Reuters
By Daniel Flynn
June 10, 2009
www.reuters.com

* WTO may cut its forecast for 9 pct fall in 2009 trade

* "All indications" point to 2010 Doha deal, WTO deputy says

* New U.S. administration understands importance of cotton

ROME, June 10 (Reuters) – The World Trade Organisation may further reduce its forecast for a 9 percent fall in global trade this year as the global economic crisis bites, WTO Deputy Director General Valentine Rugwabiza said on Wednesday.

But despite some protectionist measures by major economies, the severe economic downturn has not had an impact on talks for the Doha round of world trade negotiations, which appear likely to conclude next year, Rugwabiza told Reuters in an interview.

"WTO economists are forecasting a contraction of 9 percent for this year in world trade, which is a big contraction, and even this forecast might need to be revised," said Rugwabiza, one of the WTO’s four deputy directors.

The Rwandan-born diplomat said there had already been some low-level protectionist measures by major economies, such as the reintroduction of dairy subsidies by the United States and European Union, which have had an impact on poorer agricultural nations.

"It is happening within the margins left to members within WTO agreements, but nevertheless some protectionist measures are taking place," she said. "The most efficient way to resist it is precisely to strengthen multilateral rules through the Doha round."

She said a meeting this week in Indonesia of the Cairns Group of agricultural nations — 19 nations which account for a quarter of the world’s farm exports — was "very encouraging" because it condemned protectionism and called for a senior technocrats to draft a road map by the summer for a deal on Doha. [ID:nWEL408416]

The Doha deal is estimated to be worth $150 billion to the global economy and is considered even more important now that the world is facing its worst economic crisis in decades.

"If senior officials meet before the summer to put together a road map … that is going to give us a clear indication of when the round should be concluded," Rugwabiza said. "All indications are pointing to 2010."

U.S. UNDERSTANDS IMPORTANCE

Trade ministers came close in July 2008 to clinching a deal on Doha but talks collapsed over a dispute between Washington and emerging economies spearheaded by India over proposals to help farmers in poor nations.

The new administration of U.S. President Barack Obama has completed a policy review, but U.S. Trade Representative Ron Kirk has declined to discuss subsidies on sensitive products such as cotton. An estimated 10 million people in West Africa, one of the world’s poorest regions, depend on cotton for a living.

"I’m convinced the U.S. understands the importance of this issue and it knows very well there cannot be a successful conclusion of the development round without solving the cotton issue," Rugwabiza said. "African countries … have no interest in a round being concluded without solving the cotton issue."

The global economic slump was having a "huge impact" on African economies, many of which rely on agricultural or mineral exports to the developed world, she said.

Africa, with its fast-growing market of around 1 billion people, needed to reduce its vulnerability to external shocks by encouraging trade within the continent. Doha could also boost Africa’s trade ties with other developing regions.

"Africans … need access to developed markets but also to developing countries’ markets, which is where growth is going today," she said. "They want to speed up and increase South-South trade."

http://www.reuters.com/article/latestCrisis/idUSLA737496