Brussels, 02/02/2001 (Agence Europe) - The 31st World Economic Forum of Davos which ended on Tuesday was an especially rich and impassioned session, devoted to an agreed perspective of "sustainable growth, the mending of fractures, a framework for our world's future". This year, the event brought together over 2000 prominent people, from the industrialised and developing world of business, politics, academia and civil society, or almost as many as anti-globalisation demonstrators that tried in vain to join them. Many of those anti Davos went to Porto Alegre in Brazil to consider constructive alternatives to globalisation in what they called "World Social Forum" (see EUROPE of 31 January, p.17). What to remember from this week, seen from Brussels, among the profusion of debates of which Davos was the theatre?
Doubtless a first point to Europe's credit: participants stressed that 2001 could well be Europe's year, the one when the Union will, through its economic growth, overtake the American locomotive, which has somewhat run out of steam (to reach a rate "close to zero", according to Alan Greenspan, the President of the Federal Reserve) after some years of record performances. In the global context, "Europe could be the predominant source of growth for the world economy", said Stanley Fischer, First Deputy Director General of the International Monetary Fund, summarising the feelings broadly shared by the Assembly. Jean-Claude Trichet, Governor of the Banque de France, agreed: "I believe that growth in Europe will be significant, and most likely stronger than that of the United States". A rate of 2.5% was put forward by the less optimistic, 3% by German Finance Minister Hans Eichel and his French counterpart. "Europe is back", trumpeted Laurent Fabius, stipulating that this was a question of "confidence, not complacensy"
For many, these promising prospects are not without obstacles. Different opinions were heard in Davos on the nature of the obstacles the Union could find in its path. For some, especially economists, its performance could either be impeded or propelled above all hopes (the 5% growth that the Americans were recently still recording, or more even), depending on the rate of deregulation, labour market liberalisation and structural reforms. Its assets? Solid foundations and a margin of manoeuvre to relax its monetary policy, in response to the weakening of economic activity or the strengthening of the euro, or even to engage in additional structural reforms, said Mr. Fischer. But, as Mr. Fabius himself conceded, the forthcoming electoral deadlines in France and Germany will doubtless limit the latitude at national level, even though "our financial markets are pushing strongly for the pursuit of reforms". Some especially fear a rise in the strength of the European currency, notably the economist and Nobel Prize winner Robert Mundell, for whom, "the current danger is a steep rise in the euro" compared to the dollar. "If the euro goes too far, that could affect exports", and, whence, European competitiveness, Nicholas Stern, economic official in the World Bank, agreed.
For businessmen, it is the mentality in Europe that especially needs changing. Some mentioned the double administrative and tax burden weighing on the companies in the Old Continent. But, even more so, the Union is stigmatised by business circles for its lack of political leadership. "The greatest obstacle now looming is the lack of governance, different agendas", summarised one participant. He then, as did Peter Sutherland, President of Goldman Sachs International and former European commissioner (as well as former Director General of GATT), pointed to the "not very edifying spectacle of Nice". "I greatly regret that the French Government should have lost its voice regarding the long-term vision of Europe", declared a French businessman whose disappointment was shared, especially on the German side. A representative of the Deutsche Bank called on the Union to clarify the timetable for enlargement, whereas other people from the world of business stressed the need once and for all to specify the division of powers within the Union, between regional, national and Community levels.
Nevertheless, "Europe has certain natural assets" of which it could take advantage in the near future in the information technology market, stressed the editor-in-chief of an American publication in Silicone Valley, in another discussion. The concerted approach to technical standards that prevails on the Old Continent will be an asset for the second Internet era, based, notably, on interactive television, European Commissioner Erkki Liikanen was pleased to announce. The use of the Internet in European households is on the rise, he added, citing the figure of 28% of households with the Internet in January 2001 compared to 18% in March of last year, or a much higher rate of growth than on the American market.
Trade: Pascal Lamy and Mike Moore stress this will be a decisive year
Appeals for launching a new round of trade talks, restated by Europeans and Japanese in unison, found a fresh echo in Davos. On the fringe of the Forum, some fifteen industrialised and developing countries urged for Mike Moore, Director General of the World Trade Organisation (WTO), to make every possible effort so that the 140 would set out the framework for the future agenda of talks, from July this year.
The future of the trade system will "probably come into play this year", stressed Commissioner Pascal Lamy. Others recalled that the opportunity, provided by the Doha ministerial session, of launching the round in the autumn would be the last for years. If the round is not begun then, there is the risk of seeing the "multilateral system disintegrate and the problems of developing countries grow rapidly worse", summarised Alec Erwin, South African Trade Minister. The same words rung out in other WTO member countries including Argentina, Australia, Brazil, Korea, Egypt, Mexico and Nigeria. Mike Moore also tabled on the launching of a new round this year, provided that the "change in mood" to be seen in Geneva is accompanied by a "political commitment at the highest level". The support promised by a certain number of ministers, sometimes even from countries hitherto reticent, already gives him a sufficient "political margin" to go forward, he said. "We are now entering a new phase in very intensive consultation and we think that, by end July, we should see the shape of what will happen during the ministerial meeting", he declared shortly after to the Reuters Agency. Mr Moore is also aware of the devastating impact that a new fiasco of the Seattle kind could have. "One of the mistakes that we made in Seatlle", he said, "was to try to conclude negotiations rather than to launch negotiation. We went too far with the details".
Commissioner Lamy, for his part, sees a "rise in optimism levels", but three main obstacles have still to be overcome: to integrate nations which are still outside the system, tackle the broader issues of globalisation and deal with the concerns expressed by the public. The new trade round must put development issues in the foreground and tackle the problems of environmental protection, health and other issues of a social kind, insisted Commissioner Lamy. On the first aspect - the taking into account of the difficulties of developing countries mainly those linked to intellectual property, investment rules, textile quotas and farm subsidies from industrialised countries - views are beginning to converge. "The tone has changed", observed an African ambassador in Geneva, noting that, today, after a "period of affliction" during which several developing countries threatened to block the launching of the round if they did not obtain the flexibility desired for implementing the existing agreements, these countries seem to be willing to make an exchange of concessions with the rich countries in the context of the next round.
In addition, the announced relaxation of the Community position is reassuring. "We believe that an agenda closer to the concerns of the developing countries would help to refloat the process", declared a senior European official in Geneva, who wished to remain anonymous. The official stressed that the idea was also to aim at a conclusion within three years of the round that would, ideally, begin this autumn. According to convergent sources, the Union, which should have finished re-reading within a few weeks, could also review its ambitions downward regarding competition, investment and environment, including some of its demands that were very badly received in the Third World. For the environment, the agenda will remain "limited and non-protectionist", aimed at sustainable development. On the two other themes, however, the EU could propose to negotiate rules with those that so wish, without them necessarily becoming binding for the others. The EU would also be more receptive than before to the arguments of developing countries, that wish to obtain better access to the markets of rich countries, mainly for their agricultural and textile exports.
Finally, the unavoidable support of the United States has still to be obtained (but the new Administration was not represented in Davos). "Without a common transatlantic approach, it would be a disaster … but if we come to an agreement, I believe that the main opponents to the new round will follow closely on our heels", stressed another European official. Mike Moore, however, is very "reassured" and "comforted" by the first declarations by Robert Zoellick, designate US Trade Representative. He said he thought the attitude of the United States would be to push things forward.