Introductory Report on the State of Negotiations at the WTO and on the TEP

06 မေလ 1999

"Ce texte a été entrepris dans le cadre de la lutte contre l'Accord Multilatérale sur l'Investissement [AMI] de manière à répondre aux sempiternelles questions, "Oui, mais qu'est-ce que vous proposez?, Que va-t-on mettre à la place?, Quelle est l'alternative?" A un moment donné, l'on répond que l'ACPIR n'a pas à fournir une "alternative", pas plus qu'on ne proposerait une "alternative" au cancer, si ce n'est l'absence du cancer; nous essayons plutôt d'imaginer comment serait un Accord qui voudrait promouvoir le bien des peuples et de leur environnement. J'en ai été le principal auteur, mais le texte est passé par plusieurs versions et a été beaucoup discuté en France et à l'étranger. Il est conçu comme une contribution à un débat vital: comment concevoir la citoyenneté à l'âge de la mondialisation?"

At the end of 1994, before the vote on GATT in the American congress - which was to establish the World Trade Organization (WTO) - Public Citizen, an NGO founded by Ralph Nader, offered a prize. Public Citizen would give US$ 10,000 to a charity named by any member of Congress who could sign an affidavit testifying that he or she had read the GATT Agreement and answer ten simple questions about it.

Nobody applied. The USA, like other countries, was on the point of ratifying an agreement that would have disastrous effects on employment, the environment, national sovereignty and democracy, and the legislators knew nothing about it. In the end, after the vote had been postponed for a month, one republican senator accepted Public Citizen s challenge, signed an affidavit and answered the questions. He then held a press conference to announce that he had intended to vote for this Agreement, as he had the year before for NAFTA, but he had changed his mind, horrified at what he had found on reading the text. The Agreement was approved by 235 votes to 200 in the House of Representatives and by 68 to 32 in the Senate. Did the 303 who voted in favour really know what they were voting for?

In France, only 17 deputies voted against the GATT Agreement. It is a safe bet that French members of parliament were as ignorant of its content as their American counterparts. In their defence it must be said that the text of the Agreement runs to several hundred pages, and is deliberately complex and abstruse, but it is binding on our countries and it causing the same havoc in France and in Europe as elsewhere.

The Globalisation Observatory is holding this symposium today in the hope of averting a similar failure of democracy. With our friends in the artistic world, we were among the first people in France to call attention to the existence of the Multilateral Agreement on Investment (MAI), at a colloquium held at the National Assembly on 3 December 1997. One and half years later we can congratulate ourselves that the concerted efforts by the social movement, members of parliament, concerned intellectuals and - after an initial heavy silence - the mass media, have defeated the MAI.

By withdrawing from the MAI negotiations at the OECD, France torpedoed this Agreement, which was formally laid to rest on 3 December of last year, but new dangers have immediately arisen.

The interests which supported the MAI are still pursuing the same objective, namely, total liberalisation of investment. Their strategy now is to deploy on several fronts and catch their opponents in a pincer movement. They plan:

  • on the one hand, to transfer the negotiations on investment to the World Trade Organization (WTO);
  • and on the other, to create a vast free-trade zone between the USA and the European Union, to be called the Transatlantic Economic Partnership (TEP).

The Observatory considers it its duty to explain the nature of these dangers, the more so as the political stakes in the negotiations in which our governments have been invited to take part are increasingly complex. The European Parliament s Commission on External Economic Relations has emphasized this:

The European Union s negotiating methods are generally considered to be essentially technical and opaque, and do not allow for an assessment of the implications for society, because of a serious lack of political debate and consultation of civil society. (1)

In the case of the WTO and of the TEP we are dealing with a series of highly technical agreements, which are difficult to understand. Indeed, the content as a whole is accessible only to the experts who are paid specially only for that. Monitoring by citizens is deliberately made difficult; the task of the politicians practically impossible. If the MAI was opaque, the current strategy sets out to be impenetrable.

I. The MAI in the World Trade Organization

When the OECD negotiations collapsed, governments had reached agreement on approximately 90% of the content of the MAI. Having been unable to complete it because of the unprecedented mobilization of their citizens, many of them are keen to add the field of investment to the agenda of the WTO. Sir Leon Brittan, former heir-apparent to Mrs Thatcher, as well as a former (and perhaps future) European Commissioner, is working tirelessly in this direction. He maintains today that the WTO has always been his preferred forum for the negotiations on investment, and travels the world recruiting allies. It should be remembered that the member countries of the European Union do not vote at the WTO but are represented by the Commission; in this case, Sir Leon.

