Peter Gallagher

Alan Beat­tie, the World Trade Edi­tor for the Finan­cial Times has reviewed Global Trade Advo­cate. Here’s a link to the non-subscription page ver­sion of the review (also over the fold). To make it eas­ier for you to see what Alan is talk­ing about when he men­tions the ‘huge rewards’ from trade advo­cacy described in GTA, I’ve cut the price of the book. I hope you enjoy it.

Beneath the bureau­cracy lie rich rewards

By Alan Beattie

Pub­lished, Finan­cial Times: Sep­tem­ber 25 2005 19:30

Lob­by­ing an inter national club made up of 148 frac­tious gov­ern­ments and suf­fused with brain-numbing bureau­cratic jar­gon is no one’s idea of fun. But com­pa­nies and indus­tries that have learnt to press their case at the World Trade Organ­i­sa­tion have dis­cov­ered their efforts can be remark­ably fruitful.

The WTO has been in exis­tence for 10 years; its pre­de­ces­sor, the Gen­eral Agree­ment on Tar­iffs and Trade, was around from 1948. Busi­ness lob­by­ing was instru­men­tal in get­ting a suc­ces­sion of trade “rounds” — mul­ti­lat­eral agree­ments to cut import tar­iffs across a range of sec­tors — com­pleted since Gatt was founded.

More recently, busi­ness advo­cacy for the cur­rent “Doha round” of talks, named after the Qatari cap­i­tal where it was launched in 2001, has been rather weak. And some experts argue that apart from gen­eral lob­by­ing for more open­ness in trade, busi­nesses are miss­ing the oppor­tu­ni­ties the WTO’s quasi-judicial dis­pute set­tle­ment sys­tem affords them to press cases of par­tic­u­lar interest.

One such advo­cate is Peter Gal­lagher. For­merly a senior Aus­tralian trade offi­cial, he makes a liv­ing advis­ing com­pa­nies and busi­ness asso­ci­a­tions on how to get their way in the world trad­ing system.

In a per­fect world — as designed by a trade econ­o­mist such as Mr Gal­lagher — he would not have to exist. Coun­tries would sim­ply realise it was in their inter­ests uni­lat­er­ally to lib­er­alise, and do so. Imports such as Chi­nese tex­tiles would be wel­comed and exports, rather than being regarded as a goal in them­selves, would cor­rectly be seen as the nec­es­sary evil required to pay for them.

In such a par­adise, the WTO, trade min­istries and the entire appa­ra­tus of trade diplo­macy, includ­ing the reporters that cover it, would cease to exist. In the real world, the trad­ing sys­tem is run under the pre­cepts of “mer­can­til­ism” — the idea that exports in them­selves are a source of strength. Coun­tries regard cut­ting import tar­iffs to allow in goods and ser­vices from over­seas as a con­ces­sion, not a gain.

It is in such a world that Mr Gallagher’s advice, which he has pub­lished as an e-book, Global Trade Advo­cate, is valu­able. His argu­ment is that com­pared with other forms of lob­by­ing, com­pa­nies under­value the returns pos­si­ble from trade advo­cacy, most likely because of the arcane com­plex­ity of the sys­tem of mak­ing and imple­ment­ing world trade rules. More­over, unlike tra­di­tional lob­by­ing, which gen­er­ally involves get­ting a sin­gle gov­ern­ment or reg­u­la­tor to change its mind, the inter­na­tional and inter­gov­ern­men­tal nature of the WTO means per­suad­ing one’s own gov­ern­ment to stick its diplo­matic neck out on behalf of producers.

But the rewards can be huge. He comes armed with exam­ples. The suc­cess­ful Brazil­ian legal chal­lenge to the Euro­pean Union’s sugar regime at the WTO, for exam­ple, could return as much as $494m (¬£276m) to Brazil itself and the same again to the world’s other sugar exporters. The Brazil­ian sugar indus­try and gov­ern­ment had to put in a huge amount of work over a num­ber of years to pre­pare for this and other legal chal­lenges, includ­ing hir­ing expe­ri­enced inter­na­tional lawyers, work­ing with US-based envi­ron­men­tal cam­paign­ers and in effect set­ting up a government-backed think-tank to sup­port its trade advo­cacy. But the likely pay-off almost cer­tainly dwarfs the cost.

Sim­i­larly, the Thai tuna indus­try, the third largest in the world, suc­cess­fully halved an EU tar­iff of 24 per cent on 25,000 tonnes of its exports to the EU by using the WTO’s dis­pute set­tle­ment process, in an effort co-funded by the indus­try and the government.

