The TEP and the Millennium Round in the WTO

The TEP and the Millennium Round in the WTO
Myriam Vander Stichele
Paper presented for the Conference at the European Parliament
"From the MAI to the Millennium Round", 28 April 1999

What I will try to explain in this paper is how the preparation of the next WTO negotiations are being prepared in a quite similar way as the MAI negotiations, with a strong influence from business which excludes citizen concerns.

1. Institionalising past practices relating to the WTO

The Transatlantic Economic Partnership (TEP) singles out the part of the programme of the Transatlantic partnership that is of most interest to business. The Transatlantic partnership was created to deal with many issues of EU and US concern. The New Transatlantic agenda that was agreed in 1995 laid great emphasis on cooperation in foreign policy, which included even the reform of the UN. This transatlantic agenda had also an economic side and was committed to cooperate in order to strengthen the multilateral trade system (i.e. the WTO), to further open markets for trade and investment worldwide and between the US and the EU.

This economic side of the transatlantic cooperation received strong impetus because business created a Transatlantic Business Dialogue (TABD) to emphasise their points on which they wanted to see progress. TABD was created in November 1995, was able to influence the New Transatlantic Agenda (December 1995) and had very early successes. In 1996, the TABD insisted that there would be an agreement on reducing tariffs on information technology and that practices and standards that delayed transport of goods at the borders ("trade facilitation", health and safety standards) would be removed. The TABD's positions were reflected at the WTO Ministerial Conference in Singapore (1996) where a WTO working group on trade facilitation was created -without much consultations with other WTO members who were interested in other issues- with the purpose of including the issue in possible future negations in the WTO. Also at the 1996 Ministerial Conference, the top officials of the EU and the US spent most of their time trying to finalise negotiations on an information technology agreement (ITA) and convince other countries to join. After this loose-standing agreement was almost finished, it was officially brought into the WTO process. At the same time many demands of other -mainly developing- WTO partners, such as discussing the implementation of the WTO agreements were ignored. In 1997, the WTO members agreed on an agreement to liberalise financial services, which they had not been possible in the previous Uruguay Round negotiations. The EU and the US were key in the negotiations and they had very close contact with business who had pushed for the agreement while at the same time the financial crisis was raging in Asia and clearly other measures than liberalisation were needed. At the WTO Ministerial Conference in 1998, the issue of trade through electronic means (e-commerce) was suddenly put on the agenda and a political statement was pushed through to stop any further taxation on electronic commerce. Once again, this had been an important new point raised by the TABD upon which the EU and especially the US officials acted upon in the WTO arena. At the same time, the issue of transparency and public concerns were raised, but no firm action agreed upon.

The creation of the TEP in May 1998 came as a big surprise for many non-governmental observers, especially after France had publicly denounced the creation of a transatlantic market. The launch had not been openly discussed beforehand. And afterwards, the plan of action to implement the TEP was not discussed democratically either. When NGOs asked for the draft Action Plan, EC officials flatly answered that NGOs would receive it after it had been finalised during, of course, intensive secretive meetings with the US. NGOs made a statement denouncing the Action Plan for its inadequacies to deal with public concerns and for being based on the wrong principles and objectives, and asked for a moratorium. But of course EU and US officials and politicians went ahead with their Plan and the EC newsletter on the Transatlantic Partnership only refers to those who welcomed the TEP.

The multilateral agenda of the TEP consolidates and institutionalises an informal process that already existed before. During previous GATT negotiations and current WTO decision-making processes, the EU and the US first sat together to come to an agreement on what issues to push for in the WTO, had regular informal meetings with Japan and Canada (the QUAD) where the major powers tried to agree on those issues, and later tried to convince other WTO members in order of importance, often leaving out small developing countries. Now, the TEP is a "forum for dialogue in a structured way" with "regular meetings to take stock of what takes place at the WTO" and have separate in depth discussions. This means, the superpowers try to agree among themselves before taking decisions with the others. The undemocratic practice was denounced in the NGO statement that asked for a moratorium on the Action Plan of the TEP and when I told this to Commissioner Brittan during the public meeting on 16 November, he answered that the other WTO members were asking the EU and the US to sit together come to an agreement because WTO decisions would otherwise being blocked. He thus found this process totally legitimate.

