TCS Daily


A Growing 'Eurolateralism'

By James Pinkerton - September 10, 2003 12:00 AM

CANCUN, Mexico -- "Eurolateralism." Americans, weary of being called unilateralists, might be amused to know that others get tagged with the "U-word," too. And the Europeans really deserve to be called unilateralists. That became clear to me on Tuesday, the day before the opening of the World Trade Organization meeting here, in a place where globalization has done wonders for the local economy. Here, high-rise hotels overlooking the Laguna Nichupté vastly outnumber protestors -- at least so far.

 

The buzz on Tuesday was the European Union's "Sustainable Trade Day." This morning-through-night speechathon was convened by the EU in advance of the WTO meeting, which opens today. Why? Some say that the EU had to throw a bone to its Green constituents, quite a few of whom, it seemed, had traveled to CancĂșn to attend this meeting; Gaia only knows how much energy they consumed to get here.

 

But what's "sustainable trade" as opposed simply to "trade"? "Sustainable" is one of those all-purpose worldspeak buzzwords, a modifier that's heard anywhere that globalcrats congregate. Last year, I attended the World Summit on Sustainable Development in Johannesburg, where dozens of different definitions of the phrase "sustainable development," or SD, could be found. And so it is with "sustainable trade," or ST; it's a bliss-concept for the Green Left.

 

The EU seems to define, at least for now, ST in four ways. First, one is practicing ST by trafficking in "environmentally friendly and organic products." Second, one advances ST by emphasizing "the inter-linkages between trade, environment, and development." Third, one helps ST by "strengthening international action in support of corporate responsibility." And fourth, ST calls for the "strengthening of trade and cooperation agreements with a view to promoting sustainable development." There's that other "sustainable," SD, again. And thus SD and ST are basically the same, two green shoots sprouting from the same enviro-root.

 

ST is a relatively new phrase -- heck, its got its own Day only yesterday -- but I predict it will soon join its twin in sustainability, SD, as all things to all Greens.

 

No wonder the first two speakers at the Sustainable Trade Day contradicted each other, albeit oh so politely. One spoke for the EU, and the other spoke for the WTO and the rest of the world.

 

The first speechifier was Pascal Lamy, the European Commissioner for Trade. Don't let the arcane title fool you; the Frenchman is the EU's leader on international commerce, and so he's one of the biggest players on the world economic stage. Lamy's pitch was that ST is "a fundamental aspect of trade development." And that vision of sustainability, he insisted, should be woven into everything that the Europeans -- and, by implication, all other countries -- do when it comes to trade. After getting one's ST consciousness sufficiently raised, Lamy proclaimed that the next step was to create Sustainability Impact Assessments, or SIA's. These would lead to "the effective integration of the results of SIA's into our trade policy." But of course, SIA's could venture all over the map, as it were, disrupting WTO procedures. Indeed, on Tuesday, Lamy announced a unilateral trade action in the name of sustainability: an EU effort to stop illegal logging in the Third World. To be sure, nobody wants illegal logging, but the question is whether or not the WTO is the proper body to act against it.

 

The next speaker after Lamy was Supachai Panitchpakdi, the Director-General of WTO. The former deputy prime minister of Thailand began his talk by buttering up the NGO-types in the room; the man from Bangkok declared his heartfelt need to "pay tribute to the work of Pascal Lamy." But then he proceeded to declare, however sweetly, his differences over ST implementation.

 

Whereas Lamy had said that environmental concerns need to be "internalized" into trade deals, Supachai said that trade and environmental issues should be kept separate; that is, the relationship between trade and ST should be one of "synergy." Synergy, of course, connotes cooperation between two things; that's different from "internalization," which connotes unitary oneness. Or as Supachai put it, "The two regimes," one economic and the other ecologic, should "cooperate harmoniously with each other." But at the same time, they should "examine each other" -- which is to say, yet again, that they should keep a decent distance.

 

Indeed, much of Supachai's talk was a rather Ricardian defense of free trade, which was a brave thing to do given the nature of the audience. Since trade liberalization contributes to the more efficient allocation of resources -- for reasons that free traders, if not ST-ers, understand well -- expanded trade is a key to natural resource conservation; it's "a win-win," Supachai said. This, of course, was not what the Luddites and Green Socialists wanted to hear. Supachai's interpretation was different from theirs; in his mind, ST is a secondary matter.

 

But the deep wisdom in Supachai's speech wasn't about ST; his use of the term was mostly in politeness to a worldocratic colleague. Instead, Supachai's wisdom was the realization -- and the articulation -- that the World Trade Organization should be about world trade, not the environment; there's no shortage of environmental administrations, both at the national and international level. But as the WTO's own website notes, "The WTO is the only international organization dealing with the global rules of trade between nations. Its main function is to ensure that trade flows as smoothly, predictably and freely as possible."

 

That uniqueness isn't just a slogan; it's the carefully guarded key to the WTO's success. The WTO succeeds because it's about one thing. The moment it branches out, like some ill-fated corporate conglomerate -- think AOL-Time Warner, or Vivendi Universal -- it will become everything, and thus nothing.

