After almost five years of negotiations, the WTO's Group of Six (G6) met on July 24 to try to reach a consensus on liberalizing industrial and agricultural trade. Yet after marathon discussions the deep disagreements between the parties remained unresolved. WTO Director-General Pascal Lamy announced the suspension of talks without setting a timetable for resumption.
At the G6 meetings, Brazil and India represented the developing nations of the Group of 20, which advocates that rich nations should open their markets, lower import tariffs and reduce agricultural subsidies. Japan represented Taiwan, South Korea and the other nations of the Group of Ten (G10), which advocates retaining tariffs on certain agricultural products, and opposes establishing upper limits on import taxes. Australia represented the Cairns Group, an organization of agricultural exporting countries, which also advocates that countries lower import tariffs and open their markets. The US has been attacked for being unwilling to reduce more agricultural export subsidies, while the EU has been criticized for excessive agricultural subsidies and not doing enough to open markets.
It appears that all the major groups are at loggerheads. Developed nations are unwilling to give what developing nations seek, and the inability to reach a consensus has stalled negotiations. But in reality, WTO members should not expect that all these disagreements can be resolved in one go. A more realistic course of action would be to address them in stages, and pursue gradual trade liberalization.
Taiwan's policy has always been to strive for industrial advancement while protecting agriculture, as the agricultural sector and industry and commerce have different capacities for coping with the challenges of free trade. The setbacks in the WTO negotiations are tied to Taiwan's and the G10 countries' ability to protect the interests of their agricultural industries, and should be a positive development in the government's effort to protect farmers' interests.
The economic law of comparative advantage says that trade liberalization has a positive effect on promoting countries' economic development as well as the efficient use of global resources. As Taiwan's economic development has always relied on foreign trade, and as WTO countries now encompass almost all the world's trade in goods and more than 90 percent of trade in services, the failure of the negotiations will certainly influence Taiwan's national interests.
Taiwan has much to gain from the WTO talks. If it fails to back the resumption of WTO discussions and lets other countries focus instead on signing free-trade agreements, it will find itself marginalized on the sidelines of world trade, because of the difficulty it has signing free trade agreements with major powers. Therefore, Taiwan must pull the WTO back to the negotiating table.
If Taiwan supports the resumption of WTO talks, its priorities should be to push for trade liberalization while making the agriculture industry more competitive so it can enjoy the benefits of exports. It should emphasize the security of the grain-producing sectors, environmental protection and long-term development.
Taiwan should emphasize the importance of these non-trade-related goals and strike a balance between the two. Entering the WTO has forced Taiwan to face global competition, but countries around the world must also face stiff competition from Taiwan. As long as Taiwan makes a steadfast effort to improve its competitiveness, it will break out of its current economic difficulties.
Cheng Fu-lin is an analyst at the Chung Hua Institute for Economic Research's Taiwan WTO Center.
Translated by Marc Langer
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