BUSINESS

Trade issue unresolved

By P Vaidyanathan Iyer in Dubai
September 25, 2003 09:33 IST

The two-day annual meetings of the World Bank and the International Monetary Fund have paid mere lip service to the issue of greater voice for developing countries and left unaddressed setting a timeframe for the US and the European Union to cut their massive farm subsidies.

To a question if there was a possibility of an increase in membership quotas and voting rights at the multilateral institutions, IMF Managing Director Horst Kohler said he hoped that advanced countries have heard developing ones.

"I do think a consensus is possible for all of us, including an increase in basic voting rights for developing countries," he said addressing the concluding press conference of the Fund-Bank meetings.

Indian government sources, however, said any change in the quota allocation and larger representation of developing countries were unlikely in the next two years. While several formulas were discussed during the meetings, no consensus emerged, they said.

Though the International Monetary and Financial Committee had directed the Fund-Bank heads to prepare a report, on the stakes involved for all countries, to be circulated among all trade and finance ministers, no time-bound commitments were set for the US and the European Union to cut their farm subsidies.

The move would have ensured that World Trade Organisation members made quick process in the Doha round of talks.

Kohler said, "We need to just put together again the numbers and the arguments why it is so important that this multilateral trade round is concluded successfully. The main argument is that trade is the most powerful vehicle for growth, and we need growth in particular for developing countries but also for the rest of the world."

He further said World Bank President James Wolfensohn's argument that there was a need to see a positive outcome of these trade negotiations was significant, also in the context of broader issues of development and peace on this world, that if there is no positive outcome, we will not get the strong growth numbers in poor countries and this will mean we will not achieve the millennium development goals.

Swiss Finance Minister K Villiger, who chaired the annual meetings, said the governors of all countries were disappointed with the slow progress in reaching a conclusion of the Doha round.

"A positive signal from Cancun could have played an important role in boosting confidence and raising global growth," he said.

Villiger also pointed out that the meetings concluded with the note that the industrial countries should do more to increase Official Development Assistance to finance growth, development and poverty reduction.

It was also stressed that the voice and participation of the developing and transition countries in IMF and World Bank's decision making should increase.

P Vaidyanathan Iyer in Dubai

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