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18 July 2008updated 24 Sep 2015 11:01am

Fair trade through Doha

It's make or break on a Doha deal worth 120 billion euros per year, argues Trade and Development Min

By Gareth Thomas

We are witnessing the biggest restructuring of global economic life since the Industrial Revolution. Over the next 25 years the world economy will double in size, creating a billion new jobs worldwide, offering untold opportunity to individuals, communities and nations.

However, not everyone around the world has benefited from globalisation so far, and while many have been lifted out of poverty, plenty are still unable to meet their basic needs. The response of some in the face of this crisis is to pull up the drawbridge, to retreat into protectionism – indeed this is a response which is gaining ground. Historically though, countries that have grown, prospered and reduced poverty have done so because they have become part of the global economy and opened up their markets to trade. Take East Asia. Over the last 30 years, its share of world trade has trebled while some 500m people were lifted out of poverty.

If we are to resist the forces of protectionism and at the same time make trade work for the poorest, the challenge we all face is nothing less than to transform our global trading system and make it fit for purpose in the 21st Century. Intensifying global trade and economic integration could bring unprecedented opportunities in the 21st century and the current Doha world trade negotiations have a major role in making this happen.

Why does Doha matter? Because in a time of recent economic uncertainty, a Doha deal could boost the global economy by 120 billion euros per year. Doha could bring €30bn each year for the EU economy alone.

A deal will strengthen the EU economy through improving business competitiveness, creating new jobs, and benefiting consumers. It will create further opportunities for EU companies in overseas markets.

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But most significantly, a Doha deal will bring greater access into the world’s richest markets for the poorest countries to export their agricultural goods, textiles and clothing – allowing them to trade their way out of poverty.

Developing countries lose about €12 billion a year in agricultural income from protectionism and subsidies in developed countries. A deal could help to lift millions out of poverty and make great gains in reaching the Millennium Development Goals.

But to get there all WTO members need to commit to securing a successful outcome to the upcoming ministerial gathering. The US will need to give ground and demonstrate that its commitment to closing the deal will be made a reality. This means significant cuts to agricultural subsidies, particularly on cotton.

The greatest gains for Europe will not come from protecting agriculture. Consumers across the EU will benefit from lower agricultural tariffs, while businesses will gain from greater market access for industrial goods. The EU will gain improved market access for its vehicles, medicines, chemicals and machinery into both developed and developing countries.

And developing countries need to show commitment to closing the deal now. They have much to gain from what’s already on the table now: increased market access in agricultural and industrial goods; reductions in agricultural subsidies; the ending of all forms of export support by 2013; and 97 per cent duty free, quota free (DFQF) access for the least developed countries.

The Doha negotiations need to be successfully concluded now. Not only because of the lost income and lost opportunities that would result from failing to secure a deal this year. If we don’t secure agreement on the headlines of a deal in the WTO Ministerial, we will not get a conclusion to the Round for 3 years or more. The US and Indian elections, and a new European Commission next year mean that trade talks would not start again for almost 2 years if at all. And we cannot be sure that we would be able to capture the progress that’s been made up to now if we were to start again two years from now. This deal may never be on the table again.

Further, failure to conclude the WTO’s first trade Round would be a serious blow to the credibility of one of the pillars of the multilateral system and the global community’s ability to face up to the global challenges of today and tomorrow. Failure to secure agreement would represent a missed opportunity to prevent a drift into greater protectionism, and crucially, to lift millions out of extreme poverty that still blights too much of our world.

Time is running out. In Geneva next week, we will be engaged in an historic opportunity which, if seized, could see the world take a giant step toward a fairer and more open global trading system. The significance of what lies within our grasp cannot be overstated. But, neither can the scale of lost opportunity and wasted human potential if we fail.

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