The Commission’s Director-General for Trade David O’Sullivan tells EURACTIV he remains optimistic that global trade negotiations can still be succesfully concluded, even if it does mean the EU will have to offer more concessions on agricultural tariffs, and reminds the bloc’s 27 members just how much free trade and globalisation has benefited them.
David O’Sullivan is the director-general of DG Trade at the European Commission.
One of the hottest issues on the EU’s trade agenda at the moment is still the Doha Round. After so many collapses in negotiations and with positions still so polarised, are we any nearer to reaching a compromise that could ‘save’ the Round? Will the saga ever end?
Well, I think we all hope that we can bring this Round to a successful conclusion – hopefully this year.
There are still difficult issues – you’re right that positions are still polarised. But nonetheless, six years, going on seven years, of negotiations have brought us to a point where I think we can see where a reasonable landing zone would be for most of the WTO membership, across most areas of the negotiations.
So the challenge in the next few weeks will be for people to get the mandate from their national constituencies in order to sign up to that deal and finally bring this Round to a conclusion.
It is not going to be easy – it could still fail. But I remain convinced that the negotiations have taken us a long way and that we are now close to the end point.
Where will the concessions come from? Is the EU going to have to make further concessions, notably on agricultural subsidies?
The EU has already shown a lot of flexibility. Mr. Mandelson has been at the forefront of trying to move these talks forward. We are already very close to the outer limit of what we can do. However, if everyone else makes a final effort, I am sure that we have not said our last word on agricultural issues.
The EU’s new trade strategy pleads for more global openness, but at the same time, the EU has got high tariffs on agricultural goods. Also, last year the EU introduced the largest number of anti-dumping cases, and lately, Commissioner Mandelson has been talking about the possibility of introducing ‘golden shares’ to protect some sectors from foreign takeovers. Is the EU really practising what it preaches?
Yes, we are probably the most open market in the world – open to investment, open to trade in goods. We are the largest importer of products from developing countries and the largest importer of agricultural produce from the developing world – so we are very, very open.
Of course, there are situations where we have to protect ourselves – anti-dumping cases are an example. But, for example, this year we have not opened one single anti-dumping case and we are not one of the greatest users of anti-dumping by any means.
On the issue of investment, everyone knows that this is a live issue. People are concerned that companies, which are protected from any takeover in their national context, may be able to use financial leverage to take over and manipulate companies in Europe.
It is a complex issue. I think what Mr. Mandelson was saying was that we should examine this. And the Commission’s view is that, ideally, we would like reciprocal openness everywhere. If we do not find that, then of course we have to look at whether we have to take measures to protect Europe from unfair practices.
There is growing concern about such unfair practices coming from China. Also on a day to day basis, people are worried about the increased competition, as they see factories closing and companies moving abroad. Should Europe perhaps be protecting itself more?
No, I don’t think we should. Europe gains massively from the global trading situation. We have a surplus of manufactured products. We are exporting more manufactured products than we are importing by far. We are the big winners of globalisation.
This is not to say that there are not very real issues of adjustment provoked by that situation, because factories close in one part of Europe and open in another part.
So, there are distributional issues within member states and there are issues of compensation across member states. We acknowledge this and, for example, we have created the Globalisation Adjustment Fund, which precisely permits member states or workers who have been displaced by trade flows to be compensated.
These are the kind of measures we need to intensify within Europe. But it is not by closing our frontiers.
We gain from low-cost imports; we gain from a free-trading environment. But we have to assume the social, political and economic consequences of a policy of openness in terms of adjustment mechanisms – retraining for workers and corrective measures of this kind.
Is the impact of the increasing world trade on our climate something that worries you? Do you see any solutions? Some people are talking more and more about ‘unnecessary’ trade – i.e. we do not have to fly many products around the world as we currently do. What do you think of this?
I do not think that trade in itself is detrimental to climate change. It is a question of whether we are pricing the transport costs correctly to reflect any environmental damage that is done when we carry goods from one part of the world to the other. And that is the only issue.
The idea that you would want to prevent goods from being transported seems to me to approach the problem from a completely wrong angle.
It is not the trade in itself that is the problem. It is a question of the associated policies – about whether we are using market mechanisms to address the very real issues of carbon emissions and global warming.
There are other effective ways to address these issues other than any suggestion of reducing world trade. A reduction in world trade would mean a reduction in world economic wealth and increase in poverty and a general deterioration of people’s standard of living.
Will the EU be pushing for a 0% tariff for environmental goods in the Doha Round?
Yes, this is an important objective for us.