The ongoing hurricane in the financial markets has not had a significant impact on trade flows yet, but the lack of regulation is being blamed for the current financial crisis. This has led to calls for strengthening trade rules through a new trade agreement. China's deputy ambassador to the World Trade Organisation, Xiang Zhang, believes that concluding the negotiations for a new trade deal will send a positive signal to the world economy and business community. However, failure to reach an agreement after seven years of negotiations could result in a loss of confidence in business. WTO Director-General Pascal Lamy is still hopeful for an outline deal on agriculture and industrial goods by the end of the year in the Doha round, despite the lack of progress in July. Both Lamy and EU trade chief Peter Mandelson expressed concern last week that the financial crisis could lead to an increase in protectionism, ultimately harming economic growth. They emphasized the urgency of reaching a new trade deal to take advantage of the benefits of globalization. The crisis may also divert the attention of world leaders away from trade issues, making it difficult to secure a deal. The proposed $700 billion bailout for the U.S. financial industry, expected to be announced on Sunday, could help alleviate these concerns. However, any trade agreement would not be finalized until at least 2009 or 2010, with implementation periods of up to 5 years for wealthy nations and 17 years for developing countries. This delayed impact would mean that changes in trade flows would not immediately affect financial markets, as exchange rates and company earnings would only respond later on. Experts believe that a deal would increase business confidence by demonstrating a reduction in barriers to business, a healthy world trading system, and global cooperation. Fredrik Erixon from ECIPE noted that existing WTO agreements restrict countries from raising tariffs significantly, reducing the likelihood of a repeat of the economic nationalism seen in the 1930s. However, the push for a new trade deal to open up markets may face challenges in a climate where deregulation is being blamed for the crisis, and criticism of liberalisation from leaders like Nicolas Sarkozy and Peer Steinbrueck could impact discussions on liberalising trade in financial services. At a meeting in July, governments indicated they were willing to open up markets to various services despite the credit crunch not deterring negotiators from discussing banking. John Cooke, chairman of the Liberalisation of Trade in Services Committee, emphasized the distinction between market access in trade negotiations and financial contagion regulated by authorities. He stated that globalisation will continue to progress with increased trade and investment, leading to interdependencies between different economies. Trade rounds aim to not only liberalise commerce but also establish fair rules for the international trading system. In the current Doha round, developing countries are advocating for a decrease in agricultural subsidies provided by wealthy nations, which artificially lower prices and disadvantage farmers in poorer countries. Munir Ahmed, secretary-general of the International Textiles and Clothing Bureau, likened these subsidies to short-selling in the stock market, where investors borrow and sell overvalued shares in hopes of buying them back at a lower price. Ahmed, a former Pakistani ambassador to the WTO, emphasized the importance of reaching a Doha agreement to establish regulations in international commerce. The financial crisis further underscores the need for a Doha deal, as it serves as a reminder that economic prosperity is not guaranteed. Due to the recent growth in business, many companies have not been as motivated to advocate for a reform in trade rules to prevent protectionism from returning. This lack of pressure from businesses has also resulted in governments feeling less urgency to reach a deal. As a result, the tariff and subsidy cuts that have been implemented could potentially be reversed. New Zealand's WTO ambassador, Crawford Falconer, believes that reducing entitlements is crucial to preventing regression in the financial world. He stresses the importance of getting the job done now more than ever before.