TCS Daily


"Oh Woe" the WTO

By Alan Oxley - May 11, 2005 12:00 AM

MELBOURNE, Australia -- If corridor gossip in Geneva is right, The WTO is about to become the "Oh, Woe" or the "Whoops, there we go again" World Trade Organization. Pascal Lamy, the former EU Commissioner for Trade, seems likely to be selected as next Director General of the WTO.

Those whose interests will not be served if he is Director General -- like most of the US economy -- are not blocking consensus to support his candidature. The US Trade Representative's Office should be pushing back.

Trade negotiators consider themselves more knock-about types than diplomats, but the WTO is still on the international cocktail and conference circuit. Suaveness can go a long way. Pascal Lamy is suave. It is why he has emerged as favorite to be declared the Director General later this week.

This is not cat calling. Lamy is good. He has substance. But it is the sort of substance that consistently gets Europe into trouble and separates the US from Europe. He is one of those European (no, French) thinkers to whom principles are an intellectual inconvenience, not a reference point.

Last year Lamy wrote a paper on trade policy that accommodated the case for globalization and the case against. How do you do that? Create an incoherent idea and claim it does both. His idea was to allow national governments to set solemn international legal commitments to free trade aside where "collective preferences" of a nation, however determined, decree that should occur.

This style of thinking doesn't seem to matter in the EU. Adopt a European currency. Set rules about how much debt countries can have so the currency isn't undermined. Then ignore them. Expand the European Community with its Single Market to ten new members. Then deny workers in those countries freedom to work in any country in the Single Market.

Getting by is what matters in Europe, not the basic principles. This has always been the EU's approach to the WTO. It values the WTO as an organization to manage awkward trade problems with big players, like the US, Japan and now China, not as an organization to require big players to stick to the free trade rules.

So when the EU bows to pressure from the World Wide Fund for Nature to overturn free trade rules to use trade coercion to enforce environmental standards or from organized labor or Oxfam to use trade coercion to enforce labor rules, it calls on the rest of the world to go along. It doesn't tell those NGOS that WTO rules don't permit that.

So why should India, China and the US be content to have as boss of the WTO someone who believes that?

India and China might calculate that Lamy will trim to meet their interests. If they do, they make a major mistake. Trimming may well mean accommodating NGO policies to punish developing countries for not adopting their labor or environmental standards; or turning back commitments to remove quotas on garments and textiles; or limiting liberalization of agriculture to meet European social standards.

Maybe they calculate that he will weaken the capacity of the WTO to enforce sound intellectual property standards and exempt developing countries from the obligation to reduce tariffs. If his track record is to accommodate, not resist, that may well happen.

"Oh, Woe, the WTO" will certainly be the result. Everybody will be losers then.

Alan Oxley is former Chairman of the GATT and host of the Asia Pacific page of Tech Central Station.

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