Rio+10 Conference, Brussels, 10 May 2001
Ladies and gentlemen,
I was delighted to accept your invitation to address this gathering here tonight on questions of trade and sustainability. Alas, this was a short-lived joy. Because I quickly realised what formidable task I had let myself in for.
Not only do I have to speak to you after you have already had a long day of various interventions and discussions and are looking forward to your well-deserved dinner, rather than to having to listen to another speech - I also am at a disadvantage as I haven't had the privilege to listen to the debates you have had during the day. Well, I guess I just have to face the challenge as well as I can, and rely on you filling me in on your work during discussion time.
The Rio + 10 Coalition has shown impeccable timing in scheduling this conference in the week just before the Commission will adopt its strategy paper for the Göteborg European Council devoted to sustainable development. So sustainable development is the flavour of the month. It has constantly moved up on the EU agenda over the past year, and the issue is there to stay. Essentially, this is what it boils down to: it stands to reason that the world cannot indulge in reckless plundering of the world's resources without regard for the consequences on the environment or for social equity. We want to achieve a pattern of economic development that can be maintained in the short and medium term, and sustained for future generations.
Sustainable development is a declared ambition for both developed and less developed countries. What contribution can trade policy make to this aim? We need to ensure that the sustainability benchmark is built into the thinking of trade policy-makers worldwide. Our policy measures have to pass a triple test:
will they help social development, especially in developing countries but also here? will they encourage stable worldwide growth? will they pay attention to careful use of resources, and reduce pollution? It is hard to hit all three targets at once, but to over-emphasise any one of them would be to miss the point of sustainable development.
So where does the EU stand, and how does the European Commission play its role?
The quick and easy answer is that we are already doing a lot. A first innovation introduced by us ahead of the Seattle Ministerial is the Sustainable Impact Assessment of the proposed new round of negotiations: an effort at better informing trade policy makers and those concerned by it about the impact of trade measures on so-called non-trade issues. The idea behind conducting such assessments is that trade policy and trade negotiations do not evolve in a vacuum, but are linked with other policy areas, and that it is necessary, therefore, to gain as much information as possible about impacts on growth, environment, and social aspects.
But this is just the starting point: after informing policy-makers, policy itself must fulfil the new requirements: trade policy must act in coherence with policies in other areas, taking into account all possible impacts. The European Union has set itself a number of targets in this regard, including the Cardiff decision to work on the integration of environmental considerations into all major policies of the EU, and the request of the European Council to the Commission and Member States to deliver a sustainability strategy in time for the European Council in Göteborg later this year - with a view to the World Summit on Sustainable Development. In the midst of all this, the WTO Ministerial Conference in Qatar later this year will be an important milestone for trade policy makers.
But these targets are not the only ones: making trade and trade policy more sustainable is an ongoing process - which does not end with the events and processes I have just mentioned.
The work that has been done so far (and this includes the preparation of a working paper on trade and sustainable development by my services in DG Trade) should therefore also be seen with this perspective in mind: we have started the process and launched the debate - and the solutions and decisions that need to be taken will take place as we go along.
And this task ahead, all of us should work step by step to move the trade and sustainability agenda forward.
During the past weeks and months my services and I myself have been speaking to the European Parliament, our Member States, and civil society organisations to further the debate and spark ideas on this issue.
This morning, I met with NGOs and civil society representatives to discuss sustainability in trade policy, and to draw some lessons from the debate which we have launched with these organisations.
The very organisers of today's and tomorrow's event in the framework of the Rio+10 Coalition meetings in which we are currently participating, have been working on the stimulation of discussions and debate on the issues, and I will address one of the key proposals made in this context later on.
Work is well in hand, therefore.
But this is just the process. What about the substance? What about the central issues that have to be considered, if we want sustainable development to work, and to allow us all to continue to live in prosperity that is not a mortgage on the future for our children's and our children's children?
I would advance three key points that are preconditions to making sustainable development work.
