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Pascal Lamy OMC-WTO


English version below.




Le commerce international est-il dans l’impasse ? Entretien avec Pascal Lamy

Pascal Lamy
Pascal Lamy
L'essor du commerce international a-t-il pris fin avec la crise ouverte en 2008 ? Pas si simple, répond le directeur général de l’OMC. Si des tensions protectionnistes peuvent apparaître ici ou là, la vraie question touche à la complexification des échanges, et aux limites structurelles de la technique des cycles de négociations animés par les Etats.

ParisTech Review. La Chambre des industriels brésiliens évoquait, en marge de la conférence Rio+20, le risque d’un « protectionnisme vert ». Est-ce à dire qu’on verrait aujourd’hui se reconstituer des frontières commerciales plus discrètes ?

Pascal Lamy. Je ne dirais pas cela ainsi, même si certaines réglementations techniques peuvent avoir pour objectif la protection des marchés nationaux. Mais dans la pratique, c’est surtout à une complexification du jeu que l’on assiste. Prenons, si vous voulez, l’exemple de l’Asie.

60% du commerce international de cette région se fait avec elle-même, et on assiste aujourd’hui à un puissant mouvement d’ouverture commerciale continentale. Les pays asiatiques s’ouvrent les uns aux autres. C’est un premier phénomène, qui n’est pas sans lien avec l’essor plus général du commerce international dont les pays asiatiques sont des acteurs majeurs.

Mais le jeu se complique si l’on observe les accords commerciaux en vigueur : on s’aperçoit qu’ils sont nombreux et surtout qu’ils recouvrent des échelles et des espaces différents. Il y a par exemple l’ASEAN, l’ASEAN + 3 (avec la Chine, la Corée du Sud et le Japon), mais aussi le Trans-Pacific Partnership (TPP) lancé par les Etats-Unis mais qui ne comprend pas la Chine. L’intégration commerciale n’est donc pas uniforme, et elle est encore traversée d’enjeux politiques.

A cela s’ajoute la prolifération des chaînes de production globales, dans lesquelles sont intégrés les pays asiatiques, mais aussi les Etats-Unis, l’Union européenne, la côte Est de l’Amérique latine et, à un moindre degré, d’autres régions encore. C’est un phénomène encore plus structurant, et pourtant peu visible. En moyenne, le contenu en importations des exportations est passé de 20 à 40% en vingt ans. C’est énorme ! Et surtout, l’horizon de ce phénomène, c’est la dissolution de la notion même de commerce international. Car le problème ne sera plus de franchir une frontière, mais de pénétrer un espace réglementaire différencié.

Cela change-t-il la donne ?

Radicalement. Nous ne sommes plus dans les années 1980-1990, quand les négociations commerciales portaient avant tout sur des quotas et des tarifs douaniers. Nous vivons dans un monde où les enjeux d’ouverture des échanges sont dans la juxtaposition de réglementations différentes . Et il est plus difficile de négocier sur ces préférences, car les réglementations ne visent pas tant à protéger les producteurs que les consommateurs. C’est pourquoi il me paraît trop rapide de parler de protectionnisme, ou de reconstitution de barrières commerciales. Sans doute certains groupes de pression économiques jouent-ils en ce sens, en pesant pour l’adoption de telle ou telle réglementation. Mais le premier enjeu n’est pas là. Il est dans la protection des consommateurs.

On touche alors à des questions fondamentales, comme : qu’est-ce qu’un risque ? Bien sûr, la réponse à ces questions est également corrélée au niveau de développement d’une société donnée. Mais si vous prenez deux zones de développement équivalent, comme les Etats-Unis et l’Europe, la question de la viande aux hormones sera appréhendée d’une façon toute différente. La dimension culturelle est ici essentielle, et elle est beaucoup moins facile à négocier.

Ces problématiques nouvelles redonnent une pertinence à l’approche sectorielle, comme l’a montré l’accord sur les marchés publics signé en décembre 2011, qui devrait élargir le champ de l’accès aux marchés à hauteur de 80 à 100 milliards de dollars par an, sur des champs comme les infrastructures, les transports publics ou encore les équipements hospitaliers.

La montée en puissance des accords commerciaux bilatéraux vous semble-t-elle une menace pour les accords multilatéraux ?

Rappelons tout d’abord pourquoi le multilatéral a la faveur des économistes. S’il est généralement considéré comme un optimum, c’est qu’il offre aux entreprises les meilleures conditions en termes de stabilité et de transparence. C’est l’idée du « level playing field » : un environnement de marché dans lequel toutes les firmes doivent suivre les mêmes règles, et où elles ont donc les mêmes capacités à être compétitives. Les accords du GATT et l’OMC depuis 1995 procèdent de cette vision.

