House of Commons - International Development

Select Committee on International Development First Report

4 REVIVING A GENUINE DEVELOPMENT ROUND

Post-Cancún prospects: Bilateralism, trans-atlantic relations and the peace clause

53. If the promise of a "Development Round" disappears and there is a shift to prioritise bilateral trade negotiations, then the collapse of Cancún will have been a disaster. A missed opportunity to make trade work for poverty reduction would be a major setback for progress towards the MDGs. Fears of these outcomes are well-founded.

54. As Cancún collapsed, the USA indicated clearly its intention to move forward with bilateral and regional trade negotiations with what the United States Trade Representative Robert Zoellick referred to as the "can-do" countries.[138] Pascal Lamy also wondered aloud about the best way for the EU to manage its trading relations.[139] Patricia Hewitt said that she would "strongly oppose a shift in emphasis from multilateral to bilateral talks".[140] Poor developing countries would lose most from a shift to regional trade blocs and bilateral deals. The poorest countries would not be invited to participate in such arrangements, and those that were would be subject to the full-force of bilateral arm-twisting, unprotected by a multilateral framework of rules. The UK Government must ensure that its strong support for multilateralism is heard loud and clear by its European partners, and also that in the EU's own bilateral relations—through for instance Economic Partnership Agreements with the ACP countries—its objective remains developmental partnership rather than bilateral arm-twisting.[141]

55. Heightened tensions between the USA and the EU over steel tariffs, with continuing disagreements on genetically-modified organisms, hormone-treated beef, and the taxation of foreign sales corporations, do not bode well for EU-USA trade relations and the prospects of reviving the development round. In any trade war between the EU and the USA many non-combatant developing countries would be injured too. If the round is to be revived, both the USA and the EU must remain committed to trade multilateralism at the WTO. Patricia Hewitt told us that the USA does not wish to be responsible for the failure of the Doha round,[142] but there is a world of difference between this sentiment and a willingness to provide the leadership which is needed to revive the round. Forthcoming elections, in India, and in the USA, and the appointment of a new European Commission complicate the picture still further. We trust that the Prime Minister is using what political capital he has with President Bush to convince him that reviving the development round is an important front in the war on poverty, and that the war on poverty is complementary to the war against terrorism.

56. There is a danger that trade negotiations will simply drift. For instance, it has been reported that the EU favours pushing back the 15 December deadline until February 2004.[143] But the expiry of the Peace Clause—which shields agricultural subsidies from dispute settlement proceedings (see glossary)—ought to concentrate minds,[144] assuming of course that the WTO's members remain committed to multilateral trade rules and dispute settlement procedures. When it expires at the end of 2003, agricultural subsidies will be subject to the same disciplines as industrial subsidies. The pre-Cancún EU-USA paper on agriculture proposed an extension of the Peace Clause, a measure which the G20+ refused to contemplate. We would not want to see the WTO swamped by a flood of disputes, but clearly if the WTO is to be credible and effective, developing countries must be able to make use of its dispute settlement procedures to challenge trade-distorting agricultural subsidies wherever they are found. The Peace Clause should not be extended; backdoor efforts by the USA and the EU to extend it through re-interpretation of its expiry date must be resisted strongly.[145]

What's on the table?: The Derbez text and the Singapore Issues

57. The progress made at Cancún must not be squandered. In the Ministerial Declaration made at the close of Cancún the WTO's members committed themselves to continue working on outstanding issues "with a renewed sense of urgency and purpose and taking fully into account all the views we have expressed in this Conference", taking "all the valuable work that has been done at this Conference" into the new phase of discussions.[146] Members stated that: "In those areas where we have reached a high level of convergence on texts, we undertake to maintain this convergence while working for an acceptable overall outcome."[147]

58. But somewhat predictably, disagreements have emerged in the weeks since Cancún, primarily around the question of how to take things forward. Should the Derbez text be the starting point? Or, the Derbez text plus the European Union's concession on the Singapore Issues? Or, the Derbez text with the patronising advice on cotton removed? Or the pre-Cancún first draft Ministerial Declaration? Or the Doha Declaration? Or none of the above?

