Sun, Nov 21, 2004 - Page 11 News List

WTO official warns against trade blocs

AFP , SANTIAGO, CHILE

A top World Trade Organization (WTO) official warned on Friday that a growing web of regional trading agreements threatens to wreck global trade negotiations.

"There are more voices saying we are not interested in multilateral arrangements and this can be extremely unhealthy and it is time we did something on this," said Stuart Harbinson, director in the office of WTO chief Supachai Panitchpakdi.

There are now 150 regional trading agreements in force, he told business leaders at a conference being held parallel to a weekend Asia-Pacific political summit in the Chilean capital Santiago.

Another 70 were in the works and by the end of 2007, the total could snowball to 300, he said.

The spread of such deals would distract attention from and dampen the force behind the main WTO trade talks, launched in Doha, Qatar in 2001, to open up farm, industrial and services sectors, Harbinson said.

"This expanding web of RTAs (regional trading arrangements) raises the question of the workability of parallel multilateral approaches," Harbinson said.

Unlike WTO trade rules, which are standard across the world, bilateral and other regional free trade agreements vary widely and are largely discriminatory against other partners. They also tended to jack up production costs because businesses have to comply with a variety of trading rules.

Prominent US economist Fred Bergsten warned that regional trading arrangements threatened to produce trading blocs centering around Europe, the Americas and Asia and eventually create a "dangerous" tripolar trading system and trade wars.

The US, for example, stands to lose exports totalling some US$25 billion a year if an East Asian Free Trade plan becomes a reality, he warned at the conference Friday.

Nevertheless, free trade agreements were a key insurance against any failure of of current multilateral trade talks, said Bergsten, director of the Washington-based Institute for International Economics.

"The prospects for the Doha round are uncertain," he said.

The round is aimed at a binding international treaty among 148 WTO nations, but disagreements over how to proceed in key areas such as agriculture have bogged down negotiations.

Leaders of the APEC forum who meet in Santiago at the weekend are expected to discuss a business leaders' proposal for the creation of a Free Trade Area of the Asia-Pacific embracing the giant trading groups of the Americas and East Asia.

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