Recent trade developments in the region

WTO Doha negotiation suspended indefinitely

WTO negotiations were suspended indefinitely from July 23, despite repeated efforts by India, Brazil,the EU,the US,Japan and Australiato breach key differences over agriculture. No timelines have been set for the resumption of negotiations, nor a new target set for finishing the Round.
The suspension means stalling of progress on what was agreed as part of the Doha Round and included in the Hong Kong Declaration of December 2005. These agreements were not substantial and Members have so far failed to decide on the modalities for agriculture and non agricultural market access.
The capacity of the WTO system to administer existing agreements or to enforce compliance with them is not diminished by the stalling of the negotiations. Commitments made by members are legally binding. Most world trade is now open and bound under the rules, with the exception of a few remaining pockets in goods trade (such as agriculture) and liberalisation of trade in services, which is a relatively new process. The system of compulsory compliance will continue to function and countries will continue to utilise it to resolve disputes over commitments already made.
The suspension will consolidate the trend, which has been strong for several years, to negotiate regional and bilateral agreements. Free Trade Agreements (FTAs) are likely to proliferate among those countries interested in liberalisation. They present both risks and opportunities. The risk is in the negotiation of conflicting administrative arrangements governing exports and import obligations which could lead to the creation of trading blocs and undermine the multilateral trading system. In the immediate future, bilateral agreements will provide perhaps the only opportunities for further removing barriers to business in foreign markets, particularly in areas of services, investment and competition policy.

It could be years before the Doha Round restarts. It is unlikely agreement will be reached by early 2007 which will make it very difficult for a new deal to be endorsed in the US before trade promotion authority (TPA) expires in June. The Bush Administration might secure renewal of TPA in 2007. US industry will need to be convinced that the EU will increase market access in agriculture. More time is needed for the major players to shift positions. This probably won’t occur in the short term with upcoming elections in the US, a new Prime Minister expected in Japan later this year and presidential elections in both France and Brazil in 2007.

Governments will now focus on resuming talks. At a recent conference of Economic Ministers in Malaysia, ASEAN called for resumption of negotiations before the end of 2006. The G20 Group of developing countries will meet in Rio in early September and Australia will convene a Trade Ministers Meeting on the back of a Cairns Group Meeting in late September. A G6 Ministerial will likely follow the Cairns Ministerial.

 

Source : Trade Analysis and Reform Project News .