59. For us the key question is, what starting point will maximise the chances of the WTO's members delivering a genuine development round?[148] This is not an easy question to answer, but the WTO's members must decide, and they must decide in a manner which rebuilds trust between members and their confidence in the WTO as an institution capable of delivering a development round.

60. The decision on which text to use as the starting point must not be made by a limited group of countries. The USA has been promoting the Derbez text as the best basis for re-starting negotiations, and has the support of the APEC (Asia-Pacific Economic Cooperation) countries. But the Derbez text was roundly condemned at Cancún, and many countries, including India, are adamantly opposed to its re-incarnation.[149] If the Derbez text is to be the basis for negotiations, the Singapore Issues must—with the possible exception of Trade Facilitation on which an explicit consensus seems near - be removed and the condescending language on cotton subsidies expunged. The Singapore Issues should be considered parallel to the round, with reports on possible ways forward made to the WTO's General Council by the start of 2005. A solution to the issues around cotton should be pursued within the agriculture negotiations, alongside efforts to tackle agricultural subsidies more generally.

61. There is some confusion too as to what offer was made by the European Commission, on behalf of the EU, on the Singapore Issues, and whether this offer stands. There is no doubt that Pascal Lamy offered to withdraw Investment and Competition; but there have been reports that he also offered to withdraw Transparency in Government Procurement.[150] Perhaps to gloss over such confusion, and the gaps in accountability which created this situation, the Commission's DG for Trade has since stated that: "Although the Commission indicated its willingness to reduce the agenda at Cancún, this offer was not accepted and therefore does not constitute any formal or informal commitment on behalf of the EU".[151] In his evidence to us, Pascal Lamy said that he made the proposal in an effort to move negotiations forward, and that as the negotiations did not move forward "we are now back to square one."[152] He explained: "The table crumbled; there was no table and there was nothing on the table."[153] This may be a nice metaphor, but this attitude will not help to revive the round. As Patricia Hewitt put it: "If everybody goes back to their own positions we will not get anywhere."[154]

62. We fail to understand how, having signed up to the Ministerial Declaration, the European Commission can perform a u-turn on the Singapore Issues and hope to retain its credibility. Such a manoeuvre shows no appreciation of the strength of feeling among developing countries about the Singapore Issues. If the Commission's about-turn looks shoddy to us, as parliamentarians of an EU member state, we can imagine how it must look to developing countries. This is not the way to rebuild trust and confidence in the EU's commitment to a genuine development round. Neither is it the way to revive the round or to work towards an equitable inclusive system of multilateral global governance. Credibility and trust, the essential lubricants of peaceful international relations, are quickly lost, but slowly regained. We look forward, in the interests of transparency and accountability, to hearing exactly what position the Government has been taking at meetings of European trade Ministers and officials in the run-up to 15 December.

63. The Commission has been consulting Member States, and others, as to what its position should be on the Singapore Issues.[155] A paper prepared by the Commission's DG for Trade on 30 October sets out a range of options, and questions for the Article 133 Committee to discuss.[156] The paper berates other countries for not sharing the Commission's, in our view, bizarre interpretation of "explicit consensus", for failing to "participate constructively" or to "respect their commitments". It then indicates that whilst the EU is not prepared to give up on the Singapore Issues in the WTO, it may be sensible to consider each of them on their own merits (unbundling), to remove them from the Single Undertaking, and to pursue optional and plurilateral agreements.

64. In this scenario, progress with the development round would not be conditional on reaching agreement on the package of four issues. This is welcome—each issue should always have been treated on its own merits—although of course unbundling and dealing with the issues in a plurilateral manner will not in itself make them any more palatable to some. Plurilateral agreements can constrain countries' policy space just as much as multilateral ones.

65. In its analysis of potential ways forward, the Commission reveals the limitations of its thinking. The Commission's starting point is to ask why the Singapore Issues were rejected. Its own answers relate to:

the reluctance of some developing countries to surrender their policy space;
the apparent absence of negotiating capacity for some developing countries; and,
the reluctance of some developed countries to tie their hands to a multilateral rather than a bilateral or unilateral approach to investment and competition.