Indeed, one of the idio­syn­crasies of trade lob­by­ing through the WTO is its legal dis­pute set­tle­ment sys­tem, includ­ing, if nec­es­sary, a judi­cial panel that rules on WTO law. The advan­tage is that it allows even the small­est coun­try to take on the largest, as evinced by the recent case brought by the tiny Caribbean coun­try of Antigua and Bar­buda against US restric­tions on online gambling.

The draw­back is the slow and bureau­cratic nature of the process: it can take nearly three years from ini­tial com­plaint to imple­men­ta­tion of the deci­sion (which, in any case, only allows the wronged party to impose rec­i­p­ro­cal trade sanc­tions, which a purist trade econ­o­mist would say hurts mainly itself).

Bring­ing a legal case, or ask­ing gov­ern­ment to lobby dur­ing trade talks on behalf of a par­tic­u­lar indus­try, requires care­ful and detailed prepa­ra­tion, and Mr Gal­lagher goes into some depth about the process of accu­mu­lat­ing data, build­ing busi­ness alliances to gain domes­tic sup­port and approach­ing gov­ern­ments to take up the cause. Brazil has cre­ated a sub­stan­tial indus­try in government-backed WTO advo­cacy that has helped put the coun­try in a piv­otal posi­tion in WTO negotiations.

A forth­com­ing book, Man­ag­ing the Chal­lenges of WTO Par­tic­i­pa­tion, edited by Mr Gal­lagher and oth­ers, pro­vides 45 case stud­ies of how com­pa­nies, indus­tries and gov­ern­ments have coped with the chal­lenges of assert­ing them­selves in the WTO, and empha­sises the impor­tance of com­mu­ni­ca­tion between all inter­ested par­ties at home before tak­ing a fight into the inter national arena.

Fre­quently, one industry’s gain is another one’s loss even within the same coun­try: wit­ness the anger of the Euro­pean retail indus­try at being out­gunned by the rel­a­tively small, tex­tile– pro­duc­ing lobby that recently per­suaded the Euro­pean Com­mis­sion to re impose lim­its on Chi­nese gar­ment imports.

Given the hybrid nature of the WTO — part inter­gov­ern­men­tal nego­ti­at­ing forum, part court, occa­sion­ally arena for polit­i­cal pos­tur­ing — a wide mix of skills is nec­es­sary to lobby effectively.

Good lawyers are essen­tial, not least because the dis­pute set­tle­ment sys­tem is a rel­a­tively new part of the WTO appa­ra­tus and many new cases, such as the suc­cess­ful cases on sugar and cot­ton brought by Brazil, cre­ate fresh legal prece­dents that can imme­di­ately be exploited by other countries.

But lawyers are not enough. While cases are legally tech­ni­cal, they also require polit­i­cal sophis­ti­ca­tion, not least in under­stand­ing the impor­tance of per­sonal rela­tion­ships among national del­e­ga­tions to the WTO.

From the pub­lic inter­est point of view there can be uncom­fort­able aspects to com­pany lob­by­ing within the WTO. The sub­ter­ranean path of mer­can­til­ism does not always lead to the light of freer trade. Trade advo­cacy can be used to dis­tort or even close off the chan­nels of enter­prise as well as open them.

One of Mr Gallagher’s own exam­ples is that of the US phar­ma­ceu­ti­cal indus­try. Through an inten­sive lob­by­ing and pub­lic­ity effort over 10 years, the indus­try man­aged to get the inter­na­tional pro­tec­tion of patents and the wider issues of intel­lec­tual prop­erty rights admit­ted to WT
O agree­ments, much to the dis­gust of many free mar­ket trade economists.

Mr Gal­lagher draws a dis­tinc­tion between “trade advo­cacy” — where a wide range of com­pa­nies and inter­ests presses for an open­ing of mar­kets — and “trade lob­by­ing” — where a nar­rower set pushes for spe­cific inter­ests for them­selves. In real­ity, that dis­tinc­tion may be murky. Advo­cat­ing for lower tar­iffs in a bilat­eral trade deal between two coun­tries, for exam­ple, may divert trade from third coun­tries and under­mine efforts at wider liberalisation.

Still, whether the pub­lic inter­est is always served or not, the case for busi­nesses to pay atten­tion to trad­ing rules is compelling.

(“Finan­cial Times

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