Examination of Witnesses (Questions 367-379)
Ambassador Bruce Gosper
10 JULY 2008
Q367 Chairman: Ambassador, it is
very good of you to come. Welcome to the meeting. You have seen
our list of questions and we understand that you will be answering
in your capacity as the Chair of the WTO General Council. We are
taking a transcript and all evidence will, in fact, be published.
You will be provided with a copy of the transcript, so any infelicities
can be ironed out at that point. We know you have had a copy of
the topics we would like to discuss but is there anything by way
of a general statement you would like to say first, or would you
rather we just started?
Ambassador Gosper: No, thank you very
much, my Lord Chairman. The questions are fine. Some of them ask
for a response as Australian's Ambassador, of course, and Australia's
aspirations, so I will try to be clear in what general capacity
I am giving a response on some of these questions. They are fairly
wide-ranging and give scope for some responses on issues of significance
for the WTO and of importance for Australia.
Q368 Chairman: Thank you very much.
In which case, I will start by asking you is there a Plan B if
the Doha Round fails?
Ambassador Gosper: Well, at the moment,
of course, we are two weeks away, or less than that, from ministers
coming here to seek to establish modalities, that is the basic
framework agreement for agriculture and NAMA. There are open questions
about whether or not we will be successful on this occasion. We
may not be successful but that does not, of course, necessarily
mean that the Round will not succeed at some point. It may be
that if we are not successful on this occasion, there is a further
work programme ahead for the WTO to try and bring the Doha Round
to some sort of conclusion. This is by way of me saying that I
am reluctant to talk about Plan Bs at the moment. People have
a variety of motives for talking about Plan B. From my perspective,
as Chair of the General Council and as Australia's Ambassador,
the immediate objective is to conclude modalities on agriculture
and NAMA. There is a reasonable prospect that can be done with
some goodwill on the parts of all. If it is not successful on
this occasion then ministers will have to consider the implications
of that for the Round, whether there is a further process that
they should indicate is necessary to enable modalities to be concluded
or whether there are some more fundamental problems with the mandate
for the negotiations or the way we undertake the negotiations,
but that is an issue yet to be addressed.
Q369 Chairman: One issue that we
have heard really very little about from anybody is services.
Do you have much hope for the Round on services?
Ambassador Gosper: I should say that
services is quite important, not just for the trading system but
from an Australian perspective it is an important part of these
negotiations. Like most developed economies, services is by far
the largest component of our economy but an increasingly important
part of our top ten exports. Currently, all of them are resources
or services. There are no manufactured goods or agricultural items
currently in our top ten exports. We are a large exporter of education
services, tourism services, professional services, mostly to countries
within our region, the ASEAN countries, China, India, who do not
necessarily have very liberal regimes. We do see an important
outcome from this Round on services. That being said, of course,
I think, somewhat unfortunately, services has been left in the
vanguard of these negotiations. We did not take advantage of the
inbuilt agenda on services and now it is following along behind,
to some extent, the agriculture and industrial tariff negotiations.
We also have an architecture for services, the GATS architecture
that was negotiated in the Uruguay Round, which is not particularly
conducive to producing new market opening or new market access
as a general architecture. That is an issue that the trading system
will need to discuss and in some fashion address over the coming
years. We have to be realistic about what we can actually secure
in the negotiations in the Doha Round. That being said, we have
been reasonably encouraged over the last couple of months about
the sort of process we have had in Geneva and some capitals. As
you might know, we have had this process of developing so-called
plurilateral requests where members come together, both demandeurs
and recipients of requests, to discuss specific areas and something
akin to a bilateral request offer process which has been reasonably
encouraging. We have found when we step back from broad public
rhetoric on these sorts of issues and talk more specifically with
neighbouring countries on the restrictions they have in place
on, let us say, the movement of business people, whether it is
architects, lawyers or doctors, or on some of their commercial
presence restrictions or the like, we can get some practical results.
Certainly on the services side we see that we will get something
out of these negotiations, particularly on neighbouring markets.
We also have a general perspective that what we bring to the table
is just as important as what we bring from the table in services.
Generally we have a quite open services regime at the moment.
