Turmoil in the world economy could spell trouble in the next round of world trade talks, says a prominent agricultural economist.
“I don’t think it will be a simple incremental extension of what happened at the last WTO talks,” said Clay Gilson of the University of Manitoba.
Eighteen months ago, it looked like the free trade freight train would simply keep roaring down the tracks when talks resumed in late 1999, he said.
But the collapse of the southeast Asian economy, turmoil in Russia and the meltdown in commodity prices and stock markets around the world could derail that momentum.
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“It’s quite clear there’s a backlash to the global market-driven type of economy,” said Gilson, particularly in the hardest-hit countries like Indonesia and Russia.
Some governments and interest groups will want to pull back from trade liberalization and adopt more protectionist policies. But at the same time, others will argue the solution to recent problems is even freer trade.
“I see, to put it mildly, very interesting discussions unfolding,” said Gilson.
National Farmers Union president Nettie Wiebe, a persistent critic of the trend toward liberalized trade and export promotion, agrees, saying even south of the border, protectionist sentiment seems to be on the rise.
“That tells you that the whole agenda of freer trade in agricultural goods is under pressure from all kinds of sources now, and some surprising sources,” she said. “Three or four years ago you weren’t hearing those noises.”
However, Canada’s top agri-food trade negotiator doesn’t believe the recent economic crises will halt the trend toward more liberalized trade.
By the time discussions get to the serious stage, today’s economic woes will be a distant memory, said Mike Gifford, acting assistant deputy minister of agriculture and the man at the helm of Canada’s agriculture negotiating team during the last round of world trade talks.
It will be 2002 or 2003 at the earliest before the talks conclude, followed by another year or so for domestic legislation to be passed and phase-in periods of five or 10 years for some of the new regulations.
That means it could be 2010 or 2015 before whatever is negotiated takes full effect.
“In that context, worrying about this year’s or next year’s problems is very, very short term,” said Gifford. “With trade liberalization and the need to get rid of export subsidies, improve market access and make it more secure, you’re in it for the long haul.”
He acknowledged that when times are tough, there is pressure on governments to intervene in the market to protect domestic interests.
But he expressed confidence the hardest-hit Asian countries like Indonesia, South Korea and Malaysia will regain their economic vitality and again become strong markets for agri-food exporters.
Peter Phillips, an agricultural economist at the University of Saskatchewan, said he thinks the recent economic woes may provide an impetus to free up markets even more.
“A traditional response to this kind of volatility in markets is to find ways of allowing markets to adjust more quickly to changed circumstances,” he said. “That in the past has tended to support efforts to pursue negotiations like the WTO.”
Even if some of those Asian countries want to become more protectionist, he said, they are so dependent on international organizations like the International Monetary Fund and the World Bank that any such “backsliding” is unlikely.
Some are hesitant
Wiebe of the NFU said trade negotiators, corporate leaders, agricultural economists and politicians may still think freer trade is the answer, but for many grassroots groups the experience of the last year says otherwise.
“The kind of anxieties that were expressed in … (international trade) negotiations are coming true, are being realized with a vengeance.”
However, she said it’s hard to predict the effect on the next WTO round. It may result in a greater push for a complete dismantling of remaining trade barriers and domestic institutions and a totally unfettered marketplace. Or it may lead to a more “thoughtful analysis” that looks at the negative impact on the environment, various population groups and the social fabric.
“Then you might get negotiations that move away from that zealous faith in the marketplace,” she said.
