Page last updated at 23:30 GMT, Wednesday, 4 June 2008 00:30 UK

Trade debate rages at OECD meeting

By Steve Schifferes
Economics reporter, BBC News, at the OECD in Paris

Chinese port
China has signed a number of trade agreements with other countries

While the OECD discussed high-minded but long-term measures to tackle global warming and economic development, a fierce debate has been going on at the sidelines of the meeting over the growing protectionist pressures around the world.

The OECD, the organisation that represents the world's 30 most advanced industrial countries, sees itself as a leading advocate of globalisation, whose mission is to explain those benefits to both its members and the new emerging market countries such as China, India and Brazil.

Protectionist fears

But the current economic slowdown has increased protectionist pressures in Western countries.

The OECD's boss, Angel Gurria, argues that this is no time to give up on globalisation and, indeed, that opening markets can help ease the economic problems of the rich countries.

Mr Gurria argues that the slump would have been more severe if the big emerging market countries like China had not been able to benefit from trade, and that the fact that they are now the engines of world growth shows the benefits of such openness.

But increasingly that is not the way that the public and politicians are seeing things in many rich and poor countries.

Trade stalemate

This week, the key emerging market countries, including India and Brazil, dug in their heels and refused to make further concessions on opening their markets to Western industrial products - concessions that were crucial to a plan by the World Trade Organization (WTO) to restart the Doha Round of free trade talks.

On Thursday, in a secret meeting at the Australian embassy at the sidelines of the OECD, conference ministers from rich countries - and WTO boss Pascal Lamy - will try to persuade them to change their mind.

Bilateral deals

In an exclusive interview, New Zealand's trade minister, Phil Goff, said that it was crucial that progress was made in the Doha talks.

"Free trade and open markets are the best way to ensure world growth. We have the evidence from the last 25 years that shows this is true," he told the BBC.

However, even New Zealand, a country with one of the most open trading regimes in the world, is already hedging its bets in case the trade talks cannot be revived.

It has already signed bilateral free trade deals with China and Singapore, and is beginning negotiations with India and other Asian countries.

However, from the point of view of developing countries, the alternative could be a lot worse.

Child labour

The US trade union federation, the AFL-CIO, is pressing hard for the Democratic presidential nominee to endorse its call for labour standards to be part of the Doha Round.

This would mean that any trade deal would need to include a clause giving countries the right to block imports from countries that did not recognise free trade unions or regulate child labour.

"We are implacably opposed to a trade deal that does not include a clause that ensures workers have to be given basic labour rights, including the right to form trade unions," says John Sweeney, president of the AFL-CIO.

"If this is protectionism, then so be it."

Developing countries, including China and India, are fiercely opposed to adding such a clause.

It was firmly rejected at the start of the Doha Round, despite union lobbying.

And Jagdish Bhagwati, professor of economics at Columbia University, says that such a move could be used to discriminate against developing countries where wages are inevitably much lower than in rich countreis.

If the Democrats win the US presidential election in November and adopt such a policy, it would mean the seven-year trade round would have to go back to the drawing board.

For some activists, however, that would be no bad thing.

Business leaders are deeply concerned by such developments.

But at the moment, the tide seems to be moving against free trade.


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