Doha Failure Could Weaken WTO, Says Lamy

With deadlines fast approaching, the head of the World Trade Organization has warned that narrow vested interests threaten to scupper the conclusion of the Doha Round, thus weakening the WTO system and proving detrimental to developing countries.

The WTO's self-imposed deadline for the production of new draft texts for the Round had been set for April 21, the last day before the Easter Recess. As this date approached, world leaders and influential economists came out in force to reflect on the dangers failure would have for world trade.

A group of eight leading businessmen, representing international business in the UK, wrote to the government expressing their concerns for the "precarious state of negotiations", which prompted a reply from the Business Secretary Vince Cable that 2011 was a "make or break year" for the Round.

Most recently, South Africa's Minister of Trade and Industry Rob Davies used his Budget Vote to highlight potentially fatal obstacles caused by what he views as unreasonable demands by developed countries threatening to undermine the precarious balance achieved thus far.

Now, in two speeches made on April 16, WTO Director General Pascal Lamy has stressed that, with a financial crisis induced "hangover", high unemployment, and increased "belt-tightening", protectionist pressures are prevalent. Such pressures ought to be resisted, and markets opened, not closed, for, although world trade expanded substantially in 2010, continued growth cannot be taken for granted.

Lamy noted that: "With the membership stalling on the last hurdles of the WTO Doha Round trade negotiations, i.e. industrial tariff reductions for developed and emerging economies, we are not only just forgetting the lessons of the distant past, but also of the recent past, when the system shielded us from worst economic woes". Clearly frustrated, Lamy lamented the evaporation of optimism, and spoke of the grave risk of not being able to conclude a decade-old round of talks.

With a view to stimulating a successful conclusion, Lamy pressed the urgency of the situation: "It is high time governments rise above narrow vested interests", he said. Moreover, failure would only result in the weakening of the WTO system, he warned.

"Weakening the WTO system would serve no economic or political purpose, and will make it harder to launch new negotiations in the future. Weakening the WTO system will therefore result in a net loss of economic benefits", the Director General said. Lamy told listeners to reflect upon these consequences and think of the detrimental effects it would have on developing economies which rely upon and open and well regulated system to foster growth.

April 21^st, 2011

Source: tax-news.com