66. So far, so good. But the Commission's subsequent analysis of the options for moving forward completely ignores its own answers to the question of why the Singapore Issues were rejected. There may well be value in optional participation and plurilateral agreements on the Singapore Issues, but unless developing countries' underlying concerns are addressed—including legitimate concerns about their policy space—the Commission's proposals will not, and should not, be accepted. Plurilateral optional agreements entered into by a sub-set of the WTO's membership are not problem-free; this approach was floated by the EU prior to Cancún and received, at best, a lukewarm response from developing countries. A plurilateral approach would leave developing countries with the unenviable choice of taking part in negotiations that they don't want, or not participating and facing pressure at a later date to sign up to an agreement they had no part in negotiating.[157]

67. We reiterate what we said prior to Cancún: the Singapore Issues are not a development priority.[158] Developing countries have made this abundantly clear. Agreements on these issues should not, therefore, be pursued as part of the current round. This reasoning should apply to each of the issues, with the possible exception of Trade Facilitation, an issue on which an explicit consensus seems near. As the Chancellor of the Exchequer, Gordon Brown, stated after Cancún, "in putting developing countries' interests first, we must focus on agriculture and not be distracted by the Singapore issues (investment, competition, transparency in procurement and trade facilitation)."[159]

The European Union and agricultural reform

68. There will be no development round without agreement on agriculture. A development-friendly agreement on agriculture must, at a minimum, pass two developmental tests: will it stop dumping?; and, will it allow developing countries to protect themselves from any continuation of dumping? In addition, it must: reduce tariffs and tackle tariff peaks and escalation; extend duty-free and quota-free access to all LDC exports into all developed countries; ensure that tariff barriers are not replaced by other forms of protectionism; include binding timetables to reduce and in time eliminate domestic support and export subsidies of all types; and, compensate and assist current preference holders and ensure the food security of the net-food-importing developing countries and the LDCs.[160]

69. For the developing countries, neither the joint proposal made by the EU and the USA, nor the Derbez text were adequate. That said, some progress was made. We welcome the inclusion in the Derbez text of the EU-inspired proposal to "remove export subsidies for products of particular interest to developing countries",[161] and hope that developing countries will respond positively to this offer. This offer must remain on the table post-Cancún; there must be no backtracking. And it must be for developing countries themselves to determine which products are of particular interest to them.

70. The EU's position on agriculture plays a large part in determining what sort of a multilateral deal might be possible. The EU is—in contrast to the USA with its Farm Bill—moving in the right direction on agricultural reform.[162] But the speed of movement is far too slow. It is not simply that the EU lacked the time to explain its proposals to developing countries between its agreement on CAP reform and Cancún[163] (see paragraph 36). Developing countries, we believe, understood the agreement on CAP reform perfectly well, and, like us, were desperately disappointed, though not surprised, given the November 2002 Franco-German agreement.[164]

71. The agreement on CAP reform does not provide a sufficient basis for making good multilateral progress on agriculture. In evidence to us, and to the Trade and Industry Committee, Patricia Hewitt, Hilary Benn and Mike O'Brien all stressed that the June agreement on decoupling was better than might have been expected.[165] When we heard from Baroness Amos in June, the glass of EU CAP reform looked half-empty[166]; post-Cancún the Government's line seems to be that the glass is half-full. As Patricia Hewitt put it: "It is not perfect but this is the real world; it is a good package of agricultural reform that is good for our taxpayers, consumers and our farmers as well as for the farmers of the developing world. That is why I say our interests as well as the interests of developing countries have been well-served in this respect".[167] We disagree.

72. The interests of European taxpayers and consumers, and most especially the farmers of developing countries who suffer the effects of the dumping of agricultural products, are poorly served by the EU's agreement on CAP reform. The reform may be substantial in terms of EU politics, but that does not mean that it will make a substantial difference to developing countries. Partially decoupled agricultural support will still keep European farmers in business at the expense of farmers in developing countries. If agricultural subsidies keep farmers in business, and their products are exported, then those subsidies are trade-distorting.[168] This is self-evident.

