World Trade Becoming Conflicted

As the BBC put it in 1999 when similar conflicts emerged, the BBC says "the world is at war again - over trade". The conflict is over beef, bananas, steel and other goods where "some countries try to 'protect' their faltering industries behind trade barriers". This is not the war of which the average consumer would be aware. But trade conflicts have been at the bottom of many international conflicts over the history of the world.
The modern version of trade conflict is as multifacited and complicated as the world itself. The growth of free trade worldwide has led to a movement called Globalization. The World Trade Organization is the world forum where much of the conflicts are played out, resolved, or exasserbated and festered. In 1999, the 134 members of the WTO couldn't even agree on a leader.
Washington Post

FOR A BRIEF moment after the 2001 terrorist attacks, the world's leading nations wanted to extend a ladder of opportunity to poor and potentially resentful nations. They launched a new round of global trade talks, calling it a "development round" because it was supposed to cut farm tariffs and other obstacles to poor countries' progress. The good intentions didn't last. A follow-up summit of trade ministers in Cancun, Mexico, in 2003 broke down chaotically when the European Union and the United States tried to impose an unsatisfactory pseudo-deal on developing countries. Now, after another two-year interval, trade ministers are convening in Hong Kong. Progress has been shamefully slow, and the chances that the round will realize its development potential are almost nil. Still, it's important that the next few days yield at least a modest deal. A collapse could destabilize the global trading system.


The stakes are high because the effective negotiating deadline is nearing. Congress has granted President Bush "trade promotion authority," the power to negotiate trade deals and get an up-or-down vote in Congress without having the document picked apart in a series of amendments. But this authority expires in the summer of 2007 and is unlikely to be renewed; it was granted in 2001 in that anomalous moment of post-Sept. 11 lucidity. Negotiators therefore have about a year to put together a hugely complex deal, but their efforts so far have been confined mainly to agriculture. Even there they have stalled, largely because the European Union has offered a loophole-ridden proposal that would barely reduce its farm protectionism.


If this trade round collapses, it would fuel the disturbing trend toward regional and bilateral trade pacts, which boost prosperity less effectively. These smaller deals tend to come with burdensome red tape: For example, the United States has granted preferential market access to African exporters, but it insists that African goods be laboriously certified as genuinely African to screen out products that might be shipped from another region to take advantage of the special access. Regional deals also tend to divert trade as much as they create it, shifting prosperity from one region to another rather than actually generating it.


The collapse of the trade talks would also threaten a dangerous burst of litigation. Earlier this year, the World Trade Organization's appellate tribunal upheld a Brazilian complaint against U.S. cotton subsidies, with the result that those subsidies are supposed to be cut back. A new paper from the Cato Institute argues that, under the logic of that ruling, U.S. subsidies on corn, wheat and rice may also violate world trade rules. So long as trade talks limp on, there's little incentive for other countries to bring expensive legal challenges to U.S. farm programs. But if the prospect of a negotiated reform of U.S. policies fades, the United States might face a series of WTO rulings against agricultural subsidies. If it bowed to these, it would be putting its own house in order without getting reform from others in return. If it refused to bow, it would fuel anti-Americanism and undermine support for the rules-based trading system.

Meanwhile, an even more important trade drives the world economy. Oil still is king, but it's price has turned permanently up. The world economy weathered an increase in the price of oil without serious consequences. Economic disruption has been the means of persuading the Saudis to hold down the price of oil. But now with rumors of world oil production peaking and falling off permanently, the price of oil will stay high. A high price of oil ultimately means a surge of inflation, higher interest rates and the beginnings of complications for the US National Debt.
Los Angeles Times

Several times in the last two years, OPEC officials have made a point of publicly denouncing the high price of oil — sometimes trying to defuse criticism by blaming speculators, unrelenting demand and other factors for the surges. After hurricanes Katrina and Rita disabled Gulf Coast oil rigs and refineries, the ministers offered up additional oil to help offset lost production, but Monday they said the offer would be allowed to expire as scheduled at the end of the year.


Although OPEC's new stance wasn't explicitly stated, the cartel seems to have changed its tune, said OPEC watchers, who sift through post-meeting statements to glean messages not contained in authorized communiques. Instead of working to lower prices to reduce political pressure and head off an economic downturn or a shift to cheaper fuels, OPEC members are openly embracing production cuts to keep crude costs up, analysts said.


"OPEC is obviously happy with prices as high as they are," said Chris Mennis, owner of New Wave Energy, a trading company based in Aptos, Calif. Leeb said OPEC was telling the world that it probably would cut production if the group's collection of target oil prices fell to the equivalent of about $57 or $58 a barrel for the U.S. benchmark crude.