Europe's self-sabotage on trade - Print Version

Europe's self-sabotage on trade

Philip Bowring
TUESDAY, NOVEMBER 1, 2005

HONG KONG The rest of the world may need to look at new ways of dealing with Europe on trade issues.

The apparent deadlock over the Doha round of World Trade Organization talks is showing that the contradictions within the European Union have become a major global concern. On the one hand, the EU purports to be a single trading block for the purposes of this and other negotiations on economic and commercial issues. On the other, it is apparently incapable of acting as a sovereign power.

Today's impasse must be seen in the context of the history of the Doha round over the past three years. In June 2003, France cut a deal with Germany on EU internal issues that seemed to rule out, for now, fundamental reform of the Common Agriculture Policy that would enable real progress to be made with the round. As this column observed at the time: "The Doha round is rapidly approaching a crisis. The behavior of some European countries is proving so selfish and shortsighted that key developing countries may soon come to the conclusion that it would be better to walk away from the table than carry on with wrangling over secondary issues while progress on the crucial one of agriculture is sabotaged."

Three months later those countries did indeed walk away, frustrated by the attitudes of the EU and the United States, resulting in the collapse of the Cancun ministerial meeting. Now, two years on, it is touch and go whether the ministers will even get to Hong Kong, where the next ministerial meeting is supposed to be held in December, because of an impasse on the very same farm issues - though now the fault lies largely with the EU alone. The reason takes us straight back to that French-German stitch-up in 2003. The EU is now effectively telling the world that the talks since June 2003 have been a charade, as everything to do with farm tariffs was decided in Brussels in 2003. The arrogance is stunning.

The EU's current trade commissioner, Peter Mandelson, says that the EU has gone as far as it can or will go on ending the appalling distortions in farm trade. At the same time, he himself is under daily attack in France, which seeks to nullify the modest offers so far made by Mandelson on the grounds that they go beyond the 2003 agreement.

The world cannot even be sure that the EU's current trade offer will not be vetoed by its own Council of Ministers, as France's farmers are demanding. President Jacques Chirac himself, showing all the instincts of a rural politician, not a world leader, has joined the chorus of threats to veto Mandelson's attempts to negotiate with both the United States and the India-Brazil-China group of major developing countries.

The implications of France's position go far beyond agriculture. They tell the world that any attempt to negotiate with the EU is futile if the antidemocratic veto powers of individual members are to be used to deprive its commissioners of negotiating authority.

The net result is that other countries may see benefit in ignoring the EU, instead focusing on bilateral or regional trade deals among themselves. Ultimately, they may attempt bilaterals with EU members frustrated by the veto powers held in Brussels by minority interests like French farmers.

The choice for the EU is thus between engaging the bigger world outside Europe, or self-destructing.

The EU would perhaps already be a global laughing stock were it not for two factors. First, the general unhappiness with the United States over its Mideast adventures and unilateralist ways. And second, the shortsighted positions of Japan and Korea, which have kept quiet on the farm imbroglio as they use the EU to shield their own farm protectionism from scrutiny.

But the rest of the world has noted that self-defensive, defeatist attitudes are on the rise in Europe, as witnessed by such diverse issues as the entry of Turkey, the rejection of the EU constitution and the results of recent Polish and German elections.

The immediate danger is to a wider world that needs the Hong Kong meeting to take place and Doha to bring agriculture and the new trade players into the heart of the WTO system. In the longer run, however, the EU's inability to negotiate effectively with the world will simply be a signal of the declining relevance of an aging continent whose arrogance is a transparent mask for fear.