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WTO forecasts slowdown in global commerce

01.01.70

Bloomberg News

WEDNESDAY, APRIL 12, 2006


GENEVA Growth in global commerce may slow this year as energy prices rise, European economies struggle to recover and central banks raise interest rates, curbing demand for imports, the World Trade Organization said in its annual report Tuesday.

The WTO estimated that the trade in goods may expand 7 percent in 2006, almost half of last year's 13 percent rise, to $10.1 trillion. The value of cross-border commercial services rose 11 percent last year to $2.4 trillion in unadjusted terms, the WTO said.

Central banks in the United States, Japan and the 12-nation euro region have indicated that they planned to raise interest rates as their economies expand this year. That growth may be dampened as rising energy costs curb consumer spending and corporate profit, and the United States tries to tackle a record trade deficit.

"The global trading system is undergoing a period of transition," Pascal Lamy, the WTO director general, said. "Persistent imbalances, driven largely by macroeconomic factors, continue to be a cause for concern."

The European Union, which accounts for about 40 percent of global trade in goods and commercial services, recorded the smallest increase in trade of all regions last year, the WTO said. The EU also experienced slower expansion compared with 2004 in both euro and dollar terms. Still, stock markets and economic indicators show that "the long-awaited recovery of investment in Europe will eventually materialize and trigger broader economic growth" in 2006, the report said.

The United States, overtaken by Germany in 2003 as the world's biggest exporter, accounted for 8.7 percent of world shipments by value, worth $904 billion, and 16 percent of imports in 2005, worth $1.7 trillion, the WTO said.

Russia membership talks lag

The speaker of Russia's lower house of Parliament warned on Tuesday that Russia's bid to join the World Trade Organization could be postponed if it was unable to reach an agreement on suitable membership terms, The Associated Press reported from Moscow.

"We believe that in entering the WTO, we must not make any concessions that could worsen Russia's position," Boris Gryzlov, who also is head of the main pro-Kremlin party, United Russia, said after meeting with President Vladimir Putin and other party leaders.

Russia has signed agreements with the EU, China and Japan, among others, but has yet to reach deals with the United States, Colombia or Australia. In March, Putin expressed frustration at the pace of negotiations, charging the United States with making groundless demands.

GENEVA Growth in global commerce may slow this year as energy prices rise, European economies struggle to recover and central banks raise interest rates, curbing demand for imports, the World Trade Organization said in its annual report Tuesday.

The WTO estimated that the trade in goods may expand 7 percent in 2006, almost half of last year's 13 percent rise, to $10.1 trillion. The value of cross-border commercial services rose 11 percent last year to $2.4 trillion in unadjusted terms, the WTO said.

Central banks in the United States, Japan and the 12-nation euro region have indicated that they planned to raise interest rates as their economies expand this year. That growth may be dampened as rising energy costs curb consumer spending and corporate profit, and the United States tries to tackle a record trade deficit.

"The global trading system is undergoing a period of transition," Pascal Lamy, the WTO director general, said. "Persistent imbalances, driven largely by macroeconomic factors, continue to be a cause for concern."

The European Union, which accounts for about 40 percent of global trade in goods and commercial services, recorded the smallest increase in trade of all regions last year, the WTO said. The EU also experienced slower expansion compared with 2004 in both euro and dollar terms. Still, stock markets and economic indicators show that "the long-awaited recovery of investment in Europe will eventually materialize and trigger broader economic growth" in 2006, the report said.

The United States, overtaken by Germany in 2003 as the world's biggest exporter, accounted for 8.7 percent of world shipments by value, worth $904 billion, and 16 percent of imports in 2005, worth $1.7 trillion, the WTO said.

Russia membership talks lag

The speaker of Russia's lower house of Parliament warned on Tuesday that Russia's bid to join the World Trade Organization could be postponed if it was unable to reach an agreement on suitable membership terms, The Associated Press reported from Moscow.

"We believe that in entering the WTO, we must not make any concessions that could worsen Russia's position," Boris Gryzlov, who also is head of the main pro-Kremlin party, United Russia, said after meeting with President Vladimir Putin and other party leaders.

Russia has signed agreements with the EU, China and Japan, among others, but has yet to reach deals with the United States, Colombia or Australia. In March, Putin expressed frustration at the pace of negotiations, charging the United States with making groundless demands.

Expert opinion

Halter Marek

02.12.06

Halter Marek
Le College de France
Olivier Giscard dEstaing

02.12.06

Olivier Giscard dEstaing
COPAM, France
Mika Ohbayashi

02.12.06

Mika Ohbayashi
Institute for Sustainable Energy Poliy
Bill Pace

02.12.06

Bill Pace
World Federalist Movement - Institute for Global Policy
Peter I. Hajnal

01.12.06

Peter I. Hajnal
Toronto University, G8 Research Group