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Stop posturing, start negotiating: WTO chief

By Batuk Gathani

BRUSSELS, JULY 30. At a meeting today in Geneva, Mr. Mike Moore, Director-General of WTO, urged officials from 142 member- countries to ``stop posturing and start negotiating'' if they want to agree on a fresh agenda for global trade liberalisation at a meeting of the

WTO Ministers which starts on November 8 in Doha. The debate is between the rich countries - mainly the U.S., the European Union and other OECD members who want ``fair treatment'' for their companies under laws that govern investment and competition.

The poorer countries want increased access to rich markets for their agricultural produce, manufactured goods and stricter monitoring of anti-dumping regime which is frequently used by rich countries to discriminate against cheaply produced goods in developing countries.

India is overtly hostile to a new WTO round on the premise that India has not benefited from previous WTO agreements to cut agricultural subsidies in richer countries and their inability to remove tariffs on India's crucial textile exports.

With a global economic slump on the horizon, the richer countries are displaying a newly-found urgency in trying to secure firm markets for their products and services. In a show of pragmatism the European Union and the U.S. have even reached a broad agreement on the agenda for WTO trade talks.

These days companies on both sides of the Atlantic, almost monotonously report falling profits, more staff lay-offs and less investment in capital goods and expansion all this coupled with falling productivity levels, have raised the fear about an ensuing global economic slump. Such a scenario has also depressed investors and share prices. Analysts now call this a classic case of ``synchronised global downturn'' as the U.S. is seen experiencing its longest industrial slump in two decades, with the rest of the world, particularly the European Union, sliding with it. A prominent U.S. merchant bank - Morgan Stanley - declared last week that the world economy was officially in recession.

The latest forecasts of economic growth in the eurozone countries would indicate that yearly the economic growth rate may be below one and a half per cent. Britain could sink below two per cent, and all this is a far cry from the healthy economic growth of four to five per cent in the U.S. and Britain up to late 1990s. Today, consumers' demand for mobile phones, electronic goods, automobiles and even consumer goods has drastically slumped and an analysts notes that ``one by one the sectors and businesses that were pulling the world economy along have fallen away.''

It is argued that the fallout from over investment in technology and telecommunications in the western world has had a dire impact on economies round the world.

The U.S. - the world's largest economy - is experiencing deep crises and is ``in recession''. It is closely followed by Japan, the second largest economy. Germany, the third largest economy and the European Union's ``locomotive economy'' could be in recession by the end of the year.

Now it remains to be seen if the European Central Bank this Thursday reduces benchmark interest rates, as the U.S. and European industry calls for weaker dollar, amid the realisation that the yesterday's mighty U.S. dollar is suspected of losing its legendary clout and strength against the euro.

The markets are not surprised by the dollar's recent slide against the euro. The dollar reached a high in July and has since fallen 4.6. per cent against the euro. The European Central Bank can boost dollar's slide against the euro by lowering benchmark interest rates from 3.75 per cent. Such a move would further weaken the dollar.

The current debate in European financial capitals is about the slow down in the U.S. economy that began in the middle of this year. This has taken the annual growth rate of the U.S. economy down from 5 per cent last year to about 2.5 per cent - or 50 per cent down in the second half of this year. This is still a little higher than the current economic growth rate in the European Union countries.

The spill-over effect of the U.S. economic slow-down, on the euro-zone economies could be both dramatic and cataclysmic.

Hence, investors on both sides of the Atlantic are understandably nervous about volatile stock markets.

Since the beginning of December the dollar has dropped nearly 9 per cent in value against the euro. A recent survey of euro-zone confidence data reveals that euro-zone economies past their peak performance in the middle of this year.

European Union governments and business leaders are again bracing themselves for a fresh turbulence on european investment and stock markets. The decline of the dollar coupled with a fall in stock prices on the U.S. market could be cataclysmic and trigger a european crises.

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