23 November 2001

RISKS FROM NEGOTIATING ON ENVIRONMENT IN WTO

Overall the outcome of the Doha WTO meeting is positive for New Zealand but there are risks in the agreement to negotiate on trade and environment issues.

"The negotiation on environmental issues has positive and negative elements for New Zealand" says Trade Liberalisation Network Executive Director Stephen Jacobi.

These comments are contained in a speech prepared for delivery at a civil society forum organised by the United Nations Association of New Zealand in Wellington on Saturday 24 November.

Mr Jacobi does not accept that trade or the WTO are necessarily bad for the environment. "Trade makes possible the transfer of technologies, goods and services for environmental management. Trade liberalisation seeks to reduce subsidies which are probably the worst cause of environmental degradation. Trade promotes growth which helps countries clean up their act."

Mr Jacobi says it is positive that the "Doha Development Agenda" includes attention to the environment. "The WTO is responding to public concern and this is a good thing but the devil is in the detail. The risk is that some of the WTO's core rules will be changed, new areas of protectionist behaviour opened up and legitimised in international trade law".

Despite some reassuring language in the declaration, the motives of the participants would need careful watching. "We will need to be very vigilant as this negotiation proceeds. The Network has a role to play in co-ordinating business input into this process and hopefully also engendering a debate with environmental organisations with an open mind on trade to see if there is scope for accommodating aspirations of both sectors of civil society", concludes Mr Jacobi.

Note: Full text of address is attached (embargoed until 1130 am, 24 November 2001)

Contact

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ADDRESS TO THE CIVIL SOCIETY FORUM OF THE UNITED NATIONS ASSOCIATION OF NEW ZEALAND (UNANZ)

PARLIAMENT BUILDINGS, WELLINGTON

SATURDAY 24 NOVEMBER 2001

STEPHEN JACOBI
EXECUTIVE DIRECTOR
NEW ZEALAND TRADE LIBERALISATION NETWORK

“TRADE LIBERALISATION, CIVIL SOCIETY AND THE UN’S GLOBAL AGENDA”

EMBARGOED UNTIL 1130/24 NOVEMBER 2001

Mary McGiven, ladies and gentlemen

Thank you for the opportunity to be with you today.

It takes a degree of courage these days to talk about trade liberalisation to a civil society forum such as this.

But having returned unscathed from the World Trade Organisation meeting in Doha, I’m happy to claim my place alongside all of you as a representative of civil society.

I’d like to congratulate the United Nations Association of New Zealand, Dame Laurie Salas and Robin Halliday for their work in putting together this important forum to examine ways of strengthening the UN’s global agenda.

The Trade Liberalisation Network is a new business organisation.

Our aim is to promote better public understanding and support for trade liberalisation.

By “trade liberalisation” we mean not “free trade” which has become something of a devalued coin, nor “fair trade” which begs a big question about “fair to whom ?”.

By trade liberalisation we mean a process by which sovereign nations make decisions either multilaterally through the WTO, or regionally with groups of countries, or bilaterally with individual countries to remove the barriers to trade and investment while establishing equitable rules for the conduct of international business.

It is often said, most notably by some sections of civil society, that free trade robs countries of their right to make sovereign decisions.

In fact the reverse is true.

Trade liberalisation seeks to enhance countries’ sovereignty by limiting the ability of often larger and more powerful trading partners to take unjustifiable, discriminatory action against their exports.

Trade liberalisation is about spreading and upholding the rule of law in respect of international trade and providing the right economic conditions which allow countries to develop, grow and prosper.

These are aims that are fully reflected in the UN’s Millennium Declaration which forms the background for discussion at this conference.

Today I’d like to tell you a little more about the Trade Liberalisation Network, about the WTO meeting I attended in Doha and - since this section of the conference is also dealing with sustainable development - about the relationship between the WTO and the environment.

Trade Liberalisation Network

At the launch of our new organisation in Wellington at the end of October, WTO Director General Mike Moore, speaking by video from Geneva, said the Trade Liberalisation Network was “a concept whose time had come”.

