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    The Trade Debate Needs the Voice of Business


    © International Trade Centre, International Trade Forum - Issue 1/2006

    © Jupiterimages Corp.

    Business can do more to build public understanding of the benefits of the multilateral trading system.

    This is no time for disengagement or complacency. The period is one of great opportunity, with vast new markets opening and quantum leaps in technology. It is also one of grave risks, with the rise of trade protectionism and trade "preferentialism".

    A dual discourse has evolved since the Doha Declaration was announced in November 2001: that of reconciling multilateral trade liberalization with multiple and diverse developmental priorities.

    The perception remains that business has shown a lack of constructive engagement in the multilateral trade policy debate. Leading non-governmental advocacy groups, meanwhile, have widened their influence. If multinational businesses from the North and the South abnegate their responsibility of getting involved in public policy, they are likely to find that the business environment will become far more complex and constrained, and have far higher transaction costs. The trade debate has now entered the public sphere, a non-habitual ground for business. This means that business needs to make an extra effort to correct open market misconceptions, such as that the global trading system was devised for exclusionary private gains rather than for providing a public good.

    The successful conclusion of the Doha round is difficult without a considerable shift in both the perceptions and the opinion of the public. Job losses and dislocations are the barometers of the perceptions of the citizens of rich countries. These same perceptions have been shaped in developing nations by the expectation that trade policy would correlate in the short run with sizeable poverty reduction. These perceptions of relative benefits and individual trade-offs are fed by the silence of consumer and producer groups that stand to gain from globalization.

    If the association between trade and unemployment is to be replaced by that of trade and job creation, political leaders in developed and developing countries should work with their constituencies to navigate adjustment (including through the forward planning that predictability in the agreements allows), ensure an adequate domestic regulatory framework, address structural deficiencies and explain the outcomes of short-term sacrifices for long-term gains in the global trading system.

    More transparent WTO procedures and negotiating processes will help media and the general public to re-evaluate multilateral trade. The lack of public trust implies that emphasis is increasingly placed on procedural justice, when what is needed is justice in outcomes. This is a significant hurdle to overcome if the multilateral liberal trading system is to be understood as a global good.

    To these issues can be added technology, one of the main drivers of globalization. Process and product innovations in global networks are very much business-led. Linking industry with negotiators to shape an international regulatory framework that is sufficiently responsive and flexible to fast-evolving targets is one of the more serious challenges facing the WTO. Business cycle pressures imply diminished tolerance to procedural obstacles.

    Finally, with the shift in global balances, the future focus of multilateral trading rules will be among developing countries. They must assume greater leadership, if only by defining benchmarks for success and providing rigorous demarcations for future obligations such as the removal of discriminations. This is a shared responsibility among government, business and civil society leaders.

    These edited excerpts are from a statement made by the Evian Group on challenges facing the multilateral trading system following a brainstorming session at IMD (International Institute for Management Development) in Lausanne, Switzerland in February 2006. Participants included senior trade officials, business executives, academics, journalists and representatives of non-governmental organizations. For more on the Evian Group, visit http://www.eviangroup.org