The Future of World Trade

(page 2 of 2)

Japan wants to supply the entire world with its cars, but closes its borders to rice imports. And the supposedly progressive European Union imposes a duty of €176 ($273) on every ton of bananas coming into the EU — unless they come from countries colonized by Europe in the past. The result is a de-facto penalty for those countries that were never victims of colonization.

In fact, it was EU representatives who fuelled one of the most grotesque disputes at the recent round of WTO talks. The issue was cold cuts. Italian makers of the original Parma ham are upset by the fact that meat factories abroad use their regional designation for ordinary ham from the United States. Some Italian negotiators called for an immediate ban on such brand name piracy.

Some Europeans were strongly in favor of the Italian effort. French red wine lobbyists were quickly won over. The Hungarians also spontaneously joined the anti-WTO movement. Other delegates attempted, in vain, to point out to their counterparts that the Italian shoe industry would suffer the most if the negotiations failed.

Death of a Grand Idea

In the end, even the Germans failed to muster the necessary enthusiasm for further liberalization. Minister of Agriculture Horst Seehofer, a member of the conservative Christian Social Union (CSU), is in the middle of Bavarian state parliamentary elections and wants the support of Bavarian farmers, who tend to oppose the lowering of trade barriers.

The result is the death of a grand idea. After the terrorist attacks of Sept. 11, 2001, many gravitated to the idea of opening up the markets of industrialized nations to underdeveloped countries as a way of mollifying the anger of their dissatisfied citizenries. Now, the true price of the failure will only begin to become clear in the fall. China and the United States, in particular, as well as some representatives of the EU, have quietly expected the global trade talks to fail for some time — and they are now dusting off plan B. In the coming months, experts expect to see a sharp increase in the number of bilateral negotiations aimed at setting up mini trade alliances.

Officially the EU looks askance at such a strategy. And last week the German government insisted, once again, that bilateral agreements are not an alternative. But the reality is that concrete preparations are already underway.

By this fall, the EU could very well have signed a free trade agreement with South Korea and another agreement with the Gulf states. Many of the details have already been agreed upon. For instance, the only unresolved issue with South Korea is whether the import duty for cars should be eliminated immediately or reduced gradually.

The Europeans would have preferred a negotiated solution under the auspices of the WTO conference. But now they see themselves forces to accept an abbreviated version.

Because the Americans and, in particular, the Chinese are developing regional alliances, some fear that the EU could be excluded from increasingly important markets in Indonesia, Thailand and Malaysia. Japan has already entered into a partnership agreement with the Association of Southeast Asian Nations (ASEAN).

No Cathedral, No Monastery

Of course, the bilateral agreements are of little use to the world economy. On the contrary, trade privileges for some are detrimental to others. And bureaucracy becomes even more difficult to negotiate. Managers of companies dependent on exports have long been irritated by the myriad regulations, standards and forms they are required to observe.

The countries most in need of economic recovery are also negatively affected. The weaker a country is economically, the less leverage it has in bilateral negotiations. But even the industrialized nations face hard times ahead. The collapse of the WTO talks means an end to the trade-war truce agreed to by countries around the world. Experts anticipate that the current conflicts between aviation giants Boeing and Airbus could now lead to a trade war between the United States and Europe.

"We wanted to build a cathedral," said one disappointed German delegate as he was leaving Geneva last week. "Instead, we didn't even manage to erect a monastery."

Translated from the German by Christopher Sultan

Provided by Spiegel Online—Read the latest from Europe's largest newsmagazine