Shortly before being overwhelmingly approved as Director General for a four-year term of the 150-member, Geneva-based World Trade Organization in May 2005, Pascal Lamy of France, who fought hard for the job, described it as “treacherous.” Lean, ascetic, sharp-witted, intense, well-read, with a passion for marathon running, Lamy who turns 60 next month, was an active Socialist, yet was approved as the nation’s candidate by conservative President Jacques Chirac. Lamy previously served in key positions with the European Union – as the staff director for EU Commission President Jacques Delors, and as the EU trade commissioner. In that job,and others he has held, Lamy developed a strong, continuing friendship with his US counterpart, former Special Trade Representative Robert Zoellick, who last year resigned as Deputy Secretary of State to join Goldman Sachs in New York. Lamy shared his assessment of world trade and the difficulties in reaching agreement for completion of the Doha Round of trade talks with Transatlantic Magazine Contributing Editor Axel Krause who has interviewed him many times over the years. The interview took place in early March, 2007 in Paris.
What is the current outlook for world trade, notably for expansion this year?
Between two and three times the (earlier) expected growth of around 3%, and there are many components, such as technology and reductions in barriers to trade.
Where is the main growth coming from?
Asia. The US is still doing pretty well. The Europeans are doing better, as are Japan and Africa, referring to volumes. But price levels in some areas are going down, such as textiles and clothing, so the overall figures can be misleading. In a cover story on world trade in July 2006, The Economist headlined: “The global trade talks have collapsed because the world’s biggest economies prefer failure to compromise…for almost five years, negotiators have haggled over what an “ambitious”.effort to make globalization really means.” Is that a fair summary of where the Doha talks stand today?
No. It was a fair summary in July, particularly if you replace the word collapse by the word breakdown. Today the negotiations have resumed at both technical and political levels. This is partly because the big shots have realized what the costs of failure would be. Looking back at the shock of the breakdown last July, they decided (the negotiations) it had to move forward. Among the 150 members of the WTO, who pushed hardest for the resumption of serious talks?
Developing countries…their voices were overwhelmingly frequent and the loudest. For you, what is the immediate question?
Whether the breakthrough we are looking for will open the way to the final conclusion of the round, particularly on a few gateway issues like agricultural subsidies and tariffs. And whether or not this is do-able in the rather short window of opportunity we have between now and the expiration of (US) trade negotiating authority. (June 30) But the negotiations are now active and working. The question is the pace that will allow us to have this breakthrough in time. How accurate is the idea that for a round-launching deal to materialize, the United States must make bigger cuts in farm supports; that the EU will have to go further in cutting agricultural import tariffs. And in return, developing countries must open their markets to industrial goods and services?
That summary is absolutely correct. Because the US is saying it is ready to cut subsidies if it gets market access in agriculture and industrial tariffs. The EU is saying it is ready to cut tariffs if its gets from the US reduction in its subsidized sectors. And developing countries, in the G20 group, OK, even if it is less (in terms of tradeoffs) and that is fine. In other words, the game now is symbolized by these four elephants, the EU, US, Brazil and India. Earlier this month in Geneva, more than 60 small and less developed nations, mainly from Africa, voiced fears that their concerns could by “bulldozed” as the big trading powers – the US, the EU, India and Brazil –try to resolve their conflicts. And trade unions have now openly complained about how they are being sidelined. What is the outlook for compromise?Clearly there is anxiety among the developing countries …to the effect that the four elephants just mentioned, are waiting for a breakthrough, but might be rushed, and I totally share this concern. That is why, in the tradition of WTO decisionmaking processes, there is nothing (for starters) like an elephant breakthrough. But every breakthrough must be multilateral; There can be no agreement involving developing countries, accounting for two thirds of the WTO membership, unless they accept it. Any agreement must be multilateral.
Have you set any new deadlines for a final accord, or is it possible that The Economist’s pessimistic observations will continue to hold – indefinitely?I haven’t fixed any deadline. We all know, and this is conventional wisdom in the WTO, that the end of June is a landmark, the time horizon everyone has in mind. Because it marks the expiration of the trade-negotiation capacity of the US and if there is not a breakthrough, or elements of one, on the table, it’s going to be much more difficult for the administration to convince Congress to extend (the administration’s) negotiating authority. And here, the problem is that people are not going to negotiate with a government that does not have authorization to negotiate. That is why the US president (George W.Bush) has asked for an extension of it. What is your impression of what is happening in Washington on this score?The US administration and the Congress, with a Democrat majority are discussing this and other, related multilateral issues. Now that Democrats have taken control of the House and that there is renewed concern over protectionist forces in Washington, how do you view the Bush administration’s current approach to the Doha round?
In my experience, and on a long-range basis, trade legislation has always been bipartisan. And if you look at the voting record of members of Congress, where you come from has much more influence on your voting than whether you are a Democrat or a Republican. This is true for agriculture, industry and other considerations. When you go to the US, do you find receptivity to what the WTO is, and trying to do?
I go there three times a year and of three days on average, I spend all of them on the Hill. Two thirds of my interaction when I am in Washington is with those who have the final say, which is Congress. That is very specific to the US. I do not talk to the European Parliament, or to the Indian or Kenyan parliaments. And I do sense interest and concern (in Congress) over economic growth, international trade, and it is an easy sell globally. But it’s a tough sale locally. And much of the difference (between global and local) lies in the quality of domestic politics. Among others, French presidential candidate Nicolas Sarkozy recently criticized the WTO for having a “tendance” of neglecting environmental problems, and he argued for the creation of a World Environmental Organization, the OME. Was he correct in his assessment of the WTO and the need for another world body?
You should read the WTO Constitution and the section dealing with trade expansion, namely with regard to sustainable development. The criticism you mention is not justified. Neither with regard to our rules which provide that environment concerns should relate to trade, nor with regard to interpretation of these rules by our dispute-settling mechanism, panels…the whole jurisprudence proves the contrary. The criticism and some proposals being made reflect France’s centralized, state-minded approach to policy. How about the proposal to establish the OME?
I share the necessity to provide more visibility to world environment governance. But those who promote that should not lead people to believe that there is no international environmental governance. There are 200 multilateral environmental agreements, each administered by a secretariat, a number under the UN umbrella, and headquartered in Nairobi. There is an international network dealing with the environment which includes the WTO concerning such areas as, for example, international aviation. How do environmental issues relate to your relationships with non-governmental organizations (NGOs)?
If you look at the Doha round development agenda, there is a specific negotiation on environmental goods and services…the agreement calls for opening trade to more environment-friendly goods and services. Constant consulting with NGOs is part of the WTO negotiation on this and other environment-related issues. The links between commercial, social and environmental preoccupations are there, as part of the Doha negotiatons. When you came to the WTO two years ago, for a four-year term renewable once, what were the main things that surprised you, that you perceived later to be different from what you had envisioned?
I did not really discover a lot. I have been in this (trade) business for quite a time. But there was the (discovery of) discrepancy between the responsibilities you are loaded with and the executive authority you are given. In contrast to national systems or the European system, you have at the WTO a big legislature, with 150 members, a big judiciary and a very tiny executive. And the organization does not operate by majority voting, but by consensus. What does consensus mean?
It does not mean unanimity. It means putting something on the table, saying, in effect, there seems to be a consensus on this. True at that point, any member can use a veto, but the burden of proof for saying no has to demonstrated. Yet changing the voting system is not really envisioned, except marginally. We will have to come back to the issue of reforms and new procedures. But after completion of the round. |
