug companies. Of course, within South Africa
they have already got their own experience of when the drug companies
did try to take the Medicines Act to court and lost so dramatically
there. What I think we need to see is that TRIPS and Public Health
was one element within the discussion on intellectual property
rights at the WTO and it has at least gone away now. Most of us
would suggest it has not been as favourable a settlement as you
are portraying. Within TRIPS there are very serious problems which
have not been opened up, and this is exactly where Claire is right,
issues surrounding food security and farmers' rights and the whole
issue of whether or not you can patent life forms. African countries
say absolutely categorically there must be no patents on life
and still the biotech companies are pushing very hard for there
to be increasing pressure on developing countries to bring this
in. If TRIPS and Public Health may seem like a done deal, it is
now up to the groups on the ground to challenge and to make it
work for them, but for the WTO it is time to start looking at
the other developing country concerns within the whole issue of
intellectual property rights.
Dr Lockwood: If I could just quickly
add, I think what Claire says is right. It remains to be seen
whether or not the deal will work, that is clear, in terms of
access. But access is not the only issue and, in fact, with the
agreement that has been there, that is politically what is possible
and let us see if it works. What is really important now is whether
it is for buying or producing generics countries need resources
and they are very poor and these drugs will still cost some money.
Secondly, the drugs have to be distributed and administered properly
for people to benefit from them, so health systems in developing
countries, many of which are in a serious state of disrepair,
also matter. I think to some extent the issue now about trying
to get treatment for people with AIDS is moving beyond access,
we really hope, to resources and treatment on the ground.
Q35 Tony Worthington: I have read
a fair amount of this stuff post-Cancún, some of which
has come from your organisations, and I just get the impression
that people have turned their backs on it or there is not an intellectual
focus on that area and it is seen as a done deal and really I
do not see how it can be given it was opposed by the Americans
and their pharmaceutical companies so strongly. They are not just
going to lie down and accept this, are they?
Mr Hilary: They tried before to
challenge on TRIPS and Public Health, both within the WTO as an
institution when they took Brazil towards a panel on this and
also within the South African legal system, and both times they
have failed dramatically. They have scored enough own goals, I
think, to make them wary of scoring many more on this.
Q36 Tony Worthington: That is terribly
optimistic.
Mr Green: That makes a change.
Q37 Chairman: Can I just ask three
quick questions. When Patricia Hewitt and Hilary Benn came and
gave evidence to us the week before last, on agriculture Patricia
Hewitt's line was that the CAP reform was really very, very substantial
and its impact, in effect, had not fully been understood and appreciated
by developing countries, which really begs two questions. One,
in your estimation did developing countries understand the nature
and the extent of the CAP reforms? If not, does it follow that
the EU should have done more to promulgate what they perceived
as the benefits of the CAP reforms because clearly ministers genuinely
feel that those reforms are very substantial, but one's impression
at Cancún was that developing countries did not think that
they went nearly far enough?
Mr Green: I think the CAP reform
was substantial in European terms but that does not mean it was
substantial in developing country terms. What the CAP reform did
not do was cut the overall spend, it goes up to about 50 billion
by 2013. What the CAP reform did do was partially decouple payments
from production. That partial is both because each Member State
decides how far to introduce decoupling but also because it is
not total decoupling. Total decoupling means a farmer can cease
to produce and still get their subsidy. That is not allowed under
the CAP reform, you have to keep your land in good agricultural
order, you are not allowed to just go and live on a beach in Spain.
You can understand why that is agreed but that actually means
that a farmer is likely to carry on producing and they will know
that in five years' time the base year for decisions on how much
subsidy is distributed will be updated so they need to keep producing
so that when the updating comes they will continue to receive
subsidy, so it is not decoupled. I think developing countries
have every right to say "Actually, we think that
40 billion a year is still going to lead to excess
production". One of the crudest examples of why decoupled
payments still affect production is because it keeps farmers in
business. I have got no brief to put farmers out of business but
the whole point about the Common Agricultural Policy is that in
certain areas it is that that stands between farmers going under
and farmers being able to carry on, so how can you say that and
at the same time say it has no effect on production decisions?
