28 July 2008

Ministers make headway on elusive WTO deal

This article is excerpted from the 28 July 2008 edition of “globeandmail.com”.

World trade ministers appear to be finally making progress in seeking a sweeping new global trade agreement.

Although critical to a deal, disputes in several areas still did not prevent a sense of optimism over the multiyear process as officials continued week-long negotiations at the World Trade Organization in Geneva yesterday.

"We're closer to an outcome than we've ever been before," New Zealand Trade Minister Phil Goff told reporters after an evening session of talks….

Protection for farmers in developing countries, U.S. cotton subsidies, European Union banana duties and industrial exports to China were still holding up a deal that has been seven years in the making,…

U.S. Trade Representative Susan Schwab and negotiators from China warned a deal can still unravel given extreme sensitivity over opening up trade in national staples such as food and industrial products. Decisions at the WTO are made by consensus and can break down if one country dissents. …

A compromise plan drafted by WTO chief Pascal Lamy on Friday averted a breakdown that could have postponed a WTO deal for several years. According to this plan, the EU would cut trade-distorting farm subsidies by 80 per cent and the United States by 70 per cent, bringing the U.S. aid ceiling to about $14.5-billion (U.S.) from more than $48-billion now….

The compromise would allow developing countries such as China and India room to protect to a limited extent industries such as textiles and car production - markets the United States and EU want to tap.

Negotiators praised the plan for averting disaster. On Saturday, ministers unveiled for the first time promises to open up global-services trade that makes up almost three quarters of gross domestic product in rich countries - from telecoms and banking to energy and the booming global shipping sector. …

Diplomats - many showing signs of exhaustion - spoke of horse trading going on behind closed doors. European negotiators are considering a financial sweetener for Caribbean banana planters hurt by European import tariffs, according to trade officials and diplomats….

Barring the collapse of talks, ministers are expected to reach an agreement by Thursday. But the shape of any final treaty is still unclear and unlikely to emerge before the end of 2008….

The stakes for a deal are high: Trade liberalization may add from $60-billion to $300-billion annually to the world economy and, depending on its final form, lift millions out of poverty. Politically, stakes are high too. A global trade deal forged 15 years ago prompted the resignation of South Korea's prime minister and riots across the world. While anti-trade protests have been muted during this round of talks, ministers are mindful of domestic pressures….