2. How the TEP steers future WTO negotiations

Through these previous actions, the TEP and the TABD have already pushed issues that they wished to see in future WTO negotiations. According to agreements made in the Uruguay Round and implemented by the WTO, the agreements on agriculture and services need to be renegotiated and the TRIPs agreement reviewed from the year 2000 onwards. But the EU, and to a certain extend the US, have been proposing a whole series of other issues to be put on the agenda.

If one analyses the issues proposed by the EU for the new WTO negotiations and multilateral issues for discussion and cooperation between the EU and US which are mentioned in the Action Plan, than one sees the strong similarities with the issues asked by the TABD (see the Charlotte statement, 7th November 1998) :

• avoid problems in the WTO's dispute settlement, where uncertainties give costly delays and uncertainties for business;
• ensure that all countries, especially developing countries, implement the WTO rules which are of benefit of business, without consideration to deal with the negative consequences for sustainability, development and choices in societies;
• services : opening up markets as much as possible with new disciplines, including in the field of e-commerce and financial services, without looking at the problems that current liberalisation of capital has provided as the current crisis has "nothing to do with trade and the WTO" according to the EC;
• trade facilitation
• further far-reaching reduction of tariffs in non-agricultural products
• removing burdensome and uncertain technical barriers of trade
• only "exchange of views" on agriculture
• intellectual property rights : ensuring full implementation by developing countries and identifying which new issues of busines interest should be incorporated, including the fight against optical media piracy (TABD) and excluding discussions on the environment (EC preparatory paper on TRIPs) while ensuring that TRIPs is not being undermined by other fora, e.g. the World Health Organisation (TABD);
• competition policy rules: incorporating a framework in the WTO for national completion rules for WTO members - which business supports as it would open markets - and common approach and cooperation towards anti-competitive practices - which is pushed by the EC to the dismay of business
• more "transparency" in public procurement
• trade and environment : looking at ways to incorporate environmental concerns into the WTO work without undermining the open trade system
• developing countries: better integration of developing countries in the trade system which also means better business opportunities.

Investment: the WTO has created a WTO working group on trade and investment due to the manoeuvres of the EU, supported by European big business such as the ERT which is interested in better access worldwide. US business might not be so interested in the WTO framework because WTO rules might be too weak for their interests and possibly that might also be the opinion of some EU businesses. The TABD declaration says it is interested in a binding global investment regime and that the WTO should be one of the arena's "to create greater transparency, accountability and predictability in the countries that need to attract long-term capital". In the TEP, the US now seems to be more interested in the multilateral WTO framework for investment, because the negotiatons failed in the OECD. The European Commission (EC) has the mandate, from the EU Ministers, to try and start "comprehensive" negotiations which includes investment. The EC is trying to identify which elements for a WTO investment agreement EU business would be interested in, as the EC realises that it cannot achieve the full objectives of the MAI. However, the EC started with trying to have the same elements of the MAI, i.e. full emphasis on an investor's protection, but apparently EU members told the EC it had to rethink the issue. The EC is now having special mechanisms and separate meetings to consulting business, which in practice is especially big business, as Corporate Europe Observatory found out. At the same time, the EC organises meetings with NGOs but ignores the concerns and demands from NGOs and citizen organisations because they are asking for a moratorium for the negotiations "which exceeds the mandate of the EC". This means that the EC is implementing th mandate it received from the Ministers by looking at the interest of business, and through the TEP and TABD, of US business as well.

The EU's push for starting "comprehensive" negotiations, which are also known as the "Millennium Round", is seen by the EU as the only way to get all these different requirements on the table and at he same time protect to a certain extend the EU's agricultural policy practices. Bargaining, or better horse-trading, between the different and very diverse sectors is the name of the game. Last week, the Director General of DG-1 explained in the European Parliament how difficult progress had been in the latest sectoral negotiations of the WTO (e.g. ITA-2) and that bargaining one sector was the only way to make progress. The TEP has been very instrumental to convince the US that a Millennium Round was necessary. The US is much more interested in sectoral negotiations and "early harvest", finalising agreements where there is consensus while other areas continue to be negotiated, i.e. reducing the room for bargaining.

This EU and US consultations towards the next WTO negotiations based on business interests has not only consequences for EU and US citizens, but also for the rest of the world the Action Plan of the TEP will be instrumental in shaping the next WTO negotiations.

