In late September, economic weakness around the world caused economists at the World Trade Organisation in Geneva to scale back their forecasts. In 2012, trade would no longer expand at a rate of 3.7 per cent, as previously predicted, but 2.5 per cent instead. For 2013, the prognosis was also reduced – to an expansion of 4.5 per cent from 5.6 per cent.
It was the latest sign that persistent trouble in the global economy – from slow growth in developing countries to slowdowns in some emerging economies – was limiting the strength in the recovery of global trade after the dip it took during the 2008/09 financial crisis.
For Pascal Lamy, director-general of the WTO, it was the latest sign that additional action was required on a policy level to rev up the engine of global trade. “More needs to be done,” Mr Lamy said. “We need a renewed commitment to revitalise the multilateral trading system which can restore economic certainty at a time when it is badly needed.”
Mr Lamy’s term at the WTO expires at the end of August, and nine candidates are lining up for his replacement – including three each from Asia and Latin America; two from Africa, and one from New Zealand.
But, regardless of Mr Lamy’s replacement, the new WTO head will be facing the same, daunting challenge of reinvigorating efforts to craft a multilateral trade deal from the ashes of the decade-old Doha round, which ran out of steam long ago.
“I think the big question is whether the major powers – China, the US, the European Union, Brazil, India – really want to put some energy into harvesting what can be harvested from the Doha round,” says Gary Hufbauer, a former US Treasury department official who is now a senior fellow at the Peterson Institute for International Economics. “The US has been conspicuously silent on this – but so have the others,” adds Mr Hufbauer.