Il est vrai que les négociations du cycle de Doha, qui doivent permettre d’aller plus loin dans cette direction sont, pour l’instant, bloquées. C’est dans ce contexte qu’il faut se poser la question des « accords commerciaux préférentiels », en d’autres termes des accords bilatéraux. Entre ceux qui ont été notifiés à l’OMC, ceux qui sont en vigueur sans avoir été notifiés, ceux qui ont été signés mais ne sont pas encore entrés en vigueur, ceux qui sont en cours de négociation et ceux qui sont à l’état de proposition, on a environ 400 accords bilatéraux aujourd’hui.

L’univers du non multilatéral est divers dans ses intentions, dans sa géographie, dans ses méthodes, et dans sa composition sectorielle. L’incidence de ces accords sur le système commercial mondial nous a conduits collectivement à décider qu’ils seraient notifiés à l’OMC, afin de vérifier leur conformité avec les règles de l’Organisation.

Au-delà de cette question juridique, que peut-on en penser ? De notre point de vue, tout ce qui va vers une réduction des droits de douane va dans le bon sens, puisqu’en fin de compte cela permet d’abaisser les barrières commerciales et de favoriser la convergence. Bon nombre d’accords sont dans ce cas. Mais il en va différemment des accords où, pour ouvrir les échanges sur une base préférentielle, on touche aux préférences réglementaires. Car si on se met à ajuster le réglementaire en bilatéral, cela a un effet régressif. Et c’est précisément là que le bât blesse. Car les barrières commerciales non tarifaires sont un enjeu de plus en plus central.

Dans ces conditions, les grands cycles de négociation (hier l’Uruguay Round, aujourd’hui le Doha Round) ont-ils encore une pertinence ?

La technologie du round est un concept politique. Elle correspond à un monde ricardo-schumpeterien – les avantages comparatifs de Ricardo, la création-destruction de Schumpeter – dans lequel l’ouverture commerciale est globalement bénéfique mais fait des gagnants et des perdants. C’est l’origine des rounds : on considère que l’impact de l’ouverture commerciale est une question politique, et on tente d’équilibrer les pertes – je vous ouvre tel marché au risque de bousculer mes producteurs, en retour vous m’ouvrez tel marché sur lequel j’ai un avantage comparatif.

Ce modèle a été poussé à sa limite par trois phénomènes : la violence des chocs économiques subis lors des phases de destruction, chocs dont Ricardo et Schumpeter n’auraient jamais imaginé l’ampleur ; le nombre d’acteurs concernés ; et les limites politiques aux concessions possibles. Par exemple, les Etats-Unis ne peuvent pas, politiquement, cesser de subventionner le coton. C’est de l’économie politique au sens plein du terme : on a des négociateurs qui négocient avec eux-mêmes.

Ces limites politiques sont encore plus sensibles dans un contexte de crise, car les économies sont fragilisées et la capacité politique des négociateurs est affaiblie.

C’est dans ce contexte qu’on pourrait reprendre votre question sur le bilatéral. Certains processus d’intégration régionale, plus faciles à mener à bien, pourraient peut-être aider à réduire le nombre d’acteurs et peut-être aussi à fabriquer des acteurs capables de négocier. Cela a été l’une des avancées historiques de la construction européenne, mais l’UE est aujourd’hui le seul exemple d’une union douanière à laquelle a été déléguée la capacité de négociation.

Car en matière de commerce, même si la complexification des échanges rend le concept de frontière politique moins pertinent, les règles du jeu restent fixées par des traités internationaux, signés par des acteurs souverains. C’est toujours un monde westphalien, où des Etats discutent avec d’autres Etats. Economie et politique n’ont plus les mêmes géographies.

N’existe-t-il pas des discussions menées en parallèle, entre acteurs de terrain, sans passer par le filtre des Etats ?

Bien sûr, des discussions ont lieu en amont ou en parallèle de celles menées par les gouvernements avec la société civile (ONG, syndicats, organisations de producteurs). Mais aujourd’hui c’est surtout à l’échelon national qu’elle peut se faire entendre. Même si, en tant que directeur général de l’OMC, je passe beaucoup de temps à rencontrer des ONG ou d’autres groupes de pression. Les enjeux qu’elles portent, les intérêts qu’incarnent les acteurs non étatiques, ne sont pas absents du débat, même s’ils ont du mal à trouver leur voie dans des discussions déjà très ardues.

Une juste représentation des intérêts en présence est-elle possible ?

Elle est, par définition, très difficile, pour au moins deux raisons. La première est aujourd’hui technique, ou plus précisément elle découle de la technicité des questions évoquées. Cette technicité pose le problème de la capture de la réglementation par des intérêts particuliers. La transparence est essentielle, elle est en quelque sorte prophylactique. Mais sur des sujets très techniques où un simple détail peut faire la différence, elle ne suffit pas. C’est là que le travail de la société civile est essentiel : il faut de l’expertise, des capacités de décryptage, une volonté politique d’information et de formation du public. Beaucoup reste à faire sur ce sujet.

