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Ensuring equity in global trade

The World Trade Organisation (WTO) report on trends in trade in 2005 and prospects in 2006 highlights the weak spots in terms of economic growth. According to WTO economists, growth in global trade has, in the past decade, been consistently double the growth in the global economy. This is apparently reflective of the fact that in an increasingly open tariff regime, goods tend to be produced and traded on the basis of comparative advantage. Global merchandise trade growth in 2005, at six per cent, was substantially lower than the growth of nine per cent in 2004. The WTO's prognosis for 2006 is a slightly higher trade growth at seven per cent in 2006, but this is subject to many uncertainties that could undermine the upside potential. The report shows that the weakest spot in global economic — and hence trade — growth currently is Europe, where developed nations such as France, Italy, Germany, and the U.K. recorded economic growth ranging from near zero per cent to less than two per cent and where high unemployment and low levels of growth in consumption marked the domestic scenario. In contrast, economic growth was the highest in China and India, followed by many other developing countries. Even within the 25-member European Union, the 10 new members from Eastern Europe fared better than others. Lower economic growth contributed to a deceleration in the U.S.' merchandise imports. Japan just started showing signs of recovery after a decade of stagnation. Merchandise exports globally were dominated by oil, with producing countries in parts of Africa, West Asia, South America, and the Commonwealth of Independent States (CIS) experiencing a boom in exports, while the trade deficit widened in oil importing countries, including the U.S. Fuel, iron and steel, and chemicals recorded price gains in global trade, while farm products and manufactured goods faced a weakening or stagnation on the price front. Trade in commercial services was expanding but figures for these in real terms are said to be unavailable globally.

Referring to the report, WTO Director-General Pascal Lamy said that "persistent imbalances, driven largely by macroeconomic factors, continue to be a cause of concern in some major economies" and that in such a climate, members of the organisation must "strengthen the global trading system" by arriving at an "an equitable, relevant and ambitious agreement" under the Doha Round. While there may be many perspectives and prescriptions in respect of individual sectors of production as also services, the world needs to recognise that the "shifting economic circumstances, major advances in technology and emergence of new players" that indicate "the cusp of big changes", to which Mr. Lamy has referred, call for responses that would take note of the interests and concerns of diverse sections. Equity at the level of the member-nations of the WTO without reference to the impact on different players within economies — such as wage workers, farmers, and small enterprises — may prove elusive.

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