Wednesday, May 17, 2006

WTO Future Hangs in Balance

It's about time =)


The future of the World Trade Organisation, even its role as referee in big commercial disputes, could be brought into question if its tottering global free trade talks finally collapse, diplomats and analysts say.

For many observers, it is fear of these consequences that could yet force the WTO's 149 member states to do what they have not done in over four years of wrangling and strike a deal in the troubled negotiations before time runs out.

Failure could encourage the more powerful to turn away from the Geneva-based WTO and seek new business through bilateral and regional deals, rather than taking the multilateral route where all can get a share of the action.

It could even tarnish the so-called "jewel in the crown" of the 11-year-old trade body, its dispute settlement role, undermining political readiness in member states to accept its rulings and so rendering them difficult to apply.

"I think the future of the WTO may be hanging in the balance. If the round collapses, it may spell the end of the WTO as a negotiating forum," warned Daniel Griswold of the pro-free trade Washington-based Cato Institute.

"If the whole thing fails, it would be very damaging for the WTO over time," echoed former Canadian trade envoy John Weekes.

The Doha Development Agenda was launched in late 2001 at the urging of rich states with the stated aim of helping boost global growth to lift millions out of poverty.

It had taken years to get suspicious developing countries to agree to further trade liberalisation, because they felt previous rounds had delivered little. It was only the swell of international solidarity sparked by the September 11 attacks on the United States that convinced them to do so.


The sense of common purpose did not last. Splits between rich and poor, particularly over agriculture, resurfaced to slow progress in the round which, if successful, could inject some $100 billion (53 billion pounds) into the world economy, the World Bank says.

Now the negotiations are drifting towards an end-July deadline for a draft pact on slashing farm subsidies, opening up industrial goods' and services' markets, reforming rules on politically sensitive issues such as dumping and giving special aid-for-trade to poorer developing states.

The final package must be signed, sealed and delivered early next year, but that will only happen if the July date is kept.

If July is missed, the WTO would be left facing a number of scenarios, none of them palatable.

There could be a desperate scramble to salvage what has already been agreed and come up with some sort of minimal deal -- a so-called "Doha lite", analysts say.

However, nearly all major players in the negotiations, including the United States and the European Union, have warned that such a thin result could be politically just as difficult to achieve as a full-blooded free trade treaty.

Rich members, such as the European Union, which have so far offered most of the concessions, albeit limited ones, would get little in return.

Brussels could have trouble convincing member states, such as France, the biggest beneficiary of EU farm spending, to surrender the right to subsidise its farmers' exports or to agree to tariff cuts without a quid pro quo from developing states in the way of more open industrial and services' markets.


"No one should be lulled into thinking that the negotiations, and our job of selling the results to our respective domestic constituencies, will be easier if we all just lower our sights," U.S. ambassador Peter Allgeier told the WTO recently. "It won't be easier."

With not even a minimal accord in the offing, the Doha round would be as good as dead even if the official verdict was that it had only gone into hibernation to await a fresh infusion of political will, sources say.

Hibernation could last years.

Past trade rounds have all dragged on way beyond their official target dates for conclusion. Doha's predecessor -- the Uruguay Round -- lasted over eight years.

But the difference this time is that U.S. presidential powers to negotiate free trade deals relatively free of congressional interference expire in the middle of next year and look unlikely to be renewed.

Without the so-called 'fast-track' powers, multilateral free trade negotiations become all but impossible. And given the protectionist mood in the United States and elsewhere, it could be another U.S. presidential election or two before Washington is once again in a position to negotiate seriously.

Technorati Tags: , , .