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WTO can withstand Doha Round freeze

you cannot freeze the desire to trade for very long
by Jonathan Fowler
Geneva (AFP) Jul 26, 2006
The collapse of global trade talks may do less damage than feared to the system of international commerce overseen by the World Trade Organisation, because it has solid foundations, experts say.

The 149-nation Doha Round negotiations were suspended on Monday after big trading nations failed yet again to agree on cuts in farm subsidies and customs duties which would have broadened free trade under the WTO system.

"There will be anxiety about how much this harms the WTO trading system. In a very important way, it won't," said Alan Oxley, a former chairman of the WTO's predecessor, the General Agreement on Tariffs and Trade.

Concern has centred on a possible resurgence of protectionism, a greater number of trade disputes and even more bilateral trade agreements, which are seen as creating a complex web of competing interests that could undermine the effectiveness and authority of the WTO.

WTO chief Pascal Lamy has said the breakdown is a blow to multilateralism.

However, Oxley said: "The foundation of the WTO system is its network of legal obligations not to increase trade barriers once they have been cut. It is buttressed by a compulsory system of compliance and arbitration."

"The general picture is that most world trade is open and bound under the rules and commitments of the WTO."

"The failure of the Doha Round does not alter that situation," he said.

The Doha Round was launched in the Qatari capital in 2001 to complete the unfinished business of previous negotiations, particularly tackling elements that critics say skew farm trade against developing countries.

The WTO is a successor to the General Agreement on Tariffs and Trade which was created after World War II as part of a framework of institutions to discourage policies such as protectionism, considered to have greatly aggravated the Depression of the 1930s.

The Doha Round was meant to expand the "rules based" global free-trade agreement into new areas, but its suspension leaves the existing system untouched.

Rich countries have pushed developing nations to make concessions on trade in manufactured goods and services, in return for cutting their own farm subsidies and customs duties.

Oxley said that the fanfare of 2001 had been misplaced.

"The aim of the Doha Round was dressed up. It was technically styled the Doha 'Development' Agenda and declared as advancing growth in developing countries," he said.

"In truth, they did not need a new round of negotiations for that. It is open for any country at any time to reduce its trade barriers, log that with the WTO system, and commit under its rules in future not to raise those barriers."

The failure of the talks, which were meant to yield a wide-ranging global trade treaty, has nonetheless thrown the spotlight back onto what are seen as both flaws and strengths in the WTO system.

All decisions, including giving a green light for new barrier-breaking measures, must be approved unanimously and any member can block a deal, provided it is prepared to bear the ire of others.

Another rule known as the "single undertaking" means that all planks of a final deal must be in place before any of it can be approved formally, thus preventing proponents of liberalisation in some areas from forging ahead without making concessions elsewhere.

Critics often charge that poor countries are at a disadvantage even though they form the majority, and have started to act together in the ever expanding WTO.

Developing world heavyweights such as Brazil and India have increasingly flexed their muscle, while China is starting to show an active interest in Doha.

Ministry of Commerce spokesman Chong Quan said in a statement that China wanted to "resume negotiations as soon as possible,".

"The Doha Round of negotiations are key to the balanced and orderly development of the world economy," he added.

Experts forecast that the talks may not kick off again until at least 2009, because short-term domestic political concerns are likely to dominate in the meantime in Brazil, France, the United States and a handful of other key WTO nations.

Related Links

Illicit Trade Led To Modern Globalization
New York NY (SPX) Jul 19, 2006
In a forthcoming study from the American Journal of Sociology, Emily Erikson and Peter Bearman (Columbia University) demonstrate that an early example of globalization was the direct result of individual malfeasance, specifically, private trade using company resources.







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