1. Coherence:
Ensuring coherence and co-ordination of Community policies is, I think, the central challenge we have to meet in order to achieve sustainable development: We need to put more systematically the different Community policies (internal and external!) at the service of strategic priority objectives. Unfortunately, coherence is often defined the other way around: as an attempt to itnegrate sustianbel development into the various sectoral policies. But such a compartmentalisation would run directly counter to the comprehensive, cross-sectoral approach that the objective of sustainability requires. Let me take two examples to illustrate this point: poverty alleviation, and the integration of environment costs in economic calculations.
Poverty alleviation, I think we all agree, is a central if not the central development policy question affecting us all. Poverty is the key issue to solve, and its reductions has potential impacts on many fronts, from health to food security to social conditions. There is no way in which we will solve the poverty problem, if we do not allow trade to play its role in the most beneficial way possible. Trade is and remains the most powerful motor available to us for building prosperity. In fact, most recent development policy initiatives, and reflection on such policy integrate trade and economic development and do not attempt to advance in one without the other. The recently concluded new Cotonou agreement with our ACP partners is a good example for this - as is the Everything But Arms Initiative (EBA).
In environment, much the same is valid: one of the key arguments brought forward again and again to demonstrate how fallacious are conventional approaches to trade and globalisation, is to say that environmental impacts are not part of the costing calculations for establishing the viability of trading or economic ventures. I have two comments to make on this: one, on substance, this is not entirely true anymore, although admittedly, the picture is very mixed: many major companies in those sectors that have been responsible for the most controversial pollution cases in the past do undertake, nowadays, environmental impact assessments as a matter of routine to ensure sustainability of their work. Many of you must also be aware of the cooperation of a number of well-known business organisations with leading NGOs to establish systems that allow more sustainable approaches to their operation. Don't misread me: I'm not claiming that this is perfect, and that the problems we face in this respect will now go away: but the inclusion of environmental elements in costing and business planning is already a reality in some areas. Governmental or semi-governmental impact assessments (for example the country case studies carried out with the support of UNEP) also have a role to play.
Second, and equally importantly, this implies that environment policy itself establish the means and techniques to integrate trade elements. Environment impacts of Human activity, whether they are business, or otherwise, are costs, and should be treated as such. But as we all know, the avoidance or reduction of environment impacts also presents opportunities. Environment policy cannot, therefore, limit itself to introducing restrictions on economic activity which are aimed at avoiding negative impacts - it must move forward beyond this limited approach and assist in developing ways in which human activities, including trade, can be reconciled with the environment, and end up making positive contributions to the environment and to sustainability. One good example of this is the trade in environmental services, or the certification of environmentally sustainable products. A more controversial example has been discussed at length in the context of the climate change negotiations: emissions trading. In other words, environment policy needs to consider and where possible integrate trade elements - as well as obviously the other way around.
In similar fashion, we need to look again carefully at the in a sense artificial conflict between MEAs and trade: what needs to be done is to find ways and means to achieve dovetailing between the goals of the MEAs on the one hand, and the benefits of trade on the other side. One of the more interesting contributions made in this context in our dialogue with civil society organisations was a paper (from an environmental NGO) which made the case for not only looking at trade rules' compatibility with MEAs, but also to verify whether and how existing MEAs could be compatible with a governance system that needs both: trade rules and environment rules.
What is my conclusion? Coherence between the policy areas that play a role with regard to sustainability is a complex and difficult issue, and not one where we can place the onus on only one side of the equation: all of us are concerned, and all of us have to contribute. Trade policy will make its contribution, and as I have hinted at various moments, we are already well on our way doing so.
2. Multilateralism
Slow progress in the multilateral process has the inevitable consequence that trading countries will look for faster and easier ways to improve their place on the world market. Many advocates of regional and bilateral agreements have appeared on the scene recently, making the case that perhaps the multilateral process has gone too far, and further progress could only be made bilaterally or regionally. The EU itself has always been a strong advocate of regional trading schemes - unsurprisingly, I'm tempted to say.