The WTO Ministerial Meeting will take place at the end of November in Seattle. The "built-in agenda" includes agriculture, services (the General Agreement on Trade in Services - GATS) and intellectual property (TRIPs). This agenda is heavy, worrying and laden with unforeseeable consequences for all our countries. Liberalisation of agriculture, for instance, could reduce food safety in many countries in the South and ruin small farmers in the North; TRIPs provides for the patenting of living entities - plants animals, micro-organism and biological material, including genes.

Brittan s, and hence the Commission s strategy is to add three new fields to this complex and threatening agenda: investment, competition and public procurement. The whole thing - the old agenda plus the proposed new fields - has been dubbed the "Millennium Round". For the moment, the latter has no legitimacy.

For each of these new areas - investment, competition, public procurement - there is a "Working Group" at the WTO. The mandate of the first two - extended in November 1998 - is restricted to examining relations between trade/investment and trade/competition policies; they are in no way mandated to prepare new negotiations. The Working Group on "public procurement", on the other hand, is working on an "interim agreement" on "transparency" in public procurement markets, as a first stage on the way to complete liberalisation which would work on the basis of National Treatment and the Most-Favoured-Nation Clause, like all WTO Agreements. If this Agreement went through, a government could no longer give priority to national firms: all calls to tender would be published on the Internet and all the firms in the world could bid.

Once again let me say, investment is not yet on the WTOs' agenda. These "comprehensive negotiations" can still be avoided, but only if we act quickly. The balance of power at the end of April 1999 is as follows:

When France withdrew from the MAI negotiations it declared itself in favour of transferring negotiations on investment to the WTO (on the pretext notably that the South is represented there). This is the position of Sir Leon and the Commission.

Sir Leon, on behalf of the EU, concluded an agreement with the Japanese government (7 January 1999) in which they speak of their "determination to place investment on the agenda of negotiations at the WTO". According to the Director General for External Economic Relations of the European Commission, the countries in favour of "comprehensive negotiations" (besides the EU and Japan) are Canada, Australia, Mexico, Korea, Latin America (except Brazil) and South-East Asia. Morocco and Tunisia "could come down for a consensus" while India, Pakistan and Egypt remain "skeptical". (2)

The position of the United States is more complicated. Bill Clinton seemed to be coming round to the European position in his State of the Union address last January, but the USA s primary strategy is to conduct various negotiations simultaneously, starting with the easiest, and conclude them as they go. This strategy is call "early intake", or sometimes "first harvest". Less elegantly one might also say "tying up".

The positions of the different governments will be decided in July at the latest. The European minsters of trade will gather in Berlin on 10 May for a supposedly "informal" meeting at which they will however be under pressure to endorse the "comprehensive" negotiations. This requires the unanimous support of European countries.

Who decides the position of the European Union? In principle, the governments. In fact, this is strongly influenced by a practically anonymous group called the 113 Committee, appointed by the Council to assist the Commission. (3)

No sooner was the demise of the MAI official than a 113-document defined the strategy for including "investment among the new issues for WTO negotiations". This document was leaked and was found to recommend the same elements as led to the defeat of the MAI.

The document indicates that:

According to the business community, it would be desirable to work out an agreement on investments in the WTO because there it would cover the largest possible number of developed and developing countries and would also facilitate the effective application of principles such as National Treatment, Most-favoured-nation status and settlement of disputes, to issues of investment. Furthermore, an instrument on investments within the WTO could be improved as it went along and adapted to the new conditions in the course of future rounds of negotiations. (4)

Curiously enough, in the official version of this document (International Rules for Investment and the WTO) published a month later, this wish expressed by the "business community" no longer appears, nor do two whole sections explicitly setting out the elements of "an ideal result which would open up markets to new investments and protect them" and reiterating the clauses of the MAI - a broad definition of investment, no obligation in regard to results, possibility of a mechanism by which the investor could take legal action against a state, and so on. The only reference to social or environmental norms notes that these will be "contested by some developing countries". On this subject, "We must also strike a very delicate balance between the conflicting aims of different constituencies within the EU".

The European Parliament deplores this way of proceeding, complaining to the Commission that it is poorly informed and not consulted (whereas) the large companies are well-informed and present in the pre-negotiation stages. As a general principle, the European Parliament must dispose of the same the 113 Committee. The reform of Article 113... regularly called for by the European Parliament, is a priority object for the forthcoming institutional reform. (5)

The French government for the moment supports Brittan's position concerning the transfer of the negotiations on investment to the WTO, claiming that, unlike the OECD, the WTO is a "democratic forum". In a formal sense this is the case, in that the countries of the South are there. There are, however, many profoundly anti-democratic aspects which should give pause for thought:

  • Historically, all the major decisions at the WTO have been worked out by the "Quad" countries: United States, Canada, Japan and the European Union. The best the countries of the South have been able to obtain, at Singapore in 1996, was that investment should be the subject of a Working Group instead of being placed on the agenda forthwith.
  • When there are several negotiations - or several working groups - going on at the same time, the countries of the South do not have the necessary personnel to be able to follow them properly.
  • The financial crisis means that almost all the countries of the South are subjected to structural adjustment programmes, under the tutelage of the IMF. The latter can oblige them to accept liberalisation in all kinds of areas, including investments.

