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WTO faces a credibility test before key summit

As the World Trade Organization (WTO) struggles to break down more global trade barriers with a key summit just five months away, the global body faces a major test of its credibility.

Trading nations will gather in Hong Kong in December for a conference which is meant to set the seal on four years of rocky negotiations aiming to deliver a treaty by 2006 that slashes barriers to commerce and uses trade to help developing countries.

A failure in Hong Kong would do more than bring back bad memories of the WTO's collapsed summits in Seattle in 1999 and Cancun, Mexico, in 2003, experts say.

It would also be a blow for the multilateral trading system of which the WTO is the hub -- one in which all members, from the big players to the microstates, agree to play by the same rules.

For example, they can ask the WTO to referee disputes if they think their trade partners are flouting the rules, and the trade body's experts can authorize massive commercial penalties against those found in breach.

If Hong Kong turns into a "real bust-up," then the WTO could be mired for years, said John Weekes, a trade expert who was previously Canada's top diplomat at the world body.

"I'm not sure that governments would admit it, but the practical matter is that negotiations would probably continue, but with no real prospect of finishing in any timeframe that would have any commercial relevance," Weekes said.

Another fruitless summit would not kill off the decade-old WTO, but would likely deaden its impact, he said.

"People haven't found any substitute outside the WTO for the management of the really big trade relationships, the US, the EU, how to deal with China," he said.

"But the risk is that its credibility would be damaged, that you'd find people less willing to abide by dispute-settlement findings, less willing to think about their WTO obligations before they took certain domestic policy decisions," Weekes said.

"The WTO would still be there, all the agreements would still be in place, but I don't think the system would function as well -- and it would be more difficult to convince governments and legislatures that it was something to be respected," he said.

The WTO's Doha round of negotiations, launched in 2001, has alternately raised and dashed hopes.

After the initial euphoria among trading nations that their summit in the Qatari capital had succeeded where their 1999 Seattle conference had failed, the talks got bogged down.

In Cancun, the summit collapsed amid a rift revolving around farm trade -- in which poor countries and exporting nations such as Australia were seeking more concessions from the EU and the US -- and on services, with rich countries pressing the poor to open up sectors including insurance and banking.

It took a year for an even partial recovery, with members sketching out an interim deal last summer. Progress has been limited since then.

Governments are far from ready for Hong Kong, as shown by a meeting last week: Billed months ago as the moment to create a loose draft, the three-day session of the WTO General Council was far off-target.
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