About CEO

Corporate Europe Observer - Issue 8
    home > observer 8 > nice

Nice Treaty
Commission Equipped for New WTO Disasters

In previous issues of the Corporate Europe Observer, we have reported European industry lobby groups campaigning to influence the negotiations on the new EU Treaty, which was finalised at the Summit in Nice in December 2000. One of the main corporate demands was for further centralisation of the EU's decision-making on international trade, through changes in the EU Treaty's Article 133. Diverse NGOs and grassroots groups from around Europe campaigned against giving the European Commission "fast-track" powers, which would further deepen the democratic gap. Kenneth Haar, SOS-WTO Denmark, looks at what the Nice Treaty means for the EU's international trade policies.

— By Kenneth Haar, SOS WTO (Denmark)

he EU's new Nice Treaty expands the European Commission's (EC) powers over WTO issues at a crucial time, giving considerable cause for concern over the decision-making process for future trade negotiations.

In the first phase of negotiations Trade Commissioner Pascal Lamy had high expectations. He and a number of governments - including Finland, Luxembourg, Belgium, Italy and Ireland - were ready to reform the EU's international trade policy, going far beyond some parts of the EU Treaty, and even contradicting it in some cases. Areas affected by their proposals would include education and health. The goal of the Commission was to get full competence to negotiate on behalf of the EU and to introduce majority voting on the important areas where unanimity is needed.

Many governments, in particular the French, expressed reservations over the EC proposal early on. On several occasions, French government representatives expressed direct opposition to this type of reform of international trade policy.

However, the French backed down, and compromised, as they had during the negotiations of the 1997 Amsterdam Treaty. As a result, decisions were made in Nice that will have negative impacts both within the EU and internationally. The Commission won increased powers to push through its highly neoliberal agenda and decision- making processes were further obscured.

A decisive moment

he changes in the Treaty come at a crucial time in the WTO's development. The EU has in recent years worked on setting a very extensive agenda for the development of the WTO. EU governments agree that the WTO should establish rules on new areas like investment and competition policy. However, the EC's problem has been that areas such as investments are not fully under EU competence, which means the Commission is more restricted in this field than it is in others (such as trade in goods). As a result, it was keen to get this issue resolved before a new round of negotiations begins in the WTO.

The fact that investments were not included in the common commercial policy is the Commission's biggest defeat. The issue of investments is key to the EU's ambitious plans for the new round in the WTO. Since the collapse of the MAI negotiations in the OECD in 1998, the EU has aimed for an agreement through the WTO. Although there is still significant opposition to a new round of negotiations among Southern governments, there is a real risk that one will begin before too long. If investments had become part of the reforms of the common commercial policy in the Nice Treaty it would have been much easier for the EC to negotiate on an investment agreement. However, as things stand, national ratification of such an investment treaty would still be needed.

The new developments in the Nice Treaty are crucially significant for the so-called "built-in agenda" of WTO negotiations (which states that different areas of trade should be reviewed for further liberalisation every five years). This includes agreements on intellectual property (TRIPs) and services (General Agreement on Trade in Services, or GATS). These are precisely the areas where the Nice Treaty will make EU decision making more "efficient". A closer look at TRIPs and GATS shows why it was so important for some negotiators to get the Treaty changed on the issue of international trade.

Although its name refers only to trade-related intellectual property rights, TRIPs covers intellectual property in all forms. The agreement has been highly controversial for several reasons. Most developing countries see it as a tool for consolidating the wealthy nations' monopoly on technology, and thereby exacerbating already serious problems. The last five years has seen the debate on TRIPs concentrate on three issues. The first centres on the effect that global patent rights will have on the quality of medical care worldwide. Predictions are that it will lead to increased prices, particularly in developing countries, since cheaper, imitation medical products will be outlawed. The second issue is that of patents on life, where the TRIPs rules are based on dubious ethics and risk harming small farmers in the South. Finally, there is the debate over cultural policies, including artists' copyrights. On this area France has very strong opinions and does not want the WTO to interfere in its cultural policies. In the coming time the TRIPs agreement will be renegotiated. The developing countries favour a fundamental revision of the agreement, but this is unlikely as both the EU and the US oppose it.

