Recently, the World Trade Organisation (WTO) kicked off yet another attempt to put back on track stalled talks that aim to reform the rules governing world trade in everything from sugar through manufactured goods to services such as insurance.
WTO chief Supachai Panitchpakdi last week said he was pressing the panic button because the talks were in danger of failing.
Trade ministers from around the world have set themselves the goal of coming up with a blueprint for tariff and subsidy reductions on a range of goods, as well as new rules on trade disputes, in time for a summit in Hong Kong in December.
This week’s meeting of the WTO’s general council in Geneva was supposed to prepare the ground for Hong Kong, but so little progress has been made by officials that trade ministers are not even turning up.
So do the rules governing international trade really matter to the man in the street? Well, they do. They affect farmers and firms across the developing world and consumers in the rich world, who end up paying far more than they should for many goods. The average family in the European Union pays twice as much as it needs to for a supermarket trolley of food.
The EU’s system of agricultural support keeps the prices of domestic and imported food high through import tariffs and quotas. For example, the EU price of sugar is three times the world price. The EU dumps excess sugar and other foodstuffs on world markets, depressing the prices that farmers in developing countries can get for their produce. That matters for continents like Africa, where 70% of the population works in agriculture.
The focus at the recent G8 summit was on increasing aid to poor countries and relieving their debts. Poverty campaign groups say that a fairer deal on trade would be a much more effective weapon against poverty.
The World Bank has estimated that a successful conclusion of the talks could inject an extra $500-billion into the world economy, lifting hundreds of millions of people out of poverty.
The Association of British Insurers (ABI) cites figures suggesting that opening markets for services such as insurance or banking could add $900-billion, or over four times as much as liberalising goods trade, since services now account for 70% of global gross domestic product.
Hugh Savill, the ABI’s head of European and international affairs, says because the talks have become bogged down on agricultural goods, the chances of a deal being done on services is remote.
So why is there no pro-gress being made when a gradual freeing up of world trade would appear to work for the benefit of all concerned? In the EU and the United States, there are powerful farming lobbies resisting any erosion of the generous subsidies they receive and of the tariffs and quotas that protect them. Developing countries, in turn, resist opening markets to Western manufactured goods and services until they get a better deal on agriculture.
In a recent report, Oxfam blames rich countries’ self-interest for the stalemate of talks.
There is every chance that this round of talks will fail rather than drag on like previous rounds did. At the end of next year the US administration’s authority to fast-track trade reforms through Congress expires, potentially killing off the negotiations.
Talks on agriculture among officials at the WTO in Geneva have gone nowhere, so the general council meeting will have little to work on. — Â