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<ul><li><p>Institut du dveloppement durable et des relations internationales Adresse postale : 27, rue Saint-Guillaume 75337 Paris Cedex 07 France Tl. : 01 45 49 76 60 iddri@iddri.org www.iddri.org </p><p>The potential role for collective preferences in determining the rules of the international trading system</p><p>Tristan Le Cotty (CIRAD, UMR CIRED) Tancrde Voituriez (CIRAD, IDDRI)</p><p>analyses n 04/2008 | g l o b a l g ov e r n a n c e</p></li><li><p> Iddri 2008</p><p>adresse : 13, rue de lUniversit 75007 Paris France </p><p>adresse postale : 27, rue Saint guillaume 75337 Paris cedex 07 France </p><p>www.iddri.org iddri@iddri.org</p></li><li><p>The potential role for collective preferences in determining the rules of the international trading system</p><p>Tristan le cotty (cIraD, UMr cIreD) Tancrde voituriez (cIraD, IDDrI)</p></li><li><p>5Iddri analyses. 04/2008</p><p>Table of contents</p><p>Table of Contents 5</p><p>Background 7</p><p>Contexte 7</p><p>Abstract 9</p><p>Rsum 9</p><p>Introduction 11</p><p>The state of the debate on collective preferences 12The core of the debate: common goals and heterogeneous collective preferences 12Is there a european specificity on collective preferences? 12a summary of potential and actual controversies raised by collective preferences 13</p><p>Definitions and aggregation issues 15</p><p>The WTO legal framework and collective preferences 16The relevant WTo agreements to deal with collective preference issues 16examining DSb cases 18Trade law and non-trade law relationships 19</p><p>Towards an assessment of European collective preferences 19labour rights 20Food quality 20Public expenditures 20</p><p>Policy implications 21</p><p>Conclusion 22</p><p>References 24</p></li><li><p>7Iddri analyses. 04/2008</p><p>The question as to whether collective pref-erences of a given WTo member for values or principles such as environmental protection, food safety, cultural diversity, the public provi-sion of education and health care, precautions in the field of biotechnology or welfare rights, could be jeopardized by the rules of the inter-national trading system has taken a high pro-file in europe during the last years of Pascal lamys position as eU Dg trade commissioner. Unachieved and criticised for its too narrow fo-cus on alleged european concerns, the debate has ever since been outpaced by the difficulties to conclude the Doha Development round and the need widely perceived that concep-tual issues and WTo reform options should be debated after, and not during, the negotia-tion process. our view is that the difficulties to conclude successfully a WTo negotiation round highlight the very issue originally raised by the emergence of collective preferences in international trade. The document , which was prepared for the european Parliament (Tender eP/exPol/n/2006/2), wraps up the meanings of and rationale for collective preferences policies in the world trading system, and their poten-tial implications on trade rules. </p><p>background</p><p>est-ce que la prfrence collective dun pays membre de loMc pour des valeurs ou des principes tels que la protection de lenvironnement, la scurit alimentaire, la diversit culturelle, le financement public de lducation et des soins mdicaux, les prcau-tions dans le domaine des biotechnologies ou les droits sociaux, pourrait tre compromise par les rgles du systme de commerce in-ternational ? cette question a t souleve de maintes reprises en europe au cours des dernires annes du mandat de Pascal lamy en tant que commissaire de lUe en charge du commerce. ce dbat, inachev et critiqu pour stre trop concentr sur les prtendues proc-cupations europennes, a depuis t dpass par les difficults conclure le cycle de Doha pour le dveloppement et lapparente nces-sit, que les enjeux conceptuels et les options de rforme de loMc devaient tre dbattus aprs, et non pendant, le processus de ngo-ciation. nous pensons que les difficults pour conclure avec succs un cycle de ngociation de loMc mettent en lumire la question pose initialement par lmergence de prfrences collectives dans le commerce international. cet article , qui a t prpar pour le Parlement eu-ropen (Tender eP/exPol/n/2006/2), sattache galement expliciter les significations et la raison dtre des politiques de prfrences col-lectives dans le systme de commerce interna-tional, et leurs implications potentielles sur les rgles du commerce.</p><p>Contexte</p></li><li><p>9Iddri analyses. 