However, despite the major issues in the TRIPs negotiations, much of the sense of urgency for reforming the Nice Treaty was probably more connected to the WTO talks on liberalisation of services. The GATS agreement separates the huge area of services into 140 sectors. Liberalisation in this field has far-reaching consequences for how our societies are organised, most of all for the relationship between state and market. GATS has direct consequences for the public sector, including postal services, water supply, health, education, pensions systems, etc. The collapse of the Seattle Ministerial Conference hampered the progress of many negotiations, but not those on GATS, and since the beginning of 2000 they have been running at full speed. This is led by the EU and the US which both want to broaden and deepen the scope of GATS, closely mirroring the interests of the Northern services industries. With the changes in the EU Treaty, TRIPs and GATS are to a much wider degree part of EU competence and fall within the mandate of the European Commission. It is clear that problems will result from this centralisation of decision-making.

Who has the final word?

The issue of competence refers to the mandate to commit the EU countries to international agreements. If an area is under full EU competence, national ratification of agreements is not required. The Commission takes care of negotiations, while the Council of Ministers takes decisions about entering the final agreement. Under the Amsterdam Treaty both services and intellectual property came under potential EU competence. However, the Nice Treaty transfers the competence to the European Commission. The EC receives its negotiating mandates from the Council of Ministers, which from now on decides by majority voting on these issues. This means it will be far easier for the EC to get the mandate to promote far-reaching liberalisation of services in the framework of the WTO.

The exceptions: how water-tight are they?

After the Nice Summit, many citizens groups were relieved about the apparently large number of exceptions to the sectors that could come under majority voting. Pressure groups had feared proposed treaty changes that would have meant that health and education sectors would come under the rules of common international trade policy. Their concern was well founded. The EU's chief negotiator for GATS, Robert Madelin, has identified the health and education sectors as "ripe for liberalisation". As well as this, the Commission has long been in dialogue with industry about liberalising these two areas. However, it was clear, even before the Nice Summit, that the Commission would not get all it hoped for. At this stage it was almost certain that any trade rules which would lead to new agreements contradicting other parts of the EU Treaty were out of the question. The EU Treaty clearly states that responsibility for health and education rests with the Member States.

However, there is still cause for concern. Firstly, the treaty is unlikely to offer protection against liberalisation of smaller sub- sectors under these two sensitive areas. Secondly, the procedure for entering agreements on health, education and social protection (for instance pension systems) has now been written into the treaty. It could be construed as a worrying sign that some governments found it necessary to get the decision-making procedure for these areas clarified. It confirms that some of the core areas of the welfare state are at stake in the EU's trade policy and in the WTO.

Who controls the process?

This controversy shows parallels with the US debate on "fast-track" authority. "Fast track" means giving the US President the right to negotiate agreements without parliamentary interference. Only after the negotiations are completed is Congress involved and then only with the option of saying 'yes' or 'no'. Even before the Nice Summit, NGOs and grassroots groups warned that the reforms of the EU treaty would give the Commission a comparable fast-track authority. In fact, the Commission has had such powers for decades on a wide range of issues: it's a fundamental feature of the EU's common international trade policy. The Nice Treaty adds more areas to the list, so the EC becomes the EU's sole representative on these issues too, and carries out negotiations largely without outside interference. France made an attempt to limit the Commission's monopoly powers by proposing that governments get the right to consult with the Commission during the negotiations. However, this was not approved. The one concession was that the EC and the Council of Ministers would jointly have to ensure that any agreements made are in line with the EU Treaty as a whole. This means the Commission is firmly in the driver's seat, both in the phase where the EU decides its negotiating mandate and during the crucial international negotiations.