Deuxième raison, et on touche là au problème fondamental des négociations commerciales, les perdants savent très précisément pourquoi ils perdent et sont capables de se coaliser pour soutenir leur cause, tandis que les gagnants ignorent souvent qu’ils gagnent. Sur le T-shirt que vous achetez aujourd’hui moins cher, il n’y a pas marqué « Merci l’OMC » ! Sans surprise, depuis vingt ans que je travaille sur le commerce international, on a vu dans les pays émergents l’opinion publique se montrer de plus en plus favorable à la libéralisation des échanges, et dans les pays développés l’opinion est de moins en moins favorable. Non plus au nom des pauvres du Sud, comme c’était le cas dans les cercles radicaux dans les années 1990, mais au nom des pauvres du Nord. L’impact positif est obscurci par les difficultés liées à la restructuration des économies occidentales, à la crise, bien sûr, mais aussi au « grand basculement » évoqué par Jean-Michel Séverino, qui peut laisser croire que le chômage est dû aux délocalisations. Dans ces conditions les négociateurs des pays développés ont aujourd’hui moins de marges de manœuvre.

Certains émergents, dont l’Inde et la Chine, ont d’ailleurs protesté récemment contre les projets européens de fiscalité carbone, suggérant que l’objectif développement durable cachait en réalité un agenda protectionniste. Que peut-on en penser ?

Sur le plan des objectifs poursuivis, des règles nationales sont évidemment moins efficaces pour la lutte contre le changement climatique qu’un régime global… dont la compatibilité avec les règles d’ouverture des échanges serait plus évidente.

Sur le plan juridique et du point de vue de l’OMC, il n’y a, par exemple, pas d’objection de principe à la mise en place d’une fiscalité carbone qui viserait à internaliser les externalités environnementales, puisque nos statuts mettent les échanges au service du développement durable. La question se pose en revanche de vérifier si les outils mis en place sont conformes aux règles en vigueur.

Il y a quatre outils principaux : régulation, subventions, taxation, permis. Chacune de ces approches peut être testée à l’aune des accords de l’OMC (par exemple l’accord sur les subventions), et il existe une jurisprudence précise, qui permet de travailler au cas par cas. Certains pays nordiques ont une fiscalité carbone depuis trente ans déjà, sans que cela ait jamais posé de problème.

Parmi les sujets qui fâchent, il y a aussi le régime des changes.

Oui : la question des taux de change n’avait jamais été abordée dans le cadre de l’OMC, mais le sujet est réapparu l’an dernier, non à propos du yuan, mais à l’initiative des Brésiliens et sur des questions qui touchaient au cours du real face au dollar.

Le moins qu’on puisse dire est que le sujet est très compliqué. L’article 15 du GATT, dont on rapporte qu’il a été écrit par Keynes en personne, dit en substance que vous ne pouvez pas manipuler votre taux de change pour échapper aux disciplines d’ouverture commerciale auxquelles vous avez souscrit. C’est un principe central… mais il n’a jamais été invoqué au contentieux, ce qui fait qu’il n’y a pas vraiment de doctrine juridique sur ces questions. La question a certes été soulevée depuis vingt ans dans le débat public, mais pendant ces vingt ans tout le monde, moi y compris, a considéré que ce n’était pas un sujet pour l’OMC : à Genève, le commerce, à Washington (siège du FMI), les taux de change. On est aujourd’hui sorti de ce silence… sans être beaucoup plus avancé !

Le FMI, l’institution la plus à même de traiter ces questions, a révisé récemment son diagnostic : le yuan ne serait plus que « modérément » sous–évalué alors qu’il l’était « substantiellement », il y a deux ans.

Ce que je retire des discussions en cours, ce sont plusieurs éléments ; les uns économiques, les autres juridiques.

Tout d’abord on ne peut pas nier que les variations de change aient des effets à court terme dans les échanges. Mais ces effets sont moins décelables à long terme. Et leur impact dépend d’un paramètre : la valeur ajoutée de votre participation au commerce mondial. On voit bien qu’une monnaie sous-évaluée favorise les exportations, mais comme je vous le disais tout à l’heure il y a de plus en plus d’importations dans les exportations. Par ailleurs il faut tenir compte de la diversité en devises des paniers d’importations et d’exportations. Enfin, si l’on considère le cas particulier du yuan, le rééquilibrage progressif du commerce chinois tend à gommer le problème. A supposer qu’il puisse être démontré que la Chine a tiré un avantage comparatif indu en sous-évaluant sa monnaie, cet avantage n’aura été que temporaire.

Juridiquement, on manque donc d’arguments et d’outils pour traiter ces questions. Même s’il est avéré que le taux de change chinois n’est pas libre, rien ne les y oblige formellement. Une législation américaine avait tenté une parade, en légitimant des compensations anti-dumping au motif que ces compensations répondraient à des subventions déguisées. Mais cette loi s’est arrêtée à l’une des deux chambres.

