WTO: Efforts to resolve trade impasse - full text
Searching more than 75 years of world history
Representatives from 151 member states gathered in Geneva as trade negotiations at the World Trade Organization (WTO) reopened on Sept. 3. The first matter discussed was how to break a long-standing deadlock in opening EU and US agricultural markets to developing countries.
On Sept. 14, the chairman of WTO's agriculture negotiations, New Zealand Ambassador Crawford Falconer, said he was satisfied with progress on farming tariffs and subsidies, two of the biggest roadblocks to a new treaty aimed at increasing global trade flows.
One proposal would reduce US cotton subsidies by more than 80 percent, a bigger cut than other crops would see. That idea is unpopular among US cotton producers, the news agency Reuters reported on Sept. 15.
The current round of global trade talks, called the “Doha Round,” had been stalled since July 2006 over disputes on how to reduce trade barriers in farm goods and industrial products and services. Developing countries like Brazil and India are calling on the US and EU to offer deep cuts in farm subsidies, while rich countries want larger developing countries to lower their barriers to imports of manufactured goods.
Also, trade tensions between the US and China flared as each brought disputes against the other though the WTO. China on Sept. 14 requested consultations with the US -- the first stage in launching a WTO dispute -- over Washington's anti-dumping measures on paper imports from China, according to the Los Angeles Times.
The US alleged that China was using tax breaks and other incentives to illegally subsidize its industrial exports, and an expert WTO panel started looking into those allegations, Xinhua News Agency reported on Aug. 31. The United States first filed the case to the WTO in February and later was joined by Mexico. The US also requested a WTO panel to look into intellectual property violations, a move that was blocked by China.
WTO Director-General Pascal Lamy on Sept. 8 said political leaders needed to give a "final push" to complete the Doha Round. Lamy warned that protectionism historically had paved the way to war, and that poor countries would feel frustrated if the industrialized world continued to enjoy favor under the existing trade regime, Xinhua reported on Sept. 9.
Reaction and Outlook
The 21 leaders of the Asia Pacific Economic Cooperation forum closing statement at APEC’s annual summit in Australia signed a resolution expressing strong support for trade liberalisation and an urgent request for countries to revive the Doha Round.
"The meeting ... issued a very strong statement calling on the nations of the world to get more serious about the Doha negotiations," Australian Prime Minister John Howard said at the closing of the summit. “They still represent the last best hope for an aggregate multi-lateral trade agreement. Movement is needed in agriculture and industrial products,” Agence France Presse reported on Sept. 9.
EU Trade Commissioner Peter Mandelson said resumption of WTO talks in Geneva “will determine whether we could achieve a breakthrough this autumn or see the whole round put on ice indefinitely,” the Seattle Times reported on Sept. 4.
Political changes such as the U.S. presidential election next year mean “it will be very difficult to take the round out of deep freeze if that's where it’s heading to a breakdown rather than a breakthrough in talks this autumn,” Mandelson said.
Brazilian President Luiz Inacio Lula da Silva said Sept. 11 that he was convinced that there could be a resolution to the impasse and that he looked to the European Union to find common ground, the International Herald Tribune reported on Sept. 11.
Background
There has never been a time in history when international trade was entirely free of national import restrictions. The most common trade barrier has been the tariff, a tax on specific imports that raise the price of those incoming goods. They are imposed to discourage consumption of that good, the generate revenue for governments, and importantly, to protect domestic industries from competition from cheaper imports. This last reason is called “protectionism.”
Tariffs and other protectionist measures are also used to punish other nations during times of bad international political relations, and to retaliate against other nations for tariffs they imposed in either that industry or another industry. In that way tariffs engender other tariffs, which are called “countervailing duties.”
The period between the world wars was the last great era of protectionism during which tariffs and other trade barriers were set very high. Tariffs have fallen dramatically since the end of World War II. A clear consensus arose after the war that protectionist policies contributed to the Second World War.
Accordingly, the principle of lowering high tariffs and eliminating predatory trade policies was seen as a necessary condition to avoiding another world war.
The establishment of the General Agreement on Tariffs and Trade (GATT) would be a leading part of the attempt to develop a framework for international trade. Another aspect of international cooperation would be in the monetary sphere. Consultations, through the International Monetary Fund (IMF), would take place in which nations would help each other to overcome short-term difficulties in foreign reserves, and manage changes in currency exchange rates.
GATT, the IMF and the World Bank were aimed at making sure that trade blocs and economic spheres of influence would no longer be a means by which countries maintain their national interest.
But these institutions could not always prevent governments of various countries resorting to protectionist policies when they felt they needed to. For example, in 1947, the US insisted that all tariff treaties include a formal “escape clause,” permitting tariff reductions to be cancelled if they can be shown to cause injury to a domestic industry. Further, trade blocs, like the European Community and the North American Free Trade Agreement, sometimes asserted their own solutions to trade issues without consulting the international bodies. And later, national trade policies with regard to agriculture, and other so-called “strategic” industries (such as steel, automobiles and “infant” industries) got in the way of trade liberalization.
Disputes over food and commodities issues soon arose between the US and the European Economic Community (precursor to today’s European Union). In the mid-1980s. Japan was increasingly the subject of allegations by western exporters that that country’s trade surplus was aggravated by its non-tariff barriers that made it extremely difficult to enter Japanese markets. China also was seen as perhaps undervaluing its currency to unfairly support its huge trade surplus with its trading partners, particularly the US. And during the more recent Doha Round of trade talks, a developing country bloc (including Brazil, China and India) changed the dynamic of the talks with their strong demands and influence.
