Concluding the now-stalled Doha trade negotiations is increasingly critical as the global financial crisis
spreads, the heads of the United Nations Conference on Trade and Development (UNCTAD) and the World Trade Organization (WTO) said the morning after stocks tumbled worldwide on news of failure of the Lehman Brothers investment bank.
Sharing the podium at UNCTAD’s annual Trade and Development Board, UNCTAD Secretary-General Supachai Panitchpakdi and WTO Director-General Pascal Lamy said reaching agreement on the seven-year-old negotiations was now important not only for the gains it would bring directly but because it would inject confidence and order into shaken economies and financial markets.
Recent economic progress made by poor nations since the turn of the Millennium has made it clear that stable trade – which requires a supportive international banking and financial climate – is vital, the two officials remarked. And Mr. Supachai said the financial slowdown that began a year and a half ago in developed nations is now having a growing impact in developing regions.
“We are witnessing a confluence of different crises this year,” Mr. Supachai said. “As for Doha, we need this one multilateral effort to be completed successfully. Then we could face these other difficulties with a more optimistic perspective.”
Achieving such a multilateral pact would be helpful at a time when bilateral and regional trade agreements – confusing in total and often lacking transparency – are growing in number. And a broader trade agreement might reinforce UNCTAD’s regular recommendations that the global financial system needs multilateral regulation similar to WTO trade rules, Mr. Supachai said.
“We are told that this is one of the most serious crises we’ve seen in the last 60 or 70 years. There must be some better rules and regulations to help the financial system as rules help the trading system. Unfettered market mechanisms have led to crises every few years” Mr. Supachai told the meeting.
WTO Director-General Lamy said “There is far too much on the table, particularly for developing countries, to give up on these negotiations.”
He added, however, that “it is clear we are coping with a fragile situation.
“A multilateral system offers many solid, important benefits which other ways of trade opening do not offer. Trade is one of the necessary conditions for development – this is clear. Because of this clear view, the pressure for concluding the round on the side of developing countries is now very high.”
A number of negotiators were “back in the machine room,” Mr. Lamy reported. “But there is not much time. Depending on progress made, I am ready to call negotiators back to Geneva to close the issues which remain open.”
The two officials were speaking at the Trade and Development Board’s debate on “evolution of the international trading system and international trade from a development perspective.” The discussion took place the day after the failure of the Lehman Brothers investment bank and after efforts intensified to save the threatened insurance giant AIG. The Dow Jones industrial average fell 504 points on Monday.
Developing countries – the majority of the world’s nations – “can only do so much” in the face of turmoil that is beginning to affect their exports and their economic growth prospects, Mr. Supachai said. “All of these crises” – and he mentioned rising food prices, climbing energy costs, damage from climate change, and other issues along with threats to the global financial and banking systems – “can only be dealt with at the multilateral level. We need international predictability and stability in the global financial system.”
Concluding the Doha Round would at least give a good foundation for “facing these other crises,” he said.
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