Examination of Witnesses (Questions 484-500)
Ambassador Don Stephenson
11 JULY 2008
Q484 Chairman: Thank
you very much for coming. It is very kind of you because I know
you have had a few other things to do today! If I may just recite,
as it were, the conventions of the Committee. We take a full transcript.
When you have cleared the transcript we put it on the website
and all evidence will be published, along with the report. We
understand that you do not appear as a representative of the Canadian
Government, that you are appearing in your WTO capacity and, indeed,
it is in that capacity that you are going to be terrifically useful
to us. My first question is what was in the NAMA paper that was
published last night and, without wasting your time with the detail,
does it meet what the United States and Germany have been hoping
for, or are there problems all over it? That is my general opening
question.
Ambassador Stephenson:
Thank you for the privilege of appearing before you. What was
in the paper? In the paper was a reflection of the state of the
discussion in the negotiating group, the best I could read it.
In particular, there was a reflection of further convergence on
many of the issues, including some extremely important ones, and
some quite minor things but things that needed to be off the table
by the time ministers get here, things like how long is the implementation
period for the Round in respect of the NAMA negotiation, how big
is the mark-up for unbound tariffs, before you apply the formula.
For most members they are trivial matters but still need to be
resolved and are important for some. I would have said with respect
to the paper last night, one of the substantial pieces was pretty
near full consensus on the basic structure of the trade-off between
the coefficients in the NAMA formula and the flexibilities for
developing countries, the so-called sliding scale, that the lower
the coefficient goes the higher the flexibilities go, and there
are choices for developing countries. That is an important piece
of architecture to allow everyone to find their happy place in
respect of the final outcome. I believe that is now fully signed
off. There were two or three other key issues, particularly for
the key players in the negotiation, the first being the treatment
of Mercosur—Brazil, Argentina, Uruguay and Paraguay. This
was in reference to the calculation of their import volume for
the purpose of calculating the cap on their flexibilities in relation
to trade volume. They made two arguments, that members accepted
at least at some level that because they are a Customs Union and,
therefore, will be submitting to some extent a common list of
flexibilities to keep their common external tariff common, they
would individually be benefiting from less flexibility than other
developing countries. They made various arguments but, to give
you an example, when we were talking about ten per cent of tariff
lines as flexibilities to an individual developing country, Brazil
was making the argument that because they had to share some of
those lines with their Customs Union partners they were only getting
the benefit of six or seven per cent of tariff lines that would
have been their own first priorities. Members accepted that argument,
at least to some extent. They also accepted the argument that
Brazil and the rest of the Customs Union were further being capped
in the use of flexibilities by the trade volume of the smaller
members because when you hit the volume cap you can no longer
take advantage of the tariff line cap. Those arguments were accepted
by the other members and this document reflects an agreement that
all of the members of Mercosur may use the trade volume of the
largest member, that is to say Brazil, in respect of the calculation
of the volume cap. That goes a long way to addressing the concerns
of the other members of Mercosur, including Argentina, which may
be meaningful to a final result. I would say that agreement around
that, and in a text agreement means there are no brackets, and
no brackets on that part of the text is an important step, I would
say. The next issue that is very meaningful is the provision for
what they call in Europe anti-concentration. That is also in a
paragraph. I felt confident enough to propose, without a bracket,
that there be some further amplification, further definition of
that provision. In the original mandate stemming from the Framework
of July 2004 there was a sentence in the mandate that said: "These
flexibilities available to developing countries may not be used
to exclude entire HS chapters", that is to say enter industrial
sectors from the tariff reductions. There has been a debate since
then about what does that mean and most of the time through that
debate the legalistic interpretation has been made, that is to
say excluding even one tariff line from the HS chapter would be
sufficient to satisfy the requirements, at least in a legal sense.
