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Friday, 1 December, 2000, 11:34 GMT
Mega-mergers 'pose monopoly threat'
Seattle police arrest an anti-WTO demonstrator
The WTO shares at least some common ground with protesters against globalisation
The World Trade Organisation (WTO) has joined protesters against globalisation in voicing concerns over the grip on trade held by some multinationals.

The increasing number and size of cross-border mergers raises concerns about whether national competition authorities can maintain competitive markets

World Trade Organisation

The WTO, which has come under fierce attack from protesters in recent years over its free trade policies, on Friday warned of the threat the growing number of cross-border mega-mergers pose to national economies.

But the WTO defended its free trade stance, which protesters claim has left developing states vulnerable to exploitation from leading industrial nations.

Developing countries have increased their share of world merchandise exports by almost 50% during the 1990s.

The WTO says the growth in exports from developing countries is the direct result of trade barriers coming down and import duties being cut following the Uruguay round of world trade talks.

Regulation concerns

In its report, the WTO highlights the growing debate on whether national trade watchdogs can stand up to the growing number of firms trading at a multinational level.

"The increasing number and size of cross-border mergers raises concerns about whether national competition authorities can maintain competitive markets," the report said.

"The present situation, with ad hoc co-operation amongst national and regional authorities, has its limitations."

Debate over enhancing regulation has centred on the negotiation by watchdogs of multilateral agreements, and even of permanent co-operation treaties.

Trade boom

Exports of merchandise are set to expand by 10% this year, double the rate in 1999 the report said. However, for next year the WTO expects a slowdown, with trade growing just 7%.

Chinese car worker
China's factories are booming

The current growth of trade is being driven by booming Asian economies, which raised their imports and exports by one quarter in the first half of the year.

"China's trade expanded by more than one third," the report said.

Asian economies have been supported by strong demand for office and telecoms equipment, with the value of shipments of mobile phones alone rising by a quarter.

Asian factories now account for about half of all world office equipment and telecoms exports.

"Trade in this product category has been growing more than two times faster than total trade, not only in 1999, but also throughout the 1990s," the WTO said.

Shift in auto sector

The car-making sector was the second strongest during the past year, expanding by 5.5% thanks to strong vehicle sales.

This growth has favoured some developing countries particularly, the report said.

"The most dynamic exporters of automobiles have not been the large traditional producers, but rather Mexico, the Republic of Korea, Brazil and Central and Easter Europe, which expanded their exports at double digit rates throughout the 1990s."

Developing countries as a whole increased their share of world merchandise exports to 25% during the past year.

This growth has come against a background of lowered trade barriers.

Customs duties collected by the EU states, the US and Japan, which together account for nearly a half of world imports, fell by 10% to $39.4bn (27.4bn) between 1994 and 1999.

The value of goods imported by these countries rose 40% during the same period.

But the report said it was difficult to relate the lowering of trade barrriers directly to booming trade, because tariff reductions are implemented "over a multi-year period".

Farming slump

Higher oil prices, which rose by more than one third last year, also contributed to growth in trade in 1999.

Agriculture was one of the weakest sectors, with all countries outside Australasia reporting decreased exports.

"Primarily due to weaker prices, the value of food and agricultural raw materials decreased for the third year in a row," the WTO said.

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16 Nov 00 | Business
Call for global trade round
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