Il faut comprendre que les filets de la régulation internationale sont hétérogènes. Certains ont des mailles très étroites, comme l’Office international des épizooties ; d’autres, sur un sujet pourtant majeur pour la vie des affaires comme la corruption, ont des mailles très larges. Et les Etats ne rentrent dans la régulation internationale que s’ils ont un intérêt à y aller. En 1947, lors de la signature des accords du GATT, il y avait une impulsion très forte, car on sortait de la crise des années 1930 et de la guerre. On a pu, à ce moment, dépasser un peu le jeu westphalien. La crise pose à nouveau cette question aujourd’hui. Saurons-nous y répondre ? C’est la grande question de notre époque.

Interview réalisée par notre partenaire ParisTech Review.

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Has international trade reached a deadlock? An interview with Pascal Lamy

Has international trade come to a standstill with the crisis that started in 2008? Things are not that simple, says the Director-General of the WTO. While protectionist pressures may appear here and there, the real question revolves around the growing complexity of trade and the structural limits inherent to the technique of negotiation rounds undertaken by member states.

ParisTech Review. In parallel with the Rio +20 conference, the Brazilian Chamber of Commerce evoked the risk of a “green protectionism”. Does this mean more inconspicuous trade barriers could arise?

Pascal Lamy. I would not put things that way, although some technical regulations may really be intended to protect domestic markets. But what we are witnessing is actually a complexification of the game. Let us consider, if you will, the example of Asia.

60% of this area’s international trade is carried out between its own countries, and we are now witnessing a powerful drive towards a continental trade liberalization. Asian countries are opening up to each other. This is a first phenomenon, which is not unrelated to the more general expansion of international trade in which Asian countries are major players.

But the game gets more complicated if you look at the existing trade agreements: you realize that there are many and more especially, that they cover different scales and different spaces. There is for instance ASEAN, ASEAN + 3 (with China, South Korea and Japan), but also the Trans-Pacific Partnership (TPP) launched by the United States but that does not include China. Trade integration, thus, is far from being uniform, and is still subject to underlying political issues.

Add to this the proliferation of global production chains, in which the Asian countries are integrated, but also the United States, the European Union, the East Coast of Latin America and, to a lesser extent, other areas as well. This is an even more structuring – yet inconspicuous – phenomenon. On average, the import content of exports has risen from 20 to 40% in twenty years. This is huge! And above all, looming in the distance of this phenomenon is the dissolution of the very notion of international trade. Because the problem will no longer be about crossing a border, but about entering a differentiated regulatory space.

Is this a game-changer?

Radically so. We are no longer in 1980-1990, when trade negotiations focused primarily on quotas and tariffs. We live in a world where the stakes behind trade openness have to do with the juxtaposition of different regulations. And it is more difficult to negotiate on these preferences, because regulations are not intended to protect producers as much as consumers. Therefore it seems to me that it is too early to talk about protectionism, or of the return of trade barriers. Undoubtedly some business lobbyists are playing to that end, pushing for the adoption of specific regulations. But the real challenge does not reside there. The real challenge is protecting consumers.

At this point, fundamental questions come in, like: what is risk? Of course, the answer to these questions is also correlated with the developmental level of a given society. But if you take two areas with equivalent development, such as the United States on one side and Europe on the other, the issue of hormone-treated meat, for instance, will be viewed in a quite different perspective in each place. The cultural dimension is essential here, and it is much less easy to negotiate.

These new issues have reinforced the relevance of sectoral approach, as shown by the Government Procurement Agreement that was signed in December 2011, which should broaden the scope of market access by 80 to 100 billion dollars per year in areas such as infrastructure, public transportation or hospital equipment.

Do you think the rising power of bilateral trade agreements is a threat to multilateral agreements?

We should first recall why multilateralism is favored by economists. If it is widely considered an as an optimum, it is because it offers companies the best conditions in terms of stability and transparency. This is the idea of a “level playing field”: a market environment in which all firms must follow the same rules, and where, therefore, they have the same capability to be competitive. The GATT and since 1995 the WTO derive from this vision.

It is true that the negotiations of the Doha round, which should allow to go further in this direction are, for now, in a deadlock. It is in this context that it becomes imperative to question “preferential trade agreements” – in other words, bilateral agreements. For between those which have been notified to the WTO, those which have been implemented without having been notified, those which have been signed but not yet enforced, those which are under negotiation and those still in draft status, we have about 400 bilateral agreements today.

Nonmultilateral agreements have very diverse intentions, geographies, methods, and sectoral compositions. The impact of these agreements on the global trading system has led us to decide collectively that they would be notified to the WTO, so as to verify their compliance with WTO rules.

Beyond legal aspects, what should we think of it? From our perspective, anything that goes towards reducing tariffs is heading in the right direction, as ultimately it permits to lower trade barriers and to promote convergence. This is the case for many agreements. But things are quite different regarding agreements which, in order to open up trade on a preferential basis, breach regulatory preferences. Because if you start dealing with regulatory stuff in a bilateral context, what you have is a regressive effect. And this is precisely the rub. Because non-tariff trade barriers are an issue that is more and more central.

