Global Trade war can cause worldwide depression - Tempers flare in US-EU subsidies dispute, developing nations up in arms over farm subsidies issues with West
Kiran Sen
Mar. 20, 2005

The world is closer to a worldwide trade war. And that can be devastating for the world economies. The developing nations are demanding that US and EU lift the farm subsidies. And in the mean time, US and EU meeting over subsidies and issues involving Boeing and Airbus ended up in flares of temper and breakdown of talks.

Weeks of delicate negotiations between Robert Zoellick, the outgoing US trade representative, and Peter Mandelson, EU trade commissioner, exploded on Friday night, after a tense, hour-long teleconference.

The china and Russia is also ready to create a block along with India, Brazil and South Africa popularly known as BRICS. The block with the support of developing nations can be the largest trading block in the whole world. In a few years BRICS can dominate the world trade.

The European and the Americans still believe in open and free trade. But once they realize how far they are going to lose through open and fair trade, they will not back out from free trade talks, they will also fight among each other on issues similar to subsidies over Boeing and Airbus.

Global communications especially Electronic Data interchange and the Internet is the root culprit. The national borders have disappeared virtually. Information is freely exchanged between populations of the countries. Business can shift work quickly and save money. The R&D can be done in one country, manufacturing in another country and customer se4rvice from a third country. Believe or not the head quarter of the company can be in a fourth country.

The net result of an all out trade war is bad. This can cause a world depression which may takes decades for the world economies to recover.

The World Trade Organization can crumble once the trust between nations disappears. It was significant when India, China, Brazil and other developing nations decided not to cut any duties till a cut off date is established by the Americans and the Europeans for the end of farm subsidies.

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