WTO’s Lamy Presses U.S. as World Trade Tumbles

By | March 24, 2009

World Trade Organization Director General Pascal Lamy pressed U.S. trade officials Monday for a strong commitment to finishing the Doha round, while a U.S. business leader warned against accepting a “phony deal” just to wrap up the talks.

Lamy’s trip to Washington came as the WTO forecast world trade would fall 9 percent in 2009 due to the shrinking global economy, the biggest fall since the Great Depression and much worse than the 2.8 percent drop the International Monetary Fund forecast in January.

The sharp drop in world trade has increased calls in Europe, Asia and Latin America for a quick conclusion to the Doha round on the basis of texts proposed in December.

But the Obama administration has said it cannot agree to proposals for cutting U.S. farm subsidies and politically sensitive manufacturing tariffs until advanced developing countries, including Brazil, India and China, make better offers to open their markets to U.S. goods and services.

A U.S. trade official, speaking on condition of anonymity, said U.S. Trade Representative Ron Kirk and Lamy “had a very productive meeting to get acquainted and establish a relationship for working together.”

The official shared no further details of Monday’s meeting, which was Kirk’s first opportunity to talk in person with Lamy since winning Senate approval of his nomination last week.

The Doha round was launched in November 2001 with the goal of helping poor countries prosper. Since then, it has suffered one setback after another even as negotiators have narrowed many differences.

Lamy has argued a quick conclusion to the nearly seven-year-old Doha round would boost economic growth and provide an “insurance policy” against future protectionism by ratcheting down the maximum tariff and subsidy levels now permissible under WTO rules.

But “that’s not going to come from a phony Doha deal” along the lines of what WTO negotiating chairmen proposed in December, Robert Vastine, president of the Coalition of Service Industries, said in a panel discussion at the American Enterprise Institute think tank.

The United States should use the current economic crisis to galvanize countries to make “one more big try” to finish the round on terms that generate substantial new trade flows and ensure a standstill against new protectionism, Vastine said.

But it should also explore alternatives to the Doha talks, such as a series of sectoral agreements with interested countries to liberalize service trade, Vastine said.

President Barack Obama and other leaders from the Group of 20 developed and developing countries will meet in London on April 2 to discuss jump-starting world economic growth.

G20 leaders, at their last meeting in November, pledged not to impose any new measures to restrict trade or investment for the next 12 months. At least 17 of the 20 have violated that promise, according to a recent World Bank report.

Lamy supports strengthening the standstill commitment by requiring G20 members to file a report each quarter on any new barriers or subsidies they impose. He’s also hoping for concrete action at the G20 summit on helping to unfreeze credit lines to finance imports and exports.

(Reporting by Doug Palmer; editing by Eric Beech)

Topics USA

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