Under these conditions, do the great rounds of negotiation (the Uruguay Round yesterday, the Doha Round today) still have relevance?

The technology of rounds is a political concept. It is aligned with a Ricardo-Schumpeterian world – Ricardo’s comparative advantages, Schumpeter’s creation/destruction – in which trade liberalization is overall beneficial, but in which there are winners and losers. This is the origin of rounds: the impact of trade liberalization is considered to be a political issue, and attempts are made to balance the loss: I will open this market to you at the risk of upsetting my producers, and in return you open such and such market to me, in which I have a comparative advantage.

This model has been pushed to its limit by three phenomena: the violence of economic shocks suffered during destruction phases – the magnitude of which neither Ricardo nor Schumpeter could ever have imagined; the sheer number of players involved; and lastly, the political limits that possible concessions are faced with. For example, the United States cannot, politically, stop subsidizing cotton. This is political economy in its fullest sense: what we have here are negotiators who are negotiating with themselves.

These political limits are even more sensitive in a context of crisis, because economies are more fragile and the political capacity of negotiators is thus weakened.

It is within this context that your question on bilateralism could be addressed. Some regional integration processes, easier to carry out, could perhaps help to reduce the number of players and perhaps also to produce players able to negotiate. This was one of the historic breakthroughs of European integration but presently the EU is the only example of a customs union which has been granted delegated negotiating ability.

Because in trade, even though the growing complexity of exchanges makes the concept of political border less relevant, rules remain set by international treaties signed by sovereign players. It’s still a Westphalian world, where states discuss with other states. Economics and politics no longer share the same geography.

Are there no discussions in parallel, conducted between field players, bypassing States’ filters?

Of course, discussions are taking place upstream or in parallel to those carried out by governments with civil society (NGOs, trade unions, producer organizations). But today these can be heard mostly at the national level. Even though, as Director General of the WTO, I spend much time meeting with NGOs and other pressure groups. The issues they address, the interests embodied by non-state actors, are not absent from the debate, even if they have a hard time finding their way into already very tough discussions.

Is a fair representation of relevant interests possible?

It is, by definition, very difficult, for at least two reasons. Today the first reason is technical, or more precisely, it stems from the technicality of the issues discussed. This technicality poses the problem of regulation capture by special interests. Transparency is essential, it is, in a sense, prophylactic. But on highly technical subjects where a simple detail can make a difference, it is not enough. This is where the work of civil society is crucial: it requires expertise, decryption capabilities, and political will to inform and educate the public. Much remains to be done on this subject.

Second reason, and this raises a fundamental problem of trade negotiations, in this game the losing parties know precisely why they lose and are able to form coalitions to support their causes, while the winning parties are often unaware they won. The T-shirt you are buying cheaper today doesn’t come with a “Thank you WTO” sign on it! I have been working on international trade for twenty years, and unsurprisingly, it turns out that in emerging countries, public opinion is more and more open to trade liberalization, while in developed countries it is less and less favorable to it. Not in the name of the poor in the South anymore, as was the case in radical circles in the 1990s, but on behalf of the poor in the North. The positive impact is obscured by the difficulties associated with the restructuring of Western economies, by the crisis, of course, but also by the great shift from industrialzed countries to emerging countries, which may lead to think that unemployment is due to relocation. Under these conditions negotiators from developed countries now have less room to maneuver.

As a matter of fact, some emerging countries, notably India and China, have recently protested against the European carbon tax proposal, suggesting that the sustainable development objective was actually hiding a protectionist agenda. What should we think of it?

In terms of the objectives pursued, national rules are obviously less effective in the fight against climate change than a global regime… which compatibility with open trading rules would obviously be more fitting.

From a legal perspective and the WTO’s point of view, there is no objection in principle to the establishment of a carbon tax that would seek to internalize environmental externalities, as our statutes put trade and all exchanges at the service of sustainable development. The question arises, however, to verify whether the tools put in place comply with the rules.

There are four chief tools: regulation, subsidies, taxes, and permits. Each of these approaches can be tested in terms of WTO agreements (e.g. the agreement on subsidies), and there is a precise body of case law, which allows to work on a case by case basis. Some Nordic countries have had a working carbon tax for thirty years already, without this having ever been a problem.

Among the sensitive subjects, there is also the exchange rate regime.

Indeed: the issue of exchange rates had never been addressed within the framework of the WTO, but the issue reappeared last year, although not about the Yuan, but at the initiative of Brazilians and about issues involving the rate of the Brazilian Real against the Dollar.

