Pompous prancing about is embarrassing and counter-productive

Financial Times, London, December 11, 2006

By Jean-Pierre Lehmann
Professor of International Political Economy at IMD, Lausanne, Switzerland & Founding Director, The Evian Group

Sir, Peter Mandelson, the European Union trade commissioner, is committing two serious errors (“EU plans to link labour standards to trade deals”, December 6). Both are well illustrated in the first sentence of your article: “The European Union will try to improve working conditions in the developing world by demanding that trade partners must meet minimum labour standards in new bilateral trade deals.”

What business is it of the EU to try to improve working conditions in the developing world? For 200 years Europe ravaged and exploited the developing world, with abysmal labour practices, as well as brutally mistreating its own labour, but now chooses to prance pompously about with its allegedly superior values that it wishes to impose on others. No doubt labour practices do need improvement in many parts of the developing world, but let the developing world (in collaboration with the appropriate international organisation, which is the International Labour Organisation, not the World Trade Organisation) sort out its own problems. As a European I find it extremely embarrassing, and in any case totally counter-productive, to have our political leaders and senior officials so manifestly display their incapacity to abandon colonial mentalities and colonial attitudes.

What the world needs is the conclusion of a constructive, inclusive, equitable and progressive trade agenda that will eliminate all the inequities that developing countries face in accessing the markets of the Organisation for Economic Co-operation and Development.

Mr Mandelson must be disciplined and made to understand that he is the trade commissioner and not the commissioner for saving humanity in the developing world. Indeed by far the biggest contribution the EU stands to make to improving the lives of people in the developing world is to open up its markets far more to the flow of goods and the flow of people from the developing world. This is win-win both for the EU and for the developing world. Efforts must be made by the commissioner to educate European citizens, consumers and politicians on the benefits and imperatives of an open and fair trade agenda, while refraining, in fact totally desisting, from pontificating.

The second big error is to engage in these bilateral deals in the first place. Mr Mandelson’s task is to strengthen the multilateral system and bring the Doha development agenda to a successful conclusion. The objective of the multilateral system, as its name implies, is to be inclusive and its key principle is non-discrimination. Bilateral deals are by definition discriminatory and those that will lose out the most are poor countries and small and medium-sized enterprises. Bilateralism is an unfair Darwinian tactic to marginalise weak countries – so Mr Mandelson is pursuing bilateral deals with India and South Korea. But what about Laos, Bangladesh, Sri Lanka, the majority of the sub-Saharan economies and so on. Bilateralism also marginalises weaker corporate players aspiring to engage in the global market. Bilateral deals are highly complex, often including Kafkaesque rules of origin and high transaction costs, that the big, deep-pocketed multinationals can handle without great difficulty, but that eliminate newer, aspiring and smaller companies.

So while Mr Mandelson is presenting himself as the white knight for the downtrodden labourers of developing countries, he is in fact beefing up the large and strong countries and the large and strong corporations at the expense of small and weak countries and small and weak companies. This will have a very adverse effect on conditions generally, including the working conditions, of people in developing countries.

Prof. Lehmann is a member of the Advisory Committee of CUTS’ project on Linkages between Trade, Development and Poverty Reduction