 

Putting Trade First

 

Before anyone decides to "improve" the WTO through divesification, it's worth examining its track record as a single-purpose entity. The WTO was created in 1995, growing out of the worldwide General Agreement on Tariffs and Trade. And it was GATT that began the post-war boom; world commerce has increased 22-fold from 1950 to 2000. And today, international trade is a $6 trillion-a-year planetary enterprise.

                                          

With international trade as its only business, the WTO has flourished. Today, it has 146 member states, accounting for over 97 percent of world commerce. So with that much riding on the WTO's staying focused, it's understandable that Supachai's agency wants to stick to its knitting. Indeed, the WTO doesn't have much choice, because it operates by consensus. That's right, consenus. 146 countries.

 

No wonder the WTO puts a premium on procedure, so that none of its member states feels ambushed or surprised at its meetings. In their bones, WTO-crats know that if they venture too far afield, into the politics of extraneous topics, they will never achieve consensus on anything. And that will be the end of the organization's effectiveness, on trade or anything else.

 

Which is why it's distressing to see the European Union trying to sneak environmental issues into the WTO agenda. To be sure, the eco-breach was made in Novemeber 2001, in Doha, as this current "round" of trade talks got going. There, in that capital of Qatar, the EU persuaded other WTO states to take environmental considerations into account in future talks. But since then, such new considerations have counted for little, for one simple reason: most WTO members understand that trade is the only useful function of the trade agency.

 

In the Q and A session that followed both men's speeches, Lamy admitted that the EU was isolated in regard to ST. He was pushing a "Sustainable Trade Initiative," he said, even though, "We in the EU know that we have not convinced enough countries, either on the developed side or on developing side." Gee, if both the developed countries, led by the US, and the developing countries, the Third World, are against the Europeans, then who does that leave? Which is to say, the Europeans are pretty much alone on this issue. The Brussels-based EU can speak for its 350 millon citizens, maybe. And of course, they've got the Green NGO's with them. But Lamy & Co. can't claim to be speaking for the other 6 billion people on the planet.

 

And so, in fact, the EU is going it alone -- unilaterally. If the EU can't get environmental issues on the WTO agenda, it will resort to pseudo-WTO events, such as Sustainable Trade Day. And while such events might not have any force in international law, they contribute to the perception that the "world community" is being called upon to act, and so it must act.

 

European Unilateralism: A Study

 

Meanwhile, the EU is doing its thing. Some some argue that the EU actions involve, simply, the "greenwashing" of old-fashioned economic protectionism. That is, if the WTO prevents the EU from protecting its high-cost industries with tariff barriers, then the EU will come up with non-tariff barriers, such as extreme environmental regulations.

 

A new booklet, European Unilateralism: Environmental Trade Barriers and the Rising Threat to Prosperity through Trade, written by Alan Oxley of the Australian APEC Study Centre at Monash University in Melbourne, details some 40 environmental restrictions on free trade, all of which "disregard the rights of members of the WTO."

 

As an example of such green Smoot-Hawleyism, in 2002 the EU has ordered drastic restrictions on the importation of foodstuffs -- those with levels of "contaminants" that modern scientific opinion believes to be perfectly safe. Should such an action, not supported by any hard-nosed data, be counted as an an illegal restriction on trade? Non, says, the EU, it's not an economic restriction at all; it's merely an environmental restriction -- and thus outside of the WTOs's purview. But the point, says Oxley, is that if the EU economy, which represents a quarter of world output, is allowed to slap on such restrictions based on its own eccentric eco-views, then the WTO is doomed.

 

To be sure, the US is not the perfect WTO member. In 2002 the Bush administration authorized the quadrupling of steel tariffs, to be imposed for three years. Remarkably, this timeline meant that the tariffs would expire just four months after the 2004 elections. The steel tariffs were not only economically counterproducitve; they were also illegal under WTO rules. It's widey believed that the Bush adminisration knew that the tariffs were going to be struck down by the WTO, but made by the cynical calculation that such striking would happen only after Bush's re-election.

 

But these examples of Eurolateralism and Amerilateralism merely underscore the point: the WTO is a fragile entity. It's a golden goose, all right, overseeing the laying of $6 trillion worth of golden eggs each year, but it's not guaranteed to live forever. Indeed, one could say that the "sustainability" of the WTO depends upon the self-discipline of its members.

 

The bottom line is that all countries act in their self-interest. But in acting on one's own behalf, one must decide whether or not to act within the framework of law. If the laws don't matter, then one can't expect others, either, to obey them. And so the new law becomes the law of the jungle.

 

That's the bad news. The good news, as Oxley the Aussie observed, is that if one had to write a headline based on the Sustainable Trade Day, the banner would read, "EU Isolated."

 

The EU can talk a good Green game, to itself, to enviros around the world -- and not to many others. The WTO, by contrast, speaks to the world and its economic aspirations. And the lesson being taught is that free trade makes everyone better off, starting with the poor countries. That's a lesson worth sustaining.
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