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TRADE: EU Proposals on WTO Challenged

Stefania Bianchi

BRUSSELS, May 5 2006 (IPS) - European Union plans to push for a new fast track court to settle trade disputes within the World Trade Organisation could undermine democracy and development, leading civil society groups say.

Friends of the Earth Europe (FoE Europe) says the proposals to allow trade experts to resolve disputes without the involvement of other parties could threaten standards worldwide.

The proposals were put forward by European Union (EU) trade commissioner Peter Mandelson at trade talks in Geneva late last month.

“The EU proposal for a new mechanism to swiftly harmonise or eliminate technical standards and national regulations behind closed doors would threaten vital environmental and safety legislation as well as measures to promote local development around the world,” Alexandra Wandel, trade campaigner for FoE Europe told IPS.

“What is shocking about this EU proposal is the way it blatantly favours the interests of industry even though the EU’s own commitment to environmental protection and poverty eradication could be undermined if the proposal were accepted,” she added. “That Europe tabled it is outrageous.”

Made up of all member governments, the WTO’s current dispute settlement board is usually represented by country ambassadors. A dispute arises when one country takes some action over perceived violation of WTO agreements.

Much of the procedure does resemble a court or tribunal, but the preferred solution is for the countries concerned to settle the dispute among themselves.

There is currently a huge array of challenges by governments on measures such as labeling and certification requirements, national standards and regulations, export restrictions, restrictions on foreign investment, and measures to promote local economic development.

The European Commission, the executive arm of the EU, says the existing WTO dispute settlement mechanism is too burdensome. It says that business needs a new way to “reduce the risk of new regulations arising in the future, and facilitate more rapid resolution of conflicts.”

It is proposing to set up a fast track mechanism to resolve disputes about technical standards or national legislation behind closed doors, without the involvement of the concerned parties.

The EU says the whole process should take no longer than 90 days, whereas the existing dispute settlement mechanism often takes years. The dispute between the European Union and the United States over genetically modified food has already gone on three years.

The EU says its proposals are designed to “facilitate mutually acceptable agreements between trade experts about how to modify or otherwise deal with the offending measures, even if they are legal under the WTO and with no requirement for external consultation.”

FoE Europe says the existing WTO dispute settlement mechanism is already undemocratic and secretive, but the new EU proposals could undermine national protection measures developed over years.

The group says the proposals are particularly dangerous in resolving environmental disputes because the WTO is not a competent authority to judge the legitimacy of trade restrictions designed to protect people and their environment.

“The EU’s new proposals could make it easier for the bloc to eradicate export taxes, including those used by developing countries to conserve natural resources and to promote local economies and employment,” said Wandel. “It could also increase European industry’s freedom to invest in developing country markets.”

The environmental group WWF says the WTO’s dispute settlement understanding (DSU) provision, the main WTO agreement on settling disputes, should be reviewed.

“The DSU should more clearly take account of the fact that it is the most powerful enforcement mechanism of international law,” Eivind Hoff, trade and investment advisor for WWF’s European policy office told IPS. “As long as such a powerful tool is not used to tackle global challenges in a coherent manner, but gives overwhelming priority to rectify trade grievances, there is little prospect of the WTO achieving its aim of sustainable development.”

Hoff says the relationship between the WTO and other international agreements and their dispute settlement systems needs to be clearly established. “The WTO is not the right place to establish that relationship,” he said.

Nathalie Bernasconi-Osterwalder, managing attorney for the Geneva-based Centre for International Environmental Law, also expressed concern over the proposals.

“I think the proposed mechanism is potentially very dangerous,” she told IPS. “It is likely that the process will be even less transparent than the regular dispute settlement process. This is extremely worrisome, particularly given that many non-tariff measures concern the public directly over issues such as the environment and health, amongst other things.”