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Leaders tout trade deal as global litmus test

GERMAN Chancellor Angela Merkel and British Prime Minister David Cameron swung their weight behind calls to clinch a global trade deal yesterday, citing it as a key test for the international community's ability to co-operate in reviving the world economy.

Both leaders warned that failure to conclude the so-called Doha round of trade talks risks setting back efforts to liberalise global commerce by years, if not decades.

Their call came on the eve of a meeting of commerce ministers in Davos, Switzerland, timed to coincide with the World Economic Forum at which business and political leaders mingle each year to discuss the state of the planet.

"The conclusion of the Doha round is of utmost importance," said Merkel. "We are literally metres away from the finishing line."

She warned that if a deal was not reached soon "decades will go by without this opportunity offering itself again".

The trade talks, launched 10 years ago in the Qatari capital Doha, have been declared moribund by experts for a long time, as rich and poor countries clash over lowering tariffs and easing access to each others' markets.

"People feel like this is somehow Monty Python's dead parrot, but we won't stop talking about it," Cameron said. "I profoundly believe that is not true."

Proponents say a Doha deal could add billions to the global economy. "This is a stimulus that doesn't cost money, so it is the stimulus that we need," Cameron said.

Experts remain sceptical that a deal can be reached this year, mainly because China and the United States remain at loggerheads on key issues. Pushing the talks into 2012 -- a US presidential election year -- would make a conclusion even less likely because the sensitive issue of trade would be a hard sell for politicians of any stripe.

"It may not be dead, but it's playing possum," said Jean-Pierre Lehmann, professor of business at the IMD business school in Lausanne, close to the World Trade Organisation's Geneva headquarters.

Not reaching a deal this year could be a firm sign that the world is headed for one or more trade wars, Lehmann said.

The discussion over trade echoes concerns that the global economic downturn since 2007 has made it harder for leaders to put immediate national interests aside and work together towards a bigger goal -- be it combating climate change, global food price rises or currency speculation.

Merkel said earlier that eurozone countries had to abide by the rules set out when the common currency was founded, including sticking to government debt limits.

She branded the public debt that has seen Greece and Ireland seek bailouts from fellow EU members as "the biggest danger to prosperity on this continent".

Cameron said his country's austerity measures, aimed at reducing debts and boosting confidence in the British economy, had already begun to bear fruit and urged others to follow suit.

US Treasury Secretary Tim Geithner said Washington was prepared to take radical action to rebalance the world's biggest economy, which for so long has been the driver of global growth.

"There is a much greater recognition across the US political system that our fiscal position is unsustainable in the long-run," Geithner said. (AP)

Irish Independent