The least we can say is that the subject is very complicated. Article 15 of GATT, which is reported to have been written by Keynes himself, essentially says that you cannot manipulate your exchange rate to escape the disciplines of trade openness you subscribed to. It is a central principle… yet it has never been invoked in litigation, so there is no real legal doctrine on these matters. The issue has certainly been raised in the course of twenty years in the public debate, but during these twenty years everyone, including myself, felt that it was not an issue for the WTO: Geneva is about trade, and Washington (IMF Headquarters) is about exchange rates. We have now broken the silence… but we’re no further forward today than we were then!

The IMF, the institution best able to address these issues, has recently revised its diagnosis: according to it, the Yuan is only “moderately” undervalued while it was “substantially” undervalued, two years ago.

There are several elements I take from ongoing discussions; some are economic, the others legal.

Firstly one cannot deny that exchange rate fluctuations have a short-term impact on exchanges. But these effects are less noticeable in the long run. And their impact depends on one parameter: the added value of your participation in world trade. It is obvious that an undervalued currency will promote exports, but as I said earlier there are more and more imports contained within exports. Also, the currency diversity of imports and exports baskets must be taken into account. Finally, if we consider the special case of the Yuan, the gradual rebalancing of China’s trade tends to iron out the problem. Assuming that it could be demonstrated that at some point China benefited from an unfair competitive advantage by undervaluing its currency, this advantage was only temporary.

Therefore, we are lacking legal arguments and tools to address these issues. Even if it were found that the Chinese exchange rate actually is not free, nothing obliges them formally to do otherwise. U.S. legislation had attempted a parade, by legitimizing anti-dumping offsets on the grounds that such compensation was retaliating against disguised subsidies. But this law was rejected by one of the Houses.

One must understand that the nets of international regulation are heterogeneous, making it more or less easy to slip through. Some institutions have very close-knit meshes, like the World Organization for Animal Health (OIE), others, even though they deal with a major topic for the course of trade such as corruption, have very large meshes. And states do not join international regulations unless they have an interest in going there. In 1947, when the GATT was signed, there was a very strong impulse, for we were just emerging from the 1930s crisis and doing our best to address the aftermath of World War II. At that time, we proved we were capable of going a little beyond the Westphalian game. Today’s crisis raises the very same issue – again. Will we be able to respond in time? This is the great question of our age.

Interview realized by our partner ParisTech Review.

Has international trade reached a deadlock? An interview with Pascal Lamy

Has international trade come to a standstill with the crisis that started in 2008? Things are not that simple, says the Director-General of the WTO. While protectionist pressures may appear here and there, the real question revolves around the growing complexity of trade and the structural limits inherent to the technique of negotiation rounds undertaken by member states.

ParisTech Review. In parallel with the Rio +20 conference, the Brazilian Chamber of Commerce evoked the risk of a “green protectionism”. Does this mean more inconspicuous trade barriers could arise?

Pascal Lamy.I would not put things that way, although some technical regulations may really be intended to protect domestic markets. But what we are witnessing is actually a complexification of the game. Let us consider, if you will, the example of Asia.

60% of this area’s international trade is carried out between its own countries, and we are now witnessing a powerful drive towards a continental trade liberalization. Asian countries are opening up to each other. This is a first phenomenon, which is not unrelated to the more general expansion of international trade in which Asian countries are major players.

But the game gets more complicated if you look at the existing trade agreements: you realize that there are many and more especially, that they cover different scales and different spaces. There is for instance ASEAN, ASEAN + 3 (with China, South Korea and Japan), but also the Trans-Pacific Partnership (TPP) launched by the United States but that does not include China. Trade integration, thus, is far from being uniform, and is still subject to underlying political issues.

Add to this the proliferation of global production chains, in which the Asian countries are integrated, but also the United States, the European Union, the East Coast of Latin America and, to a lesser extent, other areas as well. This is an even more structuring – yet inconspicuous – phenomenon. On average, the import content of exports has risen from 20 to 40% in twenty years. This is huge! And above all, looming in the distance of this phenomenon is the dissolution of the very notion of international trade. Because the problem will no longer be about crossing a border, but about entering a differentiated regulatory space.

Is this a game-changer?

Radically so. We are no longer in 1980-1990, when trade negotiations focused primarily on quotas and tariffs. We live in a world where the stakes behind trade openness have to do with the juxtaposition of different regulations. And it is more difficult to negotiate on these preferences, because regulations are not intended to protect producers as much as consumers. Therefore it seems to me that it is too early to talk about protectionism, or of the return of trade barriers. Undoubtedly some business lobbyists are playing to that end, pushing for the adoption of specific regulations. But the real challenge does not reside there. The real challenge is protecting consumers.

At this point, fundamental questions come in, like: what is risk? Of course, the answer to these questions is also correlated with the developmental level of a given society. But if you take two areas with equivalent development, such as the United States on one side and Europe on the other, the issue of hormone-treated meat, for instance, will be viewed in a quite different perspective in each place. The cultural dimension is essential here, and it is much less easy to negotiate.