We have full commitments in more service sectors than almost any
other member, I would say. Certainly our expectation is that we
will keep up that general stance, that we will be making further
offers of interest to our trading partners. For instance, we have
made it very clear that areas of interest to the EU in areas such
as postal services will be part of new commitments we will make
in services. We will be making new commitments in Mode 4 areas.
We have already indicated that we will be bringing more to the
table and we already have a very liberal Mode 4 regime in Australia.
We have good standing in terms of our existing commitments, the
offers that we have already brought to the table and the improved
offers we will bring. We will ensure that we remain at the front
of the services negotiations in terms of the level of commitments
that we have. That is an important perspective because we are
asking others to make a contribution in this area. Certainly when
it comes to assessing the outcome of this Round we will be focused
on what comes out on market access as well as the Rules area.
Market access for Australia is very much driven by agriculture
and services.
Q370 Chairman: That is very interesting.
Do you see the negotiations on services perhaps as a way of assisting
or unsticking some of the negotiations on agriculture or NAMA?
I do not quite know where, but anywhere in the negotiations is
this likely to be helpful?
Ambassador Gosper: Certainly in a general
sense it will be helpful because they bring more to the table
that is of interest to more members, and some key members of the
negotiations, whether it is the EU or US or India, that certainly
have a strong interest in the services outcomes. There are others,
of course, who are important parts of the trading system, important
trading partners, who can bring some important things to the table
in the area of services. I am thinking in particular here of China,
but also some of the other major emerging developing countries.
This is one of the things we are grappling with now, the product
of the sequencing that we have adopted which puts agriculture
and NAMA at the front. This is one of the reasons why we have
got to this signalling conference, so that we can give all members
a reminder of the meaning of the single undertaking and of what
is on the table at the end of the day across market access, including
not just agriculture and NAMA but services. It is meant to provide
a reassurance to demandeurs in this area, but also a reminder
to others that what they contribute in that area is an important
part of the package ultimately.
Q371 Lord Haskins: Is not the problem
with services compared with goods, and the European Union has
struggled with the same thing, that the single market has been
remarkably successful except in this area? Does not the WTO have
the same problem in that the barriers here are not tariff barriers,
they are regulatory barriers, and is the WTO, and indeed the European
Commission, in a position to tackle those regulatory barriers
under its remit?
Ambassador Gosper: That is a very fair
question because we are dealing with issues beyond, at and behind
the border in the area of services. We all know that it is a complex
part of the negotiations. Whether or not you have mixed competences
in this area it is a very difficult question. You usually find
in most economies that a very small number of ministries have
responsibility for what they are negotiating, whether it is trade
rules, tariffs or even agriculture, but in services, of course,
you are asking people to change regulations that are applied domestically,
not necessarily even at the border. For instance, during the course
of next week we will have a series of bilaterals with many other
members where we seek to cover professional services, tourism,
telecommunications, financial services, postal services. For all
of the different domestic agencies which are responsible for the
legislation policy, and in many cases, of course, that is a shared
jurisdiction with states, each of whom may or may not have a mutually
consistent regulatory regime, so the problem for negotiators,
governments, to be at a negotiating table and negotiate concessions
and packages across services and with other parts of the negotiations
is very difficult. It takes time and, frankly, it takes a lot
of buy-in from domestic agencies many of which, even in economies
like Australia which are relatively outward oriented, still need
encouragement from trade ministries and industry groups to come
to the table to dedicate resources to international negotiations
where the benefit that might be gained is a benefit for an industry
in another market which the domestic agency might not otherwise
have a particular role in. It is certainly much more complex.
Q372 Lord Haskins: Almost too hard.
Ambassador Gosper: I would not say that.
It is hard work definitely, but not too hard.
Q373 Lord Moser: Ambassador, on a
very general issue, there is obviously a sort of competition,
if not a conflict, between bilateral and regional negotiations
on the one hand and multilateral negations on the other. One is
conscious that there are more and more of the former bilateral
regional negotiations. Do you personally see them as an impediment
in the multilateral progress, which is what everybody prefers,
especially in the WTO context?
Ambassador Gosper: I am not sure I would
describe them as an impediment. They are certainly a feature of
the system, an explosion of activity in recent years, and Australia
itself has been a part of that. Successive governments have made
very clear that their primary focus is on the multilateral system
but, nevertheless, a couple of decades ago we negotiated an agreement
with New Zealand, the CER, which is very much a blue ribbon agreement.
