Business | Economy
US bets on Doha deal to ease prices
Treasury secretary and German minister agree that little can be done in the short term.
- Reuters
- Published: 00:08 July 2, 2008
Berlin: US Treasury Secretary Henry Paulson on Tuesday said the United States and Germany agreed that a breakthrough in the Doha round of trade talks would help control world food price inflation, but high oil prices required longer-term solutions.
Paulson, speaking at a news conference in Berlin with German Economy Minister Michael Glos, said the two nations agreed there were "no obvious short-term solutions" to high oil prices. He added the current oil price was a function of supply and demand.
"There's no doubt that both our countries as well as the world are feeling the burden of high oil prices and high food prices," Paulson said after a breakfast meeting with Glos.
"We agreed that a breakthrough in Doha would help us in the food area," Paulson said. "Policies that restrict trade in food products aren't helpful."
On oil prices, Paulson said he and Glos agreed that little could be done in the short term, but more investment was needed in alternative energy and reducing fuel consumption.
He has consistently denied that the weaker US dollar and futures market speculation were significant factors driving oil prices higher.
Output
Glos said high energy prices were feeding into food prices, and in the short term a "temporary" rise in oil output would help cool prices to bridge a gap for consuming countries to allow them to develop alternative technologies that would reduce consumption.
Paulson also said German and other European banks were still dealing with common credit problems and were supportive of the co-ordinated policy responses between the US and Europe.
"A number of German banks are dealing with the same issues that the US banks are dealing with and the banks around Europe, which have to do with too much leverage dealing with complex products, and they're still in the process of repricing risk."
He said European banks support recommendations by the Financial Stability Forum and the US President's Working Group on Capital Markets for more market discipline.
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