Examination of Witnesses (Questions 80-84)
Professor Richard Higgott and Professor Simon Evenett
3 JUNE 2008
Q80 Lord Haskins: There are lots
of people who are against it, critics who think it is irrelevant
and so on. You come out rather strongly and say that you want
this to be, if anything, pushed further and a priority. That is
the impression I get. I think we would like to hear a bit more
about that. On Aid for Trade, this is encouraging as a sort of
background to multi-trade policies, with countries being given
help with infrastructure developments (human, physical, et cetera)
to back trade, if I have understood it correctly. Your main issue
there seems to be, "Is this a job for the WTO to do?"
It sounds to me like making it into another World Bank. How on
earth does one bring that about? A bit more on both those things
would be helpful.
Professor Higgott: You are quite right
to identify the political nature of this. One of the things that
we were adamant to do was to make sure that it was understood
that special and differential treatment needed to be disaggregated
and made country-specific. It was not some blanket policy that
could be applied across the board to "all categories of developing
countries". There is a very highly charged political debate
about this. It is a right, some would argue. It is an expectation
that has emerged because, in signing on to the WTO, many developing
countries took on a set of obligations that they may not have
understood the full implications of at the time, it is argued.
Our judgment here is that it should be treated quite explicitly
on a case-for-case basis. The challenge of the 21st century, though,
is not to protect the poorest developing countries from trade
competition—and this is where we contrast with some earlier
theory and practice—but to make developing countries more
able to compete. Globalisation is not something about which you
have a choice, we would argue, in many ways. It is how you assist
and enhance the ability of developing countries to participate
in the emerging international division of labour on more equal
terms. The purpose of Aid for Trade would be to ease the burden
of adjustment and implementation, not to provide an alternative
source of support. I think that was the way we took it. We had
two approaches: one was to improve S&DT and one was to enhance
Aid for Trade. Simon, I have to say is the expert on Aid for Trade
and not me.
Professor Evenett: First, perhaps I could
start with special and differential treatment. As has been indicated,
this has been treated in a very political manner. To say that
you do not approve of special and deferential treatment would
immediately antagonise at least 100 WTO members. The critics who
come forward and say that S&DT has no purpose and the like
on technical grounds could well be right, but as a way of arguing
something at the WTO it is a non-starter. You will not get anywhere.
Instead, I think the approach we took on the Commission, and which
several of us have written about, is to ask the question: "What
are we trying to accomplish with Aid for Trade, as with special
and deferential treatment?" If the idea is to help us design
WTO rules and obligations which help developing countries progress
and develop their industries and the like, fair enough, but then
that is a very technocratic question, and the answer to that technocratic
question will probably vary across different types of WTO agreements
and across different types of countries, in which case the special
and differential treatment should not be of the blanket type,
with one set of rules for developing countries and one set of
rules for the rest, but much more tailored to the specific matter
at hand. It is hoped that by elevating this matter from the political
perhaps to the technocratic, one might be able to make a little
more progress. That is the logic underlying that particular recommendation.
With respect to Aid for Trade, you mentioned the role of the WTO
here. This has to be handled, as we have suggested in the report,
very carefully. On the one hand the WTO and its members have a
clear interest in seeing Aid for Trade being supported, especially
if they are keen to demonstrate to developing countries that they
can get something out of trade reform and integrating into the
world economy, yet, at the same time, the cheques for Aid for
Trade are written by aid ministries and/or the international development
agencies and the WTO is not responsible for how forthcoming that
money is and how it is used, so the WTO there is left with a convening
role and perhaps an important monitoring role but not an implementation
role. The risk that we flag in the report is that, as the opposition
to Aid for Trade, which is often very quietly expressed by some
aid ministries and by some international organisations, has grown,
they have literally tried to abandon this issue and walk away
from this issue and hang it around the necks of the WTO, and so
the WTO would be blamed for something which is essentially not
their decision. The fear we have is that, unless the responsibility
for the failure of any Aid for Trade initiative is clearly and
correctly identified, the WTO will be blamed for this. It will
be seen as another example where expectations of developing countries
were raised and then dashed and the WTO is to blame, whereas in
fact it is a lack of commitment in other quarters to this initiative
which is the problem.
