The WTO and the EU post-Cancún

A submission by Federal Union to the House of Lords European Union Committee (Sub-Committee A)

1. The failure of the recent summit at Cancún should be an occasion to consider the direction in which global trading policies are going and the way in which they are made. Federal Union welcomes this opportunity to contribute to the debate.

2. Federal Union is an NGO founded in 1938 that campaigns for federalism for the UK, Europe and the world. It argues that democracy and the rule of law should apply between states as well as within them. Its conception of federalism is the division of political power between levels of government to achieve the best combination of democracy and effectiveness.

Formulation and co-ordination of the EU’s trade policy

3. Participation in global trade negotiations is a good example of the kind of issue for which the EU was designed. It is an area where the 15 member states (soon to be 25) can have much more influence by acting together than they could if they tried to act individually. The G21 group of countries has proved how much more influential collective positions are than individual ones.

4. The EU is unique among international organisations in that it has a permanent set of institutions to identify and represent the common European interest, as distinct from the interests of each individual member state. The Community method of decision-making involves the European Commission as an executive independent of the member states, the European Parliament as the directly elected representative of the citizens, and the Council of Ministers to represent the governments of the member states. This triangle of decision-making is the reason why the EU has been such a success: compare the last fifty years of European history with the previous fifty.

5. It is no accident that the most successful areas of EU policy, such as the single market and environmental protection, have been conducted according to the Community method, while the less successful areas, such as foreign policy, have been more intergovernmental. If EU trade policy is to be effective, it must remain subject to the Community method.

6. This does not mean eliminating a role for the member state governments. They remain represented in the Council of Ministers, which has to agree the negotiating mandate. What it does mean is that the lead role at summits is taken by the European Commission. If this is not the case, proper coordination between the EU’s trade and other external policies will become impossible.

7. The concern is often expressed that the European Commission, in exercising its external negotiating role, might not be sufficiently legitimate and accountable. To the extent that this concern is valid, it can be met by strengthening further the connection between the European Parliament and the European Commission. The political colour of the Commission should be influenced more strongly by the results of the elections to the European Parliament. For example, the parties should nominate their candidates for president of the European Commission along with their manifestoes for the elections this coming June.

The structure and procedures of the WTO

8. In some ways, the WTO has a similar mission to that of the EU: to break down trade barriers in order to increase the prosperity of the citizens of the member states. It also faces some of the same criticisms, too.

9. The fact that the summit in Cancún failed to reach agreement should not be taken as a disaster. Intergovernmental decision-making is difficult and ponderous. That is a good reason why the EU has adopted the Community method in order to take decisions. The WTO has a much broader membership and so reforms to its decision-making systems will be harder and slower, but nevertheless there are some ideas that can be contemplated.

10. To the extent that the WTO finds it hard to reach compromise decisions, some kind of stronger leadership is needed. Rotating presidencies are fraught with danger – accidents of the alphabet can have all kinds of unwelcome consequences for crucial meetings. A stronger permanent secretariat makes sense.

11. A second criticism of the WTO lies not in its effectiveness but in its legitimacy. There is a widespread perception that its decisions are too secretive and distant. There is truth in this argument: negotiations must by definition take place in private. But that does not mean that the debate must take place in private.

12. Federal Union proposes that the WTO should establish, alongside its ministerial meeting, a consultative parliamentary assembly. The members of the parliamentary assembly should be seconded by the parliaments of the member states and should address the same issues as are on the agenda of the ministers. In the first instance, the parliamentary assembly should be purely consultative (that is why it is a parliamentary assembly and not a parliament) and so would not have a formal role in the decision-making procedures of the WTO. It would have influence to the extent that its arguments and conclusions had force.

13. Reinforcing the legitimacy of the WTO as a whole will become increasingly important as the global trade agenda spreads. It is moving from specifically financial questions to issues which are more of a moral or cultural significance. For example, the use of genetically modified organisms in food production or the protection of cultural identities cannot be treated purely as economic questions.

14. The proposals for asymmetric trade liberalisation – by which poorer countries might be permitted to retain higher trade barriers than richer ones do – needs to be accompanied by greater transparency if it is not simply to be seen as a vehicle for defending protectionism. Open parliamentary debates will be a means of ensuring this transparency.

15. Lastly, the stronger role for the secretariat referred to earlier requires stronger mechanisms of accountability, too. The Director General of the WTO could appear regularly before the parliamentary assembly to answer questions and explain decisions.

The future of EU trade policy

16. The EU is a significant force in world trade and therefore its policies on the subject are of vital interest. They deserve to be a central subject of the forthcoming elections to the European Parliament. The EP is currently required to give its assent to all external treaties and has the right of co-decision over many, but not all, the legislative and budgetary decisions that might flow from them (agricultural spending is a glaring exception).

17. The EU’s experience in developing an international system for regulating trade (not, as many people seem to think, de-regulating trade) has been of unprecedented success. Its institutional structure, including an independent court to resolve disputes, has helped Europe reach an unprecedented level of stability and prosperity. It should seek to advocate the same methods for the WTO as well.

18. In short, the trend of future reform should lead the WTO to become more like the EU, and not, as is sometimes suggested, that the EU should become more like the WTO.

Brendan Donnelly, Chair
Richard Laming, Director
12 January 2004

More information

House of Lords European Union Committee (Sub-Committee A)

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