By Nicola Bullard*

IN the personality-free world of trade negotiations, Pascal Lamy is instantly recognisable. His close-shaved hair and a lean-and-hungry look earned through long distance running and formidable work hours, carves him out from the rest. From the moment he put his hat in the ring for the job of WTO director general, there seemed little doubt that it was his for the taking.

 

Lamy is perfect for the post. He is a true believer in free trade and multilateralism, an experienced bureaucrat and an effective political operator. What he lacks in public charisma, he more than makes up for with his skill at working the inside game, finely tuned as “chef de cabinet” during Jacques Delors presidency of the EC, and perfected as an EU commissioner.

Fifty-eight year old Lamy is the quintessential product of France’s elite educational system. As a graduate of the Ecole Nationale d’Administration (ENA) and with an MBA from the “hautes ecoles” of commerce and political science, Lamy was trained – probably from birth — for high public office. Although Lamy is a social democrat — in 1993 he stood, unsuccessfully, as a socialist party candidate — he is, like most of his “comrades” these days, economically (if not socially) neo-liberal.

In his six years as EU trade commissioner Lamy earned a reputation for relentless hard work and an exceptionally quick grasp of technicalities, and during his ten years in the inner sanctum of Delors’ bureau, he learnt how to maximise behind-the-scenes influence in a bureaucracy. In short, his credentials as WTO director general are impeccable.

PROSPECTS FOR THE NEXT SIX MONTHS

So what can we expect from Pascal Lamy when he takes up the post on 1 September?

At a personal level, Lamy will be aiming to overcome the “collapse” of the Cancun ministerial which was not only a blow to his worldview, but also a personal defeat. Paul Nicholson, who was in Cancun with the international peasant’s movement Via Campesina, saw Lamy shortly after the talks failed and describes him as a “man with his head on the ground.”

There is no doubt that much of the blame for the outcome of Cancun lies with the EU position on agriculture, and with Lamy who personally clung to the Singapore issues long after the consensus had shifted in another direction. And when he did compromise, it was too little and too late. Eric Wesselius of Corporate Europe Observatory interprets this as Lamy carrying the corporate agenda too far and says that, in spite of his pro-developing country rhetoric, Lamy is very close to business. As EU trade commissioner, he continued the trajectory set by his Thatcherite predecessor, Leon Brittan, and maintained close links with the Trans Atlantic Business Council and the European Services Forum. According to Wesselius, “Lamy talked a lot about development and fair trade rules, but his policy focus was always agriculture and business.”

Agriculture will continue to be a sticking point in the WTO and although Lamy talks with passion about removing export subsidies, he was not able to move that debate in Brussels. There is no reason to believe that he will have any more success from Geneva. Similarly, without any cards in his hand, he will have little influence over the US. Indeed, Lamy’s success or failure will ultimately depend on his working relations with his successor Peter Mandelson and the new United States Trade Representative (USTR) Rob Portman.

But the EU and the US have problems of their own. The expensive and extremely close CAFTA vote, underscored by ongoing nervousness about China, may have exhausted the appetite for further trade liberalisation in the US. In Europe, agriculture is still the key issue, and although there is budgetary pressure to reduce subsidies, it’s not likely that Mandelson is the right person to push France and Germany on this issue. Mandelson is an aggressive liberaliser without the tempering experience of the French social model. He is determined to caste off “old Europe” and to strengthen Europe’s global “economic leverage”. Given his pugnacious style and the complexities of the expanded EU membership, Mandelson will find it difficult to build consensus, even at the European level. This will make Lamy’s job all the more difficult.

CULTIVATING THE SOUTH

Throughout his term at the EU, and most recently in his campaign for director general, Lamy has carefully cultivated the support of developing countries. In his “application” speech to the WTO he appealed repeatedly to the interests of developing countries and asserted the centrality of “development” in the Doha Round. The priority, he said is to “rebalance the international trade system in favour of developing countries.” As EU trade commissioner he could buy the support of developing countries, especially the “least developed countries” with the sweeteners of the Cotenou Agreement, the “Everything but Arms” deal giving duty free access on some agricultural products, and other trade and aid goodies. As WTO DG, he doesn’t have any carrots, except for the ones that he can persuade other countries to offer.