73. Agricultural negotiations at the WTO revolve around definitions. Under the current Agreement on Agriculture, Amber Box support (production-boosting and trade-distorting) is to be reduced, Blue Box support (production-limiting) is not subject to reduction commitments, and Green Box support (at most minimally trade-distorting) is neither limited nor subject to reduction commitments. The unfettered use of Green Box measures is crucial for the EU; moving agricultural support from the Amber Box and the Blue Box to the Green Box is central to maintaining progress with CAP reform, and consequentially with multilateral negotiations. In Pascal Lamy's view, capping the Green Box would be the "best disincentive" to further CAP reform.[169] Capping the Green Box would not—so the Commission and the UK Government argue—be politically realistic.[170] But for others, including the G20+, if Green Box subsidies keep farmers in the business of exporting their produce, then they are trade-distorting and should be subject to limits and reduction commitments. The question is: is the Green Box a stepping stone or a stumbling block towards fundamental development-friendly agricultural reform, within the EU and internationally? Pascal Lamy dismissed our questioning about whether Green Box support is trade-distorting as "a very interesting academic question".[171] To poor farmers in developing countries and to exporters in less poor but still developing countries, it is more than academic.

74. Pascal Lamy explained that decisions about what sorts of subsidies fall into the Amber, Blue and Green Boxes are made at the WTO; in his view this is where such decisions should be made.[172] We are not convinced.The question of whether or not particular forms of agricultural support fall into the Green Box must be based on objective assessments rather than political bargaining, as the EU itself seemingly recognised in its earlier proposal to review the Green Box criteria.[173] This issue has become too politically divisive for it to be considered objectively at the WTO. We support the call made by CAFOD, Action Aid and others for an independent review—preferably conducted by the World Bank—of the Green Box criteria and the impact of different forms of subsidies on production and trade,[174] and recommend that the UK Government support this proposal too.

75. We recognise the complex multi-level politics of agricultural reform, but efforts to create a set of fair and development-friendly rules for international trade in agricultural goods cannot be built simply on the basis of what seems politically feasible from an EU perspective. Multilateral trade negotiations at the WTO are supposed to be about providing a level playing field. The Common Agricultural Policy slants the playing field to the tune of $50 billion per year. As Oxfam point out, you can defend multilateralism or defend the Common Agricultural Policy, but you cannot do both.[175] The UK must continue to press for urgent and radical reform of the CAP, including full decoupling, rather than going along with an exercise which tries to hide trade-distorting subsidies in a different coloured box. If the EU wishes to support its farmers, or protect its environment, or improve animal welfare, this must be done in a manner which does not harm the interests of developing countries.

Dealing with difference: Preference erosion, SDT and coherence

76. For some commentators, Cancún saw the emergence at the WTO of the sort of North-South conflict which has sometimes been apparent at the United Nations. There may be some truth to this, but it seems to us that Cancún was a key moment in the emergence of an increasingly multi-polar world which is more complex than a North-South picture suggests. As Pascal Lamy explained, there are several Souths and several Norths.[176] We would not want to overdo this—was much agreement between diverse developing countries at Cancún—but there is little identity of interests between agricultural exporters such as Brazil who favour rapid and widespread agricultural liberalisation and ACP countries who are heavily dependent on preferences.[177] This poses the question: can multilateral liberalisation—which, by definition leads to preference erosion—be development-friendly, particularly given the emergence of China as an economic superpower capable of producing many goods at lower cost than most developing countries? For countries which are heavily-dependent on preferential access to markets—for sugar and other agricultural goods, for textiles and clothing—at first glance the answer is no. A round which is development-friendly for Brazilian agricultural exporters, risks being development-unfriendly for Caribbean sugar producers.

77. The WTO's members range from the desperately poor to the immensely rich. This puts them in very different positions in terms of their ability to benefit from liberalisation. In turn this raises the key question of whether negotiations aimed at delivering a multilateral framework of rules for progressive liberalisation can deliver a development round which will be to the benefit of all.

78. If trade liberalisation is a positive-sum game, then it ought to be possible to deliver a round, or a round combined with supporting mechanisms, which sees all countries win. The challenge is to devise mechanisms, either within the WTO or external to it, which will ensure that the round delivers a framework of rules and tariff reductions which will enable all countries to harness the benefits of trade for development and poverty reduction. Unless all countries feel they will gain by concluding the round, the round will not be concluded, and no country will gain.

