Getting the Multilateral Trading Agenda Back on Track

Not only is the evidence of free trade as a fundamental means to achieving economic efficiency overwhelmingly persuasive. That system is also an agenda for justice and fairness and openness to aspirations. It is an inclusive approach. It is a moral approach. With greater economic efficiency the cake becomes bigger and there is more for all to share. Free trade also allows each participant to enjoy the full benefits of his relative strength without others being allowed to neutralize that strength in an artificial way. The multilateral free-trade system is a champion of rapid economic development for underdeveloped countries.

It is therefore doubly regrettable that the globally-organized trade system ran into more problems of legitimacy a short while ago than at any other time since the revival of free trade after the Second World War. There is no way around it. While the agenda itself is immensely strong and inclusive, it was a failure not to have been able to explain it in a way that sufficiently persuaded the increasing numbers of participants from countries with varying levels of economic development of its benefits. It was also a failure not to take the debates circulating in important parts of civil society seriously enough, thereby inadequately addressing their concerns. Having recognized these failures of persuasion and presentation, it is time to rebuild consensus and bring the system back on track again. But the new agenda must take account of recent experiences. It must not repeat the errors of the past.

Europe’s Role and Agenda
Europe is well placed to assist in building bridges and nursing some new dynamism back into the process. We have to construct the basis upon which it will be possible to relaunch a comprehensive new round of multilateral trade negotiations. Europe, and the European Union in particular, has a historical responsibility to foster dialogue and cooperation between the richer and the poorer quarters of the world. Recent experience has demonstrated this European role. One of the most important international agreements in many years, the Kyoto Protocol on Climate Change, would not exist today without the success of the European Union in keeping the developing world and the industrialized countries together in the same negotiation.

Europe should also demonstrate such negotiating skills in the trade field. My very able colleague Pascal Lamy will lead the field as far as the European Commission is concerned and that is a cause for optimism. A European agenda for a new round of talks to improve the world trading system must remain broad. We have a well-established book of rules and a functioning organizational structure. We should build on these rules and this structure to strengthen the existing system. But we should do this in a way that more clearly addresses the interests of all participants, and in particular the interests of developing countries.

Within the Commission I have been a strong supporter of our recent initiative to enhance market access across the board for the poorest countries of the world. I have been somewhat disappointed that it has so far proven difficult to maintain the highest level of that ambition. European farmers should sooner rather than later come to grips with the realities of world trade. Nonetheless, the Commission’s initiative remains important and should demonstrate the willingness of Europe to encourage what one could almost call confidence-building measures. Our general approach on issues of market access—whether on agricultural products, industrial products, or services—will be a key to our success in revitalizing the negotiating process. Europe has some soul-searching to go through here and should, hopefully, come out as leader of the pack, pushing the rest of the world to follow suit.

I also support a balanced approach to the sensitive issue of access to drugs. I subscribe to the analysis of this issue set out by Director-General Mike Moore some time ago. The Commission has been working actively in this area to promote accelerated action targeted at major communicable diseases. It cannot be questioned that there is a need to ease the flow of vital drugs to developing countries. But it would be a marksman’s shot in our own foot if we did this at the cost of discouraging investments in the drugs of the future. The approach set out in the TRIPS agreement is therefore the right one, namely, that any measures which involve restricting certain aspects of intellectual property rights should be balanced by adequate compensation. The existing provisions of the TRIPS agreement are sufficiently flexible and give clear guarantees in this respect. This agreement obviously does not prevent—and I would consider it an excellent idea—supporting access to drugs more actively via development aid budgets.

At the same time as strengthening the developmental aspect of our approach, it should also remain part of the European agenda to argue in favor of rules on issues such as investment and competition. The logic behind such a policy is compelling. The more we open our trading system, the more urgent it becomes that we have some basic rules of fair play. Some of our partners may have difficulties with this, so why not open the door to optional membership of those rules? This is not a perfect solution but it may start the process and allow all partners to take an active part in the negotiations while reserving their right not to participate at the end of the negotiating cycle.

It remains true that there is a need for a global dialogue on trade and social development. But it is equally true that such a dialogue should have a broad setting. The WTO is not the only institution to be involved in that dialogue. We should therefore pursue it in a multi-institutional setting that would involve all relevant international institutions in a solid timeframe.

We also have to tread carefully as regards trade and environmental protection. It is evident that a clarification of the relationship between the numerous multilateral environmental agreements and the WTO rulebook would be useful. But to be credible with our partners any such dialogue must explicitly rule out all possibilities of discriminatory practices or disguised trade restrictions.

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Ladies and Gentlemen, I am convinced that there is an urgent need to get the multilateral trade agenda back on track again. The greater prosperity brought to us by free trade is not a given and the risk of the world lapsing into ineffective protectionism is real. It is a duty of all policymakers to ward off this danger. We must do so not in splendid isolation, but with a subtle and sensitive feeling for the different requirements of the various partners in the process. Without such subtlety and sensitivity we shall surely fail.