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Mandelson: China and India may 'go it alone'

By Faisal Islam

Updated on 30 January 2010

Lord Mandelson warns the US that its increasing neglect of world trade talks, would see fast-growing emerging economies, like China and India, "go it alone" with "serious consequences" for the world economy. Faisal Islam reports.

Mandelson (Credit: Getty)

The business secretary was deeply pessimistic about prospects for completing the stalled Doha Development round of trade talks by the end of this year, despite a pledge to do so by G20 leaders including President Barack Obama last September.

"I don’t think they going to get finished this year, certainly not if they are going to reopen issues I was negotiating when I was trade minister," he told Channel 4 News.

The US has sent only a deputy ambassador to a traditional informal meeting of trade ministers at the World Economic Forum in Davos.

The former European Trade Commissioner said: "The US administration is putting world trade and the negotiations that we need to resume rather low on their political agenda.

"They’re bowing to Congress's prejudice and public opinion that is not favouring opening up trade, so that everyone can gain. Now if this continues and the trade talks globally remain dead locked – I think the consequences could be quite serious".

Amid growing pessimism South Africa’s trade minister Rob Davies told Reuters in Davos: "While other nations accepted WTO compromise documents that have been worked out over nearly a decade of the so-called Doha Development Round of trade talks, the United States was unwilling to negotiate on that basis.

"One of the bigger trading partners in the world is not indicating that it's willing to engage on the processes of these texts. It wants substantial revisions but hasn't developed any great clarity."

South Africa and the other fast growing developing countries, such China, India and Brazil face rosy economic prospects in the coming year that contrast sharply with the sluggish growth of Europe and North America.

At Davos the pained negotiations between Western bankers and their governments have been in sharp contrast to growing political confidence of the emerging bloc. Economists fear that this is a potent brew for an upsurge in protectionism.

"The economic power of the world is tilting eastward towards China and India and other emerging economies, which are growing in strength.

"We should welcome that, as economies grow, more opportunity for us to invest and trade.

"But if we reach a point when those emerging economies feel they can go it alone... then we in the developed world could find ourselves increasingly left out," said Lord Mandelson.

South Africa has already begun pushing a plan for a special separate trading package for the word’s poorest nations.

Lord Mandelson said if the US impasse continues he feared for the world trading system: "We have to include all the emerging economics and the developed world… does mean some concessions on our part, and it does mean giving the emerging economies a real stake in international trading system.

"And with the current failures in talks, in the Doha round, we are at risk of seeing emerging economies going their own way", added Lord Mandelson.

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