If you have interests, for example, in the auto sector and you
exclude one line from chapter 87, which is the chapter involved,
that line could be baby carriages or golf carts and by that definition
that would satisfy the requirement. More recently, in the discussion
members agreed almost unanimously that certainly the spirit of
that provision takes you past one tariff line. Perhaps it does
not take you all the way to the European suggestion that it be
50 per cent of tariff lines, but somewhere between one line and
50 per cent of lines there must be some conclusion. I took a step
on that issue by removing the brackets from a provision that we
have been working on, however I put no numbers at all because
members are not nearly close enough in respect of how they define
the provision. In the debates in recent weeks some have spoken
about the spirit of the provision, others good faith implementation
of the provision, some have spoken about de minimis and then argued
about what that would mean. By the way, if you were to closely
examine this provision there are two provisions, the number of
tariff lines that must take the full formula cut and the volume
of trade in the chapter that must take the full formula cut. Those
are very different and some of the simulations we have done both
in the WTO for the Chairman or individual members clearly demonstrate
although the results are different for each chapter, for each
industrial sector, and they are different for each member, because
every member has a different tariff schedule, clearly those numbers
are very different, in some instances five per cent of trade volume
in a chapter could represent 20 per cent or more of tariff lines
and the per cent of trade volume could represent 50 per cent of
tariff lines. In the final negotiation of that issue, which I
trust will be when ministers gather the week of the 21st, and
they agree some numbers for those brackets, I expect them to be
two different numbers and you should consider them both very carefully.
The next issue that I would point to as important in respect of
this text would be the issue of the treatment of sectoral agreements.
As you know, there are proponents for agreements in specific industrial
sectors that propose to go further than the formula cuts in that
particular sector. These proposals are made by individual sets
of countries' proponents who are trying to attract on a voluntary
basis the participation of other countries and to reach something
that they refer to as a critical mass of world trade agreeing
to participate. In my last text in May there had been a proposal
to create a hard link, a mechanical linkage, between agreement
to participate in sectorals and the coefficient in the formula
for all tariffs. It was a kind of credit system: participate in
one sectoral of X size and you get Y reduction in the coefficient
in the formula. The discussion since the last text moved away
from that mechanical linkage. Frankly, it is extremely difficult
to articulate in a way that satisfies all interests. As I say,
all members are different, they all have different levels of interest
in particular sectors, they all start from a different starting
point in the race. It is very difficult to come up with a mathematical
formula that would capture everyone's possible interest and sensitivities.
The discussion moved more towards a soft link, what some referred
to in the debate as a political linkage, between agreement on
sectors and the level of ambition in the formula. That is what
I have now described in the document. For those of you who follow
this negotiation too closely, it moved in the document, so if
you do not find it in paragraph seven at the end do not panic,
read the beginning of the sectoral part of the document in paragraph
nine. It is a very obvious linkage that is being made. It says
that some members will include the results in sectoral agreements
in their calculation of the overall balance in the deal, including
what goes on in the formula. That is a very sensitive issue for
many members who believe that the basic balance does not include
the sectorals. I have always said in the negotiating room, so
I am not shy about saying it here, that in my own view it is impossible
to separate these things. I admit that there should not be a hard
linkage but there is obviously going to be a soft linkage because
both the formula and the result of sectoral agreements speak to
the same simple point, and the point is, "What am I getting
in relation to what I am being asked to pay?" When we are
finished with all this nonsense of building the perfect modalities
for submitting schedules, the only question anyone will ask themselves
is, "What am I getting in relation to what I am paying?",
although even as I say that perhaps I would amend it by saying
in this negotiation there is one other question we are supposed
to ask ourselves, and that is "Does it all pass the red face
test on development?" I would point to those issues as the
most important things that go on in the document. I have not changed
any of the numbers, any of the ranges in respect of the formula.
