All or nothing at all at the WTO

By Andreas Oldag

BRUSSELS (DPA): Pascal Lamy is fond of comparing himself with a tennis player. "I rush from one international tournament to the next," says the European Union's trade commissioner.

Appropriately, he is currently preparing for the next round, the Millennium Round, of World Trade Organization (WTO) talks, scheduled to be agreed by WTO member-states in Seattle at the end of November.

Next week, however, the travel-happy Frenchman, who is due to visit Tokyo and Budapest early in November, will have to yield pride of place to the European Commission's president, Romano Prodi of Italy, who will be conferring in Washington with U.S. President Bill Clinton on the Millennium Round.

There is more than symbolic significance in the fact that the Commission president himself is dealing with the topic. As the largest trading block in the world, the European Union (EU) wants to present itself at the WTO talks as an honest broker of free world trade.

The Europeans do not want to limit themselves to a handful of issues, such as deregulation of agriculture and services, which were already agreed by the terms of the 1994 Uruguay Round of the General Agreement on Tariffs and Trade (GATT).

In the Millennium Round, which is scheduled to last until 2002, the EU is aiming for a more comprehensive approach. It wants the WTO to deal with regulations governing international cartel law, with environmental and social standards and with consumer protection.

And the aim is to make it all a single undertaking. In other words, agreements are to be binding on everyone but nothing is to be considered agreed until agreement has been reached on each and every issue.

That said, it will be for the progress of the talks to show how closely the EU sticks to its ambitious guns. In Washington there are uneasy suspicions that the EU's all-or-nothing approach is intended to distract attention from its own inability to tackle at long last the deregulation of agricultural trade.

In the agricultural sector the EU persists in keeping the hatches firmly battened down, and for the United States the EU's agricultural export subsidies, which distort competition, are an ongoing irritant. That said, the EU accuses the United States of unfair practices.

At its Berlin summit last March the EU agreed only to a half- hearted reform of its common agricultural policy as part of its Agenda 2000. The price cuts agreed were well below the demands originally made by the EU's commissioner for agriculture, Austria's Franz Fischler.

Protectionists can now take cover behind the EU's agricultural policy, which continues to rely on subsidizing farming and farmers.

Consensus in the EU about a joint approach to the Seattle round is fragile, to say the least. That is partly due to the complexity of contractual arrangements.

By the terms of the 1957 Treaty of Rome, trade policy is to be conducted on the basis of uniform principles, and the European Commission has the right to submit proposals (Article 133). It also conducts negotiations on behalf of the Council of Ministers, which is supposed to reach majority agreement.

But under pressure from France the more recent Amsterdam Treaty made an exception in the case of services and protection of intellectual property, both of which require unanimous agreement. And that has repercussions on the application of Article 133.

The EU has set itself a trap. If it is to agree on a comprehensive negotiating package, including services, the EU will have to abandon majority decisions. De facto it will have to agree unanimously on a WTO negotiating mandate. And experience has shown that endless disputes can then be expected.

The Germans insist on minimum social standards geared to the ones drawn up by the International Labor Organization (ILO). They include a ban on child and forced labor. So the German government has called on the WTO to set up a working party to deal with these issues.

Other EU countries have misgivings about this. They fear it may impose an unnecessary political strain on the WTO talks. For many Asian threshold countries in particular, demanding minimum social standards is like showing a red rag to a bull.

After a lengthy to and fro, the EU will probably agree to the setting up of a working forum, which sounds less committal than a working party and could be acceptable to all EU member-states.

A further internal dispute concerns deregulations of trade in cultural goods. France has voiced misgivings and is determined to ward off uncontrolled imports of U.S. film and TV industry products.

The EU presidency has suggested a compromise by which cultural goods are to be more clearly distinguished from bananas or computer chips. There are times when a great deal of skill in framing compromises is needed to get the EU to move a step forward. Yet it is doubtful whether such compromises will be enough for Seattle.