Bridges Weekly Trade News Digest • Volume 8 • Number 31 • 22nd September 2004
EC’s Lamy Advocates Value-Based Trade Relations
In a speech delivered in Brussels on 15 September, European Trade Commissioner Pascal Lamy presented a case for consideration of so-called ‘collective preferences’ in trade relations. The speech was entitled ‘The emergence of collective preferences in international trade: implications for regulating globalisation’. Collective preferences are the end result of choices made by communities that apply to the community as a whole (in short, values). Amongst other issues, the speech offered reasoning behind the EC’s positions in areas such as clarifying the relationship between WTO rules and multilateral environmental agreements and advocating sustainability impact assessments of trade agreements. Notably, Lamy forwarded the idea of a special safeguard clause to clarify how collective preferences might be integrated into WTO rules. The aim in taking such an approach in trade, Lamy said, is to make the most of greater openness through trade liberalisation while ensuring that it does not threaten to override domestic policy choices.
While he admitted that the concept of collective preferences can be an ambiguous one, Lamy outlined a number of specific European examples, namely multilateralism, environmental protection, food safety, cultural diversity, public provision of education and healthcare, precautions in the field of biotechnology, and welfare rights. He said that different collective preferences among countries are essentially complementary; however, it can sometimes be difficult to accommodate them. Trade presents a particular challenge in this area, he noted, since the underlying stakes are considerable (i.e. the exporting countries’ offensive interests may not sit well with the importing country’s collective preferences), and trade is the only area in which there is an effective and binding mechanism for settling disputes. These two factors tend to exacerbate any incompatibilities, which are made even more problematic by the fact that collective preferences relating to trade may coincide with protectionist interests.
MEAs, GMOs and sustainability impact assessments
In the speech, Lamy commended the WTO’s Appellate Body for being a "faithful guardian" of collective preferences under the WTO system by balancing wider public concerns with WTO principles such as non-discrimination as well as with rules of international public law. However, he said that both WTO rules and case law are incomplete and leave room for interpretation. "That is one of the reasons Europe wanted WTO negotiations to include discussions on clarifying the relationship between the WTO and multilateral environmental agreements", he said. Lamy went on to say that collective preferences also informed the EC’s approach on genetically-modified organisms (GMOs): "individual choices, if necessary facilitated by labelling, are done within the limits fixed by collective choices: this is typically the EU approach regarding GMOs".
Commissioner Lamy argued that conducting sustainability impact assessment to inform discussions on collective preferences could be used as an instrument for revealing trading partners’ collective preferences. "The purpose of this instrument would be to highlight the difficulties caused by clashes of collective preferences in international trade. This, in turn, would make it possible to anticipate any conflicts that might arise from greater openness, by revealing incompatibilities between collective preferences before greater openness made them apparent, and by examining possible solutions," he said.
Safeguard clause
The key to taking collective preferences into account at the WTO, according to Lamy, was the inclusion of a special safeguard clause. This should be seen as an "insurance policy, as the ultimate guarantee that trade integration will not pose a threat to legitimate collective preferences," he said. The acceptability of such a clause — which would conceivably allow countries to limit imports deemed a threat to collective preferences — would depend on the conditions attached to its use, he said. This would mean it would have to demonstrate that there was a coherent underlying social demand and that the safeguard measure adopted was consistent with that demand; that the measures adopted did not restrict trade more than other measures capable of satisfying the same demand; that it complied with the basic principles underlying the multilateral trading system; and that it could not be used to sanction customs duties, as conventional safeguard clauses do. Further, protection granted by the safeguard clause should be temporary, and include a compensation mechanism that would be skewed in favour of developing countries.
Lamy conceded that a collective preference approach to trade was likely to garner suspicion from a broad range of actors, since the issue of collective preferences is a relatively new one and raises conceptual difficulties. "Liberals might see it as opening a Pandora’s box of arbitrary barriers; the Southern countries as protectionism and euro-centrism in disguise; and environmentalists and human-rights activists might see it as representing an unacceptable status quo because it fails to put pressure on those who infringe social standards and destroy the environment," he said. But he defended his comments by noting that the ideas he discussed are likely to provoke discussion because they bring together two objectives that are viewed as mutually exclusive: to promote greater openness and international integration, except where social choices are at stake, but also to think about imposing limits on international integration to defend the legitimacy and diversity of social choices.
Lamy’s speech was given at the conference on "Collective preferences and global governance: what future for the multilateral trading system?"
To view Lamy’s speech visit http://europa.eu.int/comm/commissioners/lamy/speeches_articles/spla242_en.htm.
ICTSD reporting.