Paving the way for Cancun

IT HAS BEEN almost two years since a new round of multilateral trade talks, the Doha Development Agenda, was launched after a WTO meeting in Qatar. During that time, efforts have been underway to further liberalise the multilateral trading system. Member countries have been trying to achieve progress in their negotiations over the issues that form part of the DDA such as the liberalisation of the agricultural sector and market access for goods. Niveen Wahish takes a critical look at the WTO's annual report, which addresses the first full year of negotiations under the DDA.

Although the WTO report praised the fact that members have continued their efforts, particularly in areas which concern developing countries such as implementing earlier agreements, the provisions on special and differential treatment and the issue of making pharmaceuticals more accessible to developing countries, it lamented the fact that members have failed to reach full agreement on many of the issues by the set deadlines. The report urged that tangible progress quickly be made to ease the burden on the upcoming WTO ministerial meeting in Doha 10-14 September. "The number and scope of subjects for ministerial action must be manageable or there is a real risk of overload," it said.

The ministerial meeting in Cancun will be the venue where trade and finance ministers of the 145-member organisation will examine the progress in negotiations, provide any necessary political guidance and make decisions. "Ministers will also need to set the roadmap to conclude the round within the remaining 15 and a half months," the report said.

The WTO annual report stressed the need to reach "a final balanced agreement to the DDA has become more urgent given the atmosphere of political and economic uncertainty", as it will signal a global commitment to reinvigorate a slowing world economy.

Despite the fact that the year 2002 saw the size of merchandise trade grow by 2.5 per cent, challenges will continue to face the global economy. In 2001 merchandise trade had shrunk by one per cent. The improvement in 2002 occurred despite some difficult circumstances such as geopolitical tensions and the erosion of business confidence as a result of the corporate and accounting scandals. Fears of terrorism and higher fuel prices continued to stunt growth in international travel and transportation services.

What the world needs to work on to improve the global situation according to the report is to restore stability, rebuild business confidence and establish a clear balance between the need to reduce the risks of terrorism with the objective of facilitating trade.

Moreover, the report says that ambitious liberalisation of tariffs and non-tariff barriers has the potential to stimulate economic growth which could increase the living standards of people. It cited International Monetary Fund and World Bank reports showing that the elimination of barriers to trade alone could result in net welfare gains ranging from $250 billion to $620 billion. Of this amount, about one third to one half would accrue to developing countries. "It is widely recognised that trade is one of the surest ways in which to support developing country efforts to grow their way out of poverty."

Besides surveying progress on negotiations and providing an overview of developments in the international trading environment, the report also reviewed the work of the various WTO activities such as that of dispute settlement and technical cooperation and reconsidered the organisation's setup and budget.