Lamy is also known for his skilled use of “divide and rule” tactics. Speaking at a meeting with NGOs in Bangkok in early 2003, Lamy lamented that negotiations on implementation issues had not gone forward because developing countries “could not agree on the top two or five implementation issues to be discussed.” In the lead-up to the General Council meeting in July 2004, Lamy offered the G90 the “round for free” by promising that they would not have to make cuts in agricultural tariffs, a move clearly designed to split the G90 from the G20. He has also pushed the idea that middle-income developing countries should be “graduated” from special and differential treatment (S&D), a proposal which still haunts the S&D negotiations. Although Lamy cannot offer trade inducements as WTO DG, he is in a position to propose procedures and working definitions that would undermine the frail solidarity of the developing country members.

REFORMING THE WTO

Famously, Lamy called the WTO a “mediaeval” institution in an emotional press conference following the fiasco in Cancun. Later, in a more temperate mood, he suggested that thoroughgoing reform was needed, including the possibility of a more efficient negotiation process based a “consultative group” of countries reflecting the diverse interests of the members. Reform of the negotiating and decision-making process will be high on his agenda, perhaps along the (very modest) lines of the Surtherland report on WTO reform, which Lamy mentioned favourably in his speech to the WTO members. However, there will be resistance from the members if “efficiency” is the principal objective of reform. Furthermore, given the membership’s weak adherence to the WTO, Lamy would be ill-advised to discard the principle of consensus.

Seattle was Lamy’s first WTO ministerial as commissioner and Cancun his last. No doubt both experiences left him with a desire to quell the noisy mobs. However, rather than listening to the critics, Lamy thinks that enabling the WTO to interact “in a structured manner with all those who today want a say in trade policy making” will solve the problem.

“Keeping the doors closed is self-defeating for the WTO,” he says. “It feeds the unfounded paranoia about the WTO that prevails among the anti-globalists, the hard-core protectionists, and all the others in the world who oppose all that the Members of the WTO are trying to accomplish as the WTO.” (Bridges, Volume 8, Number 4, 2004) This approach will play well with the lobbyists and NGOs who like to work on the inside, but Lamy’s comments show that he has no time for those who disagree with his agenda.

It’s likely that Lamy will have more success in energising the WTO secretariat and lobbying for more resources and an expanded staff, not least to strengthen his own position and the “efficiency” of the WTO.

THE POWER OF PERSUASION

But, there are some major difference between Lamy at the WTO and Lamy at the EU, so we should not overestimate his capacity to overcome the difficulties. <

First, as director general, Lamy doesn’t have any markets to open or any tariffs to lower. All he can do is “bang some heads together” but with nothing in hand to soften the blows. Second, he doesn’t have any explicit or specific “position” to defend, other than his belief in free trade, multilateralism and keeping the WTO from further ignominy in Hong Kong. Although Lamy’s sympathies surely lie with the EU, his credibility as DG depends on being perceived as working for all the members — the G148, as he calls it. No doubt this is a lesson that he learnt well at the Commission, and it’s probably one of the most important experiences that he brings to the job. His predecessor Supachai Panitchpakdi was a lame duck, overcompensating for any perceived bias in favour of developing countries by almost total inaction, and Mike Moore before him was so completely identified with the US following their bullying to secure his nomination, that he was never really trusted by all the members.

Lamy comes on board with a relatively strong consensus, in spite of the vague selection rules and divisions in the South that Lamy was able to capitalise on. The US supports Lamy and, even though an EU trade official denied it, many observers see a close link between the US giving Lamy the nod and the EU backing Paul Wolfowitz to head up the World Bank. Despite their differences, the EU and the US agree that it’s safer to carve up the world between them — even if means accepting a French and one of the main architects of the Iraq invasion. Anyone, it seems, is better than someone from the South!

Lamy has a hard road to hoe: the deep divisions in the WTO cannot be smoothed over with clever diplomacy and technical fixes. His main weapon will be his powers of persuasion. The majority of developing countries are getting very tired of waiting for their share of the trade liberalisation windfall, and it will require some (apparent) movement on the part of the EU and the US to convince them that the game is still worth playing.

For Lamy the stakes are high, both personally and ideologically. If he can get the backing of Mandelson and Portman, he could pull something off in Hong Kong. But even if he does, it will be a victory only for Lamy and his friends. It will still be a bad deal for everyone else.

 

* Nicola Bullard is a senior associate with Focus on the Global South.