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Imponderables cast shadows over next WTO ministerial

by Chakravarthi Raghavan

Geneva, 14 Sep 2001 - The Director-General of the World Trade Organization, Mr. Mike Moore refused Friday to speculate or indicate any contingency planning under way in relation to the scheduled 4th Ministerial meeting at Doha.

Mr. Moore insisted, “We are focussed on Doha and our duty, and will continue to do our job, keep on performing our duties and work towards the process.”

Earlier, at a press conference to mark the Geneva Week (enabling WTO members not represented in Geneva to attend a week of briefings and participate in the consultations), he expressed his horror at the “gross and grotesque act of villainy” in New York.

Asked whether the Doha ministerial meeting might be postponed, Moore refused to make any comment beyond saying, “we have a duty to perform and we will continue to work...”

Responding to newsmen who referred to the private views of many ambassadors in the corridors, on the possibilities of a US military response and the consequences, and that the meeting in Doha may need to be postponed or the venue shifted, Moore refused to speculate. He did not also assert that the meeting would go ahead as planned (and a new round of negotiations he has been advocating would be launched).

Moore, however, said that the Qatar minister was due to come to Geneva on 27th or 28th.

Meanwhile, said Moore, the General Council chairman, Mr. Stuart Harbinson and he were engaged in consultations about a declaration, and by the end of the month they will present a draft. He could not say at this point that there was a consensus on a draft declaration.

Earlier on Friday, at the biweekly regular press briefing, by UN and other international organizations including the WTO, a spokesperson of the WTO said (responding in French), in response to questions (in the context of the unprecedented, and near universally condemned, terrorist attacks this week in New York), that the preparations for the Doha ministerial was going on, but qualified it somewhat with the phrase, “pour l’instant”, meaning at this time.

The permanent representative of Morocco to the WTO and the UNOG, Amb. Nacer Benjelloun-Touimi, said Thursday at a private G-77 organized consultations, that the meeting would take place as scheduled and that he had consulted the US, the WTO secretariat and the government of Qatar that is hosting the meeting.

Several trade diplomats speaking privately, and non-attributively, however, stressed that at this point of time, the minds of every capital was focussed on major issues of political and security questions, in the wake of the unprecedented attacks in New York - and whether in Washington or elsewhere, the WTO and the Doha ministerial will be too low in the priority of preoccupations.

At Hanoi, immediately after the EU meeting with ASEAN members, the EC trade commissioner Pascal Lamy spoke of the need to go ahead with Doha and the launch of a new round to demonstrate that ‘terrorist acts’ cannot thwart government policies.

In private, though, even EU delegation sources point to the difficulties of the Americans in being able to focus on these questions at this juncture.

Several Third World diplomats note that there were many imponderables including any US ‘retaliatory’ measures that could come any time, and its effects on the public of the region, even though governments and public have been horrified by the nature of the terrorist attacks and the effects on innocent populations.

At the same time, they note that it would not be feasible or possible to shift the venue of the meeting from Doha to some other host country, and if there is to be a meeting, but not at Doha, it would have to be held at the headquarters of the WTO in Geneva.

The Swiss, as the host country, have been opposed to a ministerial meeting here in Geneva, just as the Italian Prime Minister Mr. Berlosconi is insisting on the summit meeting of the FAO, hosted by Italy, not being held in Rome at the headquarters.

The growing view of many trade diplomats is that if countries want to have the privilege of hosting organizations (and benefiting economically and otherwise from their presence), they must be prepared for the obligations arising from such meetings.

At the WTO itself, in terms of the already scheduled meetings etc, there was an effort Friday to present an image of things getting back on rail.

The Trade Policy Review of the United States set for 12 September and subsequently put off, was being held Friday and Monday. The working party on China was meeting informally Friday and for a formal session Monday.

However, trade diplomats and governments also are focussing on some increasing signs that the US economy, which was already teetering on the edge of a recession, may have been tipped over into one, with implications for the world economy too.

While the US Federal Reserve, the European Central Bank and other central banks are coordinating their efforts to make funds available to the banking system, disrupted by the New York devastation, and there could be further interest rate cuts in the US and perhaps EU, the key element is the psychological effects on consumers and consumer spending in the United States economy.

Till now, consumer spending has been primarily behind the US economy not being hit by recession. Corporate investments have been cut or pulled back in recent months, and the US Federal Reserve’s successive reductions in interest rates so far has not resulted in bolstering investment contribution to the growth.  Corporations are still downsizing and letting workers go, and cumulatively and psychologically this dampens consumer expectations, increasing their insecurity about holding jobs and hence consumer spending - and there are some signs of it.

Also, of concern in the US situation, is the burgeoning trade and current account deficit, being financed by foreign capital flows which currently needs to be a billion dollars a day in the face of uncertainties and doubts about the ‘dollar’ being a safe haven (after the New York terrorist attacks).

Even if foreigners holding assets in the US, do not withdraw their assets, the US is faced with the situation that other economies face (and are forced to ‘adjust’), namely that foreigners must continue to pour in more and more money to meet structural deficits - and if they do not, the value of the dollar would come down, accentuating the spiral.

It is fine for trade theory economists and professors to pontificate to the developing world on benefits of ‘unilateral’ trade liberalisation for the liberalisers, or to make some suitable noises about the ‘unintended (negative) effects’ of the Uruguay Round on the developing world, but still advocate new negotiations and more liberalisation. A range of professors, academics and even policy- and decision-makers during the Uruguay Round have been making such statements, but they and the policies they advocate for ‘liberalization’ in developing countries lack credibility.

In the current situation, where the trade regime has reached into major domestic policy spheres and is trying to curtail domestic options of countries (in the effort to expand the options for corporations), it is difficult for governments and policy-makers to adopt ‘adventurist’ trade policies and new negotiations when they are unable to cope with the past obligations.

This is not the atmosphere in which new negotiations can be launched at any ministerial meeting, but rather the time to restore confidence of the developing world in the system.

Soon after the devastations and the loss of thousands of lives and billions of dollars worth of property and the general disruption caused by the attack in New York and Washington, the EC Commissioner, Mr. Pascal Lamy insisted publicly that it was essential to go on with the meeting at Doha and launch the negotiations to show that terrorism could not benefit.

While many share this view purely in terms of a collective response of the governments and international community, nevertheless, in private they are more cautious, underlining that much would depend on the US responses to the terrorist attacks in New York, its effects on the public, and Washington’s ability to focus on trade issues.

And George W. Bush and his administration have not so far been able to inspire such confidence, at home or abroad. – SUNS4967

The above article first appeared in the South-North Development Monitor (SUNS) of which Chakravarthi Raghavan is the Chief Editor.

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