Examination of Witness (Questions 180-199)
Ms Anja Osterhaus
24 JUNE 2008
Q180 Chairman: Can I just pick up
one point. I think you are suggesting that some of the smaller,
weaker partners would be producers in otherwise quite successful
countries. You might have some small, weak producers in successful
developing countries like India or China.
Ms Osterhaus: Yes.
Q181 Chairman: But then there are
whole countries where everybody is a small producer.
Ms Osterhaus: Yes. India is a very powerful
negotiator at the WTO level while Uganda is not.
Q182 Chairman: But would there be
interests within India that are not being met?
Ms Osterhaus: Absolutely. We have got
two problems.
Q183 Chairman: I thought that was
what you were saying, I was trying to disentangle that.
Ms Osterhaus: That was exactly what I
wanted to say.
Q184 Chairman: I think the most useful
thing we can ask you to address in the context of the WTO, which
is what we are doing, is the whole country problems where it is
the smaller countries which, as you say, lack negotiating parity.
Ms Osterhaus: Yes, because negotiations
happen at country level but there can be measures in the WTO and
also awareness among the negotiating partners that these interests
need to be taken much more into account. If trade, in theory,
is one of the means to address some of the problems, when you
look into the details of Aid for Trade and what happens there—we
are a bit provocative, so let me be a bit provocative—it
was a bargaining tool in Hong Kong to say, "Here we are,
the big players, the US, the EU and Japan, Australia, et cetera,
we offer Aid for Trade". It was two days before Hong Kong
when the pledges for Aid for Trade started. We do not think it
was a serious taking care of the development concern, it was a
bargaining tool to have developing countries subscribe to deals
which they did not really do and it did not work out. We really
think it is absolutely necessary to help developing countries,
and particularly marginalised groups in developing companies,
to benefit from trade because there are so many benefits from
trade, and we see it with Fairtrade. We see how trade can work
for development and we have the proof, it is possible. It also
works in some cases without Fairtrade, but not systematically.
Aid for Trade could be a very powerful tool, but not if it is
done to make the developing countries subscribe to a deal which
they otherwise would not subscribe to, to buy them in. That is
a big problem with Aid for Trade. Currently we are running research
looking into what is being supported under Aid for Trade. The
first thing to say is that nobody knows because Aid for Trade
is a huge concept which is not properly defined, many things overlap.
If you build a road in a poor country which has poor infrastructure,
this can well be Aid for Trade to be able to transport the goods
to the port, but why should you call it Aid for Trade, you could
also call it development support, infrastructure, it is very difficult
to define. Anyway, money goes into Aid for Trade, is labelled
"Aid for Trade". We are looking into how much of this
money goes to address the concerns and problems of the smaller,
weaker players. It is 0.5 per cent, and in some countries a little
bit more, a little bit less. It is very, very difficult to identify
and find out, but it is very small. It goes to the big projects
and big companies to help them. Of course, there is a little trickle
down effect from a big company to some workers, but then you need
additional measures to make sure that there are really benefits
for the poorer groups and society. We do not see that systematically
being addressed, absolutely not. There is no political will to
do that. The interest in Aid for Trade is not there and if that
is not met we will not overcome supply-side constraints for these
groups again.
Q185 Chairman: So we should view
Aid for Trade with some suspicion?
Ms Osterhaus: Yes, absolutely.
Q186 Lord Maclennan of Rogart: May
I ask a supplementary on these structural issues, institutional
issues. You said it was a good thing that there was, as it were,
one nation one vote, but does that not almost inevitably build
in the weaknesses that you have been describing, the negotiating
weaknesses of the smaller countries? Would it not be better if
there was some kind of regional structure in which nations with
similar problems could, as it were, come together and have a slightly
more powerful voice?
Ms Osterhaus: It sounds very good and
attractive but what would the regional groupings be, who would
come together? If you look at Africa, would you bring together
the whole region, neighbours who are about to go to war, or completely
dictatorial and tyrannical regimes with democracies? It is so
difficult. The EU is so advanced, with all the difficulties we
have, in joining positions and coming together on key issues and
we do not have that in any other region. It is very difficult
on the practical side.
Q187 Lord Maclennan of Rogart: When
you say there should be more concern expressed, it is a sort of
charitable concern that you have expressed, it is not a bargaining
among equals, you are trying to say the big countries should just
behave in a decent way.
Ms Osterhaus: It is not charitable, it
is more a concept of wanting justice.
Q188 Lord Maclennan of Rogart: Justice.
