European Affairs

Winter 2002

 

Trade Relations
The Trade Talks Must Not Be Limited to the WTO
By Alan P. Larson

 

The agreement to start a new round of world trade negotiations at the World Trade Organization meeting in Doha last November was a great achievement. It was not predestined and it very easily might not have happened. It required a great deal of active, creative diplomacy.

Now we have to figure out how we can build on Doha and actually conclude a successful round of negotiations. If we are to do so, it will be necessary to draw some of the right lessons from what was achieved there and how it was achieved.

One of the very positive factors in Doha was the close cooperation between the United States and the European Union. I hope that Doha puts to rest, at least for a while, the notion that the United States is off on some unilateralist approach to international relations.

The U.S. delegation in Doha was very engaged and worked with all our WTO partners. On several issues, we were the brokers. We came forward with initiatives that in some cases were neither necessary nor perhaps even desirable for us, but which we saw as essential to bring the group to consensus.

On the proposal to include investment in the negotiations, for instance, it does not take too much reading into the text to see that this is one of the squishier parts of the Doha Declaration. That reflects the political reality that many developing countries expressed tremendous concern about launching investment negotiations.

Some delegations, including many from Africa, felt that they just did not have the resources to figure out what a negotiation on investment would involve, what would be expected of them, and how they could protect their interests. Others, with greater capabilities, simply did not want to have investment negotiations.

It took a great deal of discussion to agree on a text that clearly holds out the prospect of negotiations, but also very clearly indicates that more work needs to be done before there can be a firm commitment to start them.

So how do we move forward on this? One way is for the European Union and the United States to work with those countries, particularly in Africa and the Caribbean, that are concerned about their capacity to negotiate and implement new agreements, in terms of institutions, personnel, training and experience.

If there is one phrase that appears at least as often as trade in the Doha Declaration, it is "capacity building" in developing countries, on which we have undertaken a number of commitments. Champions of including investment in the negotiations, such as the European Union, have a particular obligation to ensure that capacity building is provided in a meaningful and effective way, as perceived by the developing countries.

It is important to keep expectations in check. It is not going to be easy to reach agreement among the 144 WTO member countries, whose approach to investment, and the rules governing it, ranges from the open to the restrictive.

It must be recognized that having a sound investment policy is good for a country, in that it attracts investment. It is something that developing countries ought to want. I think there are many ways in which we can work in other fora to encourage countries to take steps to improve their investment regimes on their own initiative.

The forthcoming UN summit meeting on financing for development, due to be held in Monterrey, Mexico, in March, will provide a tremendous opportunity, if we are ready to seize it. We should make a big push to get away from the usual UN agenda of commitments to devote 0.7 percent of Gross National Product to overseas development assistance and start talking about how development really is financed, which is through private sector capital flows and corporate foreign direct investment.

The United States will continue to work on investment issues in many different arenas. Investment will be a big part of our bilateral trade agreements with Chile and Singapore. We expect it to be a big part of the future Free Trade Agreement of the Americas. We shall continue with an active bilateral investment treaty program.

None of this will be at the expense of investment work in the WTO. On the contrary, it probably serves the interest of both Europe and the United States to pursue the investment agenda in every forum that we can, so that we do not load too much of the weight of what we want to accomplish on the WTO alone.

Similar considerations apply to environmental issues, which were, if anything, more sensitive in Doha than investment or the disputed subject of competition. We recognize that the Cairns Group of major agricultural exporting countries, and many developing countries, were alarmed by the specter of green protectionism, following European attempts to link farm trade to environmental concerns.

We also, however, realized that it was politically important for Europe to have something substantial on environment in the Doha text. That is why we proposed negotiations on issues like fish subsidies and market access for environmentally friendly goods and services. We felt that this would be good environmental policy and good trade policy.

It became clear, however, that that was not enough. So the United States took a deep breath and floated a proposal for a narrow negotiation on the relationship between specific trade obligations of participants in multilateral environmental agreements (MEAs) and WTO rules. That was something that we could have easily lived without, and it raised some very serious concerns on our part, but we did it because we were seeking a deal.

We worked with our friends in Europe to ensure that any negotiations on this subject would be carefully limited. Negotiations, for example, would be restricted to the specific trade obligations of participants in MEAs and would not in any way prejudice the rights of countries who were not members of a particular MEA - the United States, for instance, in the case of the Kyoto Protocol on global warming.

