Swiss warns about new forms of protectionism

Wasescha feels the failure of the Geneva talks heightens the risks of recession

The head of the Swiss negotiators at the World Trade Organization says it will be difficult to resume trade liberalisation talks that broke down this week in Geneva.

Luzius Wasescha told swissinfo that the failure of the nine-day marathon negotiations in Geneva within the Doha Round could spell protectionist dangers if countries rest on their laurels.

After the talks at the WTO, several ministers said they wanted dialogue to be resumed as soon as possible.

The WTO’s head, Pascal Lamy shared this view, saying there should be no going back on advances that had been made.

But Ambassador Wasescha, who led the Swiss delegation with Economics Minister Doris Leuthard, stresses that a resumption of negotiations would be difficult.

swissinfo: Is it realistic to hope for a continuation of the negotiations in the framework of the Doha Round?

Luzius Wasescha: Some countries have the impression that they are over for good, while others would like them to restart as soon as possible. The question is therefore an open one.

In a first phase, we must see what can be done internally in each country. Then we must examine what can be done on the technical front. That means what contacts should be encouraged so there is a chance of relaunching the negotiations. That’s without a doubt the agenda for [the rest of] this year.

swissinfo: But the more time passes, the more it will be difficult for a resumption of the talks and demands from all sides will be that much higher.

L.W.: That’s obvious.

swissinfo: To get out of this stalemate, the US is proposing the idea of limited agreements, although the WTO rules stipulate a consensus on all issues to conclude an accord. Is this a good idea?

L.W.: It is one of the options we must discuss in September. We are open to discussion even if the idea appears to us rather problematic because such an approach runs the risk of not being accepted by developing countries, whose big fear is still being excluded.

swissinfo: Doesn’t the Geneva meeting also show that countries and groups of countries are more divided than ever?

L.W.: Indeed. For example, within the European Union, some countries give the impression that they have given everything and received nothing in return, while there are others which think that it was right to bet on the final negotiations of the Doha Round and therefore make concessions in Geneva.

swissinfo: To explain the failure of the Geneva ministerial meeting, the current economic crisis was mentioned, as well as increased competition among the emerging countries and the food crisis. Are they valid arguments?

L.W.: They are aspects. But the key element was the lack of flexibility shown by both United States trade representative Susan Schwab and her Indian counterpart Kamal Nath. Another aspect is that many countries do not have solid support at home for these negotiations, for example from public opinion or from within parliaments. The US, India, Japan and the EU have to face these kinds of problems.

swissinfo: The ghost of protectionism always comes up after every failure of WTO negotiations. Is this legitimate?

L.W.: We even have new forms of protectionism and they come from developing countries. As they try to protect themselves from Chinese competition, these countries also hit back at European and US interests. Their import restrictions have a general application rather than a bilateral one. There is a fear therefore that this type of measure might develop in the future.

The failure in Geneva is really a very bad signal that shows the incapability to agree on issues that are relatively modest. And this could encourage protectionist circles to go on the offensive in a stronger fashion.

swissinfo: World trade therefore continues to be governed by rules that were fixed at the time of the Uruguay Round. Does that lead to growing problems?

L.W.: A series of its measures could become obsolete. But what is more dangerous is that current plans for a solution to the Doha Round risk collapsing because they are based on reference periods that are more and more distant from the present economic reality.

swissinfo: What impact will the collapse of the talks have on Switzerland?

L.W.: We still have in Switzerland a positive situation because essentially we export speciality products. But if our main customers begin to sneeze, the Swiss economy could catch a cold. The collapse of the negotiations heightens the risks of recession.

swissinfo: Are Swiss farmers now safe from new reforms?

L.W.: The internal reform process will continue. It is essential. The more we make progress, the more the agricultural bill (in the framework of future accords) will rise.

swissinfo: In the past, Switzerland has offered its services to facilitate the negotiations. Will it do this again?

L.W.: We will do that at the level of the permanent representatives at the WTO. In addition, Economics Minister Leuthard has already indicated her willingness to organise a ministerial meeting at the World Economic Forum’s annual meeting in Davos, as Switzerland has done in past years.

swissinfo-interview: Fredéric Burnand in Geneva

Doha Round

Launched in the Qatari capital in November 2001, the WTO’s latest liberalisation talks known as the Doha Round have struggled to overcome many countries’ fears of exposing sensitive agricultural and manufacturing industries to more competition.

The negotiations earlier broke down in July 2006, well past the original deadline of January 2005.

The key elements for an overall deal have been relatively clear. The United States would cut its farm subsidies, blamed by poor countries for squeezing their farmers out of the market.

The European Union would open its protected market for food by cutting agricultural tariffs, giving developing country food exporters such as Brazil new opportunities.

And developing countries would cut their industrial tariffs, opening their markets to manufacturers in rich countries. Other elements would include a boost to trade among developing nations and liberalization of services such as banking and telecoms.

But developing countries want waivers to tariff cuts to protect their subsistence farmers and fledgling industries, while rich nations say they cannot sell the sacrifices being asked of them unless they can point to gains in market access elsewhere.

WTO building

On August 1, it was announced that the WTO building in Geneva would be renovated and extended.

Under an agreement signed by Swiss Foreign Minister Micheline Calmy-Rey and the Director-General of the WTO, Pascal Lamy, Switzerland will contribute SFr70 million ($66.8 million) to the project and the WTO, SFr60 million.

The headquarters, called the Centre William Rappard, will undergo three stages of building work, starting this year and ending in 2012.