Wrecked WTO talks change the world trade game

Ministers saw a “new order” take hold of global trade on Wednesday, with emerging economies calling the shots after World Trade Organisation (WTO) plans collapsed in a potentially devastating blow to millions of the world’s poor.

“One thing that we can celebrate is that deals here are no longer made just by the rich countries,” said Brazil’s Foreign Minister, Celso Amorim, a key broker in the talks, standing alongside India’s Commerce Minister, Kamal Nath.

“They have to take us into account and that will continue to be so,” he told reporters, as ministers assessed the wreckage of the talks on the morning after the dramatic collapse.

Delegates had struggled for nine days to reach consensus on subsidy levels and import tariffs for a new deal under the WTO’s Doha Round, which has foundered repeatedly since it was launched seven years ago.

Optimism peaked at the weekend over a package of proposals by WTO director general Pascal Lamy, but talks finally crashed without a deal on Tuesday night.

Lamy told a French radio station that the negotiations had revealed a “new world landscape in which emerging powers such as India, China and Brazil want to leave their mark on world trade”.

Another delegate, Norway Foreign Minister Jonas Gahr Stoere, wrote in a newspaper article: “I have witnessed the emergence of a new world order where all of the world’s countries are present and defend their rights.”

Key trading powers appealed for efforts to salvage the WTO proposals amid regret and emotion at the collapse of the marathon talks, and warnings that the poorest countries would suffer.

“I would only urge the director general to treat this as a pause, not a breakdown, to keep on the table what is there,” Indian Commerce Minister Kamal Nath told a news conference.

The world’s economic superpower, the United States, and one of the biggest emerging economies, India, shared dismay and regret even as they stuck by the unreconciled positions on import tariffs that sank the talks on Tuesday.

US Trade Representative Susan Schwab said the breakdown was “distressing”, while Nath turned up to talk to reporters “with a very heavy heart”.

“Susan Schwab said she loved me and I said I loved her too,” Nath said. “But probably she didn’t love me enough. I told her that.”

China’s Commerce Minister, Chen Deming, called the collapse “a tragic failure” in a statement, as the outcome was mourned by many and cheered by some, including Japanese and South Korean farmers.

‘Loss of credibility’
Talks collapsed due to disagreement between India and the US over the so-called special safeguard mechanism (SSM) that allows countries to impose a special tariff on certain agricultural goods in the event of an import surge or price fall.

“It would have worked, and yet there were others who demanded more,” Schwab said. “And more included a tool to close markets.”

India and other developing countries wanted the mechanism to kick in at a lower import surge level than has been proposed in order to protect their millions of poor farmers from starvation.

“We can’t put at stake the livelihood of one billion people from all countries,” Nath insisted on Wednesday.

But African countries that had hoped to tackle other issues, such as poor countries’ cotton and banana exports, were inconsolable.

Kenya’s Deputy Prime Minister responsible for trade, Uhuru Kenyatta, said the collapse “gravely undermines” the fight against poverty.

“Africa critically needs to realise development and get itself out of poverty through the establishment of fair trade rather than aid,” he said.

Economists warned of negative consequences amid a grave economic slowdown.

“The main danger of this failure is a loss of credibility of the multilateral [negotiating] system and the return of protectionism by certain countries,” Lionel Fontagne, an economist at Paris University, said.

Lamy insisted that “the progress we have made … should be preserved”, his spokesperson, Keith Rockwell, told reporters, quoting the director general’s comments to a full meeting of WTO delegates on Wednesday afternoon.

“We all now need to engage in a serious reflection on the next steps in our collective endeavour.”

The European Union’s Trade Commissioner, Peter Mandelson, earlier called the outcome “heartbreaking”, but on Wednesday took a determined look forward to the future of the Doha Round.

“After a summer of reflection, we must renew our dialogue,” he said. — AFP

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