We worked with Europe on language that would make clear that the negotiations would be compatible with the normal, open, non-discriminatory principles of the WTO and with existing WTO agreements. We even got some more specific bilateral assurances from Europe that it would not use these negotiations to alter the rights and obligations of WTO members with respect to taking precautionary action against other countries' exports.

With those safeguards, this is a very promising opportunity for both Europe and the United States because some substantial discussions on the environment can now start. If we handle the negotiations in the right way, we can solidify the notion that there is no necessary conflict between good trade policies and good environmental policies.

This is also a field in which we ought to be looking for opportunities to cooperate outside the WTO. Europe and the United States are going to disagree on some areas, including first and foremost climate change, at the UN conference on sustainable development due to be held in Johannesburg in September.

So it is important to find some areas where we can work together, and also address some of the concerns of developing countries over their lack of capacity. The WTO text made a specific point about developing capacity for countries interested in taking their own initiatives, for example in conducting environmental reviews of trade agreements. We could share our expertise in these and other areas.

Obviously, one of the reasons that the United States and other countries were prepared to make a special effort on issues like investment and the environment was the belief that this was part of what was necessary to secure a strong commitment from Europe and Japan to negotiate seriously on agriculture.

As the negotiations proceed, there will be many eyes on progress in agriculture. There will be a lot of interest in seeing whether the agricultural negotiations fulfill the hopes and expectations that countries had when they agreed to some of the provisions on investment, competition and the environment.

Here, too, some things should be done outside the WTO. We all are aware that the so-called Green Revolution has bypassed Africa. The African countries are very interested in addressing food security needs. In addition to offering negotiations on market access and trade liberalization, for which they are pushing very hard, it is incumbent upon us to work with them on other ways of increasing their agricultural productivity. These could include

World Bank and regional development bank programs, and measures to help them use modern technology, including biotechnology, as they pursue their food security needs.

Going into Doha, we felt that the issue of public health and the WTO was potentially the most dangerous part of the agenda. Some countries, particularly African countries battling infectious diseases such as HIV/AIDS, malaria and tuberculosis, were greatly concerned that the WTO and the TRIPS agreement on intellectual property could somehow prevent them from meeting their public health responsibilities.

There was a statement that had been under discussion in Geneva for a long time that was very dangerous because it basically would have had the effect of creating a public health exception from the rules, along the lines of the national security exception.

We felt it was very important to engage constructively on this issue and to make it absolutely clear that, while we were not going to rewrite the TRIPS Agreement, there was in fact tremendous flexibility within the Agreement itself to address these concerns. One could draw attention to that flexibility, even as one underscored the commitment of all WTO members to the importance of intellectual property protection as a tool for promoting innovation and the discovery of new medicines that will save lives in the future.

We were very pleased that once it became clear to the Africans that we were prepared to address their concerns, they were prepared to address our concerns about provisions that would have the effect of gutting the TRIPS Agreement. We were also very pleased with the cooperation we developed with other countries, such as Brazil, on this issue.

We felt that we were able to develop a text that set out a strong political statement about the commitment of WTO members to upholding TRIPS, and to making sure that TRIPS operated in a way that was public health friendly, while drawing attention to the flexibilities within the agreement. This really jump-started the negotiations because it gave a very powerful and strong signal to developing countries that we understood their concerns.

I hope that Europe and the United States can work together to stress that we have now largely removed this issue from the area of public debate. With any luck, we have dispelled the notion that there is a conflict between TRIPS and what we need to do to help countries attack these infectious diseases.

That means we can now move on to the positive agenda, which is getting a global fund to fight HIV/AIDS up and running, and making sure that we are all making adequate financial contributions to it. We must ensure that we are addressing the very real capacity needs of countries as they try to develop programs to prevent these diseases, and to treat them where they have already occurred.

At the time of the U.S. Constitutional Convention in the 1780s, some people asked Ben Franklin: "What have you given us?" He replied: "Well, a republic, if you can keep it." After Doha, I believe that the world has been given a new round of trade negotiations, if we can keep it.

We have the opportunity now to tackle these issues, but there are a lot of problems. Europe and the United States cannot run the WTO. We have learned over the last few years that there needs to be a very open, participatory process. But it is equally true that unless Europe and the United States are working together, not much good is likely to happen either.

We need to work very hard on all the issues. We need to work on them in Geneva, but I think we also need to work on them in many other fora where we can build support, confidence and trust on the part of the WTO negotiating partners. We are all going to need that trust and confidence if we are to bring this negotiation to a successful conclusion. o