Resumption of Doha Round talks uncertain until change of guard at White House

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From Fazle Rashid
NEW YORK, Dec 06: Pascal Lamy, Director General of the World Trade Organization (WTO) is seriously weighing the options of whether to convene a meeting of the ministers in mid-December to draw the broad outline of an agreement or delay it until the change of guard at the White House. The resumption of the Doha round of talks hinges on the White House with a lame duck president in office.
Mid-December talks may not bear fruit "with the US struggling with scepticism from Congress" and business and farm lobbies opposing any deal at this point of time. If the stalled talks are not resumed in December it would "probably go on hold for at least several months."
The Doha round of talks began in 2001 and is still continuing without any positive outcome emerging from it. The last meeting was held in July. It broke down over the vexatious agriculture issue of special safeguard mechanism, designed to let the developing countries protect small farmers from surges of agriculture imports which pitted America against China and India.
Gopal Pilai, commerce secretary of India was quoted as saying that a compromise is emerging on mechanism but other sticking points like sectoral agreements remain. The US wants big emerging markets like China, Brazil and India open their chemicals, industrial machinery and electronic sectors to competition.
The last meeting broke down with the US demanding farm exports increasing 40 per cent and India not agreeing. India agreed to a 10 per cent increase.
The compromise could come via fixation of tariff at 20% to 40% depending on the volume of exports. The European Union (EU) is ready for a deal, US is not.
A bipartisan letter from the members of the US Congress sounded warning against a rushed ministerial meeting. President-elect Obama may not be very enthusiastic about striking a deal with the US business and farm lobby against it.
Meanwhile, bad economic news continue to pour in from all directions. Interest rates, as briefly reported earlier, were slashed "on a historical scale across Europe as the central banks reacted aggressively to the sudden and brutal deterioration in the economic outlook since autumn. The European Central Bank announced a three-quarter percentage point cut in its main policy interest rate, its largest ever.
Washington heard with uncomfortable ease senior Chinese officials harangueing US to stabilise its economy, boost savings rate and protect Chinese investments. China's central bank governor Zhou Xiaochuan urged the US to rebalance its economy. He said overconsumption and high reliance on credit is the cause of financial crisis. He went on to say as the largest and most important economy in the world the US should take initiative to adjust its policies, raise its savings ratio appropriately and reduce its trade and fiscal deficit. China has a balance of payment edge over US by over $200 billion.
New Zealand announced a cut in its benchmark interest rate by 1.5 per cent to 5.0 per cent. Indonesia announced a quarter percent cut. Australia, Vietnam and Thailand have all cut interest rates by a full percentage point. The US factory orders fell by 5.1 per cent. Sweden cut interest rates by 175 basic points to 2.0 per cent. Nicolas Sarkozy, president of France, unveiled a $33 billion stimulus package to boost investment rather than boost consumption.
States of the US are grappling with bulging budget deficits and clamouring for federal aid as the economy worsens and lending remains tight.
Credit Suisse, the Swiss bank, said it lost $2.5 billion in two months and would axe about 5300 jobs. AT&T, the largest US telecom group will cut 12000 jobs. Viacom and NBC announced a fresh wave of job cuts darkening an already bleak outlook for the media. Bank of America, RBS, Washington Mutual, Morgan Stanley, UBS, Commerzbank, Credit Suisse, JP Morgan, BayernLB and Merrill Lynch and Citi group together have axed 150,000 jobs in past few months to trim cost.
Phillips warned that the global economy was declining must faster than expected as it abandoned profitability targets and indicated a net loss in the fourth quarter.