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Wednesday, 31 October, 2001, 19:35 GMT
Call for trade round as economy falters
currency dealers in Brazil
Latin America is suffering a severe slowdown
By BBC News Online's Steve Schifferes

The World Bank has urged global leaders to launch a trade round for the benefit of developing countries.

Talks are due to begin in Doha, Qatar next week aimed at liberalising world trade through a new set of trade negotiations.

The terrorist attacks in the United States ... have unleashed new and unpredictable forces that have substantially raised the risk of a global downturn

World Bank report
The World Bank says that developing countries could stand to gain $1.5 trillion in 10 years from complete liberalisation of world trade.

But it warns that in the short term, the prospects for world growth are grim, with international trade expansion virtually grinding to a halt.

World economic growth is forecast to be only 1.3% this year, compared with 3.8% last year, and is predicted to recover only slightly to 1.6% in 2002.

'Broader vision needed'

In an exclusive interview with BBC News Online, the author of the World Bank's new report, Uri Dadush, head of its economic policy group, said that several regions - including sub-Saharan Africa and Latin America - are expected to experience negative per capita growth this year.

World growth prospects 2001
US: 1.1%
Japan: -0.8%
Eurozone: 1.5%
Latin America: 0.9%
Africa: 2.7%
E. Asia: 4.6%
S. Asia: 4.5%
Source: Global Economic Prospects, World Bank

He said that although the world would avoid a technical recession - thanks to a strong performance by countries including China and India -"it will feel like a recession" because of one of the sharpest decelerations in growth in the post-war years.

And the effect of the terror attacks has been particularly marked on world trade, which will only grow by 1% this year compared to 13.6% last year.

World Bank's Uri Dadush: global slowdown looms
World Bank's Uri Dadush: global slowdown looms

Mr Dadush said the events of September 11 "had a very major effect on the world's economic prospects" and have caused the World Bank to predict that any recovery will be delayed until at least the second half of next year.

He said that a successful trade round was needed to rebuild confidence and to show international solidarity, as well as to bring concrete economic gains to rich and poor alike.

Development gains?

But the head of the World Development Movement, a UK-based pressure group, warned that so far the agenda for Doha shows scant regard for the needs of the poor.

Trade 'could help lift millions out of poverty'
Trade 'could help lift millions out of poverty'

"The demands of the developing countries have been marginalised or just plain ignored," Barry Coates said.

"The EU and the US are playing Russian roulette with the global trading system."

Many developing countries want to delay the implementation of some trade liberalising measures before agreeing to new talks.

And the World Bank has given qualified support to complaints that new rules on patents and copyright will cost developing countries some $20bn each year.

Mr Dadush says that the rich countries should agree to allow poor countries the right to licence the cheap production of needed drugs, and allow the poorest to delay the full implementation of intellectual property agreements.

Opening up agriculture

Mr Dadush says the most important trade measure to help the world's poor would be the elimination of agricultural subsidies by the rich countries - which cost more than $1bn each day, three times as much as development aid.

But the EU, whose Common Agricultural Policy gives the biggest subsidies to agriculture, is objecting to any mention in trade talk negotiations of the need to "eliminate" such subsidies.

And the liberalisation of trade in textiles and clothing, the biggest manufacturing sector for developing countries, has been delayed until 2005 under previous agreements.

The World Bank argues that liberalisation of trade in services could provide major gains - and that jobs would stay in developing countries.

It also wants rich countries to ease rules on temporary workers from poor countries, which could also form part of any services negotiations.

But many development activists are sceptical about services, and fear that basic services such as utilities, education and transport could become more expensive for the poor.

With so many controversial issues still unresolved, it will be touch and go whether hopes of trade liberalisation will be realised at Doha.

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