Question and Answer Session

Q: It is difficult to have a lot of bilateral agreements. So we need to revive investment negotiations or discussions in international fora on competition and investment in the WTO, but how can it be realized? Secondly, what are the technical limitations in the context of WTO negotiations?

Mr. Bourgeois: I agree that the big question is how agreement on competition and investment can be realized multilaterally. In this round, I think it is no longer a possibility. The train has already left the station. So the question is, in what other forum could such a multilateral agreement be reached?

First, as far as a multilateral agreement on competition rules is concerned. In the Organisation for Economic Co-operation and Development (OECD) there is work ongoing on the issue of competition, but it is not really meant to come up with binding commitments. While the ground work could be done in the OECD, I do not think it would be the right forum where a genuine international agreement would be negotiated and concluded.

At the first meeting of the International Competition Network, I raised a question about the status of ICN codes of good practice. The reply was that competition authorities may agree on such codes, but they are not binding rules, as only the respective ministries of foreign affairs can negotiate international agreements, not competition authorities.

So these are the difficulties in reaching an agreement in competition, and that is why the WTO offered that opportunity. In my view, one has to continue to insist and to work on it, and to keep on demonstrating that the lack of an international agreement has certain disadvantages for countries and for industries.

Second, as far as investment is concerned, I think that we are in a similar situation. I do not think that the OECD would be the proper forum for a new exercise on that point. It will have to be taken up as part of multilateral trade negotiations. In the meantime, I can see why Japan would have difficulties with its current number of 12 bilateral investment treaties (BITs). Frankly, however, I do not have much hope for a genuine multilateral agreement in the very short term.

In theory it is possible to have individual bindings in GATS schedules on investment protection. My question is how to generate a consensus to do it? I cannot very well see a WTO Member making a purely unilateral commitment without obtaining something in return from other WTO Members. There has to be a certain number of WTO Members who agree to proceed in that manner.

Mr. Bronckers: I must say that there must be a way to do that. For instance, the GATT schedules may indeed be a good vehicle to do so. But the real question is how we will be able to garner sufficient momentum and support for countries to engage in that effort. One of the challenges for the WTO after the Doha round is that, for better or worse, we are now engaged in a very modest exercise. Compared to the ambitions of the original agenda, what we are doing now is much more modest in scope.

So what does that mean for the WTO? Are we going to wait for 10-15 years before we do something else? Or is there more optimism that it is possible to move forward with individual agreements, such that if there is an issue about which all the countries feel that they should move ahead with, it is possible? For me, investment may well be the area in which we want to move ahead quicker and where it might be able to persuade countries which have so far been reluctant for the wrong reasons. This may be an area that stands on its own and has merits for them as well.

Some countries want to get rid of the Singapore Issues because they are dilutive of what are considered to be other more important negotiations, notably agriculture. So the Singapore Issues were viewed, perhaps wrongly, as a ploy of the EU to keep agriculture on the back burner. So now that agriculture is on the front burner, and being optimistic, if we assume that we get some settlements, it is then possible for countries and industries to say that the WTO is not such a bad organization. Therefore, it makes sense to move ahead as this could be a win-win situation for many people, and move ahead on that particular issue before the next round.

Frankly, I do not see another alternative. The World Bank is not the right forum, because there is no conception of enforcement. I think the WTO holds more potential, and maybe in one or two years people will be able to recognize that.

Q: You briefly touched on the question of whether or not the Singapore Issues were raised by the Europeans and maybe the Japanese in order to obfuscate and keep agriculture from going anywhere. Could you comment on that?

Mr. Bourgeois: I am a practicing lawyer and part-time academic, and not an official of the EU, but I do think that this characterization is wrong. This argument has also voiced time and again about the trade-related aspects of intellectual property rights (TRIPS). Some in the U.S. claimed that the EU was pushing for an early solution of the issue of compulsory licensing of pharmaceutical patents for export (Art. 31f TRIPS) in order to gain favors, and so as not to make too big concessions on agriculture. The EU was not the only one that was pushing for an amendment to the TRIPS agreement. By the way, generics are also produced in the EU. For the EU, the issue "trade and competition" goes back to just after the Tokyo Round. So that certainly has nothing to do with agriculture. Trade and investment may have been raised also for a purely internal reason. It is no accident that in the draft constitution of the EU, protection of investment is included in the trade policy powers. If investment protection becomes a WTO matter, this eases the path for including investment protection in the trade policy powers of the EU even if the draft constitution were not to enter into effect. Then there was an element of the bicycle theory.