These new issues have reinforced the relevance of sectoral approach, as shown by the Government Procurement Agreement that was signed in December 2011, which should broaden the scope of market access by 80 to 100 billion dollars per year in areas such as infrastructure, public transportation or hospital equipment.

Do you think the rising power of bilateral trade agreements is a threat to multilateral agreements?

We should first recall why multilateralism is favored by economists. If it is widely considered an as an optimum, it is because it offers companies the best conditions in terms of stability and transparency. This is the idea of a “level playing field”: a market environment in which all firms must follow the same rules, and where, therefore, they have the same capability to be competitive. The GATT and since 1995 the WTO derive from this vision.

It is true that the negotiations of the Doha round, which should allow to go further in this direction are, for now, in a deadlock. It is in this context that it becomes imperative to question “preferential trade agreements” – in other words, bilateral agreements. For between those which have been notified to the WTO, those which have been implemented without having been notified, those which have been signed but not yet enforced, those which are under negotiation and those still in draft status, we have about 400 bilateral agreements today.

Nonmultilateral agreements have very diverse intentions, geographies, methods, and sectoral compositions. The impact of these agreements on the global trading system has led us to decide collectively that they would be notified to the WTO, so as to verify their compliance with WTO rules.

Beyond legal aspects, what should we think of it? From our perspective, anything that goes towards reducing tariffs is heading in the right direction, as ultimately it permits to lower trade barriers and to promote convergence. This is the case for many agreements. But things are quite different regarding agreements which, in order to open up trade on a preferential basis, breach regulatory preferences. Because if you start dealing with regulatory stuff in a bilateral context, what you have is a regressive effect. And this is precisely the rub. Because non-tariff trade barriers are an issue that is more and more central.

Under these conditions, do the great rounds of negotiation (the Uruguay Round yesterday, the Doha Round today) still have relevance?

The technology of rounds is a political concept. It is aligned with a Ricardo-Schumpeterian world – Ricardo’s comparative advantages, Schumpeter’s creation/destruction – in which trade liberalization is overall beneficial, but in which there are winners and losers. This is the origin of rounds: the impact of trade liberalization is considered to be a political issue, and attempts are made to balance the loss: I will open this market to you at the risk of upsetting my producers, and in return you open such and such market to me, in which I have a comparative advantage.

This model has been pushed to its limit by three phenomena: the violence of economic shocks suffered during destruction phases – the magnitude of which neither Ricardo nor Schumpeter could ever have imagined; the sheer number of players involved; and lastly, the political limits that possible concessions are faced with. For example, the United States cannot, politically, stop subsidizing cotton. This is political economy in its fullest sense: what we have here are negotiators who are negotiating with themselves.

These political limits are even more sensitive in a context of crisis, because economies are more fragile and the political capacity of negotiators is thus weakened.

It is within this context that your question on bilateralism could be addressed. Some regional integration processes, easier to carry out, could perhaps help to reduce the number of players and perhaps also to produce players able to negotiate. This was one of the historic breakthroughs of European integration but presently the EU is the only example of a customs union which has been granted delegated negotiating ability.

Because in trade, even though the growing complexity of exchanges makes the concept of political border less relevant, rules remain set by international treaties signed by sovereign players. It’s still a Westphalian world, where states discuss with other states. Economics and politics no longer share the same geography.

Are there no discussions in parallel, conducted between field players, bypassing States’ filters?

Of course, discussions are taking place upstream or in parallel to those carried out by governments with civil society (NGOs, trade unions, producer organizations). But today these can be heard mostly at the national level. Even though, as Director General of the WTO, I spend much time meeting with NGOs and other pressure groups. The issues they address, the interests embodied by non-state actors, are not absent from the debate, even if they have a hard time finding their way into already very tough discussions.

Is a fair representation of relevant interests possible?

It is, by definition, very difficult, for at least two reasons. Today the first reason is technical, or more precisely, it stems from the technicality of the issues discussed. This technicality poses the problem of regulation capture by special interests. Transparency is essential, it is, in a sense, prophylactic. But on highly technical subjects where a simple detail can make a difference, it is not enough. This is where the work of civil society is crucial: it requires expertise, decryption capabilities, and political will to inform and educate the public. Much remains to be done on this subject.

Second reason, and this raises a fundamental problem of trade negotiations, in this game the losing parties know precisely why they lose and are able to form coalitions to support their causes, while the winning parties are often unaware they won. The T-shirt you are buying cheaper today doesn’t come with a “Thank you WTO” sign on it! I have been working on international trade for twenty years, and unsurprisingly, it turns out that in emerging countries, public opinion is more and more open to trade liberalization, while in developed countries it is less and less favorable to it. Not in the name of the poor in the South anymore, as was the case in radical circles in the 1990s, but on behalf of the poor in the North. The positive impact is obscured by the difficulties associated with the restructuring of Western economies, by the crisis, of course, but also by the great shift from industrialzed countries to emerging countries, which may lead to think that unemployment is due to relocation. Under these conditions negotiators from developed countries now have less room to maneuver.

