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Trade policies

The negotiations within the World Trade Organization on the Doha Development Agenda continued to be stalled in 2009, and the hoped-for conclusion of the talks during 2010 appears unlikely. Governments’ shared worries about the economic situation diverted their attention from the issues of negotiation, despite the positive contribution that a good agreement could make to relaunching the world economy. The persistent clash of positions between the advanced countries and the emerging or developing countries prevents the talks from reaching conclusion. In the agricultural sector there are some areas of partial agreement, but on domestic subsidies many questions remain pending. For non-agricultural goods, the gap between advanced and emerging countries in tariff levels makes it hard to reach agreement on the manner and size of the cuts to be made. Headway has also been slow for the talks on services, which are conditioned by developments in the other sectors. Despite the criticisms leveled against the WTO for its inability to break the deadlock and close the Round, the WTO played an important role in 2009 in limiting the protectionist pressures generated by the crisis. There does not appear to have been generalized recourse by governments to such explicitly protectionist devices as anti-dumping measures, the activation of safeguard clauses or the introduction of new customs duties or non-tariff barriers. And even the countries that did take restrictive measures did not generally infringe the agreements in force, because they exploited the leeway between the levels of customs duties established by the commitments within the WTO and the lower levels actually applied. In reality, some countries, notably developed countries, did use indirect protective devices, for instance public subsidies for domestic producers and measures regulating their domestic markets, with potentially discriminatory effects on imports that are difficult to identify and counter under the WTO procedures. In the first few months of 2010, with the resurgence of trade, the number of defensive measures employed began to wane. However, there should be no relaxation of vigilance concerning a possible revival of protectionism, because many firms are still in difficulty and unemployment is still very high in many countries. The persistent difficulties arising in the multilateral negotiations are a factor prompting the conclusion of regional or bilateral preferential trade agreements, which, however, often tend to exclude the more protected sectors such as agriculture or services. At the beginning of 2010 the number of such agreements in force notified to the WTO had reached 257, largely involving free-trade areas. This tendency appears to have been accentuated by the slowdown in international trade, which compelled many countries to seek new markets for their firms more quickly than is permitted by the normal timeframe of multilateral negotiations. Other factors contributing to the increase in preferential agreements, particularly on a bilateral basis, include competition among the main exporters to expand their shares on international markets, fear on the part of countries excluded from existing agreements that they might pay the price in terms of less extensive participation in trade, and the goal of fostering the development of international production and supply chains. These pressures too were possibly heightened by the decline in trade at global level. Although a notification and transparency mechanism was put in place within the WTO some years ago in order to seek to reconcile the bilateral and regional accords with the multilateral agreements, there is still good reason to fear that the shift of world trade toward a system of reciprocal and superimposed preferences will lead to greater complexity of procedures and a distortion of trade, mainly to the detriment of the smallest and most marginal countries. The Asia-Pacific region was again the most dynamic in establishing preferential agreements, but these were concluded everywhere. In 2009 China completed negotiations with the six founder-countries of ASEAN for the elimination of import tariffs on 90 per cent of industrial products. The potential of this free-trade area is enormous, even if many non-tariff barriers remain. In 2009 sub-Saharan Africa, which hitherto had given priority to a complex network of superimposed sub-regional pacts, also demonstrated growing interest in bilateral accords. The European Union carried on with the negotiations already under way. Especially important are the economic partnership talks with the African, Caribbean and Pacific (ACP) group of states, although some disagreements are delaying their conclusion. By contrast, the talks for an agreement with South Korea seem to be headed for a positive conclusion, despite serious difficulties arising during the negotiations. Finally, the EU was also active toward the Mediterranean region, with the envisaged signing of association agreements with several countries.