Europe Studies Radical Trade Veto Plan

Financial Times
By Guy de Jonquieres in London

Governments would be allowed to ban imports from countries that did not
share their national values and standards under proposals for radical
changes to global trade rules being studied by Pascal Lamy, Europe's trade
commissioner.

The changes are put forward in a discussion paper prepared for Mr Lamy, who
has not taken a position on the issue, by his staff and outside advisers.
His spokeswoman said he wanted to launch a debate at a conference this
summer.

The paper says legalising curbs on imports that do not meet individual
societies' "collective preferences" would promote global economic
integration by reducing international tensions.

World Trade Organisation rules prohibit import bans except in specified
circumstances, such as when products are found to be unsafe.

However, the paper says the WTO rules give too much weight to science and
too little to local social and political sensitivities.

The paper does not detail what kinds of imports the European Union might
want to restrict. However, it says divergent national regulations and public
attitudes worldwide threaten to create growing trade frictions over
environmental policy and in sectors such as agriculture, services, software
and pharmaceuticals.

The EU is under strong international pressure over its regulatory policies
because of its long-standing ban on hormone-treated beef and de facto
moratorium on approving genetically modified crops.

The US and other countries say the measures violate World Trade Organisation
rules, though many European consumers support them.

The paper insists it is not seeking a pretext to erect new import barriers.
However, it acknowledges that economic liberals and developing countries -
long hostile to efforts to link trade and social standards - might attack
the idea as protectionist and Eurocentric.

"Mr Lamy believes 'collective preferences' will shape trade policy
increasingly in the future," his spokeswoman said. "He believes this is a
debate we should have."

The paper says global integration is entering a new phase that directly
threatens countries' social models and regulatory systems, increasing the
risk of "ideological" trade conflicts that will be hard to resolve through
existing international mechanisms.

Efforts to harmonise international standards, and rulings by the WTO's
dispute settlement procedures, are not enough to prevent future trade
conflicts, the paper says.

Governments imposing trade restrictions would need to show they were based
on genuine public demand and social priorities.