UAE ministers warns of global trade relations as global slowdown continues
Sheikha Lubna Al Qasimi, Minister of Foreign Trade, warns the health of global trade relations is in an increasingly perilous state as the continuing global economic decline saps the lifeblood from international commerce.
"I thought it was a cold but it's a high fever," she said during a World Trade Organisation (WTO) event in Geneva before warning of a drying-up of trade finance that threatens to stall the flow of goods.
"We have seen a great shift away from trade finance and it's pretty much the bloodline for all traders," she said. "Once trade finance has been jeopardised by banks shifting more towards financial facilities related to the financial crisis and sovereign debt the outcome of this is we've seen a lot of shrinking of SMEs [small and medium enterprises]."
About 95 per cent of global trade relies on trade finance of some sort but some banks have eased back on lending to the sector in response to the European debt crisis and Basel III global banking standards, which require them to shore up their capital base.
Despite the world economy being gripped by an uncertain outlook, Sheikha Lubna said it was important countries dropped obstacles to exports and investment.
"What we need to see, not just in the Arab world but the whole world, is abiding by free-market policies, showing economic and trade openness," she said during a question and answer session at the WTO's Public Forum.
Sheikha Lubna's comments come amid signs of a recent ratcheting up in protectionist measures in response to persistently high unemployment in rich countries and slowing growth in emerging economies.
The United States and China both filed separate complaints with the WTO, the global trade body, this month, alleging illegal trade practices. China has also been at loggerheads with the EU in recent months over trade policies.
The UAE has also been caught up in its own dispute. Egypt this month agreed to exempt the UAE from a 15 per cent duty it had imposed on polypropylene imports in June. The UAE had appealed against the tax.
In response to a question about whether there was evidence of trade protectionism in Arab Spring countries, Sheikha Lubna said most steps were in response to the political climate.
"Mostly, it's a political challenge and there's more a priority now towards political and economic stability," she said during the WTO's Public Forum.
Signs of a global rise in protectionism is reflected in data from Global Trade Alert, a trade monitoring service.
It estimates the Group of 20 leading and emerging economies have together accounted for nearly 80 per cent of protectionist measures this year, up from 60 per cent in 2009.
But Sheikha Lubna said barriers to investment also needed to be lowered.
"More important than anything else, especially for us in the GCC, is a focus on investment and that there is a commitment towards legislation and a pro-investment environment," she said. "The GCC has invested largely in a lot of countries so it is very important that we are open and, in general, the rest of the world [is], to extending a helping hand, if required."
Sheikha Lubna also pushed for further reform of global trade rules.
Despite efforts by the WTO, no breakthrough has yet been found in the so-called Doha round of trade negotiations, launched in late 2001 with the aim of helping poor countries prosper through trade.
"Multilateralism is not in good shape," said Pascal Lamy, the WTO director general, speaking on Monday at the same event.
"Of course, the crisis doesn't help as moving the international system forward implies high-quantum political energy by governments."
- 2014 in three words: deflation and lower returns
- How fear can be a good force in the workplace
- Housing and education costs eating away Dubai's tax-free benefits
- With World Cup under its sleeve, Qatar comes fourth in global slavery index
- The quiet overachiever: Is Oman going to do better than its GCC peers in 2015?