Examination of Witnesses (Questions 147-159)
Ms Andra Koke, Mr Gareth Steel, Mr Douglas Brew and
Mr Jean Charles Van Eeckhaute
23 JUNE 2008
Chairman: Good afternoon. We asked a question
in the last session about climate change and they said with some
firmness that this question should be referred to members of your
delegation so, if I may, I will do that.
Q147 Lord Woolmer of Leeds: They
said the real experts were in this group! As the price of carbon
gets pushed up and the European Union is concerned about the implications
of this for certain industries and wants to avoid two things,
simply business relocating and the same issues arising elsewhere;
and potentially destroying industries, what are the implications
of that for WTO and trade and tariff policies and so on? Are there
any? What is the connection between these policies and climate
change? Is there a connection?
Mr Steel: In the space of just a few
minutes?
Q148 Chairman: Yes.
Mr Steel: This is a massive question,
with great respect. My name is Gareth Steel, I am in the Sustainable
Development Unit of DG Trade where climate change is one of the
topics that are covered in the context of our trade policy. I
do not specialise on climate change, but I think it is worth putting
it in the context of what we do in our unit, which is to look
at activities in trade policy generally, be they multilateral
or bilateral, and try to ensure that our policies relevant to
sustainable development are being served optimally in the way
that we are pursuing those trade policies. I have to say that
latterly it has been most especially on the front of bilateral
trade agreements where we have been actively pursuing those opportunities
although these issues, I recognise from your question, arise particularly
in the multilateral context as well. Just a word on each. In the
bilateral context, whether it is Economic Partnership Agreements
or Free Trade Agreements, our new generation of Free Trade Agreements
with different parts of the world, or whether it is the trade
components of broader Partnership and Co-operation Agreements
or Association Agreements, we have to recognise that these environmental
issues are a controversial part of the whole and it is not necessarily
accepted by the other side that this is the subject of a trade
agreement to get involved in these issues at all. I think when
we are talking to our partners and potential partners we are very
upfront about the fact that climate change is one very large environmental
question which is primarily to be pursued in the context of environment
policy, but our concern in the trade policy area is to make sure
that what we do fits in with the broader picture and what is going
on elsewhere. Principally we are looking at agreements on non-lowering
of standards and opportunities for environmental technology to
be facilitated. Where we get closer to climate change per se is
in the area of environmental goods and services. On the multilateral
side environmental goods and services are obviously a very prominent
part of the DDA negotiation, which is very relevant to climate
change. On the bilateral side there is limited scope. Because
you are liberalising substantially all trade there is limited
scope for playing games on tariffs for environmental goods, you
are essentially hoping to liberalise those tariffs anyway.
Q149 Lord Woolmer of Leeds: I thought
the Union were talking about seeking to internalise into imports
an imputed, implied price of carbon in some way, effectively to
tax goods on a carbon price basis. How does that fit into liberalising
trade?
Mr Steel: You are bringing me right back
to the heart of the climate change debate, disciplining me a bit
because I was doing a very rambling approach to it. Those discussions
are about the equity, as you said in your first question, of our
industry bearing costs which industry elsewhere in the world is
not bearing, and whether it is possible to level the playing field
by bringing imports into emissions trading essentially. There
has been agreement that this is one of the things that would be
looked at in the absence of a multilateral worldwide agreement
on a system to follow up on the Kyoto Protocol, but it is seen
as premature, other than doing advance technical work, to start
introducing into discussions with partners how we might burden
their imports because that by itself would start interfering and
poisoning slightly the atmosphere of what we want to be a worldwide
agreement on what to do next on climate change. It has been acknowledged
that is one of the possible ways of dealing with it, and that
is the way that involves trade, but there are other ways of dealing
with it in terms of distribution of allowances which would help
industries cope with the unequal competition from outside, but
without using a trade mechanism. I think the great fear that has
been expressed by BusinessEurope, and it is obviously a fear that
we are sensitive to at the Trade Policy Directorate-General—
Q150 Lord Kerr of Kinlochard: Does
the Commission believe it is best dealt with by a mechanism which
is entirely separate from trade, like Kyoto, a UN-type mechanism,
a world carbon trading system or whatever, or, as some Member
States seem to be arguing, that it is part of trade policy and
should be umbilically linked directly into trade policy? What
is the Commission's position?
