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Friday, November 03, 2006

Global Free Trade Talks Risk Total Failure

WTO Chief Warns of Risks to Global Free Trade

Global free trade talks risk total failure and their collapse would erode faith in the multilateral system on which international commerce depends, warned Pascal Lamy head of the World Trade Organization in an editorial published Friday in The Wall Street Journal.

The WTO's Doha round was suspended in July after nearly five years of negotiations because of seemingly insurmountable differences over agriculture and that suspension could become permanent without progress by early next year, added Lamy.

"There comes a time in every negotiation where the prospect of failure looms. For the Doha round of global trade negotiations, that time has nearly arrived".

Although accounting for less then 8% of world trade, agriculture remained the 'Gordian Knot' that had to be cut for a deal to be reached across the talks, which range from industrial goods to services and new rules on the environment and dumping.

The United States must offer further cuts in farm subsidies, while the European Union and Japan and leading developing countries such as Brazil, India and China would have to make trade concessions too, according to Lamy, who is currently in Washington to meet top U.S. trade and agriculture officials.

Reforming agriculture was always politically difficult but what separated them was not that much, just a few billion dollars of farm subsidies and a few percentage point cuts in average farm and industrial tariffs. "Compare that to what we all stand to gain," Lamy said.

What had already been agreed since the WTO talks were launched in Qatar in 2001, in agricultural and industrial reform, services, cuts to environmentally harmful fishing subsidies and slashing red tape and corruption was already more than achieved in any previous trade round, he said.

The successful conclusion of the round offered an "insurance policy" against protectionism and economic nationalism of the sort that helped trigger World War Two, he added.

"Like a progressive malady, a failure in the global trade talks will erode the multilateral trading system that has underpinned the global economy for nearly 60 years. Time is short and the stakes are high"

But the WTO had only a "few months left" to rescue the talks before the U.S. Congress turns its attention to two pieces of legislation that -- depending on which way they go -- could sound the death knell for the global negotiations.

The U.S. legislature must review farm budget spending. It must also decide whether to extend special powers allowing President George W. Bush to reach trade deals.

Without those powers, it becomes almost impossible for the United States to negotiate international trade pacts because Congress can demand to be consulted every step of the way.

However US Agriculture Secretary Mike Johanns admitted differences in world trade talks are so great it is doubtful World Trade Organization Director General Pascal Lamy could come up with a draft plan to bring parties together.

"There's some pretty fundamental differences here" said Johanns said before meeting with Lamy. " Just in agriculture, there's a big difference. I just think it would be very, very difficult for Lamy to put together a text to bridge that kind of gap," he added.

Johanns conceded that while "talks are on life support" the United States remained committed to Doha and restarting trade negotiations.


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