That is because most members can accept those numbers as the basis
on which to negotiate and in respect of those few who indicated
that they cannot accept that, they proposed no other numbers that
reached a consensus, so I had nothing to replace these numbers
with. The document is very substantially thicker now because it
includes all of the detailed proposals on sectoral agreements
by the proponents, so they have been attached. They were to be
submitted by the time we agreed these modalities, so now we have
them. The final issue I would draw your attention to with respect
to the modalities is recently acceded members, and in particular
those recently acceded members who will apply the tariff cutting
formula. There are four of them. The one that everyone is watching
is China, being such a large trader in respect of NAMA. In respect
of China the current state of the debate on recently acceded members
is that there is a footnote in my text which indicates that at
the time the formula is agreed members will consider the matter
of whether further flexibilities are required for these members,
including China. China's position, and it has been very agreeable
to all the other members, has been, "Why don't we talk about
this later when we know the level of ambition in the formula?"
and then both sides will see to what extent it would be necessary
or agreeable to provide further flexibilities to one of the world's
largest NAMA traders. The provisions were simplified in respect
of the one provision that everyone agrees on for recently acceded
members, and that is a longer implementation period than other
members. In the previous texts there had been provision both for
a grace period and a longer implementation period than other countries.
In the last text two or three years of grace on a line-by-line
basis, either a two year grace period since you complete your
accession obligations or, in the Chinese version, since January
1 2003 that same provision would apply. The difference between
those two options on the grace period was something like a couple
of tariff lines or 2,000 tariff lines being involved. Members
agreed that was rather a wide range to hand to ministers to grapple
with, so they widely agreed that perhaps just the longer implementation
period should be negotiated and the grace period was dropped altogether
in the text last night, but the range for longer implementation
moved slightly towards the longer end. In my last text that range
was two to five years and in this text it is three or four years.
We dropped the numbers off the bottom and the top. In the case
of China, the implementation period would be the ten years agreed
for developing countries plus three or four. As I say that I would
like to make it clear that there are tariff reductions beginning
in the first year. We are not waiting 14 years for tariff reductions
to begin in China. I have heard the provisions of my last text
described in that way sometimes. What this means is that instead
of dividing the total tariff reduction that is required by ten,
you divide it by 13 or 14 but it begins in the first year. Those
are what I would describe as the principal issues and where they
stand in this text.
Q485 Chairman: Professionally, Ambassador,
having been in charge of this process, are you sufficiently pleased
with progress to think that it will bring the Americans along?
How good shape do you feel you are in for the Ministerial, I guess,
is the Committee's question?
Ambassador Stephenson: I think what shape
we are in in respect of the Ministerial goes well beyond the United
States and, in relation to your question at the beginning, well
beyond Germany. It does deal with issues way beyond NAMA and the
balances that have to be struck. I do feel that we are in better
shape for the Ministerial in the sense that there are more issues
that have been resolved and taken off the table for their discussion,
which is critically important. In two, three or four days of ministerial
discussion there are only so many hours, with five minute interventions
on each of the issues by 30 or so ministers, the math becomes
rather simple and too many issues will not fit. Moreover, there
are some key issues that will drive resolution of the others.
I think this text removes some of the issues for them, although
obviously on a tentative basis because nothing is agreed until
everything is agreed in our business. It does make most of the
issues a matter of the numbers and not the architecture, so the
negotiation before ministers is relatively straightforward. It
makes most of the options on the issues very clear, ministers
pick A or B. We are in better shape, but I do not think we are
in the best possible shape. Both the Chair of Agriculture and
I have committed to use the time remaining before the Ministerial
Meeting on the 21st to try to resolve further issues, in particular
the issue of the treatment of preference erosion in both agriculture
and NAMA. In agriculture it is closely linked to the treatment
of tropical product. We will do further work next week to see
if we can get those issues fully resolved for ministers. We can
still do better in the few days remaining. I am feeling not too
bad about the shape the text is in now for ministers to deal with.