Q: You raised the question of what would be the best way for Japan to manage without making its own trade barriers? Could you provide an answer?

Mr. Bronckers: It was a rhetorical question on my part, but perhaps someone from the floor could answer.

Comment from floor: First, with the TBR, of course it has been an issue, but we should see it in the light of how Japan would cope with the WTO system as a whole. In that regard, the Ministry of Economy, Trade and Industry (METI) has been issuing reports that address unfair trade policies in light of the WTO rules. So METI is continuously discussing with industries what problems they face and how to assess those in terms of WTO rules.

The reason Japan has not been so active in using this regulation is not because there has been a lack of pipelines between industry and ministry, et cetera, but it is probably because of the basic attitudes of Japanese companies. For example, when they face certain trade obstacles, their instinct is to overcome them rather than to challenge them. Now, there have been some changes and since 1995 METI has been bringing cases - about one a year - on trade. Japan has also introduced a limited version of this system of TBR or U.S. Section 301 in the field of counterfeit products and intellectual property. So it is not something unknown in the Japanese system.

In that vein, what do you think is the real interest of business toward the WTO rules in general, particularly given the stalemate of the Doha round?

Mr. Bronckers: I am still struck by one or two things. Although key, the TBR or the Section 301 have not proven to be panacea. Less than half the cases that the EC brings to the WTO are the result of a formal TBR complaint. This suggests that the old informal route is still alive in Europe, the United States, and certainly in Japan too. Still, I can only note that industry, represented here in the Nippon Keidanren is increasingly arguing for the adoption of such procedures, not because the existing process is always wrong, but because there are a number of difficult cases. These are not cases that are necessarily bad or wrong, but more technical cases, for which an unstructured government process proves to be very difficult. For those more difficult cases - TRIPS cases, intellectual property cases, telecom cases - there is a need to be organized both from the government and from the industry side. A procedure like the TBR allows the organization of the process from both sides. In those cases, it is industry that will feel the benefit of a TBR. That is sort of an untapped need that is not necessarily replaced by more macroeconomic reporting.

With regard to a waning of interest in the WTO, I think it is fair to say that industry has not allowed itself to be heard as much in the Doha Round as it did in the Uruguay Round. There may be any number of reasons for that, and it is clearly of some concern. However, I do not see that this will also mean a waning of industry interest in the enforcement of the rules. In fact, I see an increasing interest in industry to find out how these rules can be of use. However, there are not a lot of options here. For the most part, industries do not really know what the WTO holds for them. This is an extremely complex system of rules with a lot of potential, but industry does not really understand it. It is similar to the negative reception to the EC laws in the 1960s, so maybe 20-30 years from now, there will be a similar visceral reaction from companies doing international business.

Mr. Bourgeois: The main political obstacle to the first trade barrier regulation of the European Union was that EC Member States did not want to give industry the right to complain. The obstacle came up not only on the side of EC Member States, but even some people within the European Commission had doubts. There was the attitude on the part of governments and bureaucracy of "Father knows best." and not wanting to let industry have the initiative. The interest of industry in the EU for the WTO is growing although slowly.

Q: In relation to your earlier comments about the private sector, I was surprised that the private sector may not know enough about WTO implications to their business. So maybe it is time to do more for capacity-building in terms of private sector appreciation of the WTO and the risks and benefits that they might incur. Is that the case?

Mr. Bronckers: Capacity-building is not necessary just for developing countries, et cetera, it is certainly necessary and advisable domestically. It is interesting that the European Commission, for the last four or five years, has organized biannually the Market Access Symposium, where they have almost a thousand industrial representatives, non-governmental organizations, et cetera, coming to Brussels to hear about how the WTO can be of use to them. There is a great demand for it, and every time the European Commission organizes this, a special session is devoted to the Trade Barriers Regulation to say that this is also relevant to industry.