The Doha development round: where we stand

11 April 2006

Peter Mandelson began by putting his remarks about trade in the context of where Europe is today. “We are engaged in a struggle for Europe’s soul,” he said.

He said this was a battle between an “open Europe” and one which “gives in to the forces of protectionism, populism and, at times, even xenophobia” - forces which could undermine the fundamental achievements of European integration itself.

The Commissioner insisted that EU integration was not about creating a fortress through restrictions on the free movement of labour, the attitude of some governments towards mergers and takeovers, and doubts about enlargement. Instead, it was about pulling down barriers and allowing goods and services to circulate freely.

Economic reform remains the key challenge for Europe, with growth and jobs crucial to revive public confidence in the European project. While politics drove this project when the EU was being built, an economic system designed, shaped and applied to the 21st century is what will sustain it.

“We have got to convince people that the EU has not become some alien agent of liberalisation and migration that threatens the economic future of their families and the social cohesion of their communities,” said the Commissioner.

Despite scepticism about the Lisbon Agenda, Mr Mandelson insisted that it was “unthinkable for the Commission to abandon the vigorous pursuit of economic reform”. This was the only way in which the quality of life that European citizens took for granted could be maintained.

If the Commission listened to the “siren voices”, this would result in a worsening of Europe’s competitiveness and “feed the populism that poor economic performance and unemployment generates”.

Openness is central to Europe’s ability to drive growth and sustain European values round the world, and Mr Mandelson said that, given his responsibility for the international aspects of competitiveness, he regarded himself as “the Commissioner for openness in Europe”.

Enlargement, he insisted, was “fundamental” to the debate about openness, as it was about Europe coming to terms with globalisation in its own back yard. “If we can’t come to terms with Croatia, how can we come to terms with China?” he asked. “In my view, globalisation and enlargement are two sides of the same psychological coin.”

Mr Mandelson also stressed the importance of convincing the potential “losers” from globalisation that the EU did not threaten social cohesion, but was rather an instrument to manage the positive forces of globalisation, helping to adjust to painful economic changes. The EU was not a “bulwark against change and globalisation”, but the means of making orderly adjustments to restructure Europe and help build social cohesion.

The Hampton Court informal summit in October 2005 was an important step towards deepening the growth and jobs agenda by mandating the Commission to do this by working on energy, innovation, research and development, and higher education.

The Commissioner then turned to the World Trade Organization’s (WTO) Doha Round, which was “struggling” painfully towards a conclusion. Success was not only important for development, but also for Europe for three main reasons: to show that the multilateral trading system worked; to improve European producers’ market access to the rapidly-growing emerging economies; and to stimulate the European economy by cutting tariffs and trade barriers.

Commissioner Mandelson reminded the audience that the WTO deadline to set the “modalities” for cutting tariffs and subsidies on agricultural and non-agricultural trade was only three weeks away. He said WTO Director-General Pascal Lamy had summarised the state of play accurately by calling on Brazil, India and other G20 countries to open up their industries to foreign competition and to liberalise service sectors of their economies, and on the EU and US to “sweeten” their offers to open up farm markets and reduce trade-distorting domestic subsidies.

Although there were still “gaps to be bridged”, the key players were now seriously engaging with each other, said Mr Mandelson, and he remained confident that this could be an ambitious round.

However, he stressed the need for a “proportional effort” from all WTO members except the least developed countries, and insisted that although the EU would play its part: “I am not prepared to see Europe do these things and get virtually nothing in return.” Otherwise, it would not be a deal that he could take back to EU Member States.

Finally, Mr Mandelson stressed that he favoured a modern, 21st century, social Europe, which recognised the faster pace of economic change, but also addressed workplace and social inequalities that were the by-products of globalisation and economic growth. He finished by insisting that it was necessary to “look to Europe’s social needs” if economic growth was to be sustained.