04/2008</p><p>abstract</p><p>In September 2004, the then european Trade commissioner Pascal lamy organised a con-ference on collective preferences and global governance: what future for the multilateral trading system?. In his keynote address, Pas-cal lamy stressed that whatever its benefits, international market opening also had a desta-bilising impact on the economic and social fabric, and potentially on societal choices. He secondly argued that while efforts had been made to develop accompanying measures to deal with the effects of market opening on in-dustry and employment, the threat to societal choices had so far not received proper atten-tion. even though Pascal lamys diagnosis of the fear and the threat roused by globalisation has been strikingly confirmed by the back-lash against globalisation we face today, his proposition stirred up controversy among eU trade partners and stakeholders, and criticism among a few academics. In the perspective of the inescapable reform of the WTo, our objec-tive is to re-examine the case of the potential role of collective preferences in determining the rules of the international trading system. The question we focus on is whether collective preferences can help to provide the multilat-eral system with better responses to societies expectations and fears concerning globalisa-tion notably within the eU.</p><p>en septembre 2004, Pascal lamy, alors com-missaire europenne en charge du commerce, organisait une confrence sur les Prfrences collectives et gouvernance globale: quel avenir pour le systme de commerce multilatral? (Collective preferences and global governance: what future for the multilateral trading sys-tem?). Dans son discours douverture, Pascal lamy soulignait que quels quen soient les avantages, louverture du march international avait galement un impact dstabilisant sur le tissu conomique et social, et potentiellement sur les choix socitaux. Il a ensuite soulign que si des efforts avaient t raliss pour dve-lopper des mesures daccompagnement pour grer les consquences de louverture du mar-ch sur lindustrie et lemploi, la menace sur les choix socitaux ne bnficiait pas encore de lattention ncessaire. bien que le diagnostic de Pascal lamy au sujet de la crainte et de la menace engendres par la mondialisation ait t confirm de faon saisissante avec la rac-tion brutale contre la mondialisation laquelle nous faisons face aujourdhui, ses propositions ont suscit des controverses au sein des par-tenaires commerciaux et acteurs de lUe, ainsi que des critiques de la part de certains univer-sitaires. Dans la perspective dune invitable rforme de loMc, nous nous attachons ici r-examiner la question du rle potentiel des prfrences collectives dans la dtermination des rgles du systme de commerce internatio-nal. la question sur laquelle nous mettons lac-cent est de savoir si les prfrences collectives peuvent permettre dapporter au systme mul-tilatral des rponses aux attentes de la socit et aux craintes concernant la mondialisation, notamment au sein de lUe.</p><p>Rsum</p></li><li><p>11Iddri analyses. 04/2008</p><p>Introduction</p><p>In September 2004, the then europe-an Trade commissioner Pascal lamy organised a conference on collective preferences and global governance: what future for the multilateral trad-ing system?. In his keynote address, Pascal lamy stressed that whatever </p><p>its benefits, international market opening also had a destabilising impact on the economic and social fabric, and potentially on societal choic-es. He secondly argued that while efforts had been made to develop accompanying measures to deal with the effects of market opening on industry and employment, the threat to societal choices had so far not received proper atten-tion. The challenge, in his view, was to design an open trading system that everyone accepts and that safeguards legitimate social choices.</p><p>europes collective preferences were identi-fied as including values like multilateralism, environmental protection, food safety, cultural diversity, the public provision of education and health care, precautions in the field of biotech-nology and welfare rights. eroding such values while further liberalising trade would appear as a loss for the eU, according to Pascal lamy. Mr lamy proposed a new temporary safeguard clause to be added to the WTo agreements, potentially accompanied by a compensation mechanism aimed at those who would suffer from these safeguards.</p><p>even though Pascal lamys diagnosis of the fear and the threat roused by globalisation has been strikingly confirmed by the back-lash against globalisation we face today, his proposition stirred up controversy among eU trade partners and stakeholders, and criticism </p><p>among a few academics. Still, his nomination at the WTo as Director general, and the con-siderable difficulties finalising the Doha round of trade negotiations, somehow left the debate on collective preferences unfinished. In the perspective of the inescapable reform of the WTo, the objective of this article is to re-ex-amine the case of the potential role of collec-tive preferences in determining the rules of the international trading system. The question we focus on is whether collective preferences can help to provide the multilateral system with better responses to societies expectations and fears concerning globalisation notably within the eU.