Trade on trial

Peter Mandelson, EU Commissioner for Trade

I was at a debate on Thursday evening about EU trade policy: is it, broadly speaking, doing the right things?

The pro case was that international trade is a good thing, enabling countries to make and export whatever it is they do best and buy the rest. Against that basic principle, the EU’s policy is to negotiate the progressive opening of markets and reduction of trade barriers around the world. The speed at which this policy can be implemented depends on the willingness of other trading partners to join in those negotiations: the suspension of the current Doha round of WTO negotiations is the consequence of a failure to agree.

Complaints of environmental or social problems in other countries were met with the answer that trade policy cannot do everything. Other countries themselves make their own domestic policy choices and some will make better choices than others.

There were several different strands to the case against EU trade policy, and the debate lumped them all together rather than separating them out properly. This was a bit unfortunate for the clarity of the discussion. Essentially the arguments against the trade policy fall into two, contradictory categories, and it only added to the confusion when individual opponents of the trade policy resorted to both of them.

The first complaint was based on the recognition that trade was in principle a good thing, and objected to the EU’s position in negotiations. Specifically, it was argued by Oxfam that the EU should make more and greater concessions to keep the development negotiations on track. Friends of the Earth argued that the WTO should have greater powers to manage trade opening to ensure that environmental and other considerations were taken into account.

The second complaint was that international trade is in principle a bad thing, for reasons of environment and also because it undermines the self-reliance of individual countries. Rather than objecting to subsidies, tariffs and other trade barriers, this argument wants more of them. It was strange to hear Friends of the Earth make this argument, too: less surprising that a British Green MEP might do so.

In the end, both of these two arguments against EU trade policy are arguments about the institutions that govern trade, not the trade itself. Taking the first objection first, it seems wrong to me that the EU should somehow be asked to go easy in the negotiations because its negotiating partners are weaker and less able to negotiate well. An imbalance in power in the negotiations needs to be tackled at source, not by trying to tidy up the outcomes afterwards.

The weak, poor countries are poor because they are weak and not weak because they are poor. The rich, powerful countries should adjust not the balance of wealth in the world but the balance of power. That way, if the poor countries so wish, they can exercise more influence in global decision-making and gain more benefit from those decisions as a result. Leaving the balance of power untouched merely perpetuates dependency: the poor countries will remain dependent on the rich for any benefits that the latter might care to pass on. Colonialism was a bad thing when undertaken formally, pace Gordon Brown, and it remains wrong as an informal practice too.

An illustration of the problem in the second argument lay in the objection by Caroline Lucas, the Green MEP, to the claim in the “What has Europe ever done for us?” animation (which you can watch here) that the EU has brought both environmental protection and cheap flights. The second of these counter-acted the former, she said. Nonsense, of course. It’s not cheap flights that cause pollution, but flights, however much they cost. It can’t be a good thing for flight prices to remain high because of bureaucratic obstruction and a lack of competition and innovation in the airline business. If there are externalities, such as carbon dioxide emissions, then these should be priced into the cost of flying. The cost of pollution should be reduced by direct and targeted measures rather than indirectly by exploiting national borders. (This is the argument against oil, rather than against foreign oil.)

(As an aside on the airline problem, there was an interesting article in the Guardian earlier this week arguing that a common European air traffic control would reduce flight times and therefore carbon dioxide emissions by allowing for more direct routes and less stacking. Fuel is wasted because of the retention of a national system. Where do the Greens stand on that, I wonder?)

I should add in a word from the sponsor. The debate was organised by the European Movement in Brussels as part of its Speak Up Europe programme. There will be more events along these lines in the months to come. There will be more reports on this blog, too.

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