FOREWORD—What this
report is about
This inquiry took place during a period of increased
activity and interest in international trade. For much of 2008
it looked possible that a successful conclusion to the Doha Round
of WTO trade negotiations might be achieved, and indeed in July
a Ministerial meeting in Geneva came close to agreement. These
talks took place against the background of a gathering financial
crisis and this inquiry also reflects concerns about the possibility
that the huge gains in trade liberalisation made since the Second
World War could be lost or jeopardised by protectionist attitudes
adopted by major WTO members.
As the Secretary of State for Business, Lord Mandelson,
made clear in his evidence to us, the Doha Round did not collapse
this summer. The recent decision by the leaders of the G20 countries
to press for a conclusion to the Round by the end of this year
is to be welcomed; but as we note in this Report, there is a significant
difference between rhetoric and action. This may prove to be the
most opportune time to conclude the Round for several years to
come. Changes in political leadership in several leading members
of the WTO may make participants anxious that current offers will
not be upheld by new administrations. A deepening global recession
will magnify the siren calls of protectionism. Politicians must
decide to spend domestic political capital on liberalising trade
agreements, even though the associated economic benefits may take
many years to materialise.
A return to protectionism and to beggar-thy-neighbour
policies, while tempting at a time of recession, will harm global
economic growth. It will also damage the World Trade Organisation.
The WTO, and in particular the Dispute Settlement Mechanism, has
been a successful example of the benefits of international cooperation.
However, it is a member-driven organisation. While we believe
that WTO members will always state their support for the Organisation,
we are concerned that their actions, including the conclusion
of trade-diverting bilateral agreements could undermine the Organisation.
The WTO must not be allowed to decline and we recommend enhancements
to its trade monitoring and research roles, including promotion
of best practice in bilateral trade deals. We also support a move
to plurilateral agreements in trade rounds.
As well as considering the EU's role at the WTO this
summer, and its stance towards multilateral and bilateral deals,
we have examined other aspects of the Commission's policies on
external trade, and in particular the links between trade policy
and economic development. The Commission has been negotiating
Economic Partnership Agreements with ACP countries and, where
it is led by the ACP countries themselves, we support the regional
approach the EU has adopted to these negotiations. We also support
actions aimed at building trade capacity in the Least Developed
Countries, in particular tangible improvements to infrastructure
as well as advice for potential exporters and associated domestic
supply chains.
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