World trade faces major crisis, warns SA

Boao - Trade and Industry Minister Rob Davies warned on Friday that the World Trade Organisation (WTO) was "on the verge of a very serious crisis" as 10-year negotiations for a global free trade pact failed to make headway.

Davies made the comments at an annual global forum in the southern Chinese island of Hainan that sees leaders in government, business and academia from Asia and other continents come together to discuss pressing issues.

He warned that the WTO Doha round of talks for a global free trade pact, launched in 2001, could be inconclusive amid a rift between developed and developing nations on tariff cuts on industrial goods and farm subsidies.

The disagreements centre on how much the United States and the European Union should reduce aid to their farmers and the extent to which countries such as India, China and South Africa should lower their import tariffs.

"The level of demands that have been put by some of the players in the developed world are frankly unfair, unjust and unsustainable from a developmental point of view," Davies said.

He said aid to farmers in the European Union and the United States had a big impact on poorer producers in the world, adding the value of the subsidies was "greater than the gross national income of the whole of Subsaharan Africa".

"Relatively small numbers of people involved in agriculture in the developed world are shielded against competition from more effective producers in the poorer world," he told delegates.

Davies' warning of an imminent crisis echoed comments made earlier this month by WTO chief Pascal Lamy, who said the Doha round of negotiations was stuck.

A successful Doha outcome would boost the global economy by around R170bn annually, some estimates show.