Ms Osterhaus: The question is if you
have a public institution, and the WTO is a public institution,
do you allow the players to go for their own rights and interests
or do you build in systems whereby the weaker parts are protected,
which I think a public institution should do, and does, but not
sufficiently. If not, you just have the rule of the strongest
and why do you need a WTO any more because you can do that without
any regulation, the stronger partners win.
Q189 Lord Maclennan of Rogart: I
am sorry for that slight diversion perhaps. How do you see the
way the Commission is currently playing the negotiations in the
Doha Round? Do you think they have got the right brief and right
objectives? How do you think it is going to play out? That is
a general impression question.
Ms Osterhaus: From our perspective, of
course, they do not have the right objectives because the main
objective, despite all other rhetoric, is to open markets for
the benefit of European exporters and traders. This is obvious
and understandable and it is clear that the EU has this focus
and all negotiating partners in the WTO have this as their main
focus, they want to have benefits for their own countries and
own economic players. It is obvious, it is understandable, but
it is still not right. I believe that the EU is in a position,
being one of the strongest partners in these negotiations who
benefit most from trade in general, to have other objectives and
follow them much more systematically than has been done in the
past.
Q190 Lord Maclennan of Rogart: Could
you give some example of the way that might work?
Ms Osterhaus: Yes. For instance, on the
issue of sustainable trade there is a unit in the Commission,
in DG Trade, which looks into sustainable trade and they lose
out all the time because when it goes to the negotiation and people
sit around the negotiating table, they will try and get the best
deal for European business interests. I know the people from this
unit and they say themselves it is very difficult, "Once
in a while we manage to get a little clause into the negotiation".
The key concerns addressed in trade negotiations are not sustainable
development or poverty reduction, it is business, and that is
a problem. Let us just be clear about it, the real issue is business.
There is a lot of talk about development but it does not happen.
At the negotiating table people do not negotiate development and
the negotiators are not even equipped to do that, they are trade
people and do not really know about development and what to do
and what the impacts will be. They do not care. We see trade as
a means to poverty reduction, that is why Fairtrade exists, but
this is the wrong starting point. It happens to get the right
result once in a while but not systematically because the objectives
are not the right ones. That is what we think. Of course, the
WTO would need to be completely different to meet the goals that
we try to meet with trade. It would need to be completely, completely
different from how it is set up now. We are far away from anything
like that.
Q191 Lord Woolmer of Leeds: Picking
up that point first, just then you said the WTO is not actually
set up to address the issues that you are concerned about, which
almost sounds as if you are saying that whatever you want to be
done the WTO is not capable of meeting that. My Lord Chairman
did ask you what steps could European trade policy actually take
to help less developed countries. Can you be specific because
you have been very general? In the context of the WTO negotiations
is there anything that could be done specifically by the European
trade negotiators that would further the important causes that
you advocate?
Ms Osterhaus: I do not follow the WTO
negotiations specifically, so I could not say on this particular
issue, but I am happy to pass you to other colleagues from the
Fairtrade movement who work more specifically on the details of
the negotiations and can give you more direct answers.
Lord Woolmer of Leeds: Thank you.
Q192 Lord Kerr of Kinlochard: Your
criticisms of the present WTO and how it works included your saying
you did not think it could, given its present structure, satisfactorily
take account of the concerns you are describing. Supposing it
was replaced tomorrow by something completely different, which
did provide a more adequate mechanism for taking account of these
concerns, a fairer negotiating system, what would it look like?
Ms Osterhaus: Our WTO would have as the
first objective, and it is mentioned in the WTO but not as a first
objective, sustainable development and poverty reduction and increasing
wealth in all countries basically. That would be the first objective.
Trade negotiations would have to be assessed against this objective.
That is how we do trade. We look into what is needed on the ground
for these producers and we try to give it to them. They may need
pre-financing because they do not have the inputs to even buy
the seeds for what they want to produce. They may need capacity
building, so we do that because maybe they do not need the pre-financing.
It is a system which adapts to the different situations and contexts
and that is not the case at the WTO, it does not adapt to the
different contexts. It has the overall idea that liberalisation
will be positive for all parties and that is definitely not the
case. It is beneficial for some and not for others, and systematically
beneficial for the ones already in a situation to reap the benefits,
which are the more developed. Our WTO would take it from the other
side, would say, "What is the need in the different countries
and how can trade support sustainable development and how can
it help to overcome poverty?" Then the whole WTO, which is
a dream, we know it is not going to happen and why we do our Fairtrade
in the meantime because we do not want to wait for the system
to become right, would go for changes and try to adapt things,
but we know there are limits in the current set-up.
Q193 Lord Kerr of Kinlochard: So
instead of trying to grow the cake, the total of world trade,
which is the Bretton Woods/GATT idea, and trying to look out for
those whose slices are not growing or are shrinking, you would
say one needs to divide the cake into slices and make sure the
slices are fair but then hope it grows. You would approach it
the other way around?
