Mr President, Honourable Members,

When I gave you an account of the Seattle conference last December, I promised to come back to this committee again to discuss the options open to us in a little more detail. I believe it would be a waste of time to discuss who is responsible for the failure of Seattle, as other partners are doing. What is important now is to draw operational conclusions from Seattle. Just over two months after the WTO Ministerial Conference, we are beginning to see a little more clearly what lessons can be learned and how we can move forward.

Lessons to be learned

Two initial conclusions. Firstly, the opportunity to launch ideas aimed at improving the functioning of the WTO. The developing countries need a bigger place at the table. We need procedures facilitating consensus, transparency and efficiency.

Also, we should not allow the institution to become a scapegoat for our real differences on the substance and the lack of a political will to overcome these differences. In any case, we should not lose sight of our key aim, which is to launch a new round as soon as possible.

Moreover, the overall approach to the substance remains valid

I am convinced that fundamental reasons for a broad agenda, and which have lead the Council and the Parliament to rally behind the Commission's proposals, remain valid:

• We want to, and must, further liberalise access to markets for goods and services, on the basis of predictable and non-discriminatory rules;
• The WTO must update and improve its rules in response to globalisation;
• Developing countries must be much better integrated into the system and have freer market access,
• The general public continues to be concerned, indeed worried, by the impact of globalisation on the environment, health, social standards and cultural diversity.

This does not mean that we should not review some of our objectives or the way in which we present them. We are neither deaf nor blind. We clearly underestimated the level of opposition between the wishes of our civil society and the interests of developing countries. For example, we should try to understand why we were isolated in our ambitions concerning the environment. We should also consider how to respond to the controversial question of basic social standards and certain elements, at least, of our approach towards investment and competition. But I remain convinced that these issues should remain on the agenda.

The next step - sustaining the momentum for a Round

What is the way forward? The priority is to stay on course and keep the position, which the European Union was able to demonstrate in Seattle, thanks to the fruitful co-operation between the Commission, Parliament and Council. We should continue to promote actively our position, namely: the launch of a new round based on a broad agenda as soon as possible. It is nevertheless necessary to proceed with a certain degree of caution, as we cannot run the risk of a second unsuccessful attempt. I do not share the opinion of those who believe nothing can be done before the US elections however. I believe that we should not relinquish the possibility of launching a new round still this year.

I say that as I think it best suits the interests of the European Union. I also say that because it is what I believe. Before saying it I have checked that we are not alone, and that this is a shared viewpoint.

Obviously, this assumes a political will on the part of all the members of the WTO. I have discussed this with the Japanese foreign minister, who supports our approach. Other partners with whom I have spoken - for example, Minister Erwin from South Africa, Minister Lampreia from Brazil, Minister Supachai from Thailand - are also keen to get the process back on the rails and launch a Round as quickly as possible. I am also in regular contact with Ambassador Barshefsky, and I intend to discuss with her the prospects for bringing our positions closer. Of course, I am also in regular contact with the Director General of the WTO, Mr Moore, who also shares this point of view. Contact with other partners will be pursued over the coming weeks.

Specific measures

What precisely do we intend to do to prepare the ground? I have sketched out my ideas in general at two meetings of your committee last December and at the plenary session at Strasbourg. Today, I would like to present to you a number of more precise proposals which will be discussed with our Member States in the next few days, and if possible, at a later stage with our international partners.

I envisage an overall approach, which would nevertheless take place in several stages. I think that we should proceed in two phases.

The first phase

There are a number of urgent questions that we should address. These concern what I would describe as short-term measures to restore confidence in the WTO system - and when I say short-term I mean weeks rather than months.

First of all, it is necessary to address the questions which concern developing countries, in particular the least developed countries, which are those, who feel most frustrated by the failure in Seattle. This means that in parallel with the work on the built-in agenda, it is necessary to push forward our initiative on duty and quota exemptions for the least developed countries.

This must be accompanied by concrete measures in the field of capacity building and technical assistance, which should aim to improve developing countries' participation in WTO negotiations. A dialogue with these countries should also be envisaged on the issues surrounding implementation, to which we should continue to be willing to offer reasonable solutions.

Moreover, there are still a number of other problems, which should have been resolved in Seattle: I am referring to the question of transitional periods in subsidy agreements, TRIPS, customs valuation and TRIMS. There is also the electronic commerce moratorium that expired at Seattle. All these issues need to be dealt with in the very near future.