Since then we have had free trade agreements with the United States,
Thailand, Singapore and, most recently, Chile. We are negotiating
FTAs with Japan, China, the ASEAN members, the Gulf Cooperation
Council, and have exploratory discussions with India, Korea and
some other members. We have been quite involved in free trade
agreements. Whether or not the Round is successful, I am not quite
sure that that broad global interest in free trade agreements
will dissipate. It may slow down a little bit, but a lot of it
is driven on the part of the global system by broader interests
than just commercial interests. At the same time, often these
agreements are driven by specific commercial interests. If your
car industry has interest in access to a particular market that
can often be a pretty important driver of what happens. We are
generally concerned with what is happening with the proliferation
of FTAs and more particularly, of course, those FTAs which we
think are not strongly trade liberalising or which merely entrench
some protected interests. We are trying to grapple with what that
means for the global trading system. Certainly there did seem
to be an opportunity in this Round to look at the rules that relate
to regional trading arrangements, and in particular to look at
whether the disciplines that apply to the comprehensiveness of
those agreements could be strengthened. There does not seem to
be much support for that. We used to be in good company. Australia
had good support from the likes of many other middle economy,
export oriented countries, but we do not sense that sort of strong
support at this point for tackling those who are resistant to
some stronger rules, whether in the United States or elsewhere.
We understand how hard it will be to strengthen the rules that
relate to RTAs in these negotiations. There is a big agenda that
lies out there still that the trading system has to grapple with
in coming years. There is still a lot of analytical work that
needs to be done. Ultimately, in a very broad sense we have to
find a way to multilateralise the trade gains, the access improvements,
the openness that has been secured through a variety of trade
agreements. This is a broad concept that we are beginning to develop
and think about. It is certainly true that if you look at many
FTAs, patchy though they are, there are some areas of significantly
deeper discipline than is currently available in the Multilateral
Trading System. Finding a way to bring the benefits of those agreements
to the global community, to the multilateral system, through some
multilateralisation of those sorts of agreements is a medium to
longer term objective that we are beginning seriously to think
about.
Q374 Lord Moser: Presumably from
the point of view of an LDC trying to negotiate in both directions
simultaneously it must be easier to go the bilateral or regional
route in the context of what you have just said. Do you see that
as a bit of a threat to the WTO's central objectives?
Ambassador Gosper: I am not quite sure
what you are asking there, but there are a variety of views amongst
the LDCs. In more openness of the trading system some are beneficiaries
of particular preferential agreements, for instance, with some
of the major economies and they worry about the competitive threats
from developing countries. For the LDCs these are very difficult
questions, but they are difficult questions for all of us because
we want the LDCs to prosper and develop.
Q375 Lord Maclennan of Rogart: Looking
beyond Doha to the role of the WTO in the years ahead, how do
you see it possibly developing? It seems from what you said that
there has been an explosion of bilaterals, we have got very, very
slow progress on Doha, and it does raise questions about whether
universal consensus, if you like, is the only way to have plurilateral
agreement. I wonder if you have any views about possible structural
changes that might make liberalisation more attainable on a wider
scale. Are we, by insisting on universalism, if you like, allowing
the best to be the enemy of the good?
Ambassador Gosper: Perhaps the issue
you are getting at there is the single undertaking and a broad
Round that encompasses a wide range of market access and rules
issues.
Q376 Lord Maclennan of Rogart: Yes.
Ambassador Gosper: This is a perspective
that has been talked about in many places. Certainly there is
a view that whether or not this Round is successful it might be
the last Round, as such, or last single undertaking, that because
of the complexity of issues that governments are dealing with
now, because of the near universal membership of the WTO and the
range of interests and capacities of the members that a Round
of this sort is perhaps not the appropriate way to do trade liberalisation
in the future. It seems to me that there is some sense in that
perspective. When you view the problems we have had over the last
seven years in negotiating this Round it does seem to me that
the membership will need to look at alternate ways to undertake
trade liberalisation in the future, whether it is through critical
mass agreements, sectoral agreements of the sort that we had in
the late 1990s with telecommunications, financial services and
information technology, or some other mechanism. I think when
this Round has been completed, however it is completed, there
will need to be quite a bit of thought given to catch up, frankly,
with the broader agenda that policymakers in capitals are addressing
and what that means for the institution, catch up with the institution
itself in the way it conducts its day-to-day business and the
way it manages itself, and probably some reflection on how it
next tackles the broad subject of trade liberalisation and what
sorts of mechanisms and approaches would be best. Personally,
I do feel that these sorts of critical mass sectoral agreements
are probably an important part of the future of the Organisation.
