International Herald Tribune
June25, 2002
Empty words on trade won't do
By Maria Livanos Cattaui
PARIS – If you want a safe bet about the outcome of the forthcoming Group of Eight summit meeting in the Canadian mountain resort of Kananaskis, it is that it will culminate in a ringing declaration of support for open trade and investment.
The heads of state and government will depict trade as the most potent force for defeating poverty in the developing countries and sustaining an expanding global economy, or words to that effect.
But will pledges be matched by deeds? On present form, no wise punter would be willing to risk his money. The world's two biggest traders, the United States and the European Union, will sign that declaration regardless of simmering trade disputes that threaten to deteriorate into tit-for-tat protectionism.
That is unless, in defiance of political expediency, there is a radical departure from current intransigence and the G-8 governments reaffirm their free trade principles through their actions and willingness to compromise.
It was after all the United States and the EU which only last November threw their combined weight behind the launch of the World Trade Organization's Doha development round one of the few positive developments of an otherwise grim year.
Since then, the horizons have darkened with the imposition by the United States of "safeguard" tariffs on imported steel, duties on Canadian lumber, and plans for big increases in agricultural subsidies. In Congress, moves are afoot to attach protectionist strings to the Trade Promotion Authority -- formerly known as "fast track" -- which the Bush administration needs to negotiate trade agreements.
Trading partners are gearing up to retaliate against the steel tariffs. The EU, Japan, India and China are among those busily preparing sanctions lists against U.S. products ranging from motor cycles to orange juice.
Further souring the atmosphere is a spate of moves across the world to secure relief from foreign imports through the WTO's anti-dumping and anti-subsidy provisions. Ironically, all these restrictive actions invoke the rules of the very organization whose purpose is to liberalize trade.
The 144 WTO governments have given themselves until January 2005 to complete a substantial trade liberalization package that will open world markets, including for the agricultural and textile exports on which most of the people in the developing world depend for a living. The chances of meeting that deadline look bleak unless the major trading nations settle their squabbles.
The leaders of the world's most powerful economies are rightly making African development the centerpiece of the Kananaskis summit. They will be focusing on a continent that is wracked by natural and man-made disasters and desperately needs the tonic of investment, both foreign and domestic.
To be sure, the summit leaders will be heartened by African leaders' determination to make a success of their own self-help initiative, the New Partnership for Africa's Development under whose banner African leaders have pledged their commitment to good governance and investment-friendly policies. We can expect much talk at Kananaskis about aid programs and debt relief.
But what good does it do poor African countries to invest in their industries and raise their farm output if the markets of the rich world are closed to the goods they produce? Without the ability to sell their products, the African countries will never achieve the economic growth they need. Trade barriers will cancel the benefits of aid programs.
Even though Africa's share of world exports is only a meager two percent, that still represents many times the amount the continent receives in aid. Think of the effect that even a modest increase in their share of world markets would have on their economic prospects. This is why African and other developing countries want the United Nations summit in Johannesburg at the end of August to tackle trade issues as well as all the other topics covered by its title of "World Summit on Sustainable Development."
The developing countries are crying out for greater market access from the industrialized world so that they can depend on their own resources in preference to hand-outs.
Mindful of the insecurity and instability that poverty breeds, the G-8 countries would do well, in their own self-interest, to make sure that plea is heeded. Trade is the best way to help the developing countries to help themselves.
* The writer, secretary general of the International Chamber of Commerce, contributed this comment to the International Herald Tribune.
Copyright 2002 International Herald Tribune