</p><p>Trade can be a means for emerging countries to raise per capita income, which would in turn tend to raise social demand for non-traded goods such as education, health, environment and better social conditions. Thus, trade is not necessarily an obstacle to the fulfilment of the non-trade aspects of collective preferences. nevertheless, it seems that domestic public choices are evolving more rapidly in compli-ance with international trade rules than in compliance with the non-trade rules of globali-sation. Therefore, one may wonder whether the global legal system is able to ensure both the fulfilment of collective preferences for non-tradable goods and the provision of trad-able goods. </p><p>We start by evaluating the current state of the debate on collective preferences. We then provide a definition of collective preferences based on the economic definition of preferenc-es and social choice. as a next step we explore the relevant WTo agreements and dispute cas-es to draw their main implications in terms of collective preferences. The next part suggests </p></li><li><p>The potential role for collective preferences in determining the rules of the international trading system</p><p>12 Iddri analyses. 04/2008</p><p>possible methodological elements to assess european preferences in a selected number of issues. Key policy implications are outlined be-fore conclusion.</p><p>The state of the debate on collective preferences </p><p>The core of the debate: common goals and heterogeneous collective preferences</p><p>The WTo expanded the gaTT mandate by covering new sectors such as services and intel-lectual property rights, and including domestic policies like farm policies. Such an expansion towards reserved domains of sovereignty obvi-ously generated friction and dissension among populations, ngos and politicians. The ngo campaign against the gaTS, on the grounds </p><p>that it could disrupt the social contract on particular aspects of public services provision, united resistance to the WTo in the mid 1990s. </p><p>as long as only tariffs were concerned by negotiations, trade increase would occur at the expense of specific exist-</p><p>ing activities, but only political preferences1 for these sectors were challenged. citizens outside these sectors would not be affected by trade increase as long as governments were allowed to mitigate economic changes with unconstrained domestic policies. now that ne-gotiations deal with domestic policies, public choices regarding domestic issues are being made under the potential constraint of inter-national trade rules. The fact that efficient pub-lic policy can be implemented in a non-trade distortive way whatever the policy goal (hence whatever the collective preferences) is a key is-sue for all negotiation sectors. but this overall requirement that public choices should not al-ter trade may be at the root of a growing feel-ing among citizens that they are losing control over their political destiny. </p><p>This feeling is not equally perceived throughout the world. In some countries, citi-zens do not necessarily have the feeling that governments are mandated to serve their col-lective preferences, or that governments actu-ally serve these preferences in a reliable and efficient way. In such contexts, the perception </p><p>1 Political economics define collective preferences as the diffe-rentiated weights that a government attributes to social groups when maximising a social utility function. </p><p>of the WTo threat to public choice is limited because public choice itself does not neces-sarily guarantee the fulfilment of collective preferences. Furthermore, countries with low environmental or social standards face trading partners with higher standards, and, all else be-ing equal, higher production costs. For them, the trade increase would not threaten these non-trade aspects of their collective preferenc-es. Finally countries from the old world with long-standing traditions and cultural heritage may adopt the view that their identities and values have contributed to the sustainability of their society, and are reluctant to let them be challenged by the global trading system. </p><p>nevertheless, many contries are facing poten-tial contradictions between their willingness to cooperate to the multilateral coordination and their will to defend their citizens collective preferences. For instance emerging countries often have lower preferences for environmen-tal concerns than oecD countries and see the perspective of co2 limitations as a threat to their priorities. This threat will probably not be expressed in trade negotiations, but in mul-tilateral environmental agreements. conceptu-ally, the need for emerging countries to comply with environmental cooperation in spite of the low weight of environmental concerns in their collective preferences is comparable to the need for oecD countries to comply with trade rules in spite of relatively lower importance given to the increased availability of merchan-dise in their collective preferences. </p><p>Therefore, heterogeneity in collective prefer-ences in a context of global cooperation is a global concern. </p><p>Is there a European specificity on collective preferences? </p><p>even though his conception of collective preferences is rather universal collective preferences are the end result of choices made by human communities that apply to the com-munity as a whole lamys diagnosis mainly rests on european examples.</p><p>The eU perception of the issue indeed shows so...</p></li></ul>

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