Last Chance for the World Trade Talks: Even a Modest Deal is Better than the Alternative
As the struggle to keep the Doha world trade round alive approaches its deadline at the end of this month, one thing is already clear: success will amount to a less than historic achievement, but failure could spell disaster for the World Trade Organization and the multi-lateral rules-based system it upholds, reports the World Bank press review Monday.
WTO members actions in the next two weeks will show whether they still have any appetite for global liberalization or have lost the stomach for the fight. The outcome will critically affect worldwide confidence in an institution that remains, for all its flaws, the foremost embodiment of the principles of multilateral co-operation.
The damage would not stop at opportunities for economic gains foregone. There would be further erosion of faith worldwide in a system that has done much to substitute the rule of law for the law of the jungle in international economic relations.
That would weaken disciplines on governments conduct and trigger a new stampede into discriminatory bilateral and regional trade arrangements, fragmenting the global market. Too few businesses appear at present to be aware of the higher costs and bureaucratic barriers that would result.
Equally important, another failure could prompt the US to retreat from playing an active role in the WTO. Scepticism, even hostility, towards the body is already widespread in Congress. If there were nothing to show for the Doha talks so far, many US lawmakers would question the rationale for renewing, next year, presidential authority to negotiate trade agreements.
There are signs that fear of the fall-out from failure has begun to concentrate minds. Some bigger WTO members are working harder to bridge their differences.
Meanwhile, poorer nations have stepped back from threats to push unrealistic hard-line demands urged on them by self-appointed activist “advisers” more interested in wrecking the WTO than in promoting economic development.
There are further reports that a proposed deal for troubled global trade talks may get a rough ride from World Trade Organization (WTO) states on Monday, but rival camps are likely to stop short of rejecting it altogether, trade sources say.
With an end-July deadline for a pact looming, the blueprint put forward by the talks chief mediators late on Friday aims to convince poorer countries that they will win big cuts in rich countries farm subsidies, while offering developed countries more open markets for their industrial goods and services.
Initial reactions ranged from disappointment from some major farm goods exporting countries that the plan did not go far enough in lowering barriers to agricultural trade, to a cautious welcome from some U.S. groups.
Issuing the draft guidelines for future global trade negotiations, Shotaro Oshima, Japanese chairman of the WTOs ruling general council, and Supachai Panitchpakdi, WTO director- general, said “considerable differences of view” persisted but that with “hard work and good will” agreement should be possible.
The WTOs 147 members met Monday to give their response to the text, which covers agriculture, industrial goods, services, cotton, trade facilitation and development issues.
Trade diplomats said they expected some of the most difficult negotiations to come in the area of industrial tariffs, where virtually no serious work has been done in recent months, rather than agriculture, which has been the focus of attention by trade ministers as well as officials.
The reaction of the Group of 90 mostly poor countries, whose ministers met in Mauritius this week, is also seen as critical. They have been pressing demands for separate negotiations on eliminating cotton subsidies, and for a number of conditions to be met before they agree to talks on trade facilitation designed to ease customs formalities.
The draft subsumes cotton under the broader agricultural negotiations, while promising to address the concerns of African cotton producers “ambitiously and expeditiously”. It also calls for the launch of full negotiations on trade facilitation, while agreeing that poor countries will not be asked to undertake costly infrastructure projects.
On agriculture, the draft incorporates the European Unions pledge to scrap all export subsidies by an agreed date alongside elimination of other trade-distorting export aids.
The scanty nature of the text left negotiators with much to do to complete the round of liberalization talks launched in Doha in November 2001, with trade analysts convinced that completion of the round is still a long way off.
Privately, the WTO has accepted for some time that there is no prospect of meeting the original deadline of a final deal by January 1 2005, but was desperate to achieve a framework for negotiations by the end of this month.
Meanwhile, the British government has recently published a White Paper on international trade and globalization, “Trade and investment White Paper: Making Globalization a Force for Good” in which London calls for the EU to abandon its “mercantilist approach” to trade negotiations at the WTO in favor of opening its own market to the whole world.
– The mercantilist approach to negotiations, which regards increasing market access as a concession, needs to change, stipulates the report, the foreword to which is signed by Tony Blair and Patricia Hewitt, Secretary of State for Trade and Industry).
The report is particularly scathing of the common agriculture policy (CAP), “which does serious damage to farmers in the poorest countries of the world, and costs the EUs own taxpayers some 50 billion euros a year, plus another 50 billion euros in extra consumer costs through higher food prices”.
Kilde: www.worldbank.org
