São Paulo – The agreement on tariff reduction signed by developing countries in early December is just a palliative to the lack of conclusion of the Doha Rounds. This opinion is in an article written by foreign trade consultant Michel Alaby, who is also the secretary general at the Arab Brazilian Chamber of Commerce.
The treaty was signed by 22 developing nations, among them Brazil, in the scope of the Global System of Trade Preferences (GSTP), a mechanism connected to the United Nations Conference on Trade and Development (Unctad). It establishes that its signatories should reduce import barriers among themselves by at least 20%, and that the cuts must include at least 70% of the items traded.
“Of course, the dimension is smaller than the conclusion of the Doha Rounds. However, the reasons for implementation cannot be ignored. According to the secretary general at the Unctad, Supachai Panitchpakdi, the expansion in trade may reach US$ 8 billion a year with the reduction of 20% in tariffs levied,” said Alaby.
The negotiations for the GSTP, which should go on up to mid September 2010, included Brazil, Argentina, Uruguay, Paraguay, Algeria, Chile, Cuba, Egypt, India, Iran, Indonesia, Malaysia, Mexico, Morocco, Nigeria, Pakistan, South Korea, North Korea, Sri Lanka, Thailand, Vietnam and Zimbabwe.
According to Alaby, “the group of Latin-American, African and Asian countries answers to 15% of international trade, as well as 13% of the global Gross Domestic Product (GDP – approximately US$ 8 trillion) and has a joint market of 2.6 billion people (38% of the global population). They answered to 43% of global agricultural production in 2008 (around US$ 780 billion) and 16% of industrial production (around US$ 2.8 trillion)”.
He pointed out, however, that the GSTP cannot replace the World Trade Organisation (WTO) negotiations. “There is no doubt that the conclusion of the Doha Rounds is vital for the growth of global trade, as we know that over half of the increases forecasted due to lower GSTP tariffs will be from altered trade flows, and not the creation of new ones,” he said.
Alaby pointed out, however, that “the credibility of the WTO is becoming more and more eroded, due to the lack of concrete results it has been generating over the last eight years.” He recalls the failure of the last WTO ministerial meeting, in late November: “One more ministerial meeting that took place without reaching decent results. They didn’t even manage to set a date for a new meeting. The resistance of the United States to greater opening of agricultural trade has made any advance more difficult. The only agreement signed by the North Americans is for ‘evaluation of the general state of negotiations’ by March 2010. However, it is not stated whether the meeting for evaluation will be between ministers or high-level employees.”
*Translated by Mark Ament