GENEVA: Lawmakers from around the world doubt a meaningful global trade agreement will be struck this year and fear the rapid growth of self-serving side deals could kill it off completely. Their frustrations come as the latest push to improve a draft global deal text by Easter drew a blank in agriculture discussions, and as a months-old initiative by the European Union to help flood-hit Pakistan hit the buffers.

Delegates at the annual World Trade Organisation (WTO) parliamentary conference in Geneva lauded the concept of free trade, saying the existing structure held back protectionism during the 2008 financial crisis. But although these members of national parliaments mostly lack direct influence on the talks themselves, those who would bet against completion of the decade-old Doha round by the WTO’s end-2011 target were easy to find.

“I hope it happens, but realistically speaking I don’t think it will conclude this year,” said Se Hwan Jang, an opposition Democratic Party member of South Korea’s national assembly. “It’s very hard for all 153 member countries to reach a consensus …. (and) the proliferation of bilateral and regional trade pacts will undermine the process.”

Bilateral and regional agreements have boomed since the Doha talks stalled in 2008.

Governments have found themselves jostling for position as the balance of trading power shifts to high-growth countries like China and Brazil, and as tariffs and other barriers to free trade grow into the void left by the failing global talks. Multilateral trade deals are designed to benefit all parties, but in bilateral and regional deals, weaker countries tend to get a rougher deal, or simply get excluded, and the proliferation of these pacts is seen as escalating protectionism.

“If it all (Doha) takes so long we have little choice,” said a delegate from Costa Rica, which has bilateral pacts with the United States, EU and China.

South Korea and the EU say a bilateral deal they hope to strike this year should be a building block for a global one, not a hindrance to it, but a host of others are seen as detrimental to the spirit of global trade.

“Do we have to choose? (between bilateral/regional deals and a multilateral one). No. But there is a growing number of shallow regional trade agreements that risk increasing discrimination or diverting trade between regions,” said Ditte Juul-Joergensen, acting director of WTO Affairs at the European Commission’s Directorate-General for Trade.

WTO director-general Pascal Lamy warned recently that the pace of talks has been too slow to reach that year-end deadline. Negotiators battling to rescue the talks now want to produce a working text by Easter — a deadline now just a month away and already put back from the end of March. But David Walker, chairman of the pivotal Doha agriculture talks, told negotiators on March 18 their 10 days of talks had ended without progress, according to delegates. Those discussions are due to restart in early April, and the agriculture text is said to be in better shape than other parts of the draft package. Nevertheless, the WTO is worried.

“Bluntly put, there’s a need for urgent acceleration of work at all levels,” Yonov Frederick Agah, Nigeria’s ambassador to the WTO told the conference.

Agah, recently appointed to chair the WTO’s crucial dispute-solving body, said work so far “lacks the substantive breakthroughs,” needed at this stage.

DISASTER MANAGEMENT
Agah would not be drawn on whether turmoil in the Arab world and the devastating earthquake in Japan will further slow the Doha process in any direct way. But one delegate said the failure of the WTO to react effectively to world events was part of its problem.
This week the EU suffered its latest failure to push through a tariff waiver to help Pakistan recover from last year’s devastating floods. In a plan that dates back to October, it wants to suspend tariffs on goods covering about a quarter of Pakistan exports to the EU.

But according to a source in a March 21 meeting, the vote, which has to be unanimous, was held up by countries that compete with Pakistan.

“If the WTO cannot agree on a waiver for Pakistan or countries affected by natural disasters, then I believe it has little chance of progressing on Doha,” said Robert Sturdy, a European Member of Parliament from Britain who backed the plan.
“It destroys the respectability of the whole Doha process”.

The EU has been urged to be “more prudent” in its trade defence measures against China.

EU anti-dumping measures, when merchandise is sold in a foreign market at less than its normal value, have in the past been the cause of frequent conflict between Brussels and Beijing.

Speaking in parliament on Thursday, Song Zhe, China’s ambassador to the EU, said both sides should “cooperate more” to establish “more balanced” trade relations.

He told the international trade committee that European companies stand to benefit in the coming years from the “huge” expansion in the Chinese economy.

But he cautioned against “protectionist” measures, “particularly at a time of crippling economic crisis.”

The diplomat was giving an assessment of current EU-China economic and trade relations.

Relations between the two have only recently recovered from the battering they took following the EU’s angry response to China’s military action against Tibet and the decision to invite the Dalai Lama to address MEPs in Brussels.