3. Undue influence

The problem with business having so much influence is that business does not refer at all to public interests and that their are no public and political instruments to balance and weigh the different business and public concern arguments nor the consequences of the proposals. For instance, the European Parliament has no constitutional right to do so.

The business influence of the TABD derives mostly from :

• The top level contacts between big business and trade officials and decision-makers which are most visible during the TABD annual conference which are also attended by the EC trade Commissioner and the US Trade Representative and even WTO Director General Ruggiero. Also, the TABD chairs have been to talk to the leaders of the EU-US Summits which take place twice a year, except at the latest London Summit.
• The close working relationship between the TABD working groups on particular issues, e.g. bio-technology (chaired by representatives of Unilever and Monsanto) and EU and US officials: there are lists about which official is to be contacted by which person of a particular TABD working group, the European TABD co-chair claimed (18th March 1999, at the European Parliament Rex Hearing) to have extremely regular contacts with Commissioners Brittan and Bangeman, the highest political powers in the European Commission. The TABD co-chair referred to the "natural legitimacy" of business to "exert effective influence"!
• The very clear targets which business (in more than 30 working groups) sets for administration to do with specifications of regulations to be addressed and dates for changes, called "deliverables from the administration" and a "Scorecard Report" in which the TABD assesses which changes the US and EU administrations have made according to its demands. According to the TABD co-chair, around 50% of the TABD recommendations are taken on board. As was also clear during the European Parliament hearing in February, the TABD is very arrogant in its demands towards the officials and sounds almost like a business ordering its supplier, which seems to be the reverse of what the political situation should be.
• The use of language by business is dangerous because health and safety regulations become "unnecessary barriers" which only reflects a pure business interest without any concern of the public interests and transforms a political process (rule-making) into a technical problem.

It has been very difficult to find out what issues in preparation of the Millennium Round have been taken up, discussed and decided in the TEP process up till now. There are no written reports. But from statements it is clear that the TEP is a very important vehicle for the EU and the US to progress the decisions in preparation of the next negotiations. However, even not the member states have been allowed to participate in the meetings and are now trying to fight in their way. Therefore, the relations between decision-makers and business are being strengthened in an undemocratic way at the European level whereby the national level becomes a less important source of influence while it is much easier for different interests to have access to the government at the national level and to be balanced by governments at the national level.

The dominant influence from big business in comparison with other interests is the reason why important issues have been left off the agenda and why it is so difficult to convince trade officials that the following issues need to receive priority focus, such as :

• unemployment, job creation and losses, job security, wage gaps; (labour standards is in the TEP programme);
• growing gaps between rich and poor within and between countries; poverty eradication;
• long term consumer protection and sustainable consumption;
• the interests of developing countries and marginalised groups of people;
• gender issues;
• ensuring that trade and investment are part of building sustainable and equitable societies;
• making sustainability impact assessment a tool to shape the mandate of further negotiations: currently the EC's impact assessment will have no influence on the start of the negotiations and the current direction of thinking by the EC, and the EC still refuses to assess the current rules of the WTO!

As a consequence, big business gets its freedom to:

• manoeuvre to enter the markets it wants for producing in the cheapest way en selling at most profit,
• expand markets to benefit from economies of scale in order to maximise its profits,
• please its shareholders,
• get better returns from its research and investments in technology and marketing which it needs to be ahead of its competitors,
• protect its competitive interests through TRIPs (e.g. brand name protection, genetically manipulated seeds),
• use low regulations on labour, health and the environment;
• push for elimination of so-called unnecessary regulations.

The WTO gives business guarantees and security that the free trade regulations will be implemented in more than 132 countries, if need be through the use of the WTO dispute settlement mechanism while on the other hand international rules on labour and the environment cannot be fully enforced (e.g. it is still not settled whether the WTO should not accept that trade measures by MEAs are being attacked by WTO rules). At the same time, concentration and malpractices by businesses are increasing, amongst others due to increasing investments, as EC's Competition Policy Commissioner Van Miert referred to last week in the European Parliament, for which there are no international rules of monitoring instruments.

There is an urgent need to set the balance right and make sure that no new WTO negotiations start before that is done. Business interests have too much influence in comparison with citizen's interests and the EU consults more with the US than providing information to its citizens, parliaments and even member states.