With respect to the issues of principal interest to the United
States, the overall balance in the market access, is it ambitious
enough, and, in particular, including sectoral agreements is it
ambitious enough, the text allows for a result that they could
agree with. I do not take this as my own judgment, I take it as
a reading of what they have said in the negotiating room. They
have made it clear that at the bottom end at least of each of
the ranges and numbers, including some key sectoral agreements,
they could perhaps agree to an outcome in this text. They have
made it clear that at the high end of the range and all of the
numbers and without sectoral agreements they probably could not.
Certainly the text allows for a possible outcome. With respect
to the concerns of Germany, as I understand them, because they
are represented in my discussion by the European Commission, the
anti-concentration provision is one of keen interest to Germany.
I think that the text now provides an architecture in which that
debate can be engaged by ministers in ten days' time.
Q486 Lord Maclennan of Rogart: Thank
you for that very fascinating account. Arising from what you said,
that nothing is agreed before everything is agreed, is that within
the self-contained NAMA package or could it be skewed by what
goes on in the discussion on agriculture? Secondly, you said that
there was agreement all round to talk about China later. Does
that agreement include the United States, which is usually rather
sensitive to the Chinese questions? I would be interested to know
how that pans out. Thirdly, were there any significant non-tariff
barrier issues being considered in the discussions? Fourthly,
and this is really a repetition of the question about America
but in another way, you said there are a lot more issues than
that, but all the evidence we have been getting has suggested
as far as America is concerned their stance on the agricultural
package could ditch the whole thing and if they are not going
to ditch the whole thing they are going to have to have something
to sell. I suppose I am really asking whether you can add anything
to your judgment of whether they have got enough to sell.
Ambassador Stephenson: Let me take the
easy parts first! With respect to the single undertaking, nothing
is agreed until everything is agreed both in NAMA and the Round
as a whole. Although we are now working to try to reach an important
milestone in agriculture and NAMA, that is to say the rules for
preparing your tariff schedules and then the examination of schedules,
until all parts of the negotiations are completed, we hope towards
the end of the year, and until we are ready to agree a single
undertaking on it all, none of it is a legal undertaking. I would
say that there is an important balance inside NAMA. I think I
described the formula in sectorals as one of them, but there are
others that need to be reached or there is no deal in NAMA, and
beyond that it is all of the rest. With respect to China and the
comfort level of members to take up the issues of China finally
at the end, my judgment is that the United States can accept my
footnote and that approach. I would not say that they are entirely
comfortable, nor perhaps are any of the members, until that discussion
is engaged and concluded. China is a tremendously important NAMA
trader and of keen interest, if not sensitivity, to almost every
member. I would certainly say that is true of the United States
and from my observation I would say it is true of Europe, but
that is perhaps the one consensus in the entire membership. With
respect to non-tariff barriers, I should have perhaps included
them in my opening remarks about key issues, but they are to be
negotiated in a second stage of the negotiation. What is of interest
in this text is that there is a wide convergence, it is not a
full consensus until the negotiating group actually signs off
on it, on a narrower list of proposals that have been made as
the ones that deserve particular attention, that is to say they
are the priority issues for the negotiation. They are listed in
my document and there are six or eight of them, beginning with
the one that enjoys the widest support, very, very broad support,
and that is what has been referred to as the horizontal mechanism.
It is an arbitration procedure for future NTB disputes. At the
moment the problem with NTBs is you are faced with either raising
the issue in the dispute settlement system, which is lengthy and
costly, and not well-suited to an NTB dispute that may involve
goods sitting at a border, or the standing committees and, again,
they do not meet very often and have no strong arbitration system.
This is to provide a mechanism in-between those two options. I
would say that the list we now have is a very realistic list.
In my experience in two and a half years in the chair, non-tariff
barriers get the best speeches and the worst proposals. Everyone
will tell you that tariffs are no longer the central issue in
respect of market access, it is the other kinds of barriers, but
when you ask members to define those barriers and their proposed
solutions, they struggle. That is an observation I have made about
NTBs.
