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08.05.2008 Business & Finance

WTO Cannot Immediately Ease Food Crisis — Lamy

The World Trade Organisation (WTO) cannot offer any immediate easing of soaring food prices but a deal in the Doha Round to open up world trade could bring long-term solutions, the trade body's head said yesterday.

However, to meet its goal of concluding the long-running talks this year, the WTO needed a breakthrough within weeks, Lamy told the WTO's policy-making general council, according to a copy of his remarks obtained by Reuters.

"Although the WTO cannot provide anything immediate to help solve the current crisis, it can, through the Doha Round negotiations, provide medium to long-term solutions," Lamy said.

A new trade deal would help soften the impact of high prices by lowering barriers to trade in agricultural products, including trade-distorting subsidies in rich countries, he said.

"This is doable and we are nearly there," Lamy said. "As you are all aware, the overall outcome would be less distortion in world markets and increased international trade, leading to more rapid and efficient adjustment by supply to changes in demand."

Meanwhile, oil prices, which this week hit a record high near $123 a barrel, will probably rise even further, the head of Libya's National Oil Corporation (NOC) has said.

Libya and fellow members of the Organisation of the Petroleum Exporting Countries (OPEC) have blamed factors other than supply and demand for oil's record run. U.S. crude hit a record $122.73 last Tuesday.

"I think it will go higher," Shokri Ghanem, head of NOC, told Reuters in a telephone interview. "It is the same old story -- speculation and geopolitics."

Oil has risen from below $20 in early 2002 and is widely predicted to continue its climb. The price could hit $200 within the next two years, driven by poor supply growth, Goldman Sachs said this week.

Ghanem reiterated OPEC's view that the group, source of two in every five barrels of oil, does not need to increase production.

"It is not the fundamentals. We see enough supply. What can OPEC do? Very little."

OPEC oil supply fell in April to 31.64 million barrels per day, its lowest this year, as a strike cut down Nigeria's output and top OPEC exporters Saudi Arabia and Iran trimmed production, a Reuters survey showed last week.

The Libyan official also said it would take up to two months, longer than previously expected, to resume output at 45,000 barrel-per-day at al-Jurf oil field offshore Libya.

"It will take more than a month, if not two months," he said. "We are working hard, but it is an offshore platform and we have to be sure of the safety."

— Reuters

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