Much to the dismay of Beijing, many in the EU, including EPP leader Joseph Daul, have called on China to allow Chinese dissident Liu Xiabobo to travel to Oslo next month to collect his Nobel peace prize.

In his address to MEPs, Zhe pointed out that between 2011 and 2015, China plans to invest some three trillion Chinese yuan in energy protection measures, adding that potentially “this will offer European businesses a huge market.”

“I have to stress that this is a possibility and that is why it will be important for the EU and China to work together in order to translate this potential into concrete results,” he said.

He pointed out that, under the Lisbon treaty, parliament now has co-decision powers with member states on international trade policy.

Calling for a “strategic partnership” with Europe, Zhe, China’s top diplomat in Brussels, called for “an end to all conflict which will not help either side.”

He said protectionism and a “beggar thy neighbour” approach to trade relations should be avoided, adding, “We want to uphold the principle of open markets and I hope the EU will do the same.

“We must build a consensus and remove current misunderstandings,” he said.

He said China was ready to play its part, highlighting the current “massive” campaign underway in his country aimed at tackling the issues of IPR infringement and counterfeit goods.

“My hope is that this initiative will help refuel the confidence of European businesses to cooperate with China.”

ECR deputy Robert Sturdy said that while he believes China offers “huge opportunities rather than a threat” to the EU, there remains “considerable concern” about the environmental impact of Chinese industry.

The UK deputy, a member of parliament’s China friendship group, told Zhe, “Maybe it is the case that China does not do enough to allay such fears.”

Each member state is entitled to nominate an individual to become Commissioner and the Trade portfolio is one of the most sought after post’s in the European Union’s 27 member executive arm.

The Trade Commissioner has full competence to negotiate trade deals, take action in the WTO and impose duties on imports from countries deemed to be causing harm to EU industry.

The newly elected President of the Commission, Jose Manuel Barroso, has already expressed his support for Baroness Ashton.

“While I have had many disagreements with Commissioner Ashton during her time here, most recently over anti-dumping measures on Chinese and Vietnamese made shoes, I believe that she has performed well in her role as European Commissioner.  She has certainly achieved more in two years than Mandelson managed in his time in Brussels and has been far more willing to engage with the European Parliament.

“I hope that if Commissioner Ashton is reappointed to her role that she will continue in her laudable pursuit of free trade deals, opening markets, increasing global trade integration and a conclusion to the Doha round while rejecting protectionist measures.  If the Commissioner continues in these laudable objectives, I am sure that we can work together on a range of issues to advance the United Kingdom’s trading interests in the world.”

Conservative Euro-MP Robert Sturdy has criticised China for its export restrictions on a number of key raw materials which could force businesses in the EU which rely on them to suffer financially or even close down.

Mr Sturdy, who has played a key role in international trade talks and has co-chaired the WTO Committee, has accused China of tit-for-tat actions for its response to the “Buy American” clause which the United States was later forced to retract.

Mr Sturdy says that China’s protectionist actions were clearly in breach of international trade rules and he supports a request from the EU for urgent WTO consultations with China to end the restrictions.

The products concerned include phosphorous, magnesium, silicon metal, zinc, coke and bauxite and are used by the steel, aluminium and chemical industries, representing about 4% of EU industrial activity and around 500,000 jobs.

China has recently announced it will abolish some export duties on grains and industrial products and cut the duties for chemical fertilizers and nonferrous metals from today. However, the list does not include key raw materials for European industry.

Mr Sturdy said: “Protectionism is never the answer. As markets, industries and businesses look for ways out of the recession, we have an obligation to ensure the free movement of goods and services.

“High rate export and import duties may benefit China right now, but the cost is felt all the way through the supply chain and could severely affect the financial viability of businesses in the EU which rely on their raw materials.

“Raw materials are volatile commodities at the best of times and China’s actions could severely distort the market and create an unlevel playing field, making it near impossible for European industries to compete.

“The United States quite rightly was forced to reconsider its protectionist “Buy American” clause in its stimulus package earlier this year. But China’s tit-for-tat approach is totally unacceptable.

“China is a booming economy and must demonstrate its respect for  the global market and opportunities within the WTO. Only through working together – and not against one another – can we hope to recover from this economic crisis and build stronger political will which will enable us to secure a crucial deal on DOHA.”

ENDS