The WTO s Dispute Settlement Mechanism is in the process of establishing a profoundly anti-democratic law. The decision on bananas - in a dispute started by the United States, which produces no bananas, on behalf of Chiquita Brands, formerly United Fruit - in fact prevents Europe from having its own foreign policy, in this case from upholding the Lomé Convention. By signing the WTO food-safety and plant and animal health agreement, Europe abandoned its values and allowed the (American) principle of "risk assessment" to prevail over the principle of precaution. As a result, in a week s time we have to open our markets to American hormone-treated beef. All WTO panel decisions incorporating an environmental aspect have gone against the interests of the planet, sustainable development and the Multilateral Agreements on the Environment. And so it goes on.

Immediately after the WTO decision on bananas, the cabinet of the American Special Trade Representative took on a further eleven lawyers specialising in this type of business. The WTO will be piloted by law suits and not by politics and diplomacy. The US is delighted to get what it wants by this method which the Europeans - not to mention the developing countries - have not mastered. We have to fight this pre-empting of democracy.

With several hundred other organizations around the world the Globalisation Observatory has signed the Declaration of Citizens Organizations on the Millennium Round. "We refuse any extension of the powers of the WTO, in particular with regard to investment. We propose a thorough examination, with a view to sweeping reform, of the impact the WTO has had up till now on employment, consumers, the environment, development, human rights and democracy." (6)

II. The Transatlantic Economic Partnership (TEP)

Since 1995, Sir Leon Brittan has been negotiating with the US, without any mandate to do so, for a "new transatlantic agenda" (NTA). On 27 April 1998, France officially rejected this free trade zone on the grounds of its anti-democratic character and the dangers it would represent for the construction of Europe. Strange to say, just three weeks after this statement by France, the Transatlantic Economic Partnership came into being at the EU-USA summit in London on 18 May 1998. Without prior notice and without any public discussion of the content of TEP.

This new abbreviation TEP, replacing NTA, allowed France to save face, but as regards the contents of the agreement itself, it is six of one and half a dozen of the other. The NTA is dead, long live the TEP, which is both multilateral and bilateral in its objectives. The content of TEP is elastic and has never stopped expanding since it saw the light of day on 18 May last year. The content is heavily influenced by the Transatlantic Business Dialogue (TABD), which was set up in 1995 at the same time as the NTA to advance "Trade Facilitation", in other words, the dismantling of "non-tariff trade barriers", such as health and environmental regulations, standards, inspection procedures, etc. The TABD s big annual conference is attended by the directors of the top transnational companies on both sides of the Atlantic and officials such as Al Gore and Renato Ruggiero, Director General of the WTO.

While coalitions all around the world were fighting against the MAI, the European Commission was preparing a long document intended to influence the Council s decision in favour of the TEP. You have to pick your way through its 27 pages in order to grasp the full scope of it. (7) The Commission states that EU-US relations "in the fields of trade and investment... are still hampered by a large number of barriers"; hence these "negotiating guidelines" according to which the "Commission is authorised on behalf of the European Community and its member states to enter into negotiations (with the USA)" in a large number of fields.

"The agreements negotiated within the framework of the Transatlantic Economic Partnership shall apply throughout the territory of the parties, regardless of their constitutional structure, at all levels of government and on the conditions laid down therein."

This specification is probably directed at the USA which had filed numerous exceptions to the MAI based on the laws of its different states or municipalities. It also seems to give the TEP treaty status (i.e. setting it above national law). The legal status of this set of agreements is not quite clear.

On the multilateral level, the TEP and the TABD work hand in hand with the WTO for, once again, it is a question of endorsing the Millennium Round at the WTO. The Commission's document affirms its intention to add the fields of investment, competition, electronic trading and public procurement to those already foreseen, i.e. agriculture, services, intellectual property, "at all levels of government" of the member countries.

The Commission notes the "usefulness of establishing multilateral rules on investment" and undertakes to "put investment on the agenda of the new multilateral negotiations (of the WTO)". This is MAI mark 2.

Although the term "investment" is never defined, it does seem to include at least direct investment and financial investments, the volatility of which has sparked the crises we all know about. The determination to liberalise everything - goods, services and capital - is obvious in the TEP as a whole.

As one expert has commented, it is extremely difficult in the run-up to the Millennium Round to know what questions have been discussed and decided so far within the TEP. There are no written reports. However, from their statements it appears that the TEP is a very important tool for the USA and the EU in preparing for the forthcoming negotiations.(8) Clearly, the multilateral content of the TEP is consolidating and institutionalizing an informal process that already existed.