Q81 Lord Moser: This, in a way, goes
back to your answer to Lord Woolmer a little while ago. You keep
on talking about developing countries, but you say that India
is not really and China is not really and Brazil is not really.
It begins to seem to me that we should stop talking about developing
countries. What is the category? It relates both to preferential
treatment and Aid for Trade. Do you have in mind what to say to
WTO, that what you are taking about with both these initiatives
is the following category? It is not developing countries, because
half of them you would exclude if I have listened to you correctly.
Professor Evenett: It would be fair to
say that in the report we do not have an explicit definition of
who we would include for being potential beneficiaries for Aid
for Trade but a practical response to that question—and
this would be my view: as I said, we do not take a view on this
in the report—is that we would start with the least developed
countries.
Q82 Lord Moser: The least developed
countries. What does that mean?
Professor Evenett: That is a United Nations
category of about 50 jurisdictions which are especially poor and
face particular challenges. One might then expand from that list
but I think that would be a practical place to start.
Lord Moser: That is very interesting.
Lord Watson of Richmond: I thought the
distinction that you drew when we were talking earlier about countries
like Brazil or India was also important because those countries
can be rather insistent of their developing status when one part
of the agenda is being discussed and equally insistent of their
world power status when another item is being discussed. I think
we are going to meet that paradox with a vengeance when Russia
becomes a full member of the WTO.
Q83 Chairman: Perhaps I could try
to pull this together. I would like colleagues to ask anything
they have not managed to ask. I have a kind of wind-up question
on an issue which is not one you addressed in your report. Do
we think, against this background, that the Doha Round is going
to go ahead and be successful—whatever we mean by successful—and
whether any agreement is going to be reached.
Professor Evenett: Shall I?
Professor Higgott: Rather you than me.
Q84 Chairman: This is against the
background that, for instance, the "word" in Brussels
is that it probably is going to go ahead and achieve something.
I would just like some more views from people who have looked
perhaps wider than the European interest.
Professor Evenett: To answer that question,
I would separate what and when. I think it is quite possible that
during the next month or two one could come to some agreement
whose contents would be particularly fuzzy. They would have to
be fuzzy in order for it to sit well in various national capitals,
but various people could declare victory and go home. President
Bush would have something for his legacy and Mr Mandelson would
have something for his legacy. After the US election and when
we have a new Commission in place, what one would do with this
putative agreement or whatever it constitutes would be a completely
different matter. It is quite possible that we could have a nice
crescendo over the next six to eight weeks and then wonder what
we have produced. That is one scenario. Perhaps for me that would
be the most optimistic. If you ask me what I think would be the
most likely to happen, I think the signals from New Delhi and
Washington in the last week could not have been clearer. On the
US side, they do not see enough concessions made by other countries
to merit taking on the strong commercial interests at home that
will be affected by Doha, especially in the agricultural area.
New Delhi is having enormous trouble contemplating tariff reductions
of the type which are conceived of in the Doha Round. I think
there are two important poles of opposition. The difference is
that the US can only do a deal, in my view, where they can take
on these important agricultural interests—which will lose
the potential for subsidies—if there is a substantial amount
of additional market access on the other side, especially in the
emerging markets. But there is little desire to offer that additional
market access by the emerging market countries, and the US has
asked for tariff cuts in these countries, not just reductions
in their bindings which do not involve actual tariff cuts, and
that will lead to such high percentage cuts in tariffs in emerging
markets that it would be inconsistent with one of the major negotiating
principles in the Doha Round, which is less than full reciprocity;
that is, that the tariff cuts in the industrialised countries
would exceed those in the developing countries. In order to get
the Americans to play ball, we need a huge amount of ambition
and liberalisation, but the rest of the world, quite frankly,
does not seem to have much of a taste for it. Just going back
to my earlier comment: the Americans were prepared to go along
with the Doha Round as long as it was very much on their terms
and with a very ambitious outcome; the rest of the world does
not have the stomach for that level of ambition. That is why we
have been deadlocked really for the last two years. It is a realisation
of this series of internal political constraints projected up
to the WTO level.
Chairman: Thank you. It remains for me to thank
you both very much for coming. It has been an extremely good session,
very illuminating, and may I join in Lord Moser's congratulations
on the format of what you have done. It seems to be very clever
and a real way of moving forward.
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