Q487 Lord Maclennan of Rogart: Do
they deal with the treatment of labour and that sort of thing?
Ambassador Stephenson: No. They deal
mostly with sanitary and phytosanitary rules, technical barriers
to trade. They deal with trying to agree international standards
instead of having to deal with everyone's national standards,
and how those are administered through recognition of conformity
of assessment and things like that.
Q488 Lord Moser: I want to ask you
something about the possibility of a breakthrough, but before
that can I ask one question about your initial statement on the
contents of the paper. I think I was following you when you were
describing the complexity of the linkage between all the different
numbers, and I think you used the word "mathematical"
at one point. I was intrigued by the change from hard to soft
linkages. To me that could mean one of two things that are quite
different. One could mean that instead of the linkage being in
precise numbers, it could be in precise numbers with margins of
error, so to speak, so the hard becomes soft because there is
a range, or it could mean something quite different, namely it
could remain hard numbers, precise numbers, but less commitment
to agree to everything. Which of those two things did you mean?
I am sorry to be stupid.
Ambassador Stephenson: As I have often
said in the negotiating group, sometimes if you are not confused
you are not paying attention! With respect to the hard and soft
linkages, the soft linkage does not mean a wider range of numbers.
In this instance it means simply language in the text that signals
to other members that there is—
Q489 Lord Moser: "Don't take
the numbers too seriously"!
Ambassador Stephenson: Indeed. In respect
of the sectorals, it is only to signal that my agreement to certain
numbers on the table in respect of the formula, the coefficients
and the flexibilities that apply to the formula for developing
countries, is linked to whether or not there are going to be results
in sectorals of interest to me. That is what the text now very
clearly says. That is sensitive for a lot of members who believe
that sectorals were always intended to be top-ups, always intended
to be voluntary, therefore they were only intended in sectors
where it was of mutual interest to go beyond the formula and for
that reason principally developing countries and defensive developing
countries insisted that the decision on sectorals must be made
after there is agreement on the formula and no linkage should
be made. As the chair, I can only reflect honestly what I heard
from all of the members, and some of the members were telling
me that there is a linkage, and I think it is a fairly obvious
one, which is the one I described earlier. Those members were
saying that some time in the process of agreeing the formula,
and I suppose this now means some time the week after next when
ministers are sitting at the table in the so-called Green Room
battling out the numbers on the coefficients and the flexibilities,
they are going to get to a moment where someone has asked for
a particular number and someone else says, "Well, I can't
quite get there, but what are your intentions in respect of the
sectorals?" That may happen at the table or it may happen
at the coffee break, but I am almost certain it is going to happen.
Whether or not there is a hard link, a formal agreement, or whether
or not there are simply understandings between ministers, I do
not know. That is what I describe as "hard" and "soft".
Q490 Lord Moser: Thank you very much
for that. Looking to the end of the year, the complexity is totally
formidable, frightening almost, and in our evidence we have heard
everything from the extreme optimists saying that there will be
sufficient progress for it not to be a failure, and the fairly
extreme pessimists who say it is all quite unrealistic, this cannot
happen. We are here to learn. Taking the pessimistic view, which
I hope will not be borne out in reality, that by the end of the
year, when I understand you will have left, or so the papers tell
me, and it is some kind of failure, what does that mean for the
Organisation? What does that mean for the future of the WTO, including
its other roles of solving disputes, et cetera?
