Leaders Seek to Finish Trade Deal by 2010
The Source: The Associated Press - 09/07/2009
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Leaders of rich and developing nations want to finish a long-delayed world trade deal in 2010 and head off trade wars that
could hit world economies as they struggle to emerge from the recession, according to a draft of a joint declaration obtained by the Associated Press.
Completing the so-called Doha round of talks has risen up the agenda due to fears that the economic crisis will lead to an upsurge in protectionist policies like the ones that helped cause the Great Depression of the 1930s.
"We reaffirm our commitment to maintain and promote open markets and reject all protectionist measures in trade and investment," according to a draft of the joint statement signed by 17 nations, including the Group of Eight industrialized countries and five key emerging market economies.
President Obama on Wednesday greeted European Commission President Jose Manuel Barroso, left, as world leaders looked on at the G-8 Summit in L'Aquila, Italy. The global trade talks, which were initially to conclude in 2004, have been beset by difficulties and at a standstill for months. A deal would cut goods tariffs and subsidies around the world.
The leaders asked trade ministers to meet prior to the Group of 20 meeting of developing and rich countries in September in Pittsburgh, according to the draft. The final document is to be released later in the day.
Raising barriers to imports was an important factor that contributed to the world economic crisis of the 1930s. Governments, including the United States with its Smoot-Hawley Tariff Act of 1930, sought to protect domestic businesses and farmers by blocking imports. Trade withered as a result.
The so-called G-5 developing countries issued a separate statement on Wednesday expressing the importance of concluding the talks.
"We are concerned with the present state of the world economy, which submits the developing countries to an inordinate burden resulting from a crisis they did not initiate," the G-5 said. Concluding the Doha round would aid "the restoration of confidence in the world markets and inhibit emerging protectionist trends," the G-5 said.The Group of Eight leading nations of Canada, Britain, France, Germany, Italy, Japan, Russia and the United States on Thursday opened their annual summit to Brazil, China, India, Mexico and South Africa, as well as Egypt. Also signing off on the trade goals are the leaders of Australia, Indonesia and South Korea.The so-called Group of Five, making their fifth straight appearance at the annual summit, albeit as guests, will discuss climate change, development aid, global economic growth and international trade with their Group of Eight counterparts -- all topics touched on by G-8 leaders meeting on their own Wednesday.Among the G-8 leaders, German Chancellor Angela Merkel and French President Nicolas Sarkozy have been particularly vocal that the G-8 needs to be expanded to better represent the world's population and economies. Mr. Sarkozy told reporters on Wednesday that a possible formula would be to have the G-8 meet within the structure of a G-20, major economies taking the lead on ways out of the economic crisis, or a G-14, combining the industrialized nations and emerging economies forums.In their statement, the G-5 called for greater inclusion in international decision-making, noting its members' positive contributions to tackling global challenges
.Nations Agree to Refrain From Currency Devaluation
Meanwhile Thursday, G-8 and G-5 leaders agreed not to use currency devaluation to gain a competitive advantage over each other by making their exported goods cheaper, according to draft summit conclusions.
"We will refrain from competitive devaluations of our currencies and promote a stable and well functioning international monetary system," the leaders said in a draft joint declaration entitled "promoting the global agenda."
One of the reasons often cited as to why the 1930s depression lasted so long was that countries acted independently to protect their own interest by devaluing their currencies.Christine Lagarde, France's finance minister, for one was particularly vocal earlier this year about how Britain was gaining an advantage by doing nothing to stem the sharp fall in the pound against the euro.Though the dollar was not mentioned in the draft declaration, its future as the world's reserve currency is likely to remain a topic for debate over the coming months and years, as China, Russia and India have expressed their desire to see long-term changes in the international monetary system. But they have been careful to not push their desire for change too far -- in case the dollar slumps and the value of their large dollar-denominated investments plummet.U.K. Prime Minister Gordon Brown said there had been no "real" discussion about the U.S. dollar's role."There was not a serious discussion about this and it was not on the agenda for discussion," Mr. Brown told reporters on the sidelines of the summit.China's state councilor Dai Bingguo Thursday told a meeting of G-8 and G-5 leaders that the international currency regime must become more diversified, Ma Zhaoxu, a spokesman for China's Ministry of Foreign Affairs said.Having a discussion of reserve currencies is "something the world has got to do," Mr. Brown said. But he added: "The idea that anything is going to happen in the next few weeks and months is not realistic.
"Ban Criticizes Leaders Over Climate Efforts.
Also Thursday, U.N. Secretary-General Ban Ki-moon sharply rebuked G-8 leaders for failing to make more commitments to reducing climate change in the near term, saying they must do so if the heavily polluting developing world is to follow suit.Mr. Ban also said the industrialized nations must come forward with financing for poorer countries to change their carbon-heavy growth patterns and adapt to the effects of global warming."The policies that they have stated so far are not enough, not sufficient enough," Ban said on the sidelines of the summit. "This is the science. We must work according to the science. This is politically and morally imperative and a historic responsibility for the leaders for the future of humanity, even for the future of planet Earth."Developing nations are upset at the G-8 for refusing to make more ambitious commitments, meaning that an agreement expected to emerge from a wider meeting of developing and developed nations on Thursday, in their view, will be nothing more than a political pledge to work harder toward crafting a new climate change treaty later this year.On the first day of their summit Wednesday, the G-8 recognized for the first time that average global temperatures shouldn't exceed two degrees Celsius from preindustrial times. But the leaders made no commitments to do anything in the short term to reach that goal and they made no firm financial or technological commitments for poor countries to cope with climate change.
President Barack Obama said that major developed and emerging economies have made "important strides forward" in addressing climate change, but will need to "go beyond what's expected" to seal a deal by the end of the year.
"We've made a good start but I'm the first one to acknowledge that progress on this issue will not be easy," Mr. Obama said."It is no small task for 17 leaders to bridge their differences on an issue like climate change," he said.
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