Johannesburg — AN UNDERTAKING by world leaders to conclude a multilateral trade agreement by next year, in part to help offset the deep slump in world trade spurred by the worldwide recession, has received a lukewarm response from Trade and Industry Minister Rob Davies .

The Group of Eight (G-8) industrialised nations - the US, UK, France, Germany, Italy, Japan, Russia and Canada - last week committed to concluding the Doha round of world trade talks, an undertaking backed by the Group of Five, which includes SA.

On Friday, however, Davies expressed grave reservations about the wisdom of concluding the round, effectively contradicting SA's official position.

Speaking at a public lecture by Nobel laureate Joseph Stiglitz , Davies said the trade pact would fail to deal with "other forms of protectionism" such as subsidies and bail-outs by advanced economies in response to the global crisis, which were skewing imbalances in the system afresh.

While stopping short of withdrawing SA's commitment to the round, Davies complained of persistent ine quities: "We want to make sure that we get out of this recession in such a way that we don't enhance the inequities and the inequalities that already exist in the global trading system."

Noting that the World Trade Organisation (WTO) was focused on the differential between applied and bound industrial tariff rates, and how to narrow this gap, Davies argued that another form of protectionism involved "measures, such as big subsidies, which are steering the chances that the plants and productive activities that will survive are going to be those in the developed world".

SA has its back to the wall on the demand for industrial tariff cuts. In the Uruguay round, SA made cuts as if it were a developed country, which has rendered SA's tariffs among the lowest for developing countries.

SA has made a special request in the WTO for greater flexibility on tariff liberalisation . If not accommodated, SA's industrial policy -- the flagship policy for growth - could be compromised severely .

The US and European Union have opposed SA's request for flexibility.

"We have this notion that we must complete the Doha round so we don't end up with resurgent protectionism, but we must be very careful," Davies said. "What the Doha round will do immediately is reduce the space between bound and applied industrial tariffs. What it will not do is deal with this other form of protectionism, the employment of subsidies."