WTO abandons ministerial meet

World Trade Organisation (WTO) director general Pascal Lamy yesterday decided to abandon plans to convene a meeting of ministers by the end of this year to resolve the trade issues that had failed during at the last conclave in Geneva last July.

Lamy said the risk of failure was too high and would thereby hurt the global trading system.

"Calling ministers to try to finalise modalities by the end of the year would be running an unacceptably high risk of failure which could damage not only the (Doha) Round but also the WTO system as a whole," Lamy told a meeting of WTO ambassadors.

''My assessment is that on sectorals and the special safeguard mechanism there continues to be a lack of political will to accommodate the demands of others,'' he added.

The decision to abandon the meeting was despite the fact that he had held intensive talks with the US, India, China, Brazil and the European Union to reconvene the meet in order to reach consensus on vital trade issues.

A spokesman for the US trade representative, Susan Schwab, said that although there were a few issues still not resolved, she was disappointed by the decision to abandon the meeting.

The nine-day WTO ministerial talks held at Geneva in July collapsed after developing countries led by India and China refused to buckle under US pressure and yield on the issue of safeguards to farmers against a import surge. (See: Free trade hopes fade as WTO talks collapse) 

India and China insisted on protection for their poor farmers against a surge of imports from the rich countries, whose farm goods exports are heavily subsidised, the US, facing an economic downturn, was not ready to yield ground.

The US did offer to lower its trade-distorting farm subsidies to $15 billion a year but this offer was criticised by developing countries calling it ''negative'', which, they claim, in reality is more than doubling its current effective subsidy of $7 billion.

The US and EU also wanted India and other emerging economies to scrap tariff on the automobile sector under the so-called 'zero-to-zero' or zero-for-x' sectoral initiatives while Brazil and several African nation wanted the US to remove the high subsidies it gives to its cotton farmers, which make other cotton producing countries unable to compete in the global market.

Brazil had even lodged an official complaint with the WTO, who upheld the complaint that US subsidies to its cotton farmers distorted the price of cotton and made it harder for developing nations to compete. (See: Brazil claims victory against US cotton subsidies before WTO) 

After developing and emerging nations blamed the US by for the collapse of WTO trade talks in Geneva, Susan Schwab, the US Trade Representative called for a meet of senior trade officials from a small number of countries to explore ways to restart the failed Doha trade talks. (See: US proposes mini meet to revive Doha talks)

To resolve these issues, the G20 summit of world leaders, who met in November, also called for the WTO trade talks to begin by the end of this year, but with a new incoming US administration in January next year, India going in for elections in May and a change of guard at the European Union in 2009, it is highly unlikely that the any meet will take place in the first half of next year.

Due to the global economic slowdown and the emergence of recession in many countries, many WTO members will arbitrarily raise tariffs and subsidies from the levels negotiated in the last trade round, signed in 1994, as well make more bilateral or regional free-trade deals.

Since the collapse of the talks in July many countries like Russia, India, Indonesia, Brazil and Argentina have raised import tariffs or adopted restrict trade practices with Russia increasing import tariffs on cars, India raising duties on iron, steel and soy and Indonesia introducing new measures to promote local producers.

The aim of the Doha Round of talks, which first started in Qatar was to increase international commerce by removing trade barriers and subsidies, which has not happened so far as many countries refuse to open up their markets or reduce the huge subsidies it gives to its farmers.

With many nation's economy in recession and with the delay in finding a credible solution to global trade imbalances, the WTO now fears a big increase in trade disputes as many countries will turn to dumping, increasing subsidies as countries try to grapple with wide spread unemployment, closing or idling many manufacturing plants worldwide and tight money markets.