But we have always maintained one main argument: regional trade agreements cannot substitute for the multilateral process. Whilst it is certainly true that by definition almost, regional and bilateral agreements allow to fulfil ambitions that would be hard if not impossible to fulfil at the multilateral level, they also have limitations, or even dangers with regard to those who do not participate. Sustainability is a case in point.
Whereas negotiations on bilateral agreements can more easily include sophisticated elements in the areas of environment, social issues, or development, on the other hand, the complete lack of such elements at the multilateral level would place at a disadvantage those who do not participate in regional arrangements.
In other words, I would make the point that apart from the obvious drawbacks for non-participants in regional trade agreements from the economic point of view, there are also clear disadvantages in the area of sustainable development if nothing is done to raise standards multilaterally. It becomes easier to exclude countries because they do not fulfil certain requirements, it becomes easier in particular not to trade with countries that do not have regulatory conditions that make products more attractive to consumers in countries with high environmental standards. It becomes easy not to further support trading efforts by such countries, since all trade can be done with those participating in regional or bilateral agreements. Conversely, it also becomes easier for the less scrupulous to commercially, environmentally, or socially, exploit those who do not have the standards and backing of multilateral rules to protect them and would allow them to develop in a more sustainable way.
If multilateral negotiations are about anything, they are about inclusiveness. Inclusion of all those who participate in the international trading system in a negotiation process that is supposed to raise the standards for all.
3. Governance
I do realise the potential contradiction between the two points that I just made: if coherence between all concerned policy areas, and two-way interaction between trade, development and environment policies is necessary, then logically, multilateral trade negotiations alone will not do the trick. And there is indeed one element which I have not mentioned yet, although it is one of my favourite subjects: this is governance. Managing a system as I have just outlined it, which encompasses all policy areas that can contribute to sustainable development, and is based on multilateral negotiation of rules that will further the objective of sustainable development, such a system requires solid international governance.
In the trade and economic area, we have a set of relatively well-functioning governance mechanisms or institutions. The WTO is one of them, but the Bretton Woods institutions are another example. These institutions, no matter how well they function, and no matter how far we can push their operation along the road of the reforms and improvement that are currently under discussion, can nonetheless not do all that is expected from international governance to make sustainable development work.
The WTO is a trade organisation - it's goal should be the formulation, implementation and administration of trade rules - it goes without saying that these trade rules should contribute positively to sustainability as I've just outlined. But we need those organisations whose job it is to watch over development, environment, social questions, to play their role, too. I'm sure Klaus Töpfer has a lot to say on the issue of global governance in the environment field.
In other words, the interaction between policies that I outlined before, needs to be counterbalanced by interaction and effective work of the institutions responsible for the various policy areas related to sustainable development. Each and every player in the field has to contribute to this process.
Finally, governance also signifies governance at the local level. All governing entities must make efforts to contribute to systematic, coherent and disciplined implementation of the commitments undertaken with the aim to improve sustainable development.
We all need to make efforts, therefore, to reinforce the institutional and governance structures that we need to support our efforts at building trade and globalisation on a sustainable footing.
I have spoken a lot about contributions. I want to take this opportunity to refer to an idea that has been brought forward by the International Centre for Trade and Sustainable Development, and the Rio+10 Coalition, who have proposed the setting up of a Sustainable Trade Centre. This project, which would serve in particular to ensure that trade in sustainably produced goods from developing countries is facilitated, has a number of things going for it: it would be a concrete contribution to the process of making trade in itself sustainable, it would ease access to developed country markets for those in developing countries producing sustainably produced goods, and it would contribute to networking businesses dealing in sustainable goods worldwide.
I believe such a Centre would be a welcome contribution to the efforts made by us all to further sustainability in trade and in other policy areas.
Let me conclude by thanking the organisers of this event for the work that they have undertaken to make their contribution to the sustainability and Rio+10 process: without such activities and support from non governmental actors, the process would be the poorer for it.