World governance. Presenting his proposed new regime of trade preferences in favour of poor countries (GSP) to the press last week, Pascal Lamy described its as a "step towards better global governance". This significance was already in evidence last July when the Commission approved the general outlines of the GSP valid until 2015, which I wrote about in this column of 24 July. At present, the application regulation for the period 2006-2008 makes the outlines into operational standards, stating that certain additional advantages ("GSP+ regime") will be reserved for developing countries which agree to and apply the main international conventions on fundamental civil and social rights, environmental protection and correct management of public affairs, including the fight against the production and trafficking of drugs. The EU will not enforce anything: it will be the UN bodies with responsibility for the various conventions which will verify that they are being respected, and are thus eligible for the "GSP+" regime. At long last, therefore, an indirect link will be established between the international body responsible for trade (WTO) and the others. Europe has not yet managed to get the WTO to recognise the existence of a relationship between trade liberalisation and respect for internationally recognised social and environmental standards; with the Lamy project, it will pave the way by establishing this link itself, at least partially, in the framework of the GSP, which fully respecting the competencies of the WTO. It is no surprise that this initiative stems from Pascal Lamy, because world governance has long been at the centre of his thoughts (See this column of 8 July).
For the poorest. At the same time, the plan answers another of Pascal Lamy's main concerns, that of making it easy for the poorest countries to get a foothold in world trade. All the technical provisions proposed- administrative simplification, measures to ensure that one single beneficiary country doesn't end up with all the advantages, cumulation of origin, etc- assuage this concern (see our bulletin of 21 October, pages 7 and 8). The criticism levelled by a well-known NGO (see our bulletin of 22 October, p.13) whose actions are exemplary from several points of view, does not hold water: one sometimes gets the impression that Oxfam's main objective is not to help poor countries but to bad-mouth Europe. In order to avoid a situation, especially in the textiles sector, in which China virtually monopolises the European market to the detriment of poorer, less well-organised countries, Mr Lamy has proposed that the entitlement to the GSP in the textiles and clothing sector be withdrawn once the country exceeds 12.5% of the total European imports under the GSP for three years in a row. China has already exceeded this, and India is not far off. To call this measure "protectionism" is a nonsense; it's more like an Oxfam knee-jerk response. For one thing, there is blatantly nothing in it for the EU if slightly higher customs duties are levied on Chinese textiles than on Bangladeshi ones; the aim is merely to give the latter a tiny extra helping hand to carve itself a sustainable niche in the European market, now that its situation is going to be so much harder with all quantitative restrictions on China being removed on 1 January 2005 (see this column of 12 October). The volume of Community imports will be reduced not one iota by this measure; it depends on demand, and duty of 3% is not going to hold back the Chinese tidal wave. What has protectionism to do with all this? The same considerations are true for the rules of origin measures.
The main beneficiary. Mr Lamy was also asked about the risk that the European consumer could be penalised by the extra duty applied to Chinese textiles. This is ridiculous. The difference in the costs and prices compared to European products is so vast that the transporters, wholesalers and retailers could absorb the duty without even noticing it. By making the use of the GSP simpler, broader and more advantageous, the new regime will increase the availability of low-cost products, and the main beneficiary will be the consumer. Mr Lamy also observed that the preferential regime is granted on the basis of the origin of the product (the nationality of the investor doesn't come into it), and that the new regime will enter into force in July 2005, because the EU will have changed its "drugs" regime by then (which had existed for several years, but India discovered it… when Pakistan was included among its beneficiaries, and contested it in Geneva). The WTO authorised the principle of specific advantages to countries which make an effort to replace the cultivation of drugs with other agricultural products, but asked the EU to improve its mechanisms, which the new regime does.
It is now over to the European Parliament and the European Council.
(F.R.)