The right to know - parliamentary control and access to information

The removal of the need for national ratification on issues like intellectual property and services limits the possibility for national- level parliamentary control . Early on, the European Parliament demanded the right to be heard or to get joint decision-making powers over international trade policies. However, in order to make that happen now, the EU Treaty's Article 300 would have to be revised (Article 300, point 3, on the European Parliaments right to be heard on international agreements contains an explicit exception for trade policies and that was not changed in Nice). Whatever one might think about the European Parliament, it is certainly problematic that national parliaments lose powers without any corresponding increase in the EP's possibilities to control decision-making. On the other hand it can be said that the almost complete indifference which the EP has shown towards the issue of the reforms of Article 133 leave little hope that this institution will rise to become an effective body for parliamentary control in the near future.

Parliamentary control is also about public access to information. This is crucial, as the Commission is far more difficult to monitor than national governments generally are. The Danish government, for instance, does not have access to crucial documents on the dialogue between industry and the EC. With the EC's monopoly on presenting proposals for EU trade policy, the decision-making process is extremely difficult to follow for large parts of the public. As more areas fall under full EU competence, the role of the Article 133 Committee is strengthened. The committee, appointed by the Council of Ministers, consists entirely of civil servants. Through this committee, which works largely in secrecy, the Council of Ministers has an indirect dialogue with the EC about international trade policies. "Only" parliaments and the public are excluded.

All in all an important battle was lost in Nice. Trade Commissioner Pascal Lamy received a stronger mandate, which must have pleased his friends in the European business lobby. However, on the brighter side, groups all over Europe, including SOS-WTO, have become far more aware of how the EU treaty impacts international trade policies, and this knowledge will be of great value in the coming years. An alliance between progressive movements like ATTAC in France, the international environmental coalition Friends of the Earth, World Development Movement in the UK, and all the others that were part of the campaign in the run-up to Nice, is already a strong starting point.



Treaty of Nice [.pdf file]



Maastricht II and Corporate Lobby successes

'Win-Win?' The ERT and EU Enlargement

Innovation: Corporate Restructuring of Europe

WTO Millennium Bug: TNC Control Over Global Trade Politics

Intergovernmental Conference 2000: Business and the Amsterdam Leftovers

New EU Treaty May Give European Commission 'Fast-Track' Negotiating Authority



SOS WTO (Denmark)

From Seattle to Brussels Statement

ATTAC France



1: The 1997 Kyoto Protocol mentions three types of market-based mechanisms, originally intended to play a minor role in achieving CO2 emission reductions: emissions trading, joint implementation (JI) and the Clean Development Mechanism (CDM). Emissions trading allows the 39 governments committed to collective reductions under the Protocol to trade the right to pollute among themselves. Under this scheme, due to start in 2008, a country might choose to buy emission credits from another country that had managed to reduce its emissions below its Kyoto targets. Joint implementation and the Clean Development Mechanism (CDM) grant Northern governments and corporations emission credits through special projects aimed at reducing greenhouse gas emissions in the host country. These projects can be carried out among industrialised countries and corporations (JI) or between one industrialised government or company and one Southern country (CDM). The market-based mechanisms are often simply referred to as emissions trading. For a critical analysis of these mechanisms, see "Greenhouse Market Mania - UN climate talks corrupted by corporate pseudo-solutions", is a 55-page CEO briefing published in November 2000, http://www.xs4all.nl/~ceo/greenhouse/ " | Back to Text |

2: Ibid. | Back to Text |

3: COP-6 participants list, see the UN's COP-6 website: <http://www.unfccc.de> | Back to Text |

4: Richard D. McCormick, "Charting a New Course for the Environment - and the Economy", International Herald Tribune, November 18-19, 2000. | Back to Text |

5: "Kyoto treaty flawed says top exec of ExxonMobil", Earth Times, November 15, 2000. | Back to Text |

6: "Emissions Marketing Association Well Represented at COP-6", EMA press release November 2000. | Back to Text |

7: See for instance "How COP-6 may affect the value of permits", The Carbon Market Analyst, 5 November 2000. | Back to Text |

8: Our translation of quote in "Commercie helpt ook een handje mee", Financieel Dagblad, 25 November 2000. | Back to Text |

9: "Forests and plantations in the Carbon Dealers' Market", World Rainforest Movement, November 2000. | Back to Text |

