Lisbon Treaty likely to widen democratic gap on trade rules

Tue, May 13, 2008, 01:00

Developing world will suffer as gap widens between EU decision makers and the people, writes  CONALL Ó CAOIMH.

THE LISBON Treaty is a basket of policies - some good, others less so. The challenge facing us all is to weigh up the diverse items and reach a single yes or no judgment on the overall package.

Here I wish to outline the changes in just one of the areas affected by the treaty - how trade rules are decided. My view is that in this limited area the treaty fails in its objective of narrowing the democratic gap.

The way the EU currently makes trade rules is that the commission proposes a change (usually involving negotiations with other countries). The council of trade ministers of the 27 countries makes the decision on what to negotiate. The commission conducts the negotiations with other countries and returns with the outcome. The council alone decides whether to give final approval.

We speak of a democratic gap in trade decision-making because at the moment no parliament in Europe has a say in the process. The commission must keep the European Parliament informed in general terms about how the negotiations are going, and the parliament can express an "opinion" on the outcome. But as of now the parliament has no vote. Neither do national parliaments decide, indeed they often don't even discuss.

I am quite happy to transfer a range of decisions to EU level provided it follows the basic principles of representative democracy: transfer of power with accountability, and the balance of power between institutions.

In fact, when we examine the current workings of the council and commission we see the other essential element for democracy is missing: transparency. Trade rules are made behind closed doors.

So how will the Lisbon Treaty change this status quo? Regrettably, it makes it worse.

Firstly, Lisbon conveys new powers upon the union in relation to foreign investment and the lowering of "other" trade barriers (Article 188B). These two powers move from national level to the EU.

Secondly, the treaty changes the procedure by which some trade rules are made at council. Four new areas (social, health, education and audiovisual services) are moved from unanimity into qualified majority voting - ie the loss of veto on these four issues (Article 188C). This brings qualified majority voting to effectively all trade rules.

These new competences and reduced veto might be acceptable if there was an increase in the balance of powers - eg if elected parliaments had a vote.

Does the European Parliament gain a greater role? No. It shall continue to have a say if the EU signs up to a new trade association (188 N6a), but not when existing agreements like the WTO conclude further rounds of negotiations (Article 188 N7).

Do national parliaments gain a new role in trade decisions? Again, no. They will have some say in how to implement trade agreements, but not on whether those new WTO commitments are undertaken.

Lisbon does include a new requirement for the council to meet in public when making legislative decisions. However, ratification of WTO or other trade agreements is not covered by this. After ratification by the Council of Ministers, if a WTO agreement requires implementing legislation, this shall be decided in public, but not the decision of whether to ratify a WTO agreement.

Therefore, instead of narrowing the democratic gap on trade rules, the Lisbon Treaty actually widens it. Maybe readers will view that what is lost on this swing will be gained on another roundabout, but it must be acknowledged that regarding trade rules Lisbon widens the gap between decision makers and the people. They are the facts. So what is their significance?

My concern is in relation to how Europe relates to developing countries. The Lisbon Treaty mandate for progressive liberalisation of trade (Article 10A) applies not only within the union, but also determines what we seek from developing countries in negotiations.

Trade is probably the most significant way that we relate to developing countries. Low- and middle-income countries earn 23 times more through exports than they receive in aid. So how trade rules are decided is important not only to jobs here, but also to development in poorer countries.

Yes, the treaty does use the words "fair trade" in Article 1, but in the context of committing the union to work for "free and fair trade". This euphemism is no mandate for protecting small producers.

In the current WTO talks the EU wants many developing countries to change their investment rules. It proposes that foreign companies need not employ local managers; nor be required to pair with local businesses. In this way the EU is removing the very means by which development might remain after foreign businesses move on. This may be free trade, but is far from fair trade.

Even after the Lisbon Treaty no parliamentarian in Europe will have the power to vote against such unfair trade rules.

Conall Ó Caoimh is a consultant on development and trade