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TRADE: WTO Prescribes More Liberalisation

Gustavo Capdevila

GENEVA, Jul 18 2008 (IPS) - The shortcomings of globalisation must be amended by more globalisation, according to the World Trade Report 2008, released by the World Trade Organisation (WTO).

In its report titled ‘Trade in a Globalising World’, the WTO recommends pursuing more open markets balanced by complementary domestic policies, a tacit recognition of a role for the state, “along with international initiatives to manage the risks arising from globalisation.”

The combination of trade and globalisation, leading to greater integration and economic interdependency between countries, has made a significant contribution to bettering the lives of many millions of people around the world, WTO Director-General Pascal Lamy said at the launch of the report this week.

But the benefits of greater integration and interdependency have not reached everyone, Lamy acknowledged. “There are those that are excluded and left behind,” he said.

For that reason, deeper integration into the world economy has not always proved popular. As a consequence, trade scepticism is on the rise in certain quarters, the report admits.

This is the global context for a decisive phase of the Doha Round of world trade negotiations, launched in Nov. 2001 to lower trade barriers between countries and free up markets.

The talks have frequently been on the verge of breakdown, mainly due to divergences of interests between industrialised countries and developing nations. Next week a crucial debate will be held with the participation of ministers from some 35 or 40 countries, out of the 153 members of the WTO.

Against this backdrop, Lamy seized the opportunity to examine a stark dilemma for the future of globalisation.

“What the ministers achieve together next week will be judged as an indicator of the international community’s willingness and ability to share in the management of globalisation in an effective and equitable manner,” he said.

“I am not suggesting that any deal is better than no deal. But I am suggesting that on the basis of what is on the table, an inability to come to a mutually beneficial and substantive deal would be a dark signal indeed,” he warned.

In the context of what the WTO is striving to achieve, the 2008 report could not come at a better time, Lamy said.

The document, presented by WTO chief economist Patrick Low, examines the gains from international trade and the challenges arising from higher levels of integration.

International surveys of public attitudes suggest that a majority of people recognise the benefits of globalisation, but this recognition is accompanied by anxieties about the challenges that come with it, the report says.

While large majorities believe that international trade benefits their countries, they also fear the disruptions and downsides of participating in the global economy, it says.

The report recommends adopting national policies to counteract factors that limit the potential benefits of trade, such as public investment in physical infrastructure, as well as cost reduction by reforming trade and regulations.

In the sphere of international cooperation, the document advocates negotiations to facilitate trade by reducing the costs of transporting goods and crossing borders.

It also refers to the Aid for Trade Initiative, which aims at providing financial assistance for trade capacity building in developing countries and ensuring that the opportunities and benefits of trade are more widely shared.

In Lamy’s view, trade can make a small contribution to solutions for the current international economic situation, “which is unprecedented,” he said.

It is not that the factors involved are in themselves unprecedented, but what has not happened before is the concurrence of all those factors simultaneously, he said, in reference to escalating oil and food prices and economic slowdowns in many parts of the world.

More important still are the social and political effects of what is happening. This time the effects are greater than in previous crises, because they are basically hitting the poorest first, he said.

With respect to what trade had to offer as a solution to the crisis, Lamy mentioned soaring food prices, which he said originated in imbalance between supply and demand, the obvious solution being to increase supply.

Places where increased food production is possible – at a low environmental cost – are mainly in developing countries.

But it is also obvious that no one will invest in agricultural production if they have to compete against the financial resources that the U.S., Europe, Japan and others devote to subsidising their farmers.

Lamy was optimistic about the chances of closing a deal at the negotiations next week in Geneva. The chances now are better than they were a few weeks ago, he said.