Ambassador Stephenson: With respect to
the complexity, I think that is more true of agriculture than
of NAMA. In respect of NAMA, it is more the logistical challenge
that an end of the year deadline imposes. There is a long procedure
after we agree these modalities next week or the week after. You
then have to prepare your schedules, submit your schedules, provide
time for members to examine each other's schedules, then verify
them formally in the negotiating group and finally agree. Then
there is the complexity of the other issues that may, in fact,
make the discussion by ministers the week after next somewhat
more complicated than agriculture and NAMA, issues like where
are we on services negotiations, where are we on the rules negotiations,
including very sensitive issues like zeroing in anti-dumping,
fish subsidies for some members, and issues in TRIPS like geographic
indications and CBD. There are many tricky issues yet to go. In
my experience, these things come to resolution very quickly when
people are ready. When I took the job, I was in the job for two
or three months and I complained to my chief negotiator from Canada
that things moved so slowly, and he said, "No, you haven't
understood it yet, things don't move at all until they suddenly
lurch forward". That can happen in respect of the entire
negotiation. With respect to this challenge, some members take
this to mean, particularly because of the uncertain political
situations, particularly in the United States, can this thing
be agreed by the current administration, would it face a new administration,
et cetera. My question is, what is the alternative? It seems to
me the only other alternative is simply to put down our tools
and wait until some uncertain point in the future when there is
agreement to take it up again. I would rather keep trying and
see if we can get agreement and then see what all members will
do with it, whatever their particular political situation might
be, and there are many more members than the United States that
should be of some concern to members. If there is a failure there
is a wide concern that it would do damage of a permanent nature
to the institution and in particular to the dispute settlement
system. I do not think that is necessarily true. Members do very
much value the dispute settlement system and it is still held
in very high regard by the members and I think they would do their
utmost to protect it. We would have to think carefully about the
institution. Since I arrived in Geneva four years ago there have
been a couple of interesting efforts to look at the institution
by the Sutherland Committee and a group initiated by Warwick University,
the Warwick Commission, both of which have made interesting suggestions
with respect to institutional matters, and in particular the decision
making process in the WTO. I would say that on both occasions
we skilfully avoided any real debate about those issues, always
preferring to keep our eye on the ball in respect of negotiations,
particularly if the negotiations are in a hiatus, but perhaps
in any event members should really take up those matters in a
real debate. That would be my view.
Q491 Lord Moser: In that sort of
scenario one does not have to think of a major rethink for the
WTO if the Round does not succeed totally, it will evolve but
not dramatically change. Is that what you are saying?
Ambassador Stephenson: That is my guess.
I think you need to talk to better experts on the matter than
me. It will matter very much, if there is a failure, how we failed
and on what set of issues did we fail and how acrimonious was
the failure. That will determine when we can take the matters
up again and what damage we have done.
Chairman: Indeed.
Q492 Lord Woolmer of Leeds: Can I
ask you two things, one relating to your initial presentation
and the other about your conclusions given your now wide experience.
On the first, I listened carefully to your technical exposition
doing your very best to enable me to understand it at least, but
if we were trying to explain this to the average intelligent lay
person they would not have a clue what we were talking about.
That is simply a different perspective of function in life. Taking
one sector from the perspective of two different interests in
the world, A and B, can you explain all of that? Take a sector,
automobiles or some other sector, what are the issues? When the
politicians or ministers go back home and explain why they rejected
it or accepted it, illustrating it with a sector, can you have
a stab at that in layman's language?
Ambassador Stephenson: I would not have
picked autos.
Q493 Lord Woolmer of Leeds: Or whatever.
Ambassador Stephenson: But perhaps we
should. If you take a sector that is at the top of the list of
sensitive sectors for most of the membership you might actually
have autos at the top of the list. I suppose near the top of the
list would be garments and chemicals.
Q494 Lord Woolmer of Leeds: Take
garments.
Ambassador Stephenson: Even in respect
of autos, and it provides a good example, what are the issues?
The issue is, "Am I getting any new market access?"
That is what most of the members are looking for. Also, I would
like to point out, "Am I getting a reduction in the bound
tariff, even if it doesn't have an effect on the applied tariff
and, therefore, it is not new market access" has a benefit,
has a value, and that value has recently been demonstrated by
countries like Brazil who have raised fairly significantly their
tariffs on garments and other products closer to their bound level.
