G8 launches new bid on global trade

Group of Eight (G8) leaders on Monday launched a fresh bid to pin down an elusive global trade pact, seeking to give a positive outcome to a big-power summit riven by discords over the Middle East.

With the United States and France in open dispute over the approach to Israel’s onslaught in Lebanon, hopes of progress towards unblocking deadlocked world trade talks raised spirits at the end of the G8 summit, the first to be held in the Russian Federation.

“Before we had our lunch discussion I was somewhat pessimistic,” said British Prime Minister Tony Blair after the US, leading developing countries and other major trade players met in a final summit session. “I am less pessimistic now.”

German Chancellor Angela Merkel, host of next year’s summit, said she was gratified to hear leaders of Brazil, India, Mexico and South Africa pledge to try to reach a deal to rescue the Doha round, whose goal is to lift millions out of poverty.

“We [all] will do everything to bring these negotiations in the next few weeks forward and make them a success,” she said.

G8 leaders have told their negotiators and World Trade Organisation chairperson Pascal Lamy to broker a breakthrough on the Doha round within a month.

European Commission president Jose Manuel Barroso told reporters as he flew back to Brussels from the summit that he and the US and Brazilian presidents were ready to show flexibility on a new round of trade talks.

The US quickly dispatched its trade representative to Geneva, home of the World Trade Organisation (WTO), to join ministers from five other trade powers to try to clear roadblocks over subsidies and tariffs on farm and other goods.

With divisions still apparent over how to handle Israel’s reaction to attacks by its Hezbollah foes in Lebanon, an issue that nearly hijacked the summit agenda, the progress on trade appeared to be one of the few clear-cut summit achievements.

Summit host Russian President Vladimir Putin was in an upbeat mood as he brought the curtain down on the three-day gathering in a tsarist-era palace on the rain-lashed shores of the Gulf of Finland outside his home town of St Petersburg. “We achieved all our goals and there has not been a single issue on which we would not agree,” he said.

Self-confident Russia

Putin had seen the summit from the start as a chance to showcase a new, self-confident Russia, riding high on an economic boom buoyed by record world oil prices.

He also used the occasion to defend himself against charges of backsliding on democracy and pledged not to change the Constitution to allow himself to run for a third term in power.

An unambitious formal agenda of energy security, combating infectious diseases and promoting education held little controversy and required no financial commitment by G8 members.

Russia had to concede to European Union concerns over its conduct in energy markets to get agreement on energy security.
But it did not bow to demands to ratify the Energy Charter, an international rulebook for oil- and gas-market activity.

Assistance to Africa, put at the top of last year’s summit by Britain’s Blair but initially ignored by Russia for this year’s meeting, also found its way on to the agenda.

United Nations Secretary General Kofi Annan said there had been progress since the 2005 G8 summit in Gleneagles, Scotland, “but there is much more to be done”.

Aid agencies were critical. “If the G8 leaders continue to drag their feet on their promises to Africa, the 36-million people who demanded action last year will not forgive them,” Oxfam spokesperson Irungu Houghton said.

Middle East differences

The US squabbled openly with G8 partner France over interpretation of a joint summit declaration that urged Israel to be restrained in its offensive in Lebanon but told Hezbollah it had to make the first moves to end the crisis.

France’s Jacques Chirac, who has differed with Washington by criticising Israeli action as excessive, said late on Sunday that the G8 was basically calling for a ceasefire—an interpretation contested by Washington, Israel’s big backer.

Annan said Security Council members would immediately start hammering out a detailed agreement on deploying a multilateral security force to Lebanon, following up a G8 proposal.

But the initial reaction from Israel was cool. “I don’t think we’re at that stage yet,” Israeli government spokesperson Miri Eisin said. The White House, too, was cautious.

On trade, despite the optimistic assessments, it was not clear what compromises the main players were ready to make. All the major players—the US, the European Union and key developing countries—will have to abandon entrenched positions on farm subsidies, agricultural tariffs and market access for goods and services.

Tim Brenton, analyst of Moscow-based investment bank Renaissance Capital, said in a research note: “We think the WTO negotiations are still the biggest potentially market-moving item on the summit’s agenda.”—Reuters

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