Outlook: Trade doldrums

THERE WAS a session at the World Economic Forum annual meeting in Switzerland last January on "global institutions" in which the representatives of a number of these organisations got up and congratulated each other on the quality of leadership at the international level, which, they said, had never been higher.

Given the present state of the world, this contention would generally seem open to question, but it is certainly not the case at the World Trade Organisation, whose affairs seem to go from bad to worse. Right now it doesn't have a leader at all. Signatories have been reduced to an unseemly squabble over a successor to Renato Ruggiero, who retired at the end of last month.

The US wants the combative and sometimes abrasive figure of Mike Moore, a former prime minister of New Zealand. Few could claim such good free trade credentials as Mr Moore, who frog marched his own country into an uncompromising free market approach in the 1980s, and in many respects he would seem perfect for the job.

Unfortunately Japan wants the Thai deputy prime minister Supachai Panitchpakdi, whose only real merit seems to be that he is, er, Asian. That makes him more acceptable to Third Worlders, who think he might ensure that poor countries get a better look in. The Canadians meanwhile want someone else entirely.

The four main parties - the US, Europe, Japan and Canada - are meeting in Tokyo for trade talks over the next few days, but given the lack of progress so far, the chances of a resolution are not high.

To top it all, efforts to get China to sign up to this global arbitrator of international trade disputes look to have been holed below the water line by Nato's bombing of the Chinese embassy in Belgrade. The two issues are, of course, nothing to do with one another, but that's not the way the Chinese see it.

Meanwhile, protectionism is on the increase and even those who preach free trade principles seem unwilling to practise them. The European Union has now twice refused to abide by the rulings of the WTO, once over bananas and now over hormone treated beef.

If even the big boys are sticking two fingers up at the ref, what hope for the rest? Were it not for the boom in the US economy, there would be a much fiercer political backlash from Capitol Hill than there is. Just think what's going to happen when the US economy takes a tumble.

Huge progress has been made in the post-war period towards establishing the reality of free trade. These gains have rarely looked so threatened. Globalisation makes it all the more important that trade practice is seen to be open, fair and honest. On present form, the WTO looks quite incapable of holding the fort. World leaders talk about reforming the "global financial architecture". By the look of it, the WTO is in equally urgent need of surgery.