OUTLOOK OECD, WTO ministers to try to give new impetus to world trade talks
Wednesday, May 12, 2004 3:11:53 PM
PARIS (AFX) - OECD governments will try to help breathe new life into the Doha round of WTO world trade talks at their annual ministerial meeting tomorrow and Friday here
Trade ministers from the 30 OECD countries and a number of major non-member countries, including China, India and Brazil, will discuss the WTO talks at a session within the OECD meeting on Friday morning
Many of the same ministers will then reconvene for a WTO mini-ministerial meeting on Friday afternoon. Mexican Foreign Minister Luis Ernesto Derbez, who is chairing both the OECD meeting and the WTO gathering, said new proposals from the US and EU could give fresh impetus to the stalled trade talks
"At the end of this meeting we may have the basis for a reinitiation of the Doha round," Derbez told journalists ahead of the OECD ministerial meeting
The EU this week offered to eliminate its agriculture export subsidies if other WTO members are willing to do the same, and the US in turn promised to remove export credits that act as export subsidies
EU Trade Commissioner Pascal Lamy and US Trade Representative Robert Zoellick will attend both the OECD and WTO meetings
Derbez said the EU and US moves could set the WTO talks back on track after the disappointing failure of the Cancun WTO ministerial meeting last September
Trade ministers meeting this week will need to look at the latest proposals made by the EU and US and link these to the final document from the Cancun WTO meeting, which needs to be regarded as the starting point for the new discussions, he said
The WTO has set an end-July deadline to relaunch the talks with the hope of meeting a Jan 2005 deadline to conclude the Doha round
Derbez said that if trade ministers meeting this week make progress, this could clear the way for a resumption of talks among all 147 WTO countries in Geneva
OECD secretary general Donald Johnston said in a letter to ministers attending the OECD meeting that international trade must continue to be a source of prosperity for all nations, and developing countries' concerns need to be addressed if momentum is to be injected into the Doha round
Derbez said developing countries now have to decide whether to accept the EU and US proposals as a solution to their complaints over a lack of access to rich countries' markets for their agricultural products
The Friday afternoon gathering could be the last chance to set the free trade effort back on track by the end-July deadline
"There will be no other opportunity for ministers to meet and we don't have much time," said Eduardo Perez-Motta, Mexico's ambassador to the WTO
Carlo Trojan, the EU's ambassador tot the WTO, said the 28 ministers meeting on Friday afternoon will not have to examine detailed issues in their four hour encounter
"What we are waiting for is a strong signal to conclude discussions on the modalities of the negotiations before the end of July," he said
The EU's offer on agriculture export subsidies was cautiously welcomed by Mexico, one of the countries at the heart of the G20 group of developing countries which want to see agricultural subsidies dropped
"It is a timely offer, just before the Paris meeting. It is a good political signal, but it is not a real offer, it is conditional," said Perez-Motta
Finance and economy ministers will also be attending the OECD gathering and will hold a discussion on the global economy tomorrow
In its semiannual economic outlook this week the OECD said the world economy is experiencing a strong and sustainable recovery, but that continental Europe is lagging well behind other regions
OECD chief economist Jean-Philippe Cotis said the European Central Bank should cut interest rates to underpin the euro zone recovery and described concerns over rising oil prices as an overreaction. International trade unions organisations called for governments and central banks to stimulate domestic demand, particularly in Europe and Japan, in order to achieve higher and more balanced global growth
"This requires first and foremost that the euro zone finally becomes an accelerated engine of growth, through a significant easing of monetary policy, alongside, in the short term, flexible implementation of the existing stability pact," the OECD trade union advisory committee (TUAC) said in a statement ahead of the OECD meeting and the June 8-10 G8 summit
Johnston said economic reforms in Germany, France and Italy should help these economies to accelerate from their anaemic current growth rates, and he played down concerns about the possibility of overheating in the US or China
But the US' twin budget and current account deficits are unsustainable in the long term, he told journalists
Derbez said the world economy is set to grow in 2004 but there are some concerns about the outlook for 2005 in some countries. The prospect of rises in US interest rates could be source of concern for some economies, he said
Ministers will also discuss the impact of population ageing on economic growth and fiscal policy
"Without changes in existing policies, population ageing will cause a marked slowdown in economic growth in most OECD countries and a marked deterioration of public finances. The challenge is to design and implement labour market and social policies that will increase employment and preserve the long-run sustainability both of public finances and, in particular, pensions," said Johnston
Cotis said a key contribution to closing the financing gap in public pension systems could be made by encouraging people to work longer, particularly by abandoning early retirement schemes and by removing incentives to choose early retirement over continued employment in tax and pension systems
OECD studies have shown that eliminating such distortions would significantly increase the employment rates of 55-64 year olds in euro zone countries in particular, he said
Increased labour force participation by women could also be encouraged by tax measures and subsidies for childcare, he said
A parallel meeting of OECD health ministers is to examine the financial sustainability of health systems
An OECD study shows that there is considerable room to improve the efficiency of health systems as a contribution to meeting the challenge of rising health costs, said Johnston
Finance and economy ministers will also endorse new OECD guidelines on corporate governance worked out in reaction to a series of corporate scandals, such as those at Enron Corp, Parmalat SpA and most recently Royal Dutch/Shell group
"Financial scandals involving important companies have demonstrated the need to strengthen systems of corporate governance,"said Johnston
The new corporate governance principles set more demanding standards on the protection of shareholders' interests than the 1999 guidelines that they replace
They are intended to make boards of directors and institutional investors more accountable and ensure that there are solid checks and balances in the corporate governance framework
The principles say shareholders should be able to remove board members and have full information on their pay, and that anti-takeover devices such as "poison pill" measures should not be used to protect management and the board from accountability
The OECD hopes that ministers will give it authority to monitor the implementation of the new guidelines in member countries
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