Pascal Lamy — Managing Global Expectations by Pascal Lamy

The importance of wheat

Globalist Interview > Global Economy Pascal Lamy — Managing Global Expectations
By Pascal Lamy \| Thursday, February 23, 2006

Who currently has the toughest job in the world? One candidate for a truly tough mission is Pascal Lamy, who has served as the WTO's Director General since September 2005. Many observers believe the current trade round cannot be brought to a successful completion. In this Globalist Interview, Mr. Lamy explains his own strategy and outlook.

Q: Now that you have been on the job for almost half a year, what strikes you the most about heading up the WTO?

“Everywhere I go, I see first hand that the WTO has become a scapegoat for many. In industrial countries, it is blamed for the stagnation of wages and the loss of jobs to developing countries. In developing countries, it is accused of promoting liberalization for the benefit of multinational companies.

Of course, if either assertion were true, then the WTO would have very good friends in either the developed world or in the developing world. Yet, it appears this is not the case.”

Q: Is there perhaps a structural reason why the WTO seems destined for criticism from all sides?

"U.S. leadership is indispensible. It cannot abandon its own creation. With power comes responsibilities, but also huge benefits for the U.S. economy."

“As we say in trade negotiations, whenever an agreement manages to draw criticism from all countries, it means that it is a good agreement. I am certain this applies to the WTO.”

Q: What needs to happen so that the Doha Round can be completed in 2006?

“All key players know they will have to move. The EU knows it will have to move on agriculture market access, the U.S. government knows it will have to move on agriculture domestic support — and emerging countries like Brazil, India or South Africa know they will have to move on industrial tariffs and services.”

Q: What are the odds for progress along those lines?

“The good thing is that all of them have said they will move 'in concert.' All this makes me believe we could soon start to see the shape of a final deal.”

Q: Where is the real crux?

“Although agriculture accounts for less than 10% of world trade, it holds the key to unblocking and revitalizing the negotiations and ensuring substantive progress across the board. Why? Because 70% of the impoverished population on this planet live in rural areas.”

Q: What are the basic frontlines?

"As we say in trade negotiations, whenever an agreement manages to draw criticism from all countries, it means that it is a good agreement."

“Some countries believe that the agricultural sector is no different from other sectors of world trade and should be subjected to disciplines applied to these sectors, including the prohibition of subsidies to farmers.

Others believe that agriculture is a distinct sector, which governments should be able to support for a variety of reasons, including preserving family farming or the environment.”

Q: How can a compromise be brokered?

“Public opinion seems to be in favor of support for the preservation of rural life or the environment, or support for those small farmers with less comparative advantages, rather than lavish government spending that benefits a handful of large farmers or farming companies.

In short, what the public points out — perhaps without knowing — is a good, non-trade distorting farm policy.”

Q: Who wins in the end?

“A substantial result in agriculture would benefit not only the United States and the EU, but many countries, particularly developing countries, which can in turn use their increased export earnings to import goods and services needed in their developmental process from the United States and other developed countries.”

Q: How optimistic are you to get it all done?

"Agriculture accounts for less than 10% of world trade, but holds the key to unblocking and revitalizing the Doha Round negotiations. This is because 70% of the world's population live in rural areas"

“The workload is formidable but doable, provided all members are ready to apply the necessary political energy. The challenge is both technical and political. It is about leadership, about compromises and countries recognizing their common interest in success and the collective costs of failure.”

Q: How crucial is the role of the United States in all this?

“U.S. leadership is indispensable. The United States is the world’s richest economy and the principal architect of the multilateral trading system. It cannot abandon its own creation. Power brings along responsibilities, but also huge benefits for the U.S. economy.

Developing countries are growing rapidly and their integration into the world economy would create new market opportunities for American companies and create high-paying jobs in the United States which ensure its continued prosperity.”

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