79. Within the WTO, Special and Differential Treatment (SDT) has the task of creating a level playing field for vastly unequal players, either by exempting qualifying countries from certain WTO rules, or by granting them preferential treatment in their application. But developed and developing countries have become increasingly dissatisfied with the way in which SDT works. It has rarely led to assistance with implementing agreements, or encouraged development, but rather has led to a fragmentation of the multilateral trading system.[178] The Doha Declaration promised to review SDT with a view to strengthening it, and making it more precise, effective and operational. In our pre-Cancún report, we suggested some principles which should guide the development of effective SDT,[179] building on useful work carried out by DFID, the World Bank, UNCTAD, UNDP and the International Centre for Trade and Sustainable Development (ICTSD).[180]

80. Very limited progress was made on SDT in Geneva; some measures were agreed, but few, if any, of these will bring development benefits. At Cancún, as regards SDT, there was silence.[181] The WTO's members failed totally to get to grips with the need to make multilateral rules flexible enough to accommodate their own diversity. In response to our pre-Cancún comments on SDT, the Government acknowledged that "the WTO systems must be made more flexible and sophisticated to respond to widely differing needs"[182]and suggested that a first step in encouraging a constructive debate might be to establish an expert working grouping which would report to the WTO's General Council. This sounds like a good idea; we look forward to hearing what progress the Government has made with this proposal.

81. A more differentiated system of SDT is an important way of providing flexibility within the rules of the WTO, but movement on SDT is very slow. Progress with the development round and with ensuring that the WTO can accommodate the needs of a diverse group of countries cannot wait for progress on SDT. Other mechanisms are needed to ensure that the gains from trade liberalisation are distributed so that all countries gain and hence have an incentive to keep the round's momentum going. In this regard, one of the positives from Cancún was the announcement by the IMF and World Bank of a new "contingent insurance" initiative to help developing countries to cope with the adjustment costs of liberalisation, including the loss of preferences and reduced tariff revenues.[183] Specifically, the initiative would provide financial support to countries that face a net negative impact on their balance of payments as a result of multilateral trade liberalisation. The recognition by the international financial institutions, and the WTO, that the impacts of trade liberalisation vary by country, and that the timing and sequencing of a country's trade reforms matters is welcome and somewhat overdue. Such a recognition necessitates increased coherence between the various multilateral institutions. As such, we warmly welcome the IMF-World Bank adjustment assistance initiative as a concrete mechanism for strengthening co-operation and coherence between the WTO, the IMF and the World Bank,[184] and applaud DFID for its role in promoting this initiative.

82. Coherence and an enhanced role for the international financial institutions are not good things in themselves. They are only beneficial if they support countries' nationally-owned poverty reduction strategies and make them more effective. Designed and managed well, the IMF-World Bank initiative could help countries to weather the adjustment costs of multilateral liberalisation. Designed and managed poorly it could be seen as little more than a sweetener to persuade developing countries to agree to WTO rules that are not in their interests, and, still worse, to acquiesce to other demands that the international financial institutions might make. Given the role of the IMF in encouraging developing countries to liberalise—the evidence of which Patricia Hewitt saw first hand in her pre-Cancún trip to Honduras with Christian Aid—such a fear would not be without foundations. Indeed, on her return from Cancún and Honduras the Secretary of State, emphasising that the governments of developing countries retain the right and responsibility to put in place appropriate regulatory frameworks, remarked: "That is an issue to which the World Bank and IMF should pay attention."[185]

83. The IMF-World Bank initiative is potentially very significant; the UK must do its utmost to ensure that it is well-designed. Decisions about whether, when, how, on what basis, and to which countries, assistance should be provided, must be based on the needs of developing countries. And the IMF-World Bank initiative must not be the sole preserve of the international financial institutions. Rather, its design and operation must be shaped by the expertise, knowledge and experience of developing countries themselves, UNDP, UNCTAD and bilateral donors, as well as the expertise and backing of the international financial institutions. As the Government states, adjustment assistance and mechanisms to deliver it must be built on sound analysis of the impacts of liberalisation on poverty.[186]