Finally, as regards improving the institutional functioning of the WTO, we are currently preparing proposals distinguishing between what we can do in the short term and what could be done in the longer term.

In the short term I think it would be possible to envisage a series of measures aimed at improving the organisation of ministerial conferences so as to facilitate the participation of developing countries and promote greater external transparency. For example, we could improve the preparation and running of Ministerial Conferences and simplify the working procedures. One could envisage informal processes involving a representative number of WTO members at different stages of development.

In order to improve the organisation's external transparency we could consider strengthening its dialogue with civil society and better structuring it (e.g. through a formal accreditation system for NGOs at Geneva). We could also envisage an annual public meeting of the WTO to discuss the organisation's activities.

More far-reaching improvements to the WTO system, in the context of international governance, should be the subject of a longer-term review, possibly within the context of a new round of negotiations, or in parallel with them.

To facilitate this review exercise, the Commission believes it would be useful to consider setting up an expert working group charged with producing ideas and recommendations.

I would also like to reiterate my conviction, expressed during my speech at the last plenary session of the Parliament, that members of parliament must be more closely involved in the deliberations taking place within the WTO in order to strengthen the democratic control of this work. Since December I have put forward more precise ideas on this matter:

• A way of strengthening this contact in the immediate future would be to hold an annual meeting of members of parliament from the Member States of the WTO.
• At a later stage, we could envisage the setting up of a consultative parliamentary assembly at the WTO, as has been suggested by parliamentarians from the WTO Member States present at Seattle.

But we should make no mistake: such an initiative runs the risk of being seen in developing countries as yet another attempt by industrialised countries to impose structures they are not able to support, given their limited resources and capabilities. To avoid negative reactions, I believe you will have to make contact with your counterparts in developing countries in order to define with them a common approach able to meet our expectations whilst also taking account of constraints on developing countries'.

Of course, I intend to involve fully the European Parliament in the discussion of these proposals, which - I should underline - have not yet been discussed in detail with the Member States. Your ideas, reactions and suggestions will be most welcome. The relationships you have maintained with your counterparts in other countries may, as was the case in Seattle, complement our own contacts at government level in a valuable way.

These are the points to which I would like to have your reactions, and of course, your questions. Thank you for your attention.

Answering questions from Members of the European Parliament, Mr Lamy indicated:

On the timing of the new Round; "we should not wait for the American elections to relaunch the new Round because nothing says it will be any easier after the elections and because it's not wise for the international system to be subject to election cycles. This will be discussed by the EU in March at the next informal meeting of Trade Ministers in Oporto".

On the environment: "the EU was on its own in Seattle. Regional agreements might solve regional environmental problems, but global problems require global solutions".

On the weighting of votes at the WTO according to the commercial importance of its members, there is no official American proposal. If weighting was to be based on budgetary contributions, the EU would certainly have a major weight in the organisation. Nevertheless, nobody asked for a reform in this direction.

Concerning negotiations on services and agriculture, the starting point is Marrakesh. These negotiations kick off in Geneva in the next few months. There is no change regarding our position on cultural diversity.

The European initiative exempting developing countries from duties and quotas must go forward, accompanied by concrete "capacity-building" measures and technical assistance. The confidence of developing countries must be restored. ACP negotiations are making good progress. The WTO will need to be asked for a "waiver".

Mr Lamy was reassuring on textile negotiations. Any proposals made at Seattle had minor economic implications and were conditional on market access negotiations.

Even if practical difficulties exist in assessing the Uruguay Round ,the Commission is the only one to have initiated a sustainable development impact survey for the New Round.

Concerning the WTO accession negotiations for China: "the EU position on the fundamentals has not changed. We favour rapid negotiations - the quicker China enters the WTO, the better for it - but we will not sacrifice our interests for the sake of speed. The textiles sector is not the most difficult issue in the negotiations. Human rights continue to be an ever-present issue but this does not have to be a condition of WTO accession. Increase in trade will probably contribute to improvements in this area. The Council and Parliament will be kept informed of developments in these negotiations".

There is no problem of diversion of trade flows concerning the Mexico agreement. To avoid it, we have the usual preferential rules of origin. The CAP has not been compromised by this negotiation. The Mexico agreement is not yet concluded and the normal procedures will be respected. The European Parliament will be kept informed.