Does Lamy stand a chance for WTO top job

Written by Malcolm Subhan | Updated: Jan 8 2005, 05:49am hrs
How can Indian exporters increase their sales to their largest export market, the 25-nation European Union (EU) True, their exports to the EU have tripled since 1990. And exports of textiles and garments are expected to rise and rise, now that the quotas have disappeared. But India is far from realising the potential of the growing EU market, according to the statement issued by Prime Minister Manmohan Singh and his Dutch counterpart, after their summit meeting in The Hague last November.

The very short hope to realising this potential is Pascal Lamy. If he is made the new head of the Geneva-based World Trade Organisation (WTO). The 57-year old Frenchman attended The Hague summit as the EUs trade supremo. He stepped down shortly afterwards as EU trade commissioner, and has since been nominated by the EU for the post of the WTOs next director-general. Given that the present head, Supachai Panitchpakdi, is from Thailand, the next DG will come from either Africa or South America or France.

Why Pascal Lamy For one thing, he is aware of the gap between Indias current exports to the EU and the potentially much higher future exports. He told this to an audience at the Indian Institute for Foreign Trade in Delhi during his first visit to India. What is more, he told his audience of exporters and trade officials how to close the gap, and thus catch up with their East Asian competitors.

Speaking at the IIFT in March 2000, Mr Lamy called for a joint effort to create a multilateral framework of trading rules which allows us to harness the globalisation process. In this way, the Indian and EU economies can prosper, the benefits of economic growth are fairly distributed throughout our societies and, thanks to sustainable development, our common environment can be preserved for future generations.

The best way to enter this promised land is to elect the man who made that promise to the post of director-general of the organisation that epitomises multilateralism in world trade, the WTO. But Mr Lamy is not a dogmatic advocate of globalisation. The EU, like India, rejected the notion that unfettered market forces should dictate our way of life, our culture and, ultimately, the nature of our society and our core values.

Unfettered capitalism, Mr Lamy told the IIFT some five years ago, is harmful to our concept of what constitutes responsible government. Both India and EU were, therefore, confronted with the challenging task of reconciling the way in which we manage our societies and values with the need to modernise and globalise.

Mr Lamy knows how to carry out this challenging task. One of his last acts as the EUs trade supremo was to launch last September what he termed a process of overall reflection on how to defend a societys collective preferences. The EU, for example, has a collective preference for food that is safe to eat. Having gone through the trauma of the mad cow disease, European consumers are wary of food that does not meet the EUs strict sanitary and phytosanitary standards (SPS). Nor do they like to buy clothes made using child labour or forced labour.

Protectionism Mr Lamy maintains that world trade has become much more complex than even 10 years before, when the WTO was set up. Although the WTO has not dodged the issue when dealing with conflicts over collective preferences, it was set up at a time of international integration, when such conflicts were less evident. Hence the need to reconsider the multilateral trading system in the light of these new issues.

Protectionism hiding behind the smokescreen of sociological jargon Why, Mr Lamy is the architect of the Everything But Arms initiative, under which least developed countries, like Bangladesh, enjoy duty- and quota-free entry to the EU market. Last year, he turned a deaf ear to the pleas of countries like Bangladesh and Mauritius, that the EU postpone the total elimination of its import quotas on textiles and clothing until 2007. How can Mr Lamy, who asked the EU governments to renew the EUs generalised system of preferences for all developing countries for another 10 years, be accused of protectionism

One of Mr Lamys last statements is a 58-page document he released last November. It is an assessment of his five years. If there is a single issue on which we have set out to make a profound and lasting difference, he writes, it is development. The aim of the Doha development round of trade negotiations in the WTO is ensuring that developing countries can benefit from trade. And using trade as a key element of every countrys drive to achieve poverty reduction and sustainable development.

What could be clearer And yet, Indias trade negotiators will probably argue that Mr Lamys fine words do not match his actions: the refusal to lift the textile and garment quotas more quickly, the readiness to launch anti-dumping investigations under pressure from EU lobbyists, the tendency to discriminate between developing countries, by granting Pakistan additional GSP benefits, for example.

Mr Lamy ,clearly, is the most high profile and experienced of the four candidates for the post of WTO director-general. He is also the candidate most likely to bring the Doha development round to a successful conclusion, and to rescue the WTO from strangulation by a multitude of bilateral and regional free trade agreements. Yet, he is unlikely to succeed Thailands Panitchpakdi next autumn. He is likely to divide the developing countries, given that his rivals for the post of DG come from Brazil, a leader of the G-20 group of developing countries, Argentina and Kenya, one of the 79 African, Caribbean and Pacific developing countries linked to the EU through the Cotonu Convention. India, informed sources have suggested, is unlikely to vote for Mr Lamy.