Thursday, July 31, 2008

WTO Trade On Hold Till Incumbent Leaves

As if being responsible for the Iraq war isn't enough, George Bush gets another kick in the groin.


World trade talks aimed at lifting millions out of poverty and dismantling tariffs across the globe are unlikely to be revived until a new president is in the White House, experts said.

A failure by the US and India to agree on how developing countries can raise tariffs on agricultural imports was at the heart of the breakdown of nine days of emergency talks at the World Trade Organisation (WTO) late on Tuesday.

Pascal Lamy, the director general of the WTO, admitted yesterday that the "dust will need to settle" and urged members to come up with new solutions that will breathe new life into the talks.

However, with no date yet set for another meeting, many of the key negotiators are likely to have left the top table by the time the US - a key player in the talks - has a new leader. America's own trade representative, Susan Schwab, is set to leave in January, Peter Mandelson's time as European Trade Commissioner ends in November and Kamal Nath, India's commerce minister, departs in May.
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Stephen Lewis, an economist at Monument Securities, said that "some WTO members are indicating that discussions will resume, but it seems unrealistic to expect much progress ahead of the inauguration of the new US President".

While those involved in the intense negotiations reacted with dismay and alarm to the collapse, many economists were sceptical that the breakdown would have any immediate impact on the level of trade and the health of the world economy.

The WTO already expects that the growth in the volume of world trade will ease to 4.5pc this year from an average of 6pc a year over the past decade but pinned the blame on the crisis in financial markets rather than the world's existing tariff system.

As the talks headed into their final sessions, agreement had been reached on 18 items of a 20-point agenda, but the stumbling block came when the US could not agree with India and China on 'safeguard clauses'. They were mechanisms that would have allowed poorer nations to slap emergency tariffs on imports if they suddenly jumped to unmanageable levels. The US accused India and China of trying to shield their markets from foreign competition.

And while Keith Rockwell, a spokesman for the WTO, said that all the organisation's members yesterday had expressed a willingness to build on the progress, the blame game among the key negotiators suggests they may not be reassembling soon.

China's Commerce Minister, Chen Deming, claimed that failure would add to "a world economic downturn, serious inflation and imminent financial risks".

Ms Schwab argued that the US was not prepared to sign up to a mechanism that "could be abused and set back the trading system for decades".

CBI director-general Richard Lambert put the blame at India's door and described it as "a lost opportunity for the global economy".

"The deal that was on the table offered promise for developing and developed countries alike," he said.

The crumbling of the talks after seven years may spur a wave of bilateral negotiations between countries. Since the Uruguay round of talks finished in 1994, the number of bilateral free-trade acts has more than doubled from 84 and the WTO expects it to hit 400 within two years.

"If Doha doesn't work, bilateral deals matter even more," said Jagdish Bhagwati of the Council on Foreign Relations.

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Thursday, July 17, 2008

G8 Hokkaido 2008

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