Doubts over trading nations’ ability to seal a deal this year to boost global trade have spurred a European search for an alternative plan, emphasising bilateral deals and pacts with groups of like-minded countries.
But as the world’s greatest exporter the European Union also needs to avoid undermining the World Trade Organization (WTO) in Geneva, the global trade umpire that has unsuccessfully chaired negotiations for a worldwide trade pact for almost a decade.
The so-called Doha round, launched in the wake of the Sept. 11 attacks in 2001 with the aim of lifting millions out of poverty by cutting trade barriers worldwide, is in danger of final collapse as WTO members remain divided on how to open their markets to foreign manufactured goods.
“Europe’s trade policy will be focused 95 percent on bilaterals, spiced up with unilateral measures and initiatives among groupings of countries outside the WTO,” said Fredrik Erixon, Director at the European Policy Centre for International Economy, an independent think-tank in Brussels.
But as the EU is fundamentally a trading entity, its foreign policy resting on commercial might, not military power, it needs to secure the long-term functioning of the WTO, he added.
EU Trade Commissioner Karel De Gucht made some of his most pessimistic comments about the Doha round this week, telling EU lawmakers there was no reason to be hopeful for an agreement.
The Twilight Zone
“If not Doha, we will have to see if there is a Plan B. We are now in the twilight zone. We don’t know what will happen.”
The EU knows that as hopes for Doha fade, there is growing appetite for regional accords in the U.S. and Asia.
“If Doha fails, the EU should pursue more free trade agreements and fight for market access in places like India, Latin America and South East Asia,” said Adrian van den Hoven at BusinessEurope, the EU’s biggest industry group.
De Gucht said he was doing just that and highlighted the substantial trade potential of nations such as Malaysia, Singapore and Indonesia.
“Engaging with them is all the more urgent since our global partners are negotiating preferential access too,” he said.
To clinch a slice of trade in the world’s booming technology sectors, the EU has begun writing common technology production standards with the United States and similar standards will follow on nanotechnology and other innovative sectors.
‘Plan B’ will also address raw material shortages that hold back and inflate the cost of EU industrial production, with EU officials working on a commitment by industrialised democratic members of the OECD to free up trade in raw materials.
Such a plurilateral set-up would echo the reasoning behind the Anti-Counterfeit Trade Agreement (ACTA), signed last year by almost 40 countries after the WTO’s 153 members could not agree on anti-piracy rules.
Yet plurilateral deals lack the clout of the WTO to settle disputes and decide sanctions on members that break its rules.
“The EU still needs the WTO to legislate on issues such as piracy, raw materials and information technology. It has a strong interest in strengthening the WTO,” Erixon said.
That is why the EU cannot let the Doha round fizzle out.
“The EU should push the WTO to put a proposal on the table in the next few months and tell members to take it or leave it,” said van den Hoven.
“That may not be popular, but it’s better than abandoning the WTO.” (Reuters)