Lusaka, Zambia: The Doha Round of global trade talks could be concluded within eight months of preliminary agreements on industrial tariffs and agriculture subsidies, the head of the World Trade Organization (WTO) said on Tuesday.
WTO’s director general, Pascal Lamy, said it would give time to the US to indicate its position and for India to conduct elections in April and May before convening trade ministers for more negotiations.
Lamy put the talks, launched in 2001 with an emphasis on development and opening markets in agriculture, manufacturing and services, on ice last December, citing a lack of political will among major powers to bridge their differences.
Quite optimistic: WTO’s director general Pascal Lamy. Thierry Charlier / AP
The deal is estimated to be worth $150 billion (Rs7.50 trillion) for the world economy and could be even more important now that the world is facing its worst economic crisis in decades.
Lamy has said the so-called “modalities” of a deal to open world trade—the precursor to a full agreement—could be reached before the end of the year.
“As soon as possible, but I will not fix a deadline. I will reconvene ministers when I feel that the will to compromise is there,” he told Reuters in an interview when asked about the timeline for concluding the trade negotiations.
“And then if we were to do this and cross the line, what we call modalities, the end of the round could be six or eight months ahead from that,” Lamy said on the sidelines of an infrastructure investment conference in Zambia’s capital Lusaka.
Lamy said the credit crunch had hit trade after short-term credit finance dried up and global supply and demand shrank. “Trade flows are badly hit by the crisis. Our own forecast is (about) minus 10% worldwide in volumes for this year, after five years during which world trade increased by 25%, which is a big drop.”
“This big drop stems from contraction in the economies, it is inevitable,” Lamy said.
He said global trade faced risks from protectionism.
Last week at the Group of Twenty (G-20) meet, the US said it wanted countries such as China, India and Brazil to open their markets more to American businesses, while India said it wanted to protect its poor farmers from a surge of imports.
“There are two areas of risk. High-intensity protectionism of the 1930s, raising tariffs by 50%. That will not happen. There is entrenched policy, we have rules and discipline that constrain the trade policies of countries,” Lamy said.
“There have been no protectionist measures of the magnitude that would impact on world trade, but there is a protectionist race, which is there every time there is a crisis,” he added.
Lamy said the G-20 intervention, through a $250 billion package of financing to support world trade, was a welcome gesture. “Now that is not much, but it marginally can help those most hit by financing, which is shrinking. These big political prescriptions have to translate into real flexibility.”
He urged countries in Africa to trade more with each other and to come up with uniform customs regulations and rules to attract investment.
“Africa is a place where regional trade is cold, 90% of trade is with countries outside of Africa,” Lamy said. “African countries do not trade enough with themselves and this is a legacy of colonialism.”
He said investors could be lured by a big Africa market. “The local markets are not large enough, deep enough and integrated enough. Of course, it has a consequence on direct foreign investments. Investors look for large markets.”