Lamy: Completing the internal market is more important than investing

Secretary general of the Delors European Commission, Trade commissioner under Romano Prodi presidency and then head of the World Trade Organization that welcomed Russian in 2012, Pascal Lamy was selected by the Centro Studi sul Federalismo to held the 2014 edition of the annual lecture in memory of Altiero Spinelli and Europae has met him in Turin fter his speech on Europe and globalization.

You have been Trade Commissioner, so the first question is on the TTIP, the big trade agreement between the US and the EU currently under negotiation. There is a lot of concern it will lower our technical and consumer protection standards. Do you believe this may be the case?

I have listened to the criticism. I think it derive from the fact that the Commission and the Americans poorly handled the beginning of the negotiation, because they have not given the real reason for such a discussion, which is, try to level the playing field in regulatory issue. They did not expose that. They refused to publish the mandate letter, which was a big mistake, and so far, they have not been transparent enough. Usually, in areas like this, the less transparency the more anxiety. If you look at the possible convergence in the level of precaution in one third of the cases the US are better than Europe, in one third the EU is better and in one third the level is similar. The question is, and I think they should be clear on this, how to move on the highest level of precaution on both sides. In my view, this is not a problem: producers will have to adjust to a higher level of precaution, but they will gain more in levelling the playing field and doing economies of scale than they will lose in additional costs. There is also a big prize in convergence of standards, which is that at this moment if the US and the EU agree on a standard it de facto becomes the world’s standard, and this is a sort of great first mover’s advantage. There is a potential for huge gains, but you need to call this a process, not a classical trade negotiations, it was a mistake to call it trade negotiations: you call it like that and you give the feeling to the public that you are negotiating precautions, hence your question, and it is a legitimate question until you adopt the proper narrative, that is we are trying to take the best of our two systems. This said, there will be areas where such a convergence will not be possible, i.e. GMO or data protection.

The investor – state dispute settlement (ISDS) mechanism has also been criticized. Do we need such an instrument?

There are pros and cons, there are good arguments to have one, and there are good arguments to be cautious. There are bad arguments such as corporates should not be able to sue states: but they do that every day on both sides of the Atlantic. If you are a company in Europe you can sue any public authority, anytime, and they do that all the time. That is not the point: the point is whether we need a specific channel of litigation and the main argument in favor is that there are discrepancies in the traditional disputation systems and that is an impediment to cross investments. There is a risk that such a system impedes on the sovereign regulatory capacity. But we have ISDSs in all the bilateral investment agreements already in place. The benchmark is now CETA and I have been told that the level of guarantees that such a system will not interfere with regulatory sovereignty are quite high.

We see many new bilateral and multilateral trade agreements in the world: TTIP, TTP (US and the Pacific), CETA (Canada and the EU). Is this a slowdown of trade integration in the WTO framework?

It depends on which numbers you look at. The ratio between the growth of the economies and the volume of international trade has changed. The growth of a country is measured on value addition, trade is measured on volumes. Each time something crosses a border, it increases trade. The slowing down of international trade stems from the fact that the expansion of global supply chain is slowing, it is not shrinking. If you look at numbers in added value, then you do not see this phenomenon.

You mentioned companies suing States: but today we also see the opposite, with the European Commission carrying on a series of investigations against big multinationals, such as Google.

The Commission applies the competition principles with European or with American companies operating on European soil. The Commission just make sure that these companies do not benefit from undue competitive advantages, such as tax exonerations, which are a different form of subsidies.

You mentioned Europe is facing a crisis of growth. Was the recipe applied in recent years wrong?

The reasons of the growth crisis are structural; they can only be addressed in the medium term. Energy transition, the internal market: these are the shaping factors of European growth. What determine the medium and long-term growth rate are structural factors. The Juncker’s plan, is a useful addition, short term, it’s rebalancing the demand, my own sense is that this is a useful thing.

Would you say it is more important to complete the internal market, the energy union?

Absolutely. Completing the internal market or setting up a proper energy union is more important for the medium long-term growth path of Europe than a plan of public funds. You know, the time horizons are different.

How would you explain that to European citizens?

You have to explain that you plant something and sometimes it takes two months, sometimes six, sometimes four years to grow. Nature is full of that. You may have to do something that does not produce results immediately, but if you do not do it, you have to wait even longer.

The Commission had a rough start with the LuxLeaks scandal. You believe Mr. Juncker should resign?

He did what he did when he was the Prime Minister of Luxembourg. He now is the President of the Commission, he is no Luxembourger anymore. The good thing of this LuxLeaks is that it may give to the Commission a bit more energy to tackle this issue. When you become a Commissioner, the last thing you should do is pull the rag in the direction of your country, and everybody is watching that very carefully.

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L' Autore - Andrea Sorbello

Iscritto alla Magistrale in Relazioni Internazionali - Studi Europei a Torino. Appassionato/morbosamente interessato a questioni di politica economica, relazioni internazionali, politica italiana (sic) e auto sportive. Lieto di contribuire a Rivista Europae!

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