Review of “Global Trade Advocate” in FT

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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