A reduction in the bound level, which often times in members'
rhetoric is completely discounted as having a value, is incorrect.
I would say to the average person that the reduction in the bound
tariffs of major emerging markets and the applied tariffs in developed
countries, the reduction in applied tariffs which will still be
significant in respect of most sectors for the major emerging
markets that everyone is interested in in this negotiation, are
significant. I would say that reductions will provider greater
certainty for all sectors and they will provide significant new
market access in most sectors.
Q495 Lord Woolmer of Leeds: Secondly,
reflecting upon your experience, which is not yet concluded of
course, what role do you see for the WTO looking ahead? Given
that experience, what conclusions do you draw for the opportunities
and challenges that it will face?
Ambassador Stephenson: As to my own experience,
and if I just survive the next two weeks it is over, I would say
there are new issues in trade that we will have to deal with in
the WTO and outside the WTO that will be extremely difficult.
There will have to be greater and greater attention paid to the
link of the environment and trade rules. I would say that we will
have to pay increasing attention to the issues of trade and labour.
The issue of energy, that is to say the issue of environment twice,
issues of energy trade, will become increasingly important. Going
back to the institutional matters, we may have to consider different
approaches and putting the emphasis more on plurilateral approaches
than multilateral ones perhaps as a building block. I do not like
to make that suggestion. It was made in the Warwick Commission
report and I fear it may be true. I am hesitant to support it
because I think we do have to make the multilateral system work.
Q496 Lord Woolmer of Leeds: Did you
mean plurilateral within a multilateral framework or plurilateral
bringing together bilateral frameworks?
Ambassador Stephenson: I mean plurilateral
within a multilateral framework, although I must say there are
a number of examples where members are moving away from the multilateral
system and into plurilateral discussions, not just in trade but
in intellectual property matters and other areas because the multilateral
system is so difficult. When you deal in a room, as I do, with
152 completely different sets of interests and needs and levels
of development, it is very challenging. We do have to make the
multilateral system work because almost none of the problems can
be solved at a national level any more. I think we are going to
have to examine as building blocks more plurilateral approaches
within the multilateral system, that is part of the future.
Q497 Lord Trimble: A moment ago in
reply to Lord Moser you put the question, what is the alternative,
either press for an agreement through the remainder of this year
or put Doha on ice and wait for some time, 15 months or whatever,
until Doha can be resumed. Earlier we had evidence from someone
saying he thought it would be satisfactory to end Doha now with
an agreement that simply locks in existing tariffs and then resume
in 15 months or whatever with something that is new and perhaps
more clearly defined than the Doha Development Round. I wonder
what your reaction would be to that.
Ambassador Stephenson: First of all,
I am not certain that it would be possible to lock in the current
tariffs because the inter-linkages of the issues are too great
to make that likely. The reason that we have a Round is because
the so-called built-in agenda after the Uruguay Round failed.
There was a provision in the Uruguay Round to pick up agriculture
and services again in five years, because although a framework
had been built for those new sectors there was not that much liberalisation,
so the Uruguay Round said, "Let's pick them up and pick them
up separately as stand-alone negotiations in five years' time".
There was this odd theory, called the bicycle theory, that we
had to keep moving forward or we would fall down and hurt ourselves.
Q498 Chairman: We are familiar with
it, yes.
Ambassador Stephenson: There was also
a view that the WTO would become a permanent forum of negotiation
on issues but they could be separate. It turned out that the built-in
agenda went nowhere because you need a broader set of interests
on the table so that members can make trade-offs and find their
own interests in a balance. That is why we have a Round. I do
not think that if we, as it were, fail in this Round in the next
weeks that we will be able to agree some part of it. With respect
to whether or not we can pick up Doha in 15 months, there are
split views among my colleagues about whether you can take this
mandate, put it in the freezer, take it out, thaw it out and start
over. I suspect that is not possible. I suspect there would be
too many who would believe that the mandate was flawed and, moreover,
that the world has moved on, the set of issues has changed and
the ones I described earlier as the future are now the present.
