World Trade Ministers Strike Deal | Business| Economy and finance news from a German perspective | DW | 15.11.2001
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World Trade Ministers Strike Deal

The agreement on a new round of talks to tackle barriers to global trade sends a powerful signal to the world. It raises hopes for a much-needed boost to global economic confidence.


Last Minute Breakthrough

Unanimous approval was needed to agree on a new round of talks to lower barriers to global trade. And after arduous negotiations, delegates to the World Trade Organization meeting in Qatar accepted the proposal at the last minute.

Speaking after six days of hard bargaining, the US Trade Representative Robert Zoellick said governments had made up for their failure at a conference in Seattle two years ago to set an agenda for market-opening talks.

"Today the members of the World Trade Organisation have sent a powerful signal to the world... by agreeing to launch new global trade negotiations, we are helping to deliver growth, development and prosperity" Zoellick told Reuters.

EU isolated on subsidies

The sticky question of scrapping subsidies to politically powerful farmers had been one of the main blocks to clinching a deal. The EU, particularly France, was isolated from the rest of the world on the issue.

Both Japan and Norway, which provide heavy domestic subsidies to their farmers, were prepared to back a phasing out of export subsidies, one EU diplomat said.

France's tough stance on farm trade had earlier threatened to derail the five-day talks. Presidential elections are due to be held in France next year.

Many WTO members criticised France's obstinacy, accusing it of jeopardising, for domestic political reasons, a trade round that would boost global economic confidence and lay the basis for stronger growth.

Both chancellor Schröder of Germany and the British Prime Minister, Tony Blair were said to have phoned French president Jacques Chirac urging him to compromise on the issue.

Eleventh hour breakthrough

Finally, the pieces appeared to be falling into place. The EU had found the right wording on farm export subsidies. And then managed to get the link between WTO rules and multilateral environmental agreements on the agenda, both of which France had sought.

The latest text, drafted in the early hours of Wednesday morning, made clear that ending agricultural subsidies is not necessarily an objective of the negotiations this time around.

Although the proposed form of words still calls for talks to phase out such subsidies, a goal of efficient agricultural exporters like Australia, negotiators added the crucial line "without prejudging the outcome of the negotiations".

The compromise in the wording was put forward by the United States and Canada.

Cheaper drugs for developing countries

The successful outcome in Doha was also due to the resolution of a dispute over WTO patent rules and poor countries' access to medicines.

World trade ministers formally approved a waiver for a trade agreement between developing countries and the European Union. The waiver represents an exemption from WTO rules, so they can take advantage of special privileges negotiated with the EU in June 2000.

The row over patents had pitted the developing world against rich countries, threatening to derail the meeting. The US and Switzerland had backed a weaker deal, which would have allowed countries to buy cheap copies of patented drugs only when they faced a health emergency.

An excercise in compromise

Many nations had swallowed their reservations to adopt the deal, while having to meet political demands at home. The deal is expected to give a much-needed psychological boost to business confidence at a time when the economies of many countries are on the brink of recession.

The World Bank has calculated that launching a new round of negotiations on issues from agriculture to industrial tariffs, together with the appropriate market reforms, could add a massive $2.8 trillion to global income by 2015.

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