ROUND WE GO ?

It looks good news, senior Trade Ministers, meeting in the fringes of last week’s annual talk fest in Davos, Switzerland, have said there is a glimpse of movement in negotiating positions so the suspended Doha Development Round of negotiations can begin again. The talks by Ambassadors in Geneva were suspended because nothing new had emerged by way of instructions from capitals to allow any meaningful progress in the negotiations. This is like watching an old movie for the 20th time. The headlines predictable as Ministers seek alibis and allies, but some of the headlines have been unhelpful. The animosity and distrust between key players like the U.S. and European Union was so bad in the 1990’s that phone calls were not returned. It’s not quite that bad, there is enough blame for everyone to share and sometimes there are more effective ways of catching someone’s eye than poking them in the eye with an accusing finger.

Thankfully the World Trade Organisation has been enlarged so it’s not just up to the big guys making a deal and the rest accepting it, but nothing can be done unless they show some common cause and leadership. As always, it comes down to agriculture, where the European Union need to improve on present offers on market access, and the U.S., domestic support or subsidies. Then there’s the fearful Trojan horse of something called “special or sensitive products” which can mean rice, dairy or sugar, or whatever domestic interests fear. Not to nail this down in a desire to get a result will end in tears, disputes, and could make the round pointless for many. For those who have seen their core products, such as coffee, sugar, and rice, locked out of the system, this would be a betrayal of monumental proportions. It won’t float nor should, the G20, a group of 20 developing countries, have shown solidarity and would rather have no round concluded if it means no substantial progress.

Another few years of the present economic growth and the world would have seen the greatest, most successful expansion of the global economy ever beating the 1960’s. No wonder Finance Ministers in most places look self-satisfied, even smug. All this has been underpinned by the rules of the World Trade Organisation, and those countries that have done the best are those that have opened and reformed their economies to be part of this growing global supply chain. Hard decisions by governments in Australia, New Zealand, and the U.K. in the 1980’s are being rewarded. Those who have been slower to reform, Germany, France and Japan, have been slower to progress.

The two main economies that have played a bigger role in global growth recently than the U.S., EU or Japan, have been India and China. Those who feared competition from China and India should ponder the next question, where would we all be without the appetites of China and India? Their leaders have shown courage by opening their economies but need to go further.

This round needs the leadership of China and India but they are doing very well out of existing rules and agreements, however protectionist sentiment is always out there and the clouds are gathering in Washington and have never left Paris.

Japan is showing some flexibility, now if China and India can show the way, and if the big guys are prepared to save their taxpayers and reward consumers in agriculture, and if a decent deal is done for the poorest countries, then we have an end-game in sight. The French President of the European Central Bank has warned of the danger to the global economy, and the fight against poverty in poor countries if the deal is not done. More than a little disappointing is the view of some commentators that the Doha Development Round was too ambitious, they are the same people who said in my time we would never launch the round and that China posed a threat to the global marketplace and would never live up to her commitments. Getting China into the WTO was to me more important than launching the round. Imagine where the world economy would be without them, let alone the hundreds of millions of Chinese who have been lifted out of extreme poverty, would be if they had not reformed and joined the WTO?

A recent, serious survey of business, government officials, and agencies reports a nearly 80% mark for implementing China’s WTO commitments. A lot more needs to be done to protect intellectual property, but in tariff cuts, opening markets, they are mainly on target, on time.