www.agp.orgarchiveswar & peace

Attacks in US lend new urgency to push for free trade

FT 1.10.01 - By Guy de Jonquières and Frances Williams - Oct 01 2001

If last month's terrorist attacks in the US were intended as a blow against capitalism, they appear to have backfired in one important respect, by imparting urgency to a renewed international drive to free trade and open markets.

Leading figures, from Alan Greenspan, chairman of the US federal reserve board, to Romano Prodi, president of the European Commission, have said the launch of a world trade round this year is now essential to restore economic growth and confidence.

Even long-standing opponents of a round, such as Pakistan, have softened their tone.

Meanwhile, members of the US House of Representatives last week added to the momentum by overcoming deep partisan splits and agreeing a compromise that could give President George W. Bush the authority he wants to negotiate new trade agreements.

Suddenly, political will -a commodity in scarce supply in previous discussions about a trade round - seems to be flowing more freely in capitals around the world.

However, important as the shift in attitudes is, it is not enough to ensure a round is launched at the World Trade Organisation's ministerial meeting in Doha, Qatar, next month.

The outcome also hinges on whether the WTO's 142 members can in the next six weeks reconcile widely divergent national interests and draw up a negotiating agenda that can be agreed in Doha.

Last week, Stuart Harbinson, Hong Kong's ambassador and chairman of the WTO's ruling general council, sought to push that process forward by issuing a first draft of a proposed ministerial declaration on the agenda and a paper designed to respond to developing countries' demands for a better deal on trade.

The exercise, undertaken in close consultation with WTO members, has uncovered little evidence of new-found unity. The documents reflect only a modest convergence of views and make clear that deep differences remain on such sensitive issues as agriculture.

Mr Harbinson's proposed compromises have also drawn complaints from WTO members that he has either gone too far, or not far enough, to meet their particular concerns.

"There is something to gain for everybody in the draft, but also some pain for everybody," said a US trade official.

Nonetheless, Mike Moore, WTO director-general, the US, the European Union and several other WTO members say the documents are a sound basis for further talks and have improved chances of agreement.

One reason for their optimism is that Mr Harbinson has skilfully avoided repeating a mistake that torpedoed attempts to launch a round at the WTO's disastrous meeting in Seattle two years ago.

Trade negotiators' failure before that meeting to reduce their disagreements to afew really big issues meant ministers were presented with an unmanageable 34-page draft agenda that simply summarised different countries' often conflicting demands and proposals.

"The Harbinson texts will crystallise issues and focus discussion. They are an honest attempt to put forward something balanced that takes account of different interests," said John Weekes, a former Canadian WTO ambassador who now works for Apco, a government affairs consultancy.

Some of Mr Harbinson's proposals are based on his own reading of where talks in the WTO are heading, rather than on firm evidence of members' readiness to compromise.

"Perhaps in some respects, the draft is my best shot at what the market can bear," he said in an interview.

That has called for fine political judgments. For instance, his proposal that a round include talks on anti-dumping rules is likely to face strong criticism in the US Congress.

US trade negotiators have refused to say if they support the proposal.

Mr Harbinson admitted that in some other areas, differences were still so wide that proposing compromises was pointless and might only cause negotiating positions to harden. That was true of agriculture, on which his draft has little to say.

It also gives short shrift to the EU's insistent demands for WTO rules on the environment.

These are opposed by almost all other members, who fear they are disguised protectionism.

Opinions also diverge so widely on the EU's call for WTO rules on competition and investment that Mr Harbinson has proposed two alternatives - to negotiate on the issues or to remit them for further study.

WTO members will seek to map out more common ground in negotiations in Geneva in the next few weeks.

Mr Harbinson aims to pull together the threads of their discussions in the form of perhaps two further draft texts.

However, even optimists doubt he will be able to secure complete agreement on an agenda for a round. On agriculture and environment, in particular, positions are so entrenched that differences will almost certainly have to be left to ministers to settle at next month's WTO meeting.

globalization & war | guy de jonquières | www.agp.org | www.all4all.org