There are two reasons for this.

First because, as everyone knows, there is a growing debate around the world and here in New Zealand about gobalisation and trade.

There’s nothing wrong with this debate – these are serious issues and need to be talked about. And while we haven’t seen anything like the riots of Seattle, Melbourne or Genoa here in New Zealand – and hopefully we won’t - it is right that the legitimate concerns of New Zealanders are fully taken into account as policies are formed and international agreements entered into.

The second reason given by Mike Moore was the prospect of a new round of international trade negotiations in the WTO.

New Zealand has a direct interest in these negotiations.

We live by international trade.

Our own future economic wellbeing depends on securing better market access, eliminating export and other trade-distorting subsidies and securing better trade rules whether for our farm, fish, forestry, manufactured or services exports.

It was against this background that the Trade Liberalisation Network was born and from a realisation that business needed a stronger and more co-ordinated voice both to influence the public debate and to provide input to the Government on trade issues.

The Network is entirely business led and business driven. We have been very fortunate in attracting even at this early stage some solid financial support from New Zealand exporters. We receive no Government funding.

Our aim is to contribute to the public debate in a positive way drawing attention to the role of trade liberalisation in promoting social development, a growing economy and jobs for New Zealanders.

What interests us is not ideology, or economic theory or even trade liberalisation for its own sake.

Trade liberalisation should be at the service of the community, providing benefits for business and citizens alike.

The thought that trade liberalisation might be pursued, as Sandra Lee suggested to Federated Farmers last week, “ to reduce standards of living for significant numbers of New Zealanders or to compromise the natural environment” is simply not what we’re on about.

On the contrary - we see trade as providing the sort of economy most New Zealanders want to have, and making possible the lifestyles they have become accustomed to.

That’s a message that we intend to articulate more widely and more positively both in the press, in public events such as this and through our website - www.tln.org.nz.

WTO Ministerial, Doha

It was the great Canadian Prime Minister and Nobel Prize winner, Lester B Pearson who said “decisions taken in far away places have a vital importance for the village square. There is no escaping today the results and obligations that flow from the interdependence of nations”.

Doha in the Gulf state of Qatar is one of these far away places – an unlikely setting for a meeting to consider whether or not to launch a new round of international trade negotiations.

The stakes of the Doha meeting were very high – and we were only talking about launching a new round not concluding it !

Mike Moore said Doha was about "the further liberalisation of trade, the creation of more jobs, the strengthening of the multilateral system and the extension of the full benefits of that system to countries now marginalised by poverty".

Two years ago the Seattle meeting ended in miserable and acrimonious failure.

Here’s what UN Secretary-General Kofi Annan had to say about Seattle a few months later:

“The popular myth is that (negotiations were) blocked in Seattle by the peoples of the world joining together in the streets to defend their right to be different, against a group of faceless international bureaucrats who wanted to force them all to eat the same genetically modified food. In other words there was a kind of global grassroots uprising against globalization - however paradoxical that may seem.

The truth, I'm afraid, is more prosaic. The Round was not launched because Governments - particularly those of the world's leading economic powers - could not agree on their priorities.”

Fortunately for the world, and for developing countries in particular, Ministers in Doha had their priorities in rather better shape.

The “Doha Development Agenda” paves the way for a comprehensive negotiation over a three year period to open up world markets, to reduce subsidies, notably in farming and fishing, and to put in place more effective trade rules.

New Zealand stands to benefit in time but so do developing countries who will be given “special and differential treatment” even while the markets of developed countries are opened to them.

To quote Kofi Annan again:

“The main losers in today's very unequal world are not those who are too much exposed to globalization. They are those who have been left out. The world's poorest societies and peoples …have been not so much exploited by the modern economic system as almost entirely excluded from it."

The WTO is not the problem but part of the solution in the struggle to create jobs, eliminate poverty and promote sustainable development.

