Bridges Weekly Trade News Digest • Volume 10 • Number 41 • 6th December 2006

Doha Talks Risk &Quot;Total Failure,&Quot; Lamy Warns

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In unusually strong language, WTO Director-General Pascal Lamy has warned that the troubled Doha Round of trade negotiations is in danger of "total failure," and that any chances for success depend on support from the US Congress.

Lamy told the Sunday Telegraph newspaper in an interview published on 3 December that progress in the talks would be impossible unless Congress voted to extend the Bush administration’s ‘trade promotion authority’ (TPA), slated to expire at the end of June. Since the complex negotiations cannot be completed by then, "this round will fail unless we get some sort of extension to the ‘fast track.’ That is what needs to happen."

With the expiry of TPA, the president will lose the ability to negotiate trade deals and submit them to Congress for a yes-or-no vote without the possibility of amendment. Countries are reluctant to finalise trade deals with Washington in the absence of TPA, since this would leave Congress free to make specific changes to negotiated agreements.

Top trade officials, including Lamy and US Trade Representative Susan Schwab, have suggested that there is a small ‘window of opportunity’ between now and spring 2007 during which sufficient progress in the negotiations might help the Bush administration secure Congressional support for extending TPA.

The WTO chief stressed the urgency of the situation in a 1 December speech to lawmakers from some 70-odd countries at a conference organised by the Inter-Parliamentary Union (IPU) in Geneva. He called on them to pressure their governments to work to break the deadlock in the Doha Round negotiations, reminding them that failure would come at a high economic cost.

In his interview with the Sunday Telegraph, Lamy added that failure to agree on reforms to multilateral trade rules through the Doha Round could spur "a political backlash from the developing world." At present, he said, the system "disfavours developing countries," with some laws that are "remnants of colonialism." He urged the US and the EU to soften their bargaining position in order to end the impasse in the talks.

Informal Ag, NAMA meetings in Geneva

Following a nearly four month long suspension after talks broke down in late July over differences on farm trade, Geneva-based trade officials resumed discussions in mid-November, in informal meetings organised by the chairs of the various negotiating groups (see BRIDGES Weekly, 22 November 2006). However, when announcing this ’soft relaunch,’ Lamy had specified that "fully-fledged negotiations" would remain premature until Members came forward with concrete new proposals, particularly for expanding agricultural market access and cutting farm subsidies. He believes that the suspension helped encourage governments to seriously consider what stood to be lost in the negotiations.

Nevertheless, new bargaining positions have been absent thus far. Non-agricultural market access (NAMA) negotiations Chair Ambassador Don Stephenson (Canada) said as much when reporting on his bilateral consultations to a 1 December meeting of all Members. Trade delegates reported that Stephenson said that his consultations with individual delegations had revealed no new flexibilities, although they did seem more open to discussing sectoral tariff liberalisation initiatives as a means of creating new market access.

Sources indicated that delegations broadly accepted Stephenson’s conclusions that Members were ready to restart discussions, particularly on technical issues such as non-tariff barriers and how to schedule specific liberalisation commitments. They were also willing to work from the basis of Stephenson’s report on the negotiations as they stood prior to the July suspension (JOB(06)/200/Rev.1, available online at http://docsonline.wto.org), though they stressed that Members had never formally approved it. That document contained draft agreement text for a handful of relatively minor issues in the NAMA talks — not including the more divisive central issues in the negotiations, such as the tariff reduction formula.

The NAMA chair is planning to meet with some delegations on 12 December to discuss non-tariff barriers and the issue of ‘ad valorem equivalents’ (converting specific ‘per tonne’ duties into tariffs based upon a percentage of the value of the good in question). He will report on this meeting, as well as further consultations with small economies and recently acceded Members, to a gathering of all Members on 13 December.

With regard to agriculture, negotiating group Chair Ambassador Crawford Falconer (New Zealand) has held a series of informal ‘fireside chats’ with about two dozen ambassadors, focusing