The external environment is too important in framing a negotiation
to think that is likely.
Lord Trimble: Thank you for that. May I say,
had we had our full complement of the Committee here you might
not have survived using the phrase, "the odd bicycle theory!".
Chairman: We have a proponent of the bicycle
theory on the Committee who, unfortunately, has had to go home
early!
Q499 Lord Haskins: Ambassador, your
job in a sense every time you raise the issue of garments or baby
carts is immediately 152 officials go scuttling back to the garment
or baby cart industry to take a flavour of how this is going to
fly. In a way, you are in a great position to judge the pressures
that governments are under from business, positive and negative,
and from NGOs, positive and negative, on these issues. If you
had been doing this job 16 years go, it seems to me there would
have been quite a strong message coming forward on this range
of product areas that a deal was important. At the moment there
does not seem to be that strength. On the other hand, in Seattle
six or seven years there was a great deal of hostility to what
was going on, but that seems to have reduced as well. Can you
get any flavour from the Member States about what business is
really thinking about all this? Are they widely enthusiastic,
indifferent, or frightened because of the NGOs? What do you think?
Ambassador Stephenson: I had a two year
hiatus in my experience in trade when I was responsible for WTO
matters in Ottawa and then I left to work in the Privy Council,
left the trade issues completely and returned to them for this
job. Because of the two year hiatus perhaps it was easier for
me to see and hear a difference in the nature of the debate on
the NGO side. It has shifted fairly dramatically and it is much
less anti-globalisation rhetoric as it is, "You're doing
it wrong". It is not that trade and trade liberalisation
are necessarily bad and evil, but rather it should be done in
a particular way. That is interesting. On the one side of the
table the debate is a much more realistic and constructive one
than it has been in the past, so there is less NGO opposition.
The important qualifier on how you are doing it is, are you doing
it in a manner that is respectful of the environment, that does
really contribute to development, et cetera. With respect to the
business side of the equation, I would not describe the business
interest as strong as it was in the Uruguay Round and I would
say that for a number of reasons, or at least my guess at the
reasons. First of all, trade negotiations take over, and they
know that, so there is a kind of attitude of, "Wake me up
when it gets serious". The focus is always on the next quarter.
I would say that a lot of what we are talking about, and certainly
this is true of those with important regional interests covered
already by regional agreements, and maybe that describes NAFTA,
the gains in the round will be incremental and important. They
will be pleased with any new market access that arises, but it
is incremental gains in market access so that the interest is
attenuated a little bit by that. I would certainly say that there
is continuing and sufficient interest in what is on the table,
and I would say that despite some of the rhetoric of the business
community. It is interesting that rhetoric is not always what
you hear in private discussions with representatives of the business
community. I think that interest will be greatly increased as
we move past modalities and into sectoral agreements in NAMA and
services because it is essentially a kind of sectoral discussion
in services. What will be at issue is my sector, my business,
so there will be a great deal more attention to the detail of
the negotiation. I suppose you have already heard this in my voice,
but I take the public rhetoric of one and all with a grain of
salt. In particular, I note that the European business community
some time ago was saying they wanted a result of the Round in
respect of emerging markets to be tariffs that for the most part
were below 15 per cent and when I explained that a Swiss 20 in
the formula in NAMA would do that, they changed their position
to wanting lower than that, so I do not know. Do I sound a little
cynical? I am sorry.
Q500 Chairman: You sound judicially
like a man who is reviewing a great deal of experience. It is
very good of you to have come and shared this experience with
us. We are most grateful for that very clear exposition of where
we are at. I do wish you luck. It is the Lord's work you do, as
somebody once said to me. It would be wonderful if this Round
could succeed.
Ambassador Stephenson: Thank you for
the privilege.
Chairman: Thank you very much.
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