CANCUN (Mexico): With the US economy recovering only slowly, Europe sluggish and Japan still in a slump, crucial trade talks in Mexico this week could give the world economy a ray of hope.
The World Trade Organisation (WTO) will try at the Caribbean beach resort of Cancun to solve thorny trade issues that have prevented its 146 member nations from striking a comprehensive world trade deal as planned by the end of next year.
“If we see a multilateral agreement coming out, there could be at least a reinforcement that the global environment is going to be a better place,” World Bank economist Richard Newfarmer said of the Cancun talks starting tomorrow.
On the downside, British Trade and Industry Secretary Patricia Hewitt has warned that failure at Cancun would be “disastrous” for the world economy.
In the long term, a successful deal to liberalise trade could lift 144 million people who earn less than US$2 a day out of poverty and increase personal incomes worldwide by up to US$520bil by 2015, the World Bank said in a report last week.
But a planned global trade pact by the end of 2004 is by no means guaranteed and the Cancun talks are already shaping up as a battle between rich countries and mostly poor nations.
Agriculture is the toughest issue with nations like India, China and Brazil seeking deep cuts in the US$300bil of farming subsidies given out annually, particularly by the United States and the European Union (EU).
A stinging verbal attack last week by EU Agriculture Commissioner Franz Fischler on the poor countrise seeking subsidy reductions do not augur well for the Cancun negotiations.
“If they want to do business, they should come back to mother earth. If they choose to continue their space odyssey, they will not get the stars, they will not get the moon, they will simply end up with empty hands,” he told journalists.
WTO members will also try to agree on goals for reducing industrial tariffs and a number of other divisive issues, such as whether to negotiate new international rules covering investment and national competition policies.
“Maybe there will be a fair amount of arm twisting with the rich countries offering a cut in some agricultural subsidies in exchange for something on investment and I think poor countries are going to be stuck between a rock and a hard place,” said Sam Bartlatt, a spokesman for the Oxfam development agency. – Reuters
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