EU Trade Commissioner
European Parliament Trade Committee
The DDA is going through a delicate phase, during which it is important for me to have a direct and constant contact with you. This is the first point I want to emphasise: I attach great importance to the Parliament being fully informed before and throughout the Hong Kong Ministerial. I know some of you will be there and I look forward to close cooperation.
You have all followed the negotiating process in Geneva over the last couple of weeks. I just came back from a meeting with G4 partners and with Japan and can debrief you on the latest.
We are far from where we should be in the process. We have for too long exchanged statements of political positions instead of entering into real negotiation. For too long we have had too little to negotiate about, having existed in an agricultural silo and only recently started to look beyond this. As a result we have not had time to discover potential trade-offs and to narrow our differences so as to pin down the possible deals.
Those who have forced the negotiation down this narrow path should reflect on this.
In light of this, rather than go to HK with a high level of uncertainty, and a risk of failure, the WTO members, on the advice of Pascal Lamy, decided to go for a softer landing, and one, hopefully, that will enable us to pass on to a further launch pad.
I was the last one to accept very reluctantly this scaling down of ambition for HK. But in doing so I made clear that lowering expectations for HK does not mean lowering ambition for the round as such. Lowering expectations for HK means that the key decisions will have to come some time early next year, so that the Round can end as scheduled at the end of 2006 or early 2007.
But for this to happen, our partners need to adopt a new, broader, more inclusive approach to all aspects of the negotiation. Without this, we will get no further forward.
The reason the WTO cannot afford a failure in HK is that this process is not just about trade. It is about maintaining the credibility of a multilateral organisation, it is about demonstrating that multilateralism can still play a key role in modern international politics, it is about proving that 149 members can make progress together in their mutual interest.
We also cannot afford a failure because this would damage our commitment to the central idea of the Round: to put trade at the service of development. This is why we need to top up the Hong Kong result on market access by a trade and development package.
You know the main elements of the proposal on development I have tabled. A substantial amount of time was devoted on Monday night in the informal session of EU Trade Ministers to this issue. The package I am proposing includes the following:
First, all industrialised WTO members should commit to provide duty and quota-free access to all products from all LDCs;
Second, we should adopt a package on special and differential treatment proposals to reconfirm the flexibilities for LDCs that already exist in the WTO;
Third, it is crucial that we enshrine in the WTO’s intellectual property agreements the conditions for a better access to cheap drugs against pandemics;
Fourth, we should agree on a strong Aid for Trade package along the lines of what was agreed at the Gleneagles G8 Summit. This is key to help strengthen the capacity of developing countries to trade. The Commission has set an example with the €1bn per year pledge made by President Barroso at the G8 Summit.
Let me now turn to the other parts of the negotiation.
You have seen our offer on agriculture of 28 October. The fact that we put a revised offer on the table, after waiting for over a year for the US to reveal its own initiative on agricultural domestic support, created the opportunity to move the whole Round forward. It was necessary and right to do it. And it allowed us to move to our first real negotiations at the political level on industrial goods and services, anti-dumping rules and development. Although we still face criticism, it has put the EU negotiating position on a sounder footing.
Our new offer on agriculture goes much further than we did in the Uruguay Round. It has to be seen as a whole – including our major contributions on reducing domestic support and eliminating export subsidies, assuming others do the same.
It is the most substantial offer ever made by the European Union in any trade round. It will provide substantial improvement in market access – as required under the 2004 Framework Agreement. The overall impact will be to create significant opportunities for key agricultural exporters without wiping out preferential access for our developing country trading partners. This is the right balance to strike. This is a round for all developing countries, notably poor and needy ones, not just for competitive agriculture producers who sometimes seem to want to hog all the benefits for themselves. So our offer is a substantial and credible one – not what some others would want – but in my view, by demonstrating both our ambitions and our bottom lines. It has injected a necessary realism in the agricultural negotiations. In contrast, the US demands on market access, and to a lesser extent the G20 proposals of better-off developing countries, would benefit them but would have devastating effects on the agriculture trade of poor countries in Africa, the Caribbean and the Pacific.
We have no plan to make a further offer. To do so would simply further unbalance the negotiation. The time has come for other to match the effort we have made. When there is something on the table to interest the EU in industrial goods and services, our partners will find us fully engaged.
This must mean cutting industrial tariffs as they are actually applied, as we are doing in agriculture, at the levels they exist today – not only to the bound levels agreed twelve years ago in the Uruguay Round
This does not mean going back on our commitment to ‘less than full reciprocity’ for developing countries in non-agricultural market access. This is not the case: we are not after market access in weak and vulnerable countries, and LDCs are not expected to make any new commitments to open up their markets. Nor are other developing countries expected to match the level of market opening by developed countries.
Another field where we need to stand by our economic interests are services, where negotiations are basically stuck. All members agree that the current negotiating approach based on requests and offers has not yielded satisfactory results. So we need to explore complementary approaches. I want to make clear two important points.
First, under the additional approaches we propose, countries would remain free to pursue national policy objectives and fully safeguard their right to regulate. All we ask for is equal treatment for foreign service suppliers in some sectors, not for a commitment to deregulate markets or privatise existing operators.
Second, our proposed approach does not apply to LDCs and small and vulnerable countries. Other developing countries can test the water in sectors of their choice, with transition periods as long as they need.
Those who find fault with our proposals should now enter into negotiation with me. I am not fixed to one level of ambition but I believe it is important that we create a serious multilateral and plurilateral approach to services negotiation, or we will get nowhere and I cannot conclude the Round on that basis.
In conclusion, I will do my utmost to ensure that HK registers progress as much as possible and as balanced a way as possible. The WTO will produce a draft text within days that will make clear what we may agree in HK and what should be left for later. Yesterday, we have seen a first draft progress report from the chairman of the agricultural negotiating group which we are still analysing.
I remain positive, I will defend our proposals vigorously, and I will pursue our own offensive interests to maintain the ambition of the Round as a whole. The EU has a major political responsibility to prove that further multilateral liberalisation via the DDA is both politically and economically a good thing. To some of our negotiating partners, my message is this: stop hiding behind your criticism of the EU, and making unrealistic demands. Instead enter into real negotiation with us on all issues. The alternative is to risk everything. Negotiation is the only way you can achieve your goals – and we ours.