Ms Osterhaus: Yes. I am not completely
convinced by the metaphor.
Q194 Lord Kerr of Kinlochard: Neither
am I!
Ms Osterhaus: No.
Q195 Lord Kerr of Kinlochard: I am
not sure that doing it your way round would be realistic. If you
take where the world now is with oil prices, commodity prices,
huge increases, they are a transfer of resources from the OECD
world to developing countries. I agree that "developing countries"
there is very broadly defined and the real losers are the less
developed countries which have neither oil nor copper or iron
ore or any of the commodities whose prices are shooting up. I
can see that you would like a safety net of increased fairness
in the system but I cannot see why the Australians, for example,
should agree a lower iron ore price in order to benefit the Congo,
or the Congo would agree a lower copper price in order to benefit
Brazil, or Brazil would agree a lower iron ore price. It seems
to me there is an "animal spirits" world out there:
life is a bit unfair.
Ms Osterhaus: Yes, absolutely. The discussion
on price is not a discussion which takes place in the WTO. The
WTO is about trade tariffs or non-tariffs, et cetera, trying to
avoid non-tariff barriers and all these things. The world is unfair,
we know that, and the fact that the rules are as they are is because
they have been designed by the ones who have a say and not by
the ones we think should be involved to a much greater extent.
That is why we do Fairtrade in the meantime. We try to engage
in the Aid for Trade debate and try to get the rules in Aid for
Trade better than they are and make sure that the money which
is available, and we do not even know if there is additional money
available, it has been said but since nobody knows how much money
is spent we do not know whether there is more or less, we will
never be clear, but let us assume there is more money, goes to
the ones who need support to benefit from open trade. If not,
it will not help. I agree that our vision of a world trade system
is unrealistic, we will not have anything like that in the foreseeable
future, so in the meantime we try to change bits and pieces and
do our Fairtrade and hope you will buy it and in these cases we
know the people who need it most benefit from trade.
Q196 Lord Woolmer of Leeds: I assume
that you think the kind of growth rates we have seen in India
and China of over two billion people offer more prospect now than,
say, 20 years ago for even the poorest to have some prospect of
progress.
Ms Osterhaus: Yes.
Q197 Lord Woolmer of Leeds: Can I
turn to the European Union's bilateral trade agreements because
as well as the multilateral approach there are a lot of bilateral
trade agreements and so on. Do you think that the EU's bilateral
trade agreements are fair to developing and less developed countries?
Do you think outside the WTO what the Union is doing in the bilateral
negotiations is an improvement on the WTO situation or is it just
the same? Is it a trade-orientated approach? You implied you thought
the sustainability part of the Commission does not really get
a strong voice even in bilaterals, is that right?
Ms Osterhaus: In general the approach
is the same, there is not a significant difference between the
WTO and the bilateral in terms of what are the aims of the negotiators
and the situation of having unequal partners at the negotiating
table and the powers of the negotiators and the number of people
around the table and all these things. Similar things apply, however
it will be very different from one region to the other. If you
look at the EPAs, the fact that the Caribbean happily signed an
EPA while the others did not is a sign that they achieved more
in the negotiations than others and felt this was a fair deal,
relatively at least, for the countries overall. We still have
criticisms on special parts of the agreement. It is good that
at least the countries there got a better deal, but that does
not mean necessarily the banana producers in Dominica are going
to benefit from this. We have some criticism there but it shows
it is different. In the WTO there are countries that benefit from
their openness, like India and China, and many, many people in
these countries benefit, it is not that nobody benefits from open
trade, absolutely not, but in the EPA negotiations, to go back
to that example, in Africa just by the set-up of the different
regions you have a big problem as I said before, you put countries
together where the governments are about to start a war and how
will they be able to agree on a specific tariff set for coca which
may be good for one country and bad for another country, it is
impossible. In these cases we have additional problems with EPAs.
Q198 Lord Woolmer of Leeds: What
can the European Union in its trade negotiations do in those circumstances
that would make you feel they are doing more?
Ms Osterhaus: We have been criticising
the set-up of the regions. How Africa has been divided in the
different regions was against all evidence and it was always said
this was supposed to contribute to regional integration, but this
is not true. We have been told so many things, "We take care
of this" and—
Q199 Lord Woolmer of Leeds: Should
the European Union give the effort up altogether?
Ms Osterhaus: On the EPAs?
Lord Woolmer of Leeds: Without being too critical,
you do sound as if you are continually critical and negative.
I am trying to tie you down to what it is you would like to see
done.
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