84. The detailed mechanisms of the IMF-World Bank initiative, and other ways of achieving greater coherence between the WTO and other institutions, and between countries' trade and other policies, are beyond the scope of this report. But we are aware of useful ongoing work concerning the role which might be played by mechanisms such as the Integrated Framework, the WTO's Balance of Payments Committee, or a restructured Trade Policy Review Mechanism with greater input provided by the World Bank, the IMF and the UN's development organisations.[187] Designing institutions to enable countries to harness well-sequenced trade reform in pursuit of their poverty reduction goals, and to ensure that nationally-determined policies are supported by multilateral rules, is a complex endeavour. There is no doubt that aid should be used to build countries' capacities to trade; the question is what is the most effective way of delivering aid for trade? We are pleased that DFID is leading the way with such work, and is promoting the better integration of trade and trade policy with countries' nationally-owned poverty reduction strategies.[188]

Political leadership

85. Progress has been slow with the development round. The prospects of concluding the round by its January 2005 deadline are slim. Other trade rounds have made slow progress, but if trade is to play its part in generating the resources countries need to meet the MDGs, this round must not stall. Political leaders must inject some momentum. The USA and the EU have been distracted by war in Iraq and the war on terrorism. But as the WTO's members realised at Doha, shortly after the 11 September attacks, the development round and the war on poverty are not unrelated to the war on terrorism.

86. Delivering a successful development round would be an important step towards healing the scars of poverty, improving the life-chances of billions of people, and removing one of the impediments to a more peaceful and secure world. There ought perhaps to be a plan B for harnessing the energies of trade for poverty reduction, but the overwhelming priority—particularly given the problems besetting negotiations on regional agreements such as the Free Trade Area of the Americas—is to revive the development round.

87. The USA is unlikely to provide the necessary leadership at this time; its energies are directed elsewhere. The EU has been in listening mode. But, welcome as it is, listening is not sufficient to deliver a genuine development round. Patricia Hewitt stated that: "Europe as one of the largest and leading players in the WTO does need to take a lead and put a great deal of effort into helping get the talks back on track in Geneva".[189]We fully endorse this. The EU was the primary architect of the Doha Development Agenda and could—by working with others including the G20+, the G90 and the G33—revive the round.

88. As we were finalising this report, on 26 November the European Commission published a new document, "Reviving the Doha Development Agenda negotiations—the EU perspective." This paper sets out the Commission's views on "how the EU could best contribute to a successful re-launch of negotiations".[190] It was endorsed by EU trade Ministers on 2 December, and was to be adopted by EU foreign Ministers on 8 December, so that the EU position could be settled by 15 and 16 December meetings at the WTO.

89. In this communication, the European Commission signals that the EU is ready to re-engage to get the talks on track. The paper states that the EU is committed to the multilateral trading system, sees a strong rules-making component as an essential part of the round alongside agreements to improve market access, and believes it essential to ensure that negotiations deliver a development round. The paper outlines areas where the EU might be flexible—the Singapore Issues, trade and environment linkages, and Geographical Indications[191]—and areas where the EU wants to see other players being more flexible—agriculture, cotton, industrial tariffs, and trade in services. Finally, the paper argues at present for limited reform of the WTO, especially the organisation of Ministerial meetings.

90. We are pleased that the Commission and the EU are now keen to play their part in reviving the round, but our response to the detail of the communication is more mixed. We welcome the Commission's support for the multilateral trading system, and agree that rules are a key component of any multilateral framework (see paragraph 54), but would wish to emphasise that new rules must be development-friendly and wanted by developing countries. New rules are not always a good thing. We welcome too the Commission's emphasis on a "development round", but are disappointed to see that the Commission's understanding of this amounts to little more than the greater integration of developing countries into the world economy.[192] This is no doubt desirable, but a "development round" ought to offer more than other rounds do for developing countries (see paragraphs 49-50, and our pre-Cancún report). On the Singapore Issues, the Commission's acknowledgement that these issues should be taken out of the Single Undertaking and considered, issue-by-issue, on their own merits, and with the aim being plurilateral agreements, is good news.[193] Nevertheless, as we have made clear, making an agreement plurilateral will not make it any more palatable to many developing countries (see paragraphs 63-67). The EU's pursuit of agreements on the Singapore Issues must not be allowed to endanger the round as a whole. On cotton, we welcome the Commission's support for an effective and specific solution at the WTO[194] (see paragraphs 39 and 60). And we agree with the Commission that the profile of commodities issues should be raised at the WTO.[195] Finally, we share the Commission's view about the need to improve the organisation of WTO Ministerials, whilst ensuring that we do not get distracted from the development round by embarking on too ambitious reforms at this stage[196] (see paragraphs 17-23 and 47-48).

