Limp in October, too late in December

The “World Bank(link to World Bank site)”:http://web.worldbank.org/WBSITE/EXTERNAL/NEWS/0,,date:12-08-2003~menuPK:34461~pagePK:34392~piPK:34427~theSitePK:4607,00.html#Story4 provides a round-up of press opinion on the resumed WTO negotiations next week: bq. Attempts to get countries back to the negotiating table to relaunch WTO trade talks by a December 15 deadline are in trouble, and diplomats doubt much progress will be made until next year at the earliest The talks will continue in a desultory fashion: actual negotiations however will probably not take-off again for another 15 – 18 months. In the interim, expect a lot of wheel-spinning, arguments over process (read “chairmanships of the negotiating groups”) and diplomatic churn. On this occasion, the developing countries are not to blame. The problem is transparently a failure of leadership in the world’s largest economies. Immediately after the disappointing Cancún meeting, the USA and EU negotiators passed-up an opportunity to show the sort of imagination or committment that could reasonably be expected from real leaders in the world trading system. There was a period, in early October, when it was clear that the consequences of their actions had started to dawn on the leadership of the African/Carribbean/Least-Developed group of countries who had pulled the plug at Cancún. They had given away their best opportunity to keep up the pressure on the EU over agricultural export subsidies and on the USA over domestic subsidies to e.g. Cotton farmers. The leadership of the G-21 group of developing country agricultural exporters (Brazil, Egypt, Argentina, South Africa … although perhaps not India) were obviously shocked by the early termination of the Cancún meeting and were undoubtedly ready to re-engage on agriculture. They thought they had been close to a win at Cancún when the talks went belly-up over investment etc. Despite behind-the-scenes pressure from Cairns Group members including Australia, however, neither the EU nor the USA was willing to ‘take charge’ of the talks after the collapse by offering a new way forward on key problem areas such as agricultural subsidies or industrial tariffs. Both USTR Zoellick and EU Commissioner Lamy retired to lick their wounds over the failure of their pre-Cancún strategizing and to shield themselves from the inevitable recriminations. In October, the performance of both of the industrialized majors was, to put it generously, a bit limp. Now, in December, it’s a bit too late. The immediate shock of failure at Cancún has come and gone without the sky falling. The incentive to repair the faults of misunderstanding, suspicion and crossed-purpose, evaporated. The aftermath did not bring any new thinking; only the same old scepticism about the WTO and the motives of others in the last hours of the Ministerial meeting. Now, in December, the forthcoming Presidential election makes it impossible, or even dangerous, to negotiate with the USA. Although Bush has shown that there is no period in the US electoral cycle that need be free of protectionist log-rolling, the year or so leading to a Presidential election is traditionally the time when trade-demagogery is at it’s worst. Neither Europe nor Japan nor China will press ahead with multilateral negotiations under those conditions. From a trade policy viewpoint, Europe is in still worse shape to lead world trade reform. The accession of the East European 10 to the Community next year is testing economic and constitutional “cohesion” in the EU and the coherence of Union economic policy is still more obviously in doubt following the collapse, last month, of the fiscal ‘stability pact’ of the Monetary Union. The pressures for fundamental economic restructuring highlighted in André Sapir’s groundbreaking report are still working their way through the political economy and still meeting resistance. The Council’s reluctant, incremental, self-interested tinkering with reform of spending on Agriculture—far from the biggest of the restructuring challenges in economic terms—has put paid to any progress on liberalization before the end of the current budget cycle in 2006

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