Treat the world to a tonic on the trade front
By Maria Livanos Cattaui
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| Cattaui: Freeing up trade brings huge economic gains |
Paris, 6 September 2001 - The question member governments of the World Trade Organization should be asking during the countdown to the WTO's November ministerial meeting in Doha is: "Do you sincerely want to live in a more prosperous world?"
The answer of course is: "Yes - as long as my country gets a satisfactory slice of the benefits." The inference is that any new trade liberalization negotiations, whether or not dignified with the name of a "trade round", must offer something for everyone. The negotiations must be in a spirit of give and take.
That is why working out an agenda that ministers can endorse in Doha is proving so devilishly complicated. Yet if the horsetrading at the WTO in Geneva fails, trade ministers will find it hard to clinch a deal through political willpower al
one when they assemble in Qatar. That, at least, governments have learned from their painful Seattle experience in late 1999.
At the worst, we could be confronted with another debacle like the abortive ministerial meeting of the WTO in Seattle. At best, an agreement with something for everybody would expand world trade and with it economic growth and job creation.
Study after study has shown that freeing up trade brings huge economic gains. A University of Michigan study shows that cutting barriers to trade in agriculture, manufacturing and services by one third would boost the world economy by $613 billion. That is equivalent to adding an economy the size of Canada's to the world economy.
The effects of past trade liberalization are even more impressive. According to the WTO, a 17-fold rise in world trade over the past half century has been accompanied by a six-fold rise in world output. Both developed and developing countries have felt the benefit.
The world cannot afford a repetition of Seattle, which produced nothing more than acrimony in the conference chamber and mayhem outside as the anti-globalization demonstrators went on their now familiar rampage. A second failure could, as the WTO Director-General, Mike Moore, himself has conceded, condemn the organization to a long period of irrelevance. Negotiating future trade liberalization agreements would become even harder.
The implications are scary. During the inevitable inquest on Seattle, a frequent sentiment was relief that at least the world economy was booming. Commentators reflected on how much worse things might have been if Seattle had coincided with a world recession.
This time round, the economies of all three global economic powerhouses - the United States, Japan and Europe - are faltering in unhappy unison. All the more reason, one would think, for governments to make a success of Qatar and treat the world to a tonic on the trade front.
What will it take? The good news is that the European Union and the United Staes appear determined to sink their differences over such thorny issues as anti-dumping and the environment in the interest of an overall agreement.
But that alone will not be enough. The sticking point this time is almost certainly the developing countries, who fiercely resent what they consider to be a raw deal from the previous Uruguay Round. They are finding it hard to implement their existing commitments, for example on investment and customs modernization. They want more time to meet those obligations and at the same time seek greatly improved market access for their textile and agricultural exports.
The industralized countries, for their part, will have to be careful to avoid overburdening the agenda with demands that the developing countries cannot readily meet on such matters as greater access for their services and protection of investments and intellectual property.
The WTO is a consensus organization, and the vast majority of its 143 members are from developing countries. Collectively therefore, they hold strong negotiating cards, although not as strong as their numbers might suggest.
The developing countries should exercise restraint because they have the same interest as everyone else in the health of the multilateral trading system. The last thing they need is any weakening of the WTO and a proliferation of bilateral and regional trade agreements that could discriminate against them. Provided that they are shielde
d by the WTO rules and mechanisms, they can avoid being browbeaten by more powerful trading partners.
What the developing countries should be aiming for above all is the fullest possible integration in the multilateral trading system so that they can build their economies through trade and investment. That would help them more than any amount of development aid.
Willingness to compromise in Doha is more than desirable. At stake is a glittering prize. The alternative does not bear thinking about.