Pascal Lamy, the European Union?s chief trade negotiator, is a hard man to catch up with. One hapless British journalist could interview the Trade Commissioner only by jogging with him. Your correspondent had an easier time; he was able to interview Mr Lamy in the comfort of his office, although at 8:15 pm.
Pascal Lamy has been extremely busy meeting the trade ministers of developing countries in preparation for the WTO ministerial meeting in Cancun, Mexico, in September. He was in New Delhi in mid-March, for talks with commerce minister Arun Jaitley, and in the Laotian capital, Luang Prabang, a fortnight later for a 2-day meeting with the trade ministers of the 10-nation Association of Southeast Asian Nations (ASEAN). Mr Lamy spent the weekend in Bucharest, seeking the cooperation of the 13 East European and Mediterranean countries that have applied to join the European Union, including the 10 that will be admitted to full membership in a year.
Time was when the developing countries believed that their strength lay in their unity when dealing with developed countries. Over the years these countries concluded that their interests did not always coincide and, as a result, sought to establish regional alliances. Are you seeking to hasten the process by concluding regional, even bilateral trade agreements, as with Mexico?
We are not seeking to divide and rule! However, it is clear that as developing countries move up the economic ladder, their interests diverge and divisions emerge among them. The multilateral system represented by the WTO guarantees equitable treatment for even the smaller, weaker countries and promotes solidarity.
We favour multilateralism in the European Union. But changes are taking place in the contents of trade negotiations. The days when a dry battery was a dry battery are over. Today a dry battery which is free of cadmium and nickel is good, and trade in such batteries is to be encouraged. In other words, trade issues are now value-based. They reflect our concerns over food safety and social issues, for example. I see this as a growing trend, and one which trade agreements must deal with, in order to keep markets open.
I view regional groupings, such as ASEAN or Mercosur in Latin America, as clusters of countries which share similar values and, because they have many things in common, are easier for us to address. And you must not forget that the 15 countries that make up the European Union have come together because of shared values. We are therefore biased towards regional groupings; regionalism, you might say, is in our DNA.
Are you looking, therefore, to conclude a regional free trade agreement with ASEAN?
Pascal Lamy: Two ASEAN countries, Singapore and Thailand, want free trade agreements. But at this stage we wish to establish an effective dialogue with ASEAN on regulatory issues in such areas as trade facilitation, market access and financial services. We are looking, in other words, for convergence in the rules governing these areas. We would like ASEAN to have common sanitary and phytosanitary standards (SPS) matching our own, and are prepared to offer technical assistance if necessary. Similarly, we would like ASEAN to have common banking standards and custom systems. Agreement on these regulatory issues will facilitate trade between us, thus ensuring economies of scale and investment.
Last week you hosted a 2-day conference on the future of textiles and clothing after 2005. Yet this focus on textiles and clothing suggests a sectoral approach to international trade, rather than a global approach.
Let me just say that the conference exceeded my own expectations; some 800 persons and organisations signed up for it, from around the world. Social issues, taboo at the Seattle and Doha WTO ministerial meetings, were raised by many developing countries during the two days.
I convened the conference because the elimination of quota restrictions on textiles and clothing as from 2005 presents us with a startling paradox. During the Uruguay Round of trade negotiations a decade ago, developing countries were unanimous in demanding an end to the quotas applied under the Multifibre Agreement (MFA). The result was the Agreement on Textiles and Clothing (ATC), which provides for the phased elimination of quotas over a 10-year period, ending on 31 December 2004. Now we find that many developing countries are fearful of what awaits them in a quota-free world. Let me make it clear that the ATC will not be extended, and that quotas on all textile and clothing products will definitely be eliminated. However, given that both the ATC and the on-going Doha Development round of trade negotiations will end on December 31, 2004, I see an articulation between them. In other words, negotiations on tariffs and non-tariff barriers (NTBs), covering textiles and clothing also, will take place in the framework of the Doha Development round in Geneva.
We will have to try to reach a balance between the differing demands of the developing countries. Broadly speaking, we will have to combine tariff preferences for the weakest, as sought by Bangladesh, for example, with tariff reductions for everyone else, as well as more market access for ourselves in emerging countries. We would like our exporters to be able, for example, to sell fashion garments to the small proportions of Indians who can afford them.
I know that our textile and clothing industry is demanding full reciprocity from developing countries. But the industry knows that it cannot get it, which does not prevent it from trying to secure the maximum for itself, of course. The European Union accepts asymmetry in tariff reductions.