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Multilateral Trading System Marks 60 Years

Sixty years ago, the multilateral trading system was created out of the ashes of World War II. In 1947, 23 countries met in Geneva and founded a multilateral system based on rules and on the principles of non-discrimination. These governments were convinced the world needed a system that could tame the protectionist tendencies and trade restrictions they believed had contributed to the two big wars of the 20th Century. As the multilateral trading system marks its 60th anniversary, trade experts are taking stock of its achievements, its failures and its future direction. Lisa Schlein reports for VOA from Geneva.

The General Agreement on Tariffs and Trade, came into force January First, 1948. Its aim was to abolish quotas and reduce tariffs. The GATT, which was a temporary arrangement, led to the establishment of the World Trade Organization in 1995. The GATT began with 23 members. Its successor, the WTO, has 150 member countries - practically the whole world.

To mark the 60th anniversary of the multilateral trading system, WTO Director-General, Pascal Lamy reviewed some of the highlights of the past six decades for a select group of diplomats and trade experts.

He told them the architects of the multilateral trading system wanted to create an instrument that could withstand economic shocks and prevent financial chaos. And, he noted that those shocks have not been minor.

"It survived the Berlin Wall fall. It survived the Berlin Wall rise at the time," he said. "It survived successive oil shocks and the huge financial crises of the '90s, largely retaining the essence of inclusiveness, predictability and the rule of law. And, these are key values of the system. "

Lamy says the values of free trade must be safeguarded. He suggests protectionist policies may have contributed to the outbreak of World War II and warns the world will only forget the lessons of history at its peril.

But the world has changed a lot since that post-Imperialist age. Carin Smaller is head of the Geneva office of the Institute of Agriculture and Trade Policy, a group that lobbies on behalf of poor farmers in the developing world.

Smaller believes the multilateral trading system has worked well in many respects. But she says that, since the 1980's, the radical push for free markets has benefited the rich at the expense of the poor. This, she says, has led to huge imports of agricultural goods into developing countries, displacing local production.

"In countries like Ghana, Honduras and Indonesia, you have had livelihoods displaced because of cheap rice imports coming in. Why? Because they had opened their markets up too soon probably," she said. "You have the case of sugar coming into the market in Kenya...and all of these massive increases in agricultural goods coming into these countries is actually undermining livelihoods, undermining employment prospects."

Today, this worldwide free trade is better known as globalization. And, not everyone is in favor of it.

In 1999, anti-globalization protests in the U.S. city, Seattle, scuttled the start of a new round of free trade talks.

"I think globalization arouses such high passions because of how it affects peoples' lives because of how they see it affecting their lives and because of how massive it is and how little they can do to stop it," said Smaller.

The Seattle protest was the first in a series. However, in the past few years, the WTO has put the failure of Seattle behind it. In 2000, the Doha Development Round got underway. The round aims to free global trade and extend the benefits of globalization to developing countries.

After seven years of rocky negotiations, an agreement remains elusive. The major sticking point is agriculture. Developing countries refuse to sign on to an agreement that does not give them greater access to the markets of rich countries.

"It's a sine qua nun of an agreement that we get something on agriculture," said WTO Chief Economist Patrick. "What that something is, of course, is what these negotiations are all about."

Low recognizes the difficulty of getting the European Union and United States to reduce their subsidies to a level low enough to be acceptable to developing countries. He rejects critics' suggestions that divisions over agriculture or a possible failure of the Doha Round will lead to a breakup of the World Trade Organization.

"In the foreseeable future, I do not see the World Trade Organization collapsing. I see it evolving. I see it reforming itself," he said. "But, I see it being very much a part of future international governance along with all sorts of other instruments, policy-related instruments of international governance. I certainly do not think we are witnessing the death knell of the multilateral trading system."

Advocates on both sides of the globalization debate agree the WTO will face a roster of new issues in the coming years. It is likely to include climate change and how trade policies impact on efforts to preserve environmental quality. It is also likely more pressure will be put on the WTO to create a more equitable trading system, to become more accountable, accessible and transparent. How the WTO responds to these challenges will determine the future shape of the multilateral trading system.