It is completely incoherent. There are more subtle discussions
on decoupling but that is a very crude one. Developing countries
do not buy it. I do not think it is a lack of presentational skills
on the part of the UK Government or the EC, it is actually a lack
of substance in the argument.
Ms Melamed: I think sometimes
in Europe there is a tendency where developing countries are disagreeing
with the very sincerely held views of European governments to
either write them off as misunderstandings or say the opposition
is simply tactical. I think this comes back to something that
was said before about having to change negotiating style. One
should not immediately write off all this opposition as simply
they do not know their own interests. If they are going to be
negotiating partners they have to be treated as such and their
opinions have to be taken a little bit more seriously than that.
Q38 Chairman: My next question is
about leadership. One of the things that struck me at Cancún,
and one of the things that strikes me about all of this, is if
you compare Cancún with, say, Johannesburg and the Conference
on Sustainable Development—although at Johannesburg one
had a galaxy of Heads of Government, the UK Government represented
by the Prime Minister, some real political input put into it—what
we have at the WTO is the Americans represented by an ambassador,
Europe represented by a commissioner and the rest of the world
represented by a galaxy of people, and then you have got Supachai
and whatever at the centre. Who do you see as providing the leadership
to get the grip on this to actually do the ringing round and say
"how are we going to put this together"? Who is actually
going to do that? Is that going to be Lamy? Is it going to be
Supachai? Is there someone who is going to have the energy to
pick that up and move forward? At the moment what we have got
is a kind of process. Politicians are great believers in process
and great believers if you actually engage over time everything
will come out at the end of the day, but I am not necessarily
sure that is true in this case, is it?
Mr Hilary: I agree with you very
strongly that there does have to be leadership within the WTO.
I think that leadership has to come from within the European Union.
The reason for that is because the European Union was the body
which really set the whole Doha round in motion. They were the
ones who called for it and also were the ones who tried to dub
it the "development agenda". They have put an enormous
amount of energy into starting that round, very much along their
own lines, and you will hear from Pascal Lamy on that later. The
European Union has always been very clear that its project was
the Doha round as we see it now. Also we know that the US are
not nearly as interested in the multilateral framework anyway,
so they are rather on the sidelines in that respect. Plus the
fact that the European Union bears a large measure of responsibility
for having brought down the Cancún Ministerial. I think
it does behove the European Union to put it back together again
and show that leadership. What is very encouraging is that within
some of the Member States there has been strong talk about showing
that leadership at the WTO. What I think we have not seen is the
courage of political leadership which is needed to make other
countries more confident in the European position. I think there
needs to be leadership, the European Union needs to take that
lead and the European Union Member States need to look very, very
deeply into their record and to ascertain how they can be the
ones to take it forward.
Dr Lockwood: I think in the past
there has not necessarily been such a need for leadership in trade
talks. The GATT was a kind of cosy club for the EC and US, maybe
Japan and so on, so it was not a big thing like Johannesburg.
But it has become bigger. In the meantime the strategy of the
EC and US has been to pretend nothing has changed and load everything
on to Ministerials in the hope they could just push things through.
It did not work at Seattle, it kind of did work at Doha, it did
not work at Cancún. There does need to be leadership. I
would back what John says. I think there is also a need for the
EC to take the initiative to try to get the US back in because
I do not think the US will listen to anyone else really.
Mr Green: Leadership to achieve
what? I think there is a case here for taking another look at
how broad the WTO remit has become and whether it is time to get
back to basics, to use a phrase from the past, and look at how
the WTO fits within the UN system, the wider international governance
question and whether it has got too big to be run on the basis
of trade negotiations and that particular mind set. There is a
mismatch now between how it gets into behind the border regulatory
issues but does so on the basis of horse trading and, to me, it
does not seem to fit any more.
Chairman: There are some interesting
things there. A submission was given to us by the Consumer Association
which said that the WTO failed because it was not mercantilist
enough. Thank you. This is rather a convenient time to finish,
it could not be more convenient. We are going to resume again
just before quarter to four to take evidence from Commissioner
Lamy. Thank you for your evidence.
The Committee suspended from 3.25pm to
3.44pm for a division in the House.
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