Mr Steel: I think the Commission's position
at the moment is reserved and watching and awaiting developments.
Before you asked that question I was just about to say that the
big fear on our side, and it is very relevant to your question
as well, is that if you start using border mechanisms you generate
a knock-on effect which is very difficult to control. The tit-for-tat
repercussions of any action at the border are very unpredictable
and difficult to control and essentially then generate a process
which is beside the point of tackling the climate change issue.
Those ways I was talking about at the beginning of trying to use
trade policy to help the process of dealing with climate change
as the positive steps that we see forward, we see this talk about
unequal competition as anticipating, firstly, a failure in worldwide
negotiations that has not yet happened and, secondly, a rather
negative mindset as a way to look at the problem.
Q151 Lord Kerr of Kinlochard: Could
I piggyback on that a social clauses question? I saw in the same
document, Global Europe, you guys saying that you need
to work to develop sustainable development through our EU bilateral
trade agreements: "This could include incorporating new co-operative
provisions in areas relating to labour standards and environmental
protection". What do you do you mean by "new co-operative
provisions" in areas pertaining to labour standards? I cannot
see the Thais and the Malays rushing to say that they wish to
be consulted about wage levels and working conditions in Luxembourg.
Am I wrong?
Mr Steel: No, you are not wrong. I am
going to the Philippines tomorrow night and I am sure that our
joint opinion on that will be borne out. What was meant back at
the time of the Global Europe communication by "co-operative
mechanisms", and has subsequently been refined in the negotiating
Directives that the European Council has set for these various
negotiations, was that sustainable development is not only about
Europe pointing the finger at inadequacies that we perceive in
practices elsewhere and saying, "You have jolly well got
to sign up to these standards or we will not trade with you".
That would be an error and, frankly, would not make a lot of negotiating
sense in a lot of places where we have not got much negotiating
leverage and they are extremely sensitive about these areas because
they see them as very threatening to their political systems.
Q152 Lord Kerr of Kinlochard: The
people who are pressing you to think of adding labour conditions
to bilateral trade agreements are using the same arguments that
the Democratic Party are using in the debate in the United States,
arguments which appear to be carrying the day, sadly, in the United
States and in parts of Europe. This is quite a serious debate
that we have on our hands, I think.
Mr Steel: One of the first messages that
we have got to get across in these negotiations to the potential
partners is that we are not proceeding from a protectionist motivation
and we have a genuine concern that trade agreements are not just
to let there be more trade but they are in pursuit of greater
welfare for both sides. In the European view that is very closely
tied up with this concept of sustainable development which we
do not see as culture specific but as something which is equally
of interest to the partners, whether they be in Asia, Africa or
Latin America. There is a very big part of the process of persuading
them of our intentions and I do not recognise that we would come
under massive protectionist pressures from domestic constituencies
if we were to say this is not what this is about, it is very much
more about these co-operative mechanisms, to come back to that,
setting up a couple of chapters, or one chapter, in an agreement
which would deal with environmental and social questions and say
that we have some basic levels which we expect to be respected
on both sides. It is not about imposing our own high standards,
our own current level of standards on the other side, it is allowing
a certain amount of sovereignty to have play for countries or
groups of countries to decide on their own ambitions in this area,
to set up structures in the agreement which will allow better
implementation of existing commitments which will allow co-operative
and participative processes to yield better results than have
been achieved with, say, the Chinese.
Mr Van Eeckhaute: If I can add something
to that. At the European Parliament we see a lot of demands for
having an approach that is closer to that of the US. This is something
that is coming up strongly. It depends on the political majority
in the Parliament. You can imagine that within the Parliament
there are strong demands for a less co-operative approach and
a more coercive approach on these issues and this has to be kept
in mind. We are in limbo with the Lisbon Treaty at the moment
where, in principle, the Parliament would have extended powers
on trade, which it does not have for the time being. These types
of issues will come even more to the fore when, and let us hope
it is as soon as possible, the Parliament will have a full role
to play in trade policy as well.
Chairman: That is a very fair point. I would
now like to take us back. What we have been asking your colleagues
is how is Doha going, what are its advantages, where are we not
getting anywhere and, fundamentally, what happens if no further
progress is made. Against that background, with particular relevance
to developing countries, I will come to Lord Woolmer.