Q377 Lord Maclennan of Rogart: That
is very, very interesting indeed; very interesting. Do you think
it is conceivable that the Organisation could then have a policing
role or dispute settlement role in respect of agreements which
were not universal agreements?
Ambassador Gosper: I am talking mostly
about market access here, and market access commitments. When
it comes to rules there will be a function for the dispute settlement
body in ensuring adherence to those rules. There are challenges
to the dispute settlement system itself, of course. People often
refer to the general support for the implementation of dispute
settlement findings if, of course, there is not some strong trade
liberalising component to the Round. Even more to the point, there
is a sense now that after 13 years of operation of the dispute
settlement system there are some enhancements, refinements, modifications
that we should be considering in the way the system operates.
It has operated very well but it is now building what is beginning
to be an impressive body of international jurisprudence and has
a quite remarkably successful record of findings and implementation.
From my experience, I do not think you would find that in any
other international area, but all things require improvement and
refinement after a period like that and I think that is one of
the challenges we will have to address in the coming years.
Q378 Lord Trimble: I appreciate with
the meeting that is coming up in a week or so's time that you
do not want to contemplate failure, nonetheless there is not a
great deal of optimism in many quarters for a successful conclusion
of the current Round. There are a lot of elements in the international
climate at the moment, particularly with the present uncertain
economic situation, where it does look as if we might be heading
back towards protectionism, a retreat from the liberalisation
that has characterised the World Trade Organisation. In that eventuality,
and I appreciate you are reluctant to comment, is there a future
for the WTO in the event of the failure of Doha in the context
of the present climate?
Ambassador Gosper: Well, can you imagine
a future without the WTO and without a system of rules or process
to ensure adherence to the rules? I find that a very troubling
prospect myself. There are certainly challenges to the WTO if
the Round fails, particularly if the Round were to fail in a way
that was—how can I describe this—divisive. That would
have its costs, if not to the Organisation at least to the way
in which for some period of time members are engaged in the Organisation.
The system is there, it has been remarkably successful, whether
you look at the dispute settlement system or the fact we are now
in our ninth round of trade negotiations over 50 years. It is
remarkably endurable and it is because people have self-interest
in the maintenance of the Organisation.
Q379 Lord Trimble: There has been
a general commitment to trade liberalisation which may not continue
to be the case. Some others have put to us what they call the
bicycle theory of the institution, that it has to keep going and
if it ever stops then the whole thing might fall apart.
Ambassador Gosper: Of course, there has
been a continued commitment to liberalisation and liberalisation
has continued. Members unilaterally make decisions to liberalise
trade every day. What we talk about in these negotiations, and
it has been true for successive negotiations, is often capturing
what people have done unilaterally, particularly on the part of
the major players I should say, and extending it wherever possible,
of course. I do not mean to diminish what is achieved over successive
Rounds which have often cut tariffs, bound tariffs by a third
and a third again and a third again. Logic tells you that has
an effect. The Organisation is not the custodian of trade liberalisation;
trade liberalisation occurs globally every day. What we talk about
in the WTO is capturing that, ensuring that the benefits are extended
to all, that it is implemented in a way that is non-discriminatory
and, of course, as an adjunct to that a system of rules that ensures
in areas like trade remedies that the capacity for people to reverse
engines, to move into protectionist mode, is limited in some fashion.
You are quite right, having a trade liberalising component to
the WTO is important for the political support that the Organisation
has, particularly in places like the United States, but not just
there. Let us not imagine that if the Doha Round fails trade liberalisation
is going backward by any means, which maybe does not answer your
question I must admit. I agree with your general proposition that
a failure of the Round and the uncertainty it creates over the
capacity of the Organisation to produce market access improvements,
lower bindings on tariffs, improvements to rules that affect day-to-day
trade is a problem. Whether that manifests itself in enhanced
protective activity is a different sort of proposition.
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