ICC Warns Doha Failure Would Have Dire Consequences for World Economy

The Paris-based International Chamber of Commerce (ICC) has issued a bulletin strongly supporting a call from the World Trade Organization (WTO) for a breakthrough in the Doha Round of talks in April, “if these crucial negotiations for lowering trade barriers are to be concluded this year.”

The ICC was reacting to a recent statement by WTO Director-General Pascal Lamy on an upcoming deadline for Doha talks, which stresses that international trade is critical to restoring the health of the global economy.

“Concluding the Doha Round after 10 years of deadlocked negotiations would strengthen confidence in the multilateral trading system, stimulate the global economy, create employment opportunities, and contribute to mitigating the effects of climate change,” said the ICC.

Chairman Gerard Worms added: “Achieving this is more crucial than ever in the context of a global downturn that came on the heels of the economic crisis. In the long run, bringing the Doha Round to a successful conclusion will create more jobs by improving the global economy.”

The ICC noted that it has believed for a long time that “failure to conclude the Doha Round will undermine the multilateral system built by the international community over the past 70 years. This system underpins the promise of peace and prosperity that lies within the reach of developing countries if trade barriers are brought down.

“Completing the Doha Round would provide the world with a debt-free stimulus package, thereby helping to sustain balanced economic growth across both poorer and rich countries. If current proposals were put into effect, it is predicted that global GDP would grow by US$280 billion annually.”

If a successful conclusion to the talks cannot be achieved, the ICC warned that the result would be “an ongoing tide of protectionist measures,” which would “further thwart an opportunity for growth. Despite commitments from G20 countries to avoid new trade barriers, the threat of protectionism has become worse since the economic crisis.”

The bulletin also cited findings contained in a recent report prepared by the Peterson Institute for International Economics and commissioned by the ICC Research Foundation, which concluded that “hundreds of new protectionist measures in the G20 ‘pipeline’ threaten to derail global economic recovery, trade and employment.” The report also indicated that, “if only half of these G20 country measures are implemented by the end of 2011, the world economy will face a serious protectionist problem.”

The bulletin also pointed out that “poor countries stand to suffer the most if Doha is not finalized. Reducing trade barriers would especially benefit smaller and less-developed countries, as well as South-South trade. The World Bank estimates that more than two-thirds of the overall benefits of lowering trade barriers would directly impact poorer countries through better entry to agricultural markets.

“Barriers to agricultural trade, which tend to distort commodity prices, have a particularly adverse effect on developing countries. Opening up trade will not only lead to increased productivity and efficiency, but should also encourage greater investment in low-carbon technologies through economies of scale.”

The ICC urged the WTO negotiating group “to produce the revised draft texts of the Doha agreement,” and to make a “firm commitment to get these texts pushed through,” in time to meet the fast approaching April 24-25 deadline.

It also noted that “the bulk of improved global trade rules have already been negotiated as part of the Doha process. Measures that remain to be decided will require countries to re-engage on a few politically sensitive issues and to be open to a substantial give-and-take.”

Lamy warned last week during an informal WTO trade negotiations meeting: “Now is the time for all of you, and in particular those among you who bear the largest responsibility in the system, to reflect on the consequences of failure. In politics, as in life, there is always a moment when intentions and reality face the test of truth,” he said. “We are nearly there today.”

Source: International Chamber of Commerce

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