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2004-10-07

A dilemma of global trade agreements 

Robert Poth, the economics editor of Austrian development politics magazine Südwind, analyses the state of the Doha-round negotiations at the WTO in an article in the current issue (subscription required [DE]), and points out an interesting dilemma that seems to extend beyond the case in point.

The Doha-negotiations for new liberalisation measures in global trade were on the verge of failure after a conference in Cancun, in which the developing countries managed to build powerful coalitions against interests of the rich countries, under the leadership of Brasil, India, and South Africa. Now, it seems that a compromise at least on process has been reached for further negotiations at recent talks in Geneva. A new agenda for negotiations has been agreed for the exchange of mutual trade favours between rich and poor countries on the global scale.

Poth points out that mainly the large developing countries, organised in the G-20 group, stand to benefit from such things as reductions of customs barriers for agricultural goods across the board, and the tactics of the rich countries seems to have been to bring exactly this powerful group among the developing countries on board of the new process. In contrast, Pohl argues, many of the least developed countries as well as the AKP-countries would fare better in a system like the current one, where they can rely on unilateral priviledges granted to them by specific important trading partners such as the EU. These weakest economies do not have spare capability to compete in a much wider and more open, and therefore also more competitive global market.

So the dilemma is between creating an open and efficient market for all developing countries, which benefits the stronger economies in this group, and handing out special priviledges to the group of least developed countries, by retaining some protective fences against too much competition. What is more important?

Of course this is essentially a matter for the economists to research (sigh), but on the level of semi-educated lay opinion, I believe that the global development strategy should indeed focus on creating opportunities for all, even if this means that some richer developing countries will be able to profit more than the weakest ones. Development will not be even. A strong Brasil or South Africa, for example, will in turn be beneficial for the respective regions and create new economic opportunities for poorer countries in their neighbourhoods. As more countries are able to stand their own in the global markets, the task of supporting the remaining laggards will also become smaller and more manageable.


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