As a matter of fact, some emerging countries, notably India and China, have recently protested against the European carbon tax proposal, suggesting that the sustainable development objective was actually hiding a protectionist agenda. What should we think of it?

In terms of the objectives pursued, national rules are obviously less effective in the fight against climate change than a global regime… which compatibility with open trading rules would obviously be more fitting.

From a legal perspective and the WTO’s point of view, there is no objection in principle to the establishment of a carbon tax that would seek to internalize environmental externalities, as our statutes put trade and all exchanges at the service of sustainable development. The question arises, however, to verify whether the tools put in place comply with the rules.

There are four chief tools: regulation, subsidies, taxes, and permits. Each of these approaches can be tested in terms of WTO agreements (e.g. the agreement on subsidies), and there is a precise body of case law, which allows to work on a case by case basis. Some Nordic countries have had a working carbon tax for thirty years already, without this having ever been a problem.

Among the sensitive subjects, there is also the exchange rate regime.

Indeed: the issue of exchange rates had never been addressed within the framework of the WTO, but the issue reappeared last year, although not about the Yuan, but at the initiative of Brazilians and about issues involving the rate of the Brazilian Real against the Dollar.

The least we can say is that the subject is very complicated. Article 15 of GATT, which is reported to have been written by Keynes himself, essentially says that you cannot manipulate your exchange rate to escape the disciplines of trade openness you subscribed to. It is a central principle… yet it has never been invoked in litigation, so there is no real legal doctrine on these matters. The issue has certainly been raised in the course of twenty years in the public debate, but during these twenty years everyone, including myself, felt that it was not an issue for the WTO: Geneva is about trade, and Washington (IMF Headquarters) is about exchange rates. We have now broken the silence… but we’re no further forward today than we were then!

The IMF, the institution best able to address these issues, has recently revised its diagnosis: according to it, the Yuan is only “moderately” undervalued while it was “substantially” undervalued, two years ago.

There are several elements I take from ongoing discussions; some are economic, the others legal.

Firstly one cannot deny that exchange rate fluctuations have a short-term impact on exchanges. But these effects are less noticeable in the long run. And their impact depends on one parameter: the added value of your participation in world trade. It is obvious that an undervalued currency will promote exports, but as I said earlier there are more and more imports contained within exports. Also, the currency diversity of imports and exports baskets must be taken into account. Finally, if we consider the special case of the Yuan, the gradual rebalancing of China’s trade tends to iron out the problem. Assuming that it could be demonstrated that at some point China benefited from an unfair competitive advantage by undervaluing its currency, this advantage was only temporary.

Therefore, we are lacking legal arguments and tools to address these issues. Even if it were found that the Chinese exchange rate actually is not free, nothing obliges them formally to do otherwise. U.S. legislation had attempted a parade, by legitimizing anti-dumping offsets on the grounds that such compensation was retaliating against disguised subsidies. But this law was rejected by one of the Houses.

One must understand that the nets of international regulation are heterogeneous, making it more or less easy to slip through. Some institutions have very close-knit meshes, like the World Organization for Animal Health (OIE), others, even though they deal with a major topic for the course of trade such as corruption, have very large meshes. And states do not join international regulations unless they have an interest in going there. In 1947, when the GATT was signed, there was a very strong impulse, for we were just emerging from the 1930s crisis and doing our best to address the aftermath of World War II. At that time, we proved we were capable of going a little beyond the Westphalian game. Today’s crisis raises the very same issue – again. Will we be able to respond in time? This is the great question of our age.

Interview realized by our partner ParisTech Review.

BIO

Mr. Pascal Lamy is Director-General of the World Trade Organisation (WTO) since September 2005.
Mr. Lamy holds degrees from the Paris based Ecole des Hautes Études Commerciales (HEC), from the Institut d’Etudes Politiques (IEP) and from the Ecole Nationale d’Administration (ENA). He began his career in the French civil service at the Inspection Générale des finances and at the Treasury. He then became an advisor to the Finance Minister Jacques Delors, and subsequently to Prime Minister Pierre Mauroy.
In Brussels from 1985 to 1994, Pascal Lamy was Chief of staff for the President of the European Commission, Jacques Delors, and his representative as Sherpa in the G7.
In November 1994, he joined the team in charge of rescuing Credit Lyonnais, and later became CEO of the bank until its privatisation in 1999.
Between 1999 and 2004, Pascal Lamy was Commissioner for Trade at the European Commission under Romano Prodi.
After his tenure in Brussels, Pascal Lamy spent a short sabbatical period as President of “Notre Europe”, a think tank working on European integration, as associate Professor at the l’Institut d’études politiques in Paris and as advisor to Poul Nyrup Rasmussen (President of the European Socialist Party).

Lundi 10 Septembre 2012
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