Non-Trade Impacts: The Search for Policy Balance

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Non-Trade Impacts: The Search for Policy Balance

Dr. Derrick Wilkinson, Trade Policy Adviser, London

In January, the European Commission published an informal discussion paper, "THE NON-TRADE IMPACTS OF TRADE POLICY - ASKING QUESTIONS, SEEKING SUSTAINABLE DEVELOPMENT". It is a product of the dialogue with civil society initiated by Pascal Lamy following the collapse of the Seattle Ministerial. This 30-page paper covers many of the most contentious issues facing trade policy makers. In so doing it offers an olive branch to most of the NGOs with an interest in trade policy matters. It will come as little surprise, however, that it offers few specific conclusions, serving mainly to show that the multitude of issues are often pressing policy in conflicting directions.

That may be part of Lamy's cunning plan: get the opposition all together, accept the validity of their concerns, and let the resulting confusion of interests provide a convenient excuse for proceeding to do precisely what he wants. Regardless, it provides a good overview of the pressures that NGOs are placing on trade policy makers, and of the environment within which further WTO negotiations will take place.

The paper begins by examining the various ways by which trade can affect sustainable development (as defined in the Brundtland Report, 1987) and argues the importance of finding a balance between international trade liberalisation and domestic regulation. With free trade thus a necessary but not sufficient condition for sustainable development, the paper goes on to explain the need for any WTO negotiations, including the built in agenda, to be subject to "sustainability impact assessments". These SIAs will be ongoing throughout trade negotiations, the paper suggests, and will be made public.

Throughout, the paper struggles to find the fine balance between trade liberalisation and regulation. For example, multilateral trade liberalisation and the WTO are seen as necessary for sustainable development, only if accompanied by "non-trade flanking measures" - often completely outside the WTO's remit. Quite rightly the paper argues that one of the most critical elements in ensuring that the right balance is found is greater transparency in EU and WTO trade policy making. Interestingly, it does not seem to recognise that sometimes too much transparency can lead to policy-making paralysis. Again, it is a matter of finding the right balance.

Some of the suggestions for increasing transparency in trade policy making are relatively benign, such as greater derestriction of WTO documents and enhanced contacts and information exchange between the WTO Secretariat and NGOs. However, opening TPRM meetings to parliamentarians and NGOs would be contentious. Even more so would be setting up a WTO Parliamentary Consultative Assembly, and especially a formal accreditation system for NGOs.

Unfortunately, while the paper reviews a number of specific issues, few suggestions are made about where the balance between liberalisation and regulation should be drawn. The section on trade and the environment, for example, contains nothing new; merely recalling that "the Community... argued that sustainable development should be the underlying objective of a New Round of trade liberalisation negotiations and for environmental concerns to be mainstreamed throughout". Similarly on trade and labour the paper argues, "there is a need for better understanding of the relationship between trade liberalisation, job creation and the fight against poverty, including its gender dimension. Institutions such as the ILO, WTO, UNCTAD and the World Bank should take part in such a dialogue."

Interestingly, the paper does refer to the need to increase technical assistance and capacity building in developing countries to help address the sustainability impacts of any additional trade liberalisation, but that technical assistance has been "disappointing so far and improving it is a matter of the highest priority." For this reason, "over the next year, the Commission intends to boost its trade-related technical assistance in both quality and quantity."

The paper concludes with a brief examination of nine areas "where post-Seattle debate has identified a strong potential link (and sometimes potential conflict) between trade policy and sustainable development": agriculture, fisheries, textiles, health, TRIPs, PPMs, MEAs, precautionary principle, and corporate social responsibility. As throughout, the paper remains strong on noble intent and short on specifics. The section on agriculture, for example, largely relies on reviewing the well-known shift underway in Europe from production-related supports toward payment based on the delivery of environmental objectives. To be fair, the paper does make an interesting distinction in the discussion on multifunctionality: that it is not about identifying payments and penalties for externalities, but about how to ensure the necessary incentives are in place for the delivery of public goods. Regrettably it doesn't take this idea further to see whether it is practically helpful or not.

Similarly, the paper poses a twist on the debate about how to accommodate PPMs in trade rules. It notes first that "cloning technology has the potential to produce 'like products' par excellence yet it would be a brave policy maker who would renounce all rights to control trade in them on the grounds that to do so would run counter to WTO rules." However, it acknowledges that tweaking the definition of "like product" could be dangerous. Accordingly, the paper argues, "the question could be posed as to the extent to which the fact that the application of any given process or production method cannot be detected in the final good also means that it is not related to the final product. To millions of people in both the developed and developing countries certain process and production methods can be extremely important: for the people concerned, they are not only related to the product but a quintessential part of it even though they cannot be detected. They could be said to comprise Related but Not Detectable Process and Production Methods or RNDPPMs."

Much of the rest of the paper, while providing a useful review of the issues, contains little new. We learn that the Commission believes that measures based on the precautionary principle "are a priori compatible with WTO rules", and that in the area of trade and corporate social responsibility developments "are going further and faster than the general public may be aware." Beyond that, we will have to wait until the spring of 2002 when "the Commission plans to come up with proposals for a sustainable development strategy for the European Union as a whole." Perhaps that will contain a little more clarity about how to transform all these laudable objectives into practical policy options. Until then, the dialogue with the various constituents of civil society will remain an interesting if rather unfocused sideshow.

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