The Doha round of trade talks is currently stalled but with trade up 10% this year and leaders praising the World Trade Organisation (WTO) for its success in containing protectionism, cautious optimism is emerging that the time may be ripe for a breakthrough.
WTO Director-General Pascal Lamy said the issue was discussed at the G20 summit in Toronto last week, where world leaders had a ''frank'' exchange for an hour and a half about the major obstacles to signing off on a new deal which some say would inject fresh stimulus to the recovering economy.
Lamy said 80% of the work has been done and that the US, EU and China have made ''painful concessions'' but that thorny issues such as industrial tariffs, fisheries subsidies and the services sector remain.
He said he hoped the progress made at the G20 summit would mean that ''political leaders are ready to engage in order to push through a deal''. However, he sounded a note of caution, noting there had been some unhelpful rhetoric on the issue since talks broke down in 2008.
''Right now we are stuck because the big players are trading words instead of concessions. They are talking instead of negotiating,'' Lamy told a European Business Summit session on trade.
Protectionist measures kept at bay during crisis
The G20 conclusions agreed in Toronto were notably thin on trade but did explicitly stress support for open markets and the WTO. This was something Lamy was keen to echo, attributing the pace of recovery to the relative restraint shown by major trading blocs during the deepest days of the crisis.
''2009 was a terrible year, with a decline in trade of 12%, but this year looks much better. Demand is picking up, supply is picking up and trade is picking up. The good news is that protectionism played no significant role in the drop we saw in 2009 – which is why the 2010 rebound has been so strong,'' he said.
There is now an understanding, Lamy said, that ''if you take protectionist actions, your neighbour will do the same''.
EU Trade Commissioner Karel De Gucht said the G20 had played a key role in keeping markets open, with major world economies responding well to ''peer pressure''.
''And the reason we didn't see much protectionism was the WTO. This should encourage us to press ahead with the stalled Doha round,'' he said.
The commissioner said talks in Toronto had made the EU more optimistic that progress on technical issues could be made in the months leading up to the G20 meeting in Seoul in November.
Stumbling blocks lie ahead
The sense of optimism expressed at the EBS was met with a degree of scepticism in some quarters given the number of fundamental issues that will have to be ironed out before a deal is struck.
The US says the world has changed significantly since the talks began in 2001 and is calling on China, India, Brazil and others to show ''responsibility commensurate with their growing power''.
While China prefers to view itself as a developing country and is leading a bloc of 77 poor countries known as the G77, the US refers to China as an ''advanced emerging economy''. Similarly, EU trade chief Karel De Gucht said China and Brazil are not in the same boat as poor African nations.
Washington believes it has made plenty of concessions in the talks to date and is looking for China to put more on the table. For its part, Beijing argues that it already made major concessions as part of its accession to the WTO 15 years ago and has made clear that further compromises are possible.
The EU is also keen to pressure China into adopting a more open public procurement policy. Brussels is stressing that it was ready to do a deal in 2008, putting the onus on those who walked away from the table to come up with bold new solutions.
Meanwhile, the ongoing diplomatic row over the value of China's currency is a source of daily friction between the US and China, casting doubt on how much goodwill there is at the highest level of government.