10: For an overview of non-violent direct actions during COP-6, see the website of the independent media centre: <http://www.climateconference.org> | Back to Text |

11: The Clean Development Mechanism (CDM) was intended to facilitate the transfer of funding and technology for energy efficiency measures to Southern countries. The umbrella group wants all technologies, including nuclear energy and the whole range of carbon sinks, to be included in both the CDM and under JI. | Back to Text |

12: Pronk's 'compromise' proposal included: no limits on the use of international market mechanisms (EU and G-77 would give up their demands for respectively 50 and 70% domestic action), allowing very extensive use of sinks (although not in the CDM), largely unlimited hot air trade (Russia, Ukraine and other countries could sell almost all their hot air), big dams included in the 'Clean development Mechanism', nuclear energy acceptable in joint implementation projects (Central and Eastern Europe), and extremely weak rules for 'compliance' (sanctions for not fulfilling Kyoto targets). Source: "Pronk bids to break climate talks deadlock", ENDS Daily, November 23 2000. | Back to Text |

13: During COP-6, European negotiators estimated that the package proposed by the U.S., including the use of carbon sinks, would actually allow industrialised countries to increase CO2 emissions up to 7%, instead of the Kyoto Protocol's 5.2% cut. | Back to Text |

14: "U.S. Will Resume Talks With EU On Climate Pact", Wall Street Journal, December 6 2000. | Back to Text |

15: Christian Eggenhofer of Brussels-based corporate think-tank CEPS writes that, "the Kyoto Protocol is alive and well": "A Post- Mortem on COP6 in The Hague: The Kyoto Protocol is Alive and Well", CEPS commentary, December 2000, <http://www.ceps.be> | Back to Text |

16: Mr. Joshua heads Arthur Andersons' Green House Gas (GHG) Trading Team; quoted in "Trading in Carbon: A Viable Risk?", Network 2002, March 2001. | Back to Text |

17: "The (preliminary) outcome of COP-6", The Carbon Market Analyst, 28 November 2000. | Back to Text |

18: See for instance "Carbon trading set to boom despite COP6 failure", Reuters, November 30 2000. | Back to Text |

19: "New Reports Warn of Threat of Global Warming", Houston Chronicle February 27 2001. Bush continued to present a set of policies that closely mirror those promoted by industry groupings like the Global Climate Coalition and the Business Roundtable, including "market-based mechanisms," increased use of natural gas (which has slightly lower CO2 emissions), and tax measures for U.S. businesses that develop cleaner energy technologies. | Back to Text |

20: "The Carbon Market Analyst" calls ratification of the Kyoto Protocol before 2004 a "low-probability scenario" due to the Republican dominance in the US Senate and estimates the chance to be 25%. "The (preliminary) outcome of COP-6", The Carbon Market Analyst, 28 November 2000. | Back to Text |

21: The Bush government argued this would allow them to "take a thorough look at US climate policy". "EU Sets New Targets on Greenhouse Gas Cuts, 'Worried' About Bush", IPS, January 24, 2001. | Back to Text |

22: "How Carbon-Dioxide Cap Vanished Into Thin Air", Wall Street Journal, March 15, 2001. | Back to Text |

23: "Bush rejects Kyoto emissions treaty", Financial Times, March 29 2001. | Back to Text |

24: "Kyoto Talks Collapse; EU Energy Taxes Loom", Chemical Week, December 13, 2000. | Back to Text |

25: "Clinton Presses for Restart of Climate Talks As Bitter End of Meeting Hides Real Progress", Oil Daily, December 4, 2000. | Back to Text |

26: "First came the PR blitz, now comes the rollback", The Earth Times, November 15, 2000. | Back to Text |

27: "Kyoto Talks Collapse; EU Energy Taxes Loom", Chemical Week, December 13, 2000. | Back to Text |

< Previous Article Table of Contents Next Article >

Paulus Potterstraat 20 1071 DA Amsterdam Netherlands tel/fax: +31-20-6127023 e-mail: <ceo@xs4all.nl>