European Affairs

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Twin Crises Could Strengthen both the EU and the WTO

 Reginald Dale"It often takes a crisis to focus the mind, and we are now striving to mobilize our collective will once again." Those words are taken from an article in this issue of European Affairs by Pascal Lamy, a French member of the European Commission, who was trying to put a positive spin on the brutal collapse of an important set of international negotiations. Mr. Lamy, the Commissioner for Trade, was speaking about the failure of the World Trade Organization meeting in Cancun in September, which has left efforts to strengthen the world trading system in a dangerous limbo.

He could equally well, however, have been referring to the collapse of an EU summit meeting closer to his home in Brussels in mid-December. That summit was intended to endorse a new constitutional treaty bringing greater efficiency and democracy to the new, enlarged 25-nation European Union due to be born on May 1, 2004. The European Union is now drifting, rudderless, in the same political doldrums as the WTO.

Both episodes have, correctly, been called "crises" in their respective institutions. And they have certain similarities. In both cases high-level negotiations failed because of insufficient preparation, as well as miscalculations and lack of leadership by some of the more prominent participants. In Cancun, the United States and the European Union were taken by surprise by the demands of developing countries, which were admittedly badly presented, and failed to react with the speed and skill necessary to avert a debacle.

One must remember, of course, that these are not "crises" for everyone. Although their position is indefensible, anti-globalization campaigners celebrated the disaster in Cancun as a further blow to the current world economic order. The failure in Brussels was welcomed by those who, more legitimately, oppose a European constitution or believe that it is premature. In Europe, the failure is serious in that it makes running the Union more difficult, but the crisis is greatest for those who believe most passionately in the cause of further European integration.

In both Cancun and Brussels, countries with what they saw as spurned national interests were prepared to wreck international negotiations rather than agree to compromise. In Cancun a group of developing countries, led by Brazil, China and India, objected to the niggardliness of joint U.S./EU concessions on agriculture, spurred on by a bitter protest from four cotton-producing countries in Africa. Their complaints were mostly justified. But the complainants will not achieve their objectives by wrecking the negotiations.

the negotiations. In Brussels, the crisis was largely created by two mid-size countries of the enlarged 25-nation European Union - Spain and Poland - which felt that their influence was being downgraded by the voting system proposed in the new treaty. After previously flattering themselves as having become members of the European Union's "Big Six," alongside Britain, France, Germany and Italy, these two proud countries thought they were being kicked out of that club into an intermediate status as the "Medium Two" between the big and small states.

Without the Spanish and Polish objections, it is likely that the Brussels summit would have adopted the new treaty, making the working of the enlarged European Union much easier, answering some of the criticisms that the Union suffers from a "democracy deficit" and strengthening its role in world affairs. And Spain and Poland would not have created further potential discord by alienating their partners, from whom they are also demanding large sums of money for economic and regional development. The European Union is now seeking a way out of the mess, as is the WTO. Effectively, they are seeking solutions that will allow the common interest to prevail over last-ditch stands in defense of national interests.

That, of course, will require compromise all around. As the members of international organizations increase in number, the WTO to almost 150 countries, and the European Union from 15 to 25, it becomes increasingly difficult to cater to the interests of all parties under consensus systems of decision-making. In this context, a "crisis" is not necessarily a bad thing. As former French President ValŽry Giscard d'Estaing remarked after the collapse in Brussels, it is through crises that the European Union has traditionally progressed.

The post-crisis hangover allows recalcitrant participants a fresh chance to evaluate whether their long-term interests are best served by the health of the organizations to which they belong or by their destruction. In the cases of both the European Union and the WTO the answers are clearly Yes. But it is also up to the more powerful countries to ensure that the underdogs are not treated unfairly. The developing countries in Cancun may have taken a counter-productive, unsophisticated stand, but it is true that their interests have been for far too long ignored by the developed countries. In Europe, Spain and Poland deserve less sympathy, because they were objecting to a voting system that is more democratic than the current arrangement. Equally, however, in a democratic Europe, they cannot be forced to fall into line.

If the developed countries improve their offers in the WTO, and Spain and Poland can be persuaded, with face-saving gestures, that EU membership requires solidarity not selfishness, then the crises may in the end benefit both organizations, and make them somewhat less vulnerable to the frequent criticisms that are leveled against them. That will be particularly true if serious efforts are made to correct the institutional deficiencies of both organizations. Both sets of negotiations will doubtless be revived. It is possible that both organizations will in the end emerge strengthened, if chastened. Of course these are all big ifs.


This article was published in European Affairs: Volume number V, Issue number I in the Winter of 2004.

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