Rhein on Energy and Climate

During the past 10 years the international community has witnessed a bizarre spectacle of two parallel negotiating processes.

The negotiations on the Doha Development Round that have started in 2001 as a reaction to the terror attack on the World Trade Centre in New York.

These negotiations, involving all the 150-odd WTO member countries, aim at updating the rules concerning trade, services, intellectual property and improving access to agricultural and non-agricultural products.

Since 2008 they have stalled because of wide divergences of interest and the global economic crisis. Despite repeated appeals by major countries, including the G 20, and international business groups to conclude the negotiations before the end of 2011 a successful outcome is not yet in sight.

The negotiation of dozens of free trade agreements across the world, especially in Asia.

Most of these concern regional groupings like, which find it in their interest to have free access for their manufactured products, services and investments, in other parts of the world.

During the last 50 years since the EU has launched the process with the European Economic Community in 1958 we have witnessed an unbelievable mushrooming of such agreements. As a consequence, most countries on earth have become parties of one or several free trade agreements.

Starting with the ACP Association agreements in the 1960s the EU has been a driving force behind bilateral free agreements. Deep and comprehensive free trade (DCFT) constitutes the core of its neighbourhood policy with the Eastern and southern neighbours.

In recent years the EU has expanded its “free trade ambitions” to East Asia (South Korea, Singapore, Malaysia, Indonesia, Vietnam and Thailand) and the Americas (Canada, Mexico, Columbia, Mercosur). It seems caught by a dynamic of bureaucratic, trade and geopolitic interests to pursue such an approach without having had a thorough policy discussion.

The proliferation of bilateral free trade agreements is bound to diminish the interest of members of free-trade agreements in a multilateral deal at Geneva. It has no doubt contributed to putting the Doha Round on a back-burner. That is dangerous for the future of the world trade system. The MFN clause, under which each country grants all trade partners identical access, should remain its corner stone. The world will not be better off with dozens of competing trade regimes.

The EU has been, jointly with Japan and the USA, the architect of the multilateral trade system. It should therefore give priority to the successful conclusion of the Doha round in 2011 over bilateral free trade negotiations with ASEAN or Latin American countries. Rather it should use the pending free trade negotiations or projects as a leverage to obtain appropriate compromises in Geneva. If these were to fail in 2011 it is still time to push ahead with additional bilateral agreements.

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