WTO chief bullish about prospects of new trade deal

Published on Sunday 2 August 2009 22:47

A $250 BILLION (£150bn) financial package to revive a global trading system crippled by the credit crisis is starting to bear fruit, especially in Asia, the head of the World Trade Organisation said at the weekend.

WTO director-general Pascal Lamy said: "Oil is (returning] to the various mechanisms of world trade.

"My sense – but it's a qualitative feeling at this stage – is that, notably in regions like Asia, because countries like China stepped in very vigorously, things are picking up."

Despite this cautious optimism, Lamy said that the Geneva-based body was maintaining its forecast of a 10 per cent contraction in global trade this year as a result of world recession and the freeze-up in trade credit precipitated by financial crisis.

Lamy also said that WTO members acknowledged South Africa's argument for special treatment in the current Doha round of trade talks because of relatively deep cuts in industrial tariffs made under apartheid, which ended 15 years ago.

During white minority rule, South Africa was treated in world trade terms as a developed country, rather than having the developing country status it now enjoys.

"South Africa had to take, at the time, tariff reduction commitments that were more stringent than other developing countries," Lamy said.

"This is recognised. South Africa will, at the end of the negotiations benefit from specific flexibilities. That's now recognised. How much of that is still to be negotiated."

The Doha round of talks to draw up a new framework for world trade were launched in Qatar in 2001, specifically to help poor countries.

However, a meeting a year ago collapsed and little progress has been made since then, with fundamental disagreements about farming subsidies, and the United States and big emerging countries – including China and India – pitted against others over the issue.

In the past 12 months, political leaders across the spectrum have talked at length of the need to revive the talks, leading Lamy to say the goal of wrapping up the mammoth negotiations some time next year was "do-able".

Diplomats and trade experts in Geneva are now on the northern hemisphere summer break, but Lamy said he expected renewed energy come September, especially since an apparent rapprochement between Washington and New Delhi.

Lamy said: "From September on, following a number of positive political signals, notably from the US and India, my hope is that … the negotiating activity will move up."

And he added that the technical issues of concluding such a complex series of negotiations would remain a challenge.

He also said all WTO members, including the US, accepted the need for major cuts in cotton subsidies. The so-called C4 West African countries – Benin, Burkina Faso, Mali and Chad – argue that the US subsidies depress world prices and rob their farmers of export sales.

"Everybody knows that cotton trade-distorting subsidies will have to be very substantially reduced. The US know that. It's just a question of when they confront their domestic constituency," Lamy said.

US trade representative Ron Kirk said on Friday that Washington would cut its annual support to US cotton farmers only as part of a wider deal whereby developing countries such as India and China opened up to US cotton exports.

The issue is likely to feature prominently on a trip by Kirk to Kenya, Ethiopia and Senegal this week.