Trade ministers meet amid protectionism fears

Trade ministers from two dozen countries met in the Swiss ski resort of Davos on Saturday amid fears that protectionism is increasing as governments battle to temper recession.

Ahead of the talks, hosted by the Swiss government on the sidelines of the World Economic Forum, ministers warned that measures to block imports to save jobs would deepen the crisis as happened in the 1930s Great Depression.

And they called for renewed efforts to complete the World Trade Organisation’s long-running Doha round to free up global commerce, in order to lock in current levels of openness and boost business confidence.

“The Doha round is part of the solution,” Brazil’s Foreign Minister Celso Amorim told reporters as he went into the meeting. “It’s one important signal that governments could do.”

In recent weeks top trading powers such as the United States, China and Germany have reported falls in exports at the end of last year, and international air cargo volumes dropped by nearly one fifth in December.

“The world trading situation is now a part of the general economic problem,” said New Zealand’s Trade Minister, Tim Groser.

But without a coordinated push from world leaders, calls to prevent protectionism and seal Doha are likely to go unanswered.

Unanswered call
At a summit in November to tackle the economic crisis, leaders of the G20 rich and emerging nations agreed to push for a breakthrough in the Doha talks, launched seven years before, by the end of 2008, and not to raise any new barriers to trade.

But WTO director general Pascal Lamy decided last month that the gaps were still too wide to call in ministers for a final push, despite progress on several thorny issues in industry and farming over the year.

The G20 meeting was quickly followed by tariff hikes by India on steel and by non-WTO member Russia on cars.

Since then, the European Union has outraged farm exporters, rich and poor, by resuming export subsidies on dairy produce—something that would be banned under a Doha agreement but is allowed under current trade rules.

“It’s of deep concern,” said New Zealand’s Groser. “I hope to see the suspension of these measures as soon as possible to avoid other countries following suit.”

But Groser said he was encouraged that big US corporations like Caterpillar were fighting the “Buy America” provisions of the new $825-billion stimulus package passed this week by the House of Representatives, which would allow only US-made iron and steel to be used in infrastructure projects funded by the government under the Bill.

Many fear that the “Buy America” rules would prompt a wave of tit-for-tat measures, exactly as happened in the 1930s.

“We’re looking at this package that is in the US Congress, the Buy America, definitely that’s a threat to the world, because every body will follow the US example of Buy America, Buy China, Buy Europe or Buy Brazil—that will be a great mistake,” said Costa Rican Trade Minister Marco Vinicio Ruiz.

Ministers hope the next meeting of the G20, to be hosted by UK Prime Minister Gordon Brown in early April, will renew the push for a Doha deal and a commitment to trade openness.

The effectiveness of Saturday’s meeting is limited by the fact that the United States still does not have a trade minister, pending the senate confirmation of President Barack Obama’s nominee as US Trade Representative, Ron Kirk.

Washington is represented at the talks by its ambassador to the WTO in Geneva, Peter Allgeier, who is deputising as US Trade Representative.
- Reuters

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