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Wednesday, 7 November, 2001, 13:18 GMT
New trade round is vital
By Professor Jim Rollo, University of Sussex

This is one of a series of authored pieces arguing the case for and against a new trade round. Barry Coates of the World Development puts his case in a related article.

At the global level there are two broad reasons to launch a world trade round now.

First, in the context of the war against terrorism, the ability of the world community to come together to agree to launch negotiations will signal that politics at the global level is still going ahead.

Second, launching a trade round would also be a sign of confidence in the global economy at a time when recession approaches.

A launch by itself will do nothing concrete for growth and recovery in the short term. A failure to launch however would be an undoubted blow to fragile economic confidence, especially following the earlier failure at Seattle.

Holes in the system

There are reasons within the system that also demand that a new Round be launched.

The multi-lateral trade system and the WTO rules in which it is embedded has served the world economy well over the last half century.

But there are still major holes in the system.

Agriculture in the rich countries is still massively protected (subsidies and protection to agriculture costs consumers and taxpayers $1bn a day) and this does immense damage to developing countries in particular.

Services, the most rapidly growing part of world trade and central to growth and development at national and global level, are still little liberalised and could offer gains to developing and developed countries alike.

The existing negotiations in these areas are not progressing. They need to be set in the context of a wider negotiation if they are to succeed.

More time needed

Second there are real difficulties of implementation of the outcomes of the Uruguay Round, particularly for smaller developing countries.

These need to be addressed, which will require technical aid as well as more time, and hence are unlikely to be reopened outside the context of wider negotiations.

What sort of trade round?

But what sort of trade round? There are many issues on the table that could be included in a round, not all of which are in my view either necessary or suitable.

The complexity of interests among and between developed and developing countries could result in a broad range of possible outcomes.

But the important thing is that the world reaffirms its commitment to open, rules-based trade in these difficult times.

Jim Rollo chaired a working group for the Federal Trust which produced a report Putting Trade on Track: A Realistic Negotiating Agenda for the WTO. It can be accessed from their website.

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