'Doha talks will determine next decade's economy'

Bangalore, Jan 17: Confederation of British Industry Director General Richard Lombart today observed that the tone of the global economy in the next decade will be determined by the outcome of Doha Development Round of multilateral tradce negotiations.

Participating in the session on 21st Century:Global Outlook at the three day CII Partnership Summit here, he said the fate of talks, considered to be an immediate challenge, would be determined sometime between now and around the end of April.

The rewards of the success would be very clear. A successful outcome would help to underwrite economic conditions that had driven world trade and global growth so far inthe 21st century he added.

The conventional wisdom- correctly-assumes that it was the developing countries that had the most to gain from trade liberalisation and the developed economies would benefit from the impact of more competitively priced imports as well as access to new markets around the world, he observed.

He also noted that the cost of failures were harder to pin but would be substantial. He listed three failures saying that there would not be another chance again, at least for a generation. ''If after six years of effort, Doha comes to nothing, policy makers would shrug their shoulders and concentrate on bilateral deals whereever they were to be found.

He said an European Union and India Trade agreement was an important step forward provided it was sufficiently ambitious. Both these organisations also agree that there was no substitute for Doha and there would be real risks in a shift to a whole flurry of bilateral deals. The second failure would be the weakening of credibility of the World Trade Organisation and with it the authority of the rule based multilateral trading system.

Thirdly the critically important global negotiations would also be put at risk, he feared.

Mr Richard felt India's amazing progress in recent years had given it a very real interest in a successful outcome to these talks. Its share in the world trade had more than doubled since the 1990s, and this growth was accelerating he added pointing out that the country's share in global trade in goods rose by a quarter between 2005 and 2006.

He said investment flows were increasing very fast-both inward and outward. With its rapidly increasing trade intensity and its emerging position as a global economic power, India would be a key to what was going to happen in the next few months, he noted.

He said a few months ago, Doha seemed dead in the water. But now there were signs of life. There was a complicated game of bluff and counter bluff getting under way. But there was also a sense of urgency as the talks got closer to the wire. ''So far, India's approach to the talks has been seen by the rest of the world as somewhat hesitant. Now it's time to be bold'' he exhorted.

He appealed to the Indian Government and business community to support the case for progress. India needed to make more to make the agreement possible. It should commit to lowering its import duties across all industrial sectors and more commitments in services. In return, India should get much improved access for its exporters through the developed and emerging economies, he added.

Indo-British Partnership Network Chairman Karan Billimoria, in his talk, said India, with its diverse culture and complex nature, faced enormous challenges. India was going to be a force to reckon with if the abundantly available human resources were made use of properly, he felt.

Past President Sanjiv Goenka, who chaired the session, observed that the new process of globalisation was derived from the advance in technology, increased flow of capital in search of higher returns, and constant innovation in the way corporates were conducting business. One of the most significant factors that had impacted the world economically since early 1990s was the emergence of countries with large populations on the global trading platform, he pointed out.

He said these countries including India, China, Russia and Brazil had brought new dynamics into the trading and production environment. As suppliers, their large workforces had been able to reduce costs of production and lower the income-thresholds for consumption. As consumers, these large populations had provided the market for consumption of products, he explained. The world Bank had forecast a growth of over three per cent for the next two years, half of which would probably originate in India and China, he felt.

He said global risks could also affect future growth arising from sudden shocks such as high oil prices or pandemics such as Avian flu. In the long term climate change and environmenal impact would also needed to be addressed as well as declining access to fresh water resources. Developing countries were particularly vulnerable to these risks calling for global solutions to respond to them, he added.

UNI