LexisNexis(TM) Academic - DocumentCopyright 2005 The Financial Times Limited
Financial Times (London, England)

January 18, 2005 Tuesday
London Edition 2

SECTION: INTERNATIONAL ECONOMY; Pg. 10

LENGTH: 470 words

HEADLINE: Bilateral trade agreements 'betraying' WTO ideals

BYLINE: By ALAN BEATTIE

DATELINE: LONDON

BODY:


The World Trade Organ-isation is being undermined by the intransigence and short-sightedness of member countries, according to the report of a high-level commission released yesterday.

The commission of eight experts, led by Peter Sutherland, former head of the WTO, said the proliferation of bilateral trade agreements outside the WTO process was betraying the multilateral ideals that underlay the WTO and its forerunner, the General Agreement on Tariffs and Trade.

"The reality today is that the WTO presides over a world trading system that is far from the vision of the architects of Gatt," the report said.

The report, which proposed a series of tangible but limited reforms, was commissioned by Supachai Panitchpakdi, the WTO's director-general, amid fears that the current Doha round of trade talks was revealing strains in the system.

It said that the "spaghetti bowl" of bilateral and regional trade deals was undermining the principle of treating all trading partners equally.

The report argued for outflanking bilateral agreements with a far-reaching multilateral deal, urging rich countries to set a date for the complete elimination of goods tariffs. It also complained that the WTO's judicial process for settling disputes, though generally successful, was too often ignored, particularly by the US and European Union.

Richard Mills, spokesman for the US trade representative, said the report "raises the right questions for reflection". But he rejected criticism of the US's compliance with WTO rulings, noting its agreement to abide by decisions against US steel tariffs and the foreign sales corporation tax.

The report called for more political involvement, with ministerial meetings held annually rather than every two years, and for poor countries to be given the right to aid and technical assistance to implement new agreements.

It also called for the WTO director-general to play a stronger leadership role, noting that the position had evolved into one of "international spokesperson and marketing executive" rather than the leader of world trade talks.

The WTO has always been regarded as a system driven by its member countries rather than by the director-general and the Geneva-based secretariat.

The report said: "A member-driven organisation is a valuable concept . direction consistent with its overall objectives. In recent years, the impression has often been given of a vehicle with a proliferation of back-seat drivers, each seeking a different destination, with no map and no intention of asking the way."

But the report stopped short of proposing radical changes to the decision-making processes in WTO negotiations, once described as "medieval" by Pascal Lamy, the former EU trade commissioner and candidate to replace Mr Supachai as head of the WTO. See Comment & Analysis www.ft.com/globaleconomy

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