It's a long, rocky road to `effective global governance'

The world economy will benefit by $370 billion (€358 billion) in welfare terms if state leaders next week agree to halve global tariffs and agricultural protection. A cut of 20 per cent could result in benefits to the tune of $150 billion. But that prize will not be won easily. There are major problems, says the EU Farm Commissioner, Mr Franz Fischler. Mr Mike Moore, the World Trade Organisation's (WTO) boss, jokes that prospects are "desperate but not serious".

And the tens of thousands of demonstrators and lobbyists from non-government organisations (NGOs) who will converge on the WTO ministerial meeting are determined not to make it any easier.

Their concerns include: genetically modified organisms, animal welfare, minimum labour standards, social dumping, the protection of farmers from "biopiracy" through patenting of new seed varieties; and the exploitation of the developing world by multinational corporations.

Above all there is the fear that the WTO represents the enshrinement of the forces of laissez-faire, globalising capitalism above any sense of society - the triumph of the market.

The radical US philosopher, Mr Noam Chomsky, has called trade rounds "a complicated mixture of liberalisation and privatisation carefully crafted in the interests of the transnational corporations".

There is no doubt that the new binding powers of the WTO disputes panels have made it a powerful force in the political as much as economic domain. The WTO overturned US regulations to promote cleaner petrol on a challenge from Venezuela, and ruled against another US requirement that all shrimp fishing boats use a device to prevent harm to endangered sea turtles.

In an ongoing controversy, the WTO has ruled that the EU cannot ban beef containing artificial hormone residues on the grounds that there is not sufficient scientific evidence.

Radical reforms of farm subsidisation in the Uruguay Round led to riots in more than one country and nearly blocked French approval of the Maastricht Treaty - the Seattle Round has the potential to provoke similar convulsions again.

Yet, ambitions for the new round diverge widely. The EU and Japan, while determined to defend their models of agriculture and the social market, are calling for a wide "millennium round" lasting three years and incorporating both traditional issues like manufactured goods tariffs, services, and intellectual property and also a new remit on such issues as investment and competition policy.

Japan, for example, is leading a 20-nation assault on a long-accepted WTO ban on the dumping of subsidised goods.

The US wants a narrower focus, with the hope of reaching early agreements on some issues, including ending agricultural subsidies, reducing industrial tariffs and restrictions on services, and protection of Internet business from any tariffs or restrictions.

The EU would like to freeze out US credit agencies by imposing privacy restrictions and wants to define a sale over the Internet as a service, thus circumventing far stricter free-trade rules governing sales of goods.

And with the US expected to spend $8.7 billion this year on emergency aid to farmers, its radical zeal on farm reform may be muted.

Overall OECD countries spent $362 billion on farm support this year, but the liberalisers of the Cairns Group - Australia, New Zealand, Canada and Argentina - are determined to press ahead to end all subsidies. Some chance!

Many developing countries are resisting a broad agenda. They complain they have not yet benefited significantly from earlier trade liberalisation and are suspicious that the whole exercise is more about the interests of the big boys than their own.

But within their ranks there are sharp differences of interest with the faster growing ASEAN countries likely to be the real beneficiaries.

The least developed countries in sub-Saharan Africa and those dependent on the export of steadily cheapening raw commodities will gain least from trade liberalistion.

They feel the negotiations of the Uruguay Round marginalised them and are determined it will not happen again.

The ultimate goal of developing nations is the relaxation of pharmaceutical patents so that poor countries can produce cheap drugs and vaccines without paying royalties.

The developing countries are making common cause against EU and US demands that the idea of minimum labour standards should be included in WTO negotiations.

The choice ultimately will be to let market forces rip, to retreat into protectionism, or to face the challenge put by the new Trade Commissioner, Mr Pascal Lamy to MEPs last week.

"Has the EU the political will," he asked, "using its global economic weight and the developments of its own internal structures, to reconquer a sovereignty which the markets of the world are stealing away from nation states, and so to contribute to effective global governance?"