Protectionist fears descend
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Emerging Markets

Protectionist fears descend

WTO chief warns of entrenched positions on Doha

Any revival of the Doha round of world trade talks “very much depends on domestic preparation” by big players, the WTO’s calmly realistic chief, Pascal Lamy, told Emerging Markets yesterday.

Lamy said in an interview that everything still hinges on governments persuading local constituencies to make concessions. But key players canvassed by Emerging Markets showed little inclination to shift from entrenched positions: US trade representative Susan Schwab insisted that market access is the key.

British chancellor Gordon Brown, speaking after yesterday’s International Monetary and Financial Committee (IMFC) meeting, was optimistic about the chances of resuming and successfully concluding the WTO negotiations. He said the Doha round’s revival is essential to tackle “rising protectionist sentiment”.


Brown reported that advanced countries had backed the “aid for trade” package, on which further progress is expected today, to give developing countries up to $4 billion more annually to finance trade infrastructure. Brown said the likelihood of an “ambitious and successful outcome… by the end of this year” had been boosted by an unprecedented consensus; he cited the support of US Treasury Secretary Henry Paulson.


But away from the multilateralism of Singapore meeting rooms, key players’ positions showed little signs of significant shifts.


US trade representative Susan Schwab told Emerging Markets in the meetings’ run-up: “If you’re serious about a development round, the first, second, third and fourth issues that should come to mind as priorities are market access, not cuts in domestic subsidies.” Any country had to ask itself, “what are we prepared to do on market access that will generate new trade flows?”


Schwab described discussion of cutting domestic subsidies, the issue that caused Doha to break down, as “a diversion”. She believes a deal could still be two or three years away.


Trying to broker an agreement, WTO director general Pascal Lamy told Emerging Markets yesterday that the annual meetings were helping to revive momentum, by focusing on “the big risk [of] the failure of the Doha round”.


Lamy underlined that he has to remain “neutral” about the issues. But he did comment that “developing countries have a convincing position, because they’re saying trade subsidies shouldn’t be there… it’s a fair point and that’s why [any solution] has to be a trade off” in which poorer economies don’t have to pay too much to bring wealthier players on board.


“Two basic elements” were needed for negotiations to resume, “starting with more political pressure – a clear recognition of what’s at stake if they fail,” Lamy said, which is happening, although “it’ll take a bit of time”. Then, governments must “revisit the positions that led to this deadlock”. Achieving this involves “two-thirds negotiating at home with your constituencies … Domestic heavy-lifting has to take place to remove subsidies.”


Any breakthrough “very much depends on domestic preparation. If the two conditions are met, and negotiators can come back around the table with more flexible decisions, then we will see – but it’s not something you can decide or fix a deadline to now.”


Lamy did not see any fixed deadline – except for the US administration losing negotiating authority – at latest by next spring.

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