Specter of failure haunts WTO trade talks
CRUCIAL: The WTO meeting in Hong Kong in December is supposed to secure a framework agreed on in the 2002 Doha trade round, and failure could be disastrous for Asia
AFP, HONG KONG
Monday, Oct 10, 2005
Asian member states have as much at stake as anyone in reaching an overall trade accord at the Decem-ber WTO meeting in Hong Kong in December, with failure possibly costing hundreds of billions of dollars and increased protectionism in their key US and EU markets, analysts say.
The prospects of success vary almost by the day — most officials will voice guarded optimism or hopes but in preparatory talks, there has been little sign of the major concessions necessary for an accord.
The December meeting is meant to secure a framework agreement that would put the 2002 Doha trade liberalization round, supposed to be concluded by the end of next year, back on course after it ran into the sands in Cancun, Mexico in 2003.
The key issue then — freer access for industrial goods and services against removal of protectionist tariffs on agriculture — is still largely unresolved and if that remains the case in December, the consequences could be severe.
"The WTO meeting in Hong Kong is crucial for the successful conclusion of the Doha round," said Haruhiko Kuroda, president of the Asian Development Bank (ADB).
"I hope the meeting will bring about a significant if not a complete accord. If it fails, Asian countries may face protectionist pressures from the United States and Europe," Kuroda said.
With China tangled in disputes over its massive textiles exports to the US, having just resolved similar problems with the EU, that prospect cannot be a happy one — but it could be even worse.
"The consequences of failure would be an even further switch to [bi-lateral] Free Trade Agreements [FTAs] and long-term weakness for multilateral trade. Trade would become more discriminatory," said Razeen Sally, visiting senior research fellow at the Institute of Southeast Asian Studies (ISEAS) in Singapore.
Sally, who is sceptical an overall accord can be reached in Hong Kong, said FTAs, which many in the region have promoted, are not enough for Asia which needs "a healthy multilateral trading system in a reasonably stable international political environment."
For some analysts, it is this downside of any failure that makes the most compelling case for compromise in efforts to get an agreement.
Will Martin, lead economist at the World Bank’s development research group, Trade, said that given the potential gains, he is hopeful some agreement can be worked out.
"I’m optimistic about the possibility of an accord being reached, although there are many difficulties in the path," he said.
"The potential gains [from trade liberalization] are huge — we estimate in the order of US$290 billion per year — too large for policy makers to let slip through their fingers," he said.