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Canada's International Trade Minister Ed Fast speaks during Question Period in the House of Commons on Parliament Hill in Ottawa December 8, 2011. (CHRIS WATTIE/REUTERS/Chris Wattie)
Canada's International Trade Minister Ed Fast speaks during Question Period in the House of Commons on Parliament Hill in Ottawa December 8, 2011. (CHRIS WATTIE/REUTERS/Chris Wattie)

Economy Lab

Canada's Trade Minister takes hard stand against protectionism Add to ...

Canada’s trade minister is worried that the world’s commitment to stand against protectionism is slipping, and will use next week’s World Trade Organization ministerial meeting in Geneva to reinvigorate that resolve.

Ed Fast, who was in Germany Friday, took a few minutes out of a cramped schedule to call to talk about next week’s gathering of trade ministers from the WTO’s 153 countries. Ministerial meetings are held only every couple of years.

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The Great Depression was marked by an outbreak of “beggar-thy-neighbour” policies that only deepened the economic collapse. That didn’t happen in the aftermath of the financial crisis. Some economists say there’s plenty of hidden protectionism in the form of non-tariff barriers such as industrial subsidies and preferential treatment. Still, even the most cynical agree it could be worse. Politicians at the Group of 20 have been quick to congratulate themselves for their achievement.

But Mr. Fast says the tone is changing. The language on protectionism in the draft of the statement trade ministers will issue at the end of their Dec. 15-17 meeting is “very much toned down,” Mr. Fast said from Berlin. Canada and some allies are working to change that by insisting on a “strongly-worded pledge regarding protectionism,” he said.

Mr. Fast declined to say who is responsible for diluting the WTO’s rhetorical commitment to unfettered trade.

Of course, the strongest statement the WTO could make against protectionism would be to revive the Doha round of trade negotiations, which are languishing after 10 years. No one expects progress in Geneva, including Mr. Fast.

“The Doha round is stalled,” he said.

Canada, along with several others, will offer thoughts in Geneva about how to revive talks, although Mr. Fast declined to elaborate. “I’m optimistic over time that we’ll continue to make progress in ensuring the WTO remains the most effective forum for rules-based trading,” he said.

Not very inspiring, considering the Doha proposal contains tariff reductions that the World Bank estimates would generate at least $160-billion (U.S.) every year.

Mr. Fast’s comments suggest that trade ministers may at least wipe the slate clean and start trade negotiations anew.

This is what Bernard Hoekman, a senior trade official at the World Bank, thinks the WTO should do. At a panel discussion hosted by the Carnegie Endowment for International Peace this week, Mr. Hoekman recalled 1982, when global trade talks bogged down much like they have today. The ministerial meeting failed, but at least governments agreed to go off and study how their economies would be affected by a liberalization of services. This effort provided a cooling off period, and helped create a baseline for when negotiations resumed. Mr. Hoekman said WTO members should try something similar now.

There also is something to Mr. Fast’s emphasis on the need to reinvigorate the WTO as an effective institution. It might sound like spin, but there actually is a feeling among some trade experts that the Doha failure – despite repeated G20 deadlines to finish negotiations – has hurt the WTO’s legitimacy.

“Leaders have dragged down the WTO,” Claude Barfield, a resident scholar at the American Enterprise Institute, said at the Carnegie event.

If the WTO members can’t agree on advancing free trade, perhaps the least they can do is pledge anew to follow the rules to which they already have agreed.

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