91. On agriculture, we welcome the suggestion that countries' use of the Blue Box might be capped,[197] but overall the EC's paper is very disappointing. The paper suggests that the EU should not make any concessions at this time because the EU regards its pre-Cancún movement as sufficient to begin negotiations. We disagree strongly (see paragraphs 68-75). We also note some confusion in the Commission's paper as to the nature of the Green Box, with it first referred to correctly as a box for measures which have "no or little trade effects" and a few lines later as a box for measures with "no trade distorting impact."[198] The Commission calls for other players to recognise the distinction between the different trade distorting impacts of different policies; that is, to recognise that Green Box measures are less trade-distorting than others.[199] But, successful negotiations must be based on shared understandings. If even the Commission is unsure as to the definition of Green Box measures, then this can only add weight to the proposal for a review of the Green Box criteria (see paragraph 74).

92. In summary, whilst it is very good news that the EU is going to re-engage with negotiations, and is prepared to be a little more flexible on the Singapore Issues, in other areas the Commission's paper does little more than re-state familiar positions. As the paper itself makes clear, the EU's objectives have not changed; rather what the Commission proposes are new strategies to refine and sharpen the EU's negotiating approach.[200] As we have made clear, particularly on agriculture, this is not enough.

93. The EU cannot revive the round on its own—other countries and country-groups must show some of the flexibility which the EU has shown[201]—but it must not lose interest in the development round. As a key player within the EU, the UK has a major role to play. By most accounts, and with few exceptions, the UK Government performed admirably at and before Cancún. The UK must continue to play its part, encouraging the EU in its support for multilateralism, pushing the EU further and faster on agricultural reform, and re-iterating that the Singapore Issues are not a developmental priority.

94. If the legacy of Cancún is a genuine development round and a WTO more responsive to the diversity of developing countries, then the collapse of the Ministerial may be seen as a key episode in the emergence of a fairer system of global governance in which developing countries' voices are clearly heard. As an example of what can be achieved through multilateral cooperation, the delivery of a genuine development round would be hard to beat. That should be the aim.

138 "America will not wait for the won't-do countries", the Financial Times, 22 September 2003. Available at www.ustr.gov/speech-test/zoellick/2003-09-22-ft.htm Back

139 "EU may rethink multilateral trade role", the Financial Times,17 September 2003, p.12. Available at www.ioe-emp.org/ioe_emp/news/pdf/News_15%20-19.September.pdf Back

140 Q 26 of oral evidence taken by the Trade and Industry Committee, Session 2002-03, 15 October 2003, HC1178i [Patricia Hewitt] Back

141 Ev 74 [Traidcraft memorandum] Back

142 Q 2 [Patricia Hewitt] Back

143 ICTSD, Bridges, Year 7(8), November 2003, p.11. Available at www.ictsd.org/monthly/bridges/BRIDGES7-8.pdf Back

144 Q 22 [Patricia Hewitt] Back

145 ICTSD, Bridges, Year 7(7) September-October 2003, p.4. Available at www.ictsd.org/monthly/bridges/BRIDGES7-7.pdf Back

146 WTO, Ministerial Statement, 14 September 2003 (see footnote 8). Back

147 Ibid. Back

148 Q 28 [John Hilary, formerly ActionAid] Back

149 Pascal Lamy, The EU, Cancún and the future of the Doha Development Agenda, speech delivered to the Journal for Common Market Studies, London 28 October 2003 (see footnote 134). Back