Q153 Lord Woolmer of Leeds: I will
start off with a simple, basic question. Do you think that developing
countries or the less developed countries have benefited from
multilateral trade agreements?
Ms Koke: I think that question is for
me. First of all, it depends how you look at that. I do not think
that there is any data which clearly and indisputably quantifies
the benefits which can be directly attributed to trade. Our policy,
looking from the trade and development view, is we do believe
that developing countries are benefiting from liberalised trade
and also from specific special market access they have gained
to the EU market which we refer to as quota-free, duty-free access.
At the same time, we believe that multilateral trading rules are
most important globally but there needs to be co-operation between
the partners and the EU. The EU alone cannot ensure a free multilateral
trade system globally. We also pursue the trade and development
policy aspects bilaterally and unilaterally autonomously and it
is easier to quantify and measure the benefits that trade is giving.
I think that answers your question.
Q154 Lord Woolmer of Leeds: Do you
think that the European trade policy could do still more to help
the less developed countries reap the benefits of global trade?
Ms Koke: You mean any type of trade,
multilateral, unilateral, regional?
Q155 Lord Kerr of Kinlochard: Yes.
Ms Koke: That is part of our policy.
We believe that trade is a component of development, it is not
alone, however complete economic development is not imaginable
without external trade. We see trade as part of a wider development
strategy. It is macro-economic and structural policies, human
resource development, development of social security systems,
improving infrastructure and, of course, giving market access
and taking care of the environment, providing good incentives
and a good environment for investment and innovation. Also, it
is the EU joint Aid for Trade strategy which is directly intended
to assist developing countries, and in particular least developed
countries, to develop productive capacity, infrastructure, to
carry out trade reform policies and thus enable them to benefit
more from trade.
Q156 Lord Woolmer of Leeds: This
is not a trick question because I do not know the answer myself.
We have been told there are three blocs, the developed, the developing
and least developed. Broadly speaking, what is the proportion
of the world's population that lives in the least developed category?
The question that follows from that is the impression I got from
earlier responses to questions was that the developing countries,
particularly the larger ones, have a lot to gain from the Doha
Round but many of the least developed are still pretty marginal,
they have got a lot of problems and may not benefit a great deal.
What is the proportion of the world's population that lives in
this third category of nations? What number of people are we talking
about? When the public read about trade negotiations it is helpful
if they have got an idea what proportion of the world this is
relating to that might get the least benefit. Do you think the
Doha Round, if successful, as it is currently going will be of
significant benefit to those people?
Ms Koke: That question applies to my
colleagues who were here before.
Q157 Lord Woolmer of Leeds: It is
to do with sustainable development.
Mr Brew: I am taking a complete guess
off the top of my head here, but probably around 20 per cent in
the least developed because it is the developing countries that
dominate the world population, the likes of China, India and Latin
America.
Q158 Lord Woolmer of Leeds: Twenty
per cent of the population.
Mr Brew: I can find the figure but that
would be my rough guess because you are talking largely about
the very small and very excluded economies here, not the big populations.
Q159 Lord Woolmer of Leeds: These
are the ones with least negotiating power and probably the least
to offer, the least to benefit from the current Doha Round.
Mr Brew: If it is leading into the area
where I work on EPAs it is very difficult to separate the least
developed and the developing economies one from the other. An
awful lot of the least developed economies are directly dependent
on their developing country neighbours and in Africa the Burkinas,
the Malis, go straight through the Côte d'Ivoires and the
Ghanas in order to get finance capital and access to ports. Very
often the fact is a least developed country is linked to this
isolated inland status. The same is true in an awful lot of regions.
It can sometimes be quite difficult to separate out the benefits
because they have often piggybacked on the growth that has happened
in other regions. It is rather different for us, it is how we
extend that growth out, which is one of the reasons within the
EPAs that we have taken this view, which is supported by the regions,
that this is a question of creating a scale inside those markets,
both domestically and internationally, and breaking down a lot
of very fragmented economies where you have a perfectly good production
facility or resource in a least developed country but you have
endless bureaucratic and physical barriers getting across the
border to link them into the kinds of investments that are available
in developing country neighbours. There is high potential.
Chairman: I think that answer has led us into
Economic Partnerships.
|
