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IMF ministers eye trade progress, quarrel on votes

Written by: Staff

SINGAPORE, Sep 17 (Reuters) Finance ministers raised the prospect on Sunday of a breakthrough in stalled world trade talks but failed to bridge differences over plans to give emerging economies more say in how the International Monetary Fund is run.

British Chancellor of the Exchequer Gordon Brown said he was more optimistic after talks in Singapore about the chances of progress in the long-running trade talks, which were suspended in July because of disagreements over trade in farm goods.

''I've never seen a discussion in all the years I've been to IMF meetings so determined that we bring the trade talks to a conclusion,'' said Brown, who was speaking in his capacity as chairman of the IMF's main steering committee.

Brown said finance ministers on the panel were ''fired up'' to get a deal, not least because a rising tide of protectionism posed a threat to the global economy.

Brown said he believed Pascal Lamy, director-general of the World Trade Organisation, would now be able to make progress towards an agreement by the end of the year.

''I believe he will be in a position, with the enthusiasm but also the determination expressed today, to move negotiations forward,'' Brown said of Lamy, who briefed the ministers.

He said the determination expressed by new U.S. Treasury Secretary Henry Paulson also made him optimistic about breaking the Doha round deadlock.

But as he spoke, Indian Commerce Minister Kamal Nath poured cold water on the chances of a breakthrough, saying too many Indians scraped a living from the land for India to countenance opening up its market further to imports of farm goods.

''There is no question of India making concessions at all where agriculture is concerned because our issue is subsistence,'' Nath, a pivotal player in the Doha talks, told reporters.

India was also at the forefront in objecting to a blueprint to overhaul the governance of the 184-member IMF to better reflect the growing clout of emerging economies.

A QUESTION OF BALANCE The proposal, which Brown said would usher in the most significant change at the fund in a generation, is almost sure to be approved when votes from the IMF's 184 member nations are tallied on Monday.

But the blueprint has exposed deep fault lines at an agency struggling to redefine its role in a world where fewer countries are turning to it for emergency loans and big countries are more frequently ignoring its policy advice.

The risk for the IMF is that lingering unhappiness over the redistribution of ''chairs and shares'' could further erode its standing in the Third World, where critics already resent what they see as the fund's high-handed policy advice.

The overhaul aims to correct the under-representation of nations like China, which has fewer votes than Belgium or the Netherlands even though its economy, the world's fourth-largest, is twice the combined size of the two European countries.

The plan will immediately boost the quotas, or membership subscriptions, of China, South Korea, Mexico and Turkey, to be followed by a second stage of broader reforms.

IMF quotas largely determine not only how much a country may borrow from the fund but its share of votes in the institution.

India, Argentina, Brazil and Egypt, unhappy that their power in the world economy will not be reflected in their share of IMF votes, issued a statement calling the proposal disturbing.

''Unfortunately, the new quota formula that is foreshadowed in the proposed decision is pointing in the opposite direction,'' Argentine Economy Minister Felisa Miceli said. ''This is at odds with the objective of increasing the Fund's legitimacy.'' The Netherlands expressed reservations about the complex plan on the opposite grounds that it would see its voting power diluted. The formula needed to be improved and could not be prejudged, Dutch Finance Minister Gerrit Zalm said.

Brown acknowledged the dissent but said his ministerial panel unanimously believed the reforms would significantly help to realign nations' quotas with their ranking in the world economy.

''I believe that major shareholders in the IMF will approach this in a statesman-like way because we do wish to move the institution forward,'' he said.


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