On the bilateral level, the Commission s document explicitly invokes the principle of "National Treatment" for all sectors in order to guarantee "effective access to markets". An American investor will therefore receive the same treatment as a European one and benefit from "increased possibilities of access to markets at all levels of government", including public procurement. Invitations to tender must be issued electronically. The harmonising of EU/US patenting procedures is also foreseen.

Still according to the Commission document, the bilateral scope of the TEP will aim, through a series of apparently technical but actually highly political agreements, to dismantle the food safety, environmental and health safeguards introduced by Europe. By way of "Mutual Recognition Agreements" (MRA) in a dozen fields, it will be possible to "align standards and regulations". The result would be to legalise on both sides any product which can legally be sold on the territory of either one of the parties. Upon signing these MRAs, governments would be required to dismantle any provision of their national legislation not in conformity with the agreement.

Food safety and plant and animal health measures will be under severe pressure, particularly in areas like hormone-treated beef or genetically modified organisms. You should be aware that the TABD group on bio-technologies is chaired by Unilever and Monsanto. The Grocery Manufacturers of America (GMA) has already decided to attack European laws on "eco-labeling", the German law on packaging or other laws which "reflect local cultural values and are discriminatory in terms of international competition". The GMA will use the TEP to tackle the European authorities "who have a very restrictive approach to food additives". (9)

In order to "enhance the dialogue between the regulatory authorities", the two parties EU-USA undertake to sound out "the opinion of the business community, notably in the framework of the Transatlantic Business Dialogue (TABD)"; they will also endeavour to "reach one or several levels of mutual recognition, especially on the basis of recommendations from industry". The Commission realised belatedly that others besides industry might have an opinion on all these issues, which is no doubt why it has recently and hastily started to set up Transatlantic Environment, Consumer and Labour Dialogues. These different dialogues for environmentalists, consumers and trade unionists are meant to "underpin the TEP process" and will be essentially "consultative", study and discussion groups.

The Commission "recognises that voluntary codes of conduct are an effective tool for strengthening the capacity of the business community to improve working conditions throughout the world". But this remains voluntary. Nothing obligatory is envisaged either in this field, or in that of the environment. There will be 'cabinet level meetings to maintain the political drive' and 'senior officials assisted as needed by ad hoc or expert working groups' who (with the business community) will look after everything.

The 'Mutual Recognition Agreements' should lead to 'the elimination or reduction of technical rules and regulations; public procurement markets will be open 'throughout the territory of the parties', 'at all levels of government'. Investment will be set within a framework of rules worked out at the WTO.

This long Commission document led to a much more succinct Plan of Action, approved by the Ministers in September and ratified by the European Parliament in November 1998, with only 71 votes against. Yet this Plan contains complex provisions designed to weaken safeguards to protect health, environment, employment, public services and democracy.

The Globalisation Observatory calls for an immediate moratorium on the Transatlantic Economic Partnership, transparency all concerning it and the opening of a public debate to enable citizens to assess its impact on public well-being and democracy.


1. cf. Letter from Presidents Philippe Herzog and Biagio De Giovanni of the Commission on External Economic Relations of the European Parliament, concerning the preparation of the Council meeting on 10 May. Addressed to Mr Werner Müller, serving president of the Council, Commissioners Brittan and Oreja and the President of the Parliament Gil-Robles, on 25 March 1999.
2. This is the "balance of power" as described by Agence Europe (23/4/99), "European Commission reviews preparation of Millennium Round", including the report of the European director general for external economic relations, Hans-Friedrich Beseler.
3. From Article 113 of the Treaty of Maastricht: "... The Commission shall submit proposals to the Council for implementing the common commercial policy... (The Council) shall authorise the Commission to open the necessary negotiations. The Commission shall conduct these negotiations in consultation with a Special Committee appointed by the Council to assist the Commission in this task..."
4. European Commission Directorate General, 113 Committee M.D.642/98, date received 15.12.98. Subject: WTO New Round: Trade and Investment, para. 6.
5. Idem, note 1, underlined in the original.
6. See the full statement in the press pack for this symposium.
7. "Recommendation of a Council Decision concerning the negotiation of agreements in the field of technical trade barriers...presented by the Commission", SEC (98). The copy in our possession is not numbered nor dated.
8. Myriam vander Stichele, "The TEP and Millennium Round in the WTO", Paper for the Conference From the MAI to the Millennium Round, European Parliament, 27-28 April 1999.
9. Testimony of Mary C. Sophos, Senior Vice-President, Government Affairs, Grocery Manufacturers of America, before the Trade Sub-Committee of the American Congress, Hearings on the Transatlantic Economic Partnership, 28 July 1998.