GENEVA (Reuters) - World leaders have so far failed to give the necessary impetus to a new trade deal and agreement in the long-running Doha round is far from certain, former WTO Director-General Peter Sutherland said on Tuesday.
Failure to clinch a deal would not only deprive the world of an economic boost of at least $360 billion, according to the Irish lawyer and banker, a former European Commissioner.
It would also weaken the global trading system managed by the World Trade Organization that has underpinned prosperity and provided a bulwark against protectionism.
Sutherland, chairman of Goldman Sachs International, said negotiators had stepped up the pace of talks in response to a call by G20 leaders to conclude the decade-old talks.
But that increased momentum had so far not yielded a breakthrough, and trading powers must make further concessions, he told Reuters in an interview.
“There has to be significant movement by a number of players,” said Sutherland, the first director-general of the WTO when it was formed in 1995.
“It’s by no means clear that an agreement will be reached.”
There is a particular need for leadership from the United States, China and Brazil, he said.
Sutherland headed the WTO’s predecessor, the General Agreement on Tariffs and Trade (GATT) and steered the previous trade negotiation, the Uruguay Round, which still forms the basis of current global commerce rules, to a conclusion in 1994.
Together with trade economist Jagdish Bhagwati, Sutherland chairs a group appointed by Britain, Germany, Indonesia and Turkey to assess the prospects for the Doha round and the WTO.
In an interim report presented at last month’s World Economic Forum in Davos, they recommended setting the end of the year as a firm deadline for the talks launched in late 2001.
In practice that means reaching political agreement on the substance of a deal by July to leave time for detailed technical work in the second half of the year, he told Reuters.
Trade diplomats and officials say there has been some narrowing of positions on industrial goods, but in the crucial area of agriculture there has been little movement.
One encouraging sign is that China is now willing to discuss a U.S. demand that big emerging economies sign additional deals to eliminate or cut duties in individual sectors, such as chemicals or electrical goods, beyond any general reduction in tariffs agreed by all 153 WTO members, Sutherland said.
Differences over this proposal contributed to the collapse of the last serious attempt to break the deadlock in July 2008.
But he said an apparent hardening of Brazil’s position in recent months was worrying.
“At the moment, according to most objective assessments of what’s on the table, Brazil is the biggest winner,” he said.
It would be irrational for Brazil to block a deal, even if it has to open markets in manufactured goods as the price of securing cuts in rich-country farm subsidies and greater access to their food markets, he said, noting that Brazil had paid a key role in securing a deal in the Uruguay Round.
Sutherland said high food prices would make it easier for rich countries to cut their trade-distorting farm subsidies, one of the main targets of developing countries in the talks.
“The buoyancy in agricultural markets provides an incentive for concluding the round at this time,” he said.
Sutherland said there was every reason for the United States to back a Doha deal which could attract bipartisan support in Congress, historically been suspicious of free trade.
President Barack Obama’s administration has often appeared lukewarm on the negotiations and Obama did not mention the word Doha in last month’s State of the Union address.
“No round has ever succeeded without the active leadership of the United States,” he said, adding that he had been assured privately that Doha remained an administration priority.
editing by Paul Taylor