The launch of the new round restores credibility to the WTO and removes what United States Trade Representative Bob Zoellick called “the stain of Seattle.

But it was touch and go all the way.

This is because, contrary to general belief, the WTO is profoundly democratic.

The WTO operates strictly by consensus - each member has an equal voice and nothing is agreed until everything is agreed.

Decisions in the WTO are not made by faceless international bureaucrats but by politicians from member governments who for the most part are themselves elected.

Trade and the environment

The Doha outcome also provides for negotiations in the complex area of the interface between trade and the environment.

This negotiation was resisted by developing countries. It has both positive and negative elements for New Zealand.

There is a rumour about that trade in general and the WTO in particular are bad for the environment.

I do not accept this is necessarily so – although I do accept that there is a heightened and perfectly legitimate public concern both here and overseas about environmental protection.

The argument seems to be that trade promotes unsustainable economic activity and the consumption of resources that cannot be renewed.

In the short term any economic activity consumes resources.

But businesses don’t normally set out to poison their customers or the neighbourhood in which they live.

Increasingly business sees a premium in maintaining high levels of social and environmental responsibility – triple bottom line accounting is on the increase; eco-labelling can be the key to unlocking large consumer markets as the fishing industry’s success with the labelling of hoki in Europe shows.

Trade can assist the environment.

It makes possible the transfer of technologies, goods and services for environmental management.

Trade liberalisation seeks to reduce subsidies which are probably the worst cause of environmental degradation.

Trade promotes growth which helps countries clean up their act.

Surveys of environmental sustainability have shown a direct correlation between countries’ wealth and programmes to protect and enhance the environment.

It seems that as countries grow richer their citizens care more about the environment. The converse is also true – poor countries have other things on their minds.

The WTO is clearly not an environmental organisation.

One of the secrets to its success is that it has stuck to its knitting – trade liberalisation and the adjudication of trade disputes.

But the Agreement establishing the WTO includes sustainable development as a goal and the Doha declaration restated a key provision of the right of each country to take action “to preserve human, animal or plant life and health, or the environment”.

What the WTO does and must do is ensure that such action is not taken in a way that discriminates between trading partners or for reasons other than those indicated or to protect domestic industries from imports.

It is positive that the Doha Development Agenda includes attention to the environment. The WTO is responding to public concern and this is a good thing.

So what’s negative ?

It’s the way in which it is done that poses risks. The devil is in the detail.

Amongst a package of items which were all hotly debated Ministers in Doha agreed to negotiations aimed at clarifying the relationship between WTO rules and the trade obligations of the “multilateral environmental agreements”.

There are increasing numbers of these environmental agreements – like the Cartagena Biosafety Protocol to the Biodiversity Convention or even the Kyoto Protocol – negotiated outside the WTO.

There is a need to examine their relationship with the WTO. The risk is that in so doing some of the WTO’s core rules will be changed, new areas of protectionist behaviour opened up and legitimised in international trade law.

It would be comforting to think this would not be the case. The Doha declaration contains some reassuring language on this point.

But the prime sponsor of this negotiation is the European Union whose track record from a New Zealand perspective in creating rules to restrict the flow of agricultural trade is not the best.

We will need to be very vigilant as this negotiation proceeds. The Network has a role to play in co-ordinating business input into this process and hopefully also engendering a debate with environmental organisations with an open mind on trade to see if there is scope for accommodating aspirations of both sectors of civil society.

Conclusion

The UN Millennium Declaration speaks of a commitment to an “open, equitable, rule- based, predictable and non-discriminatory multilateral trading and financial system”.

Trade liberalisation has an important role to play in promoting development and poverty elimination which are at the heart of the UN’s global agenda.

Trade promotes social progress. It has a human face. Trade need not necessarily be at the expense of the environment.

Trade, at the service of the community, contributes to building the economic growth and wealth required to make this a better world.

By participating in the public debate and helping to develop government policy, civil society – of which the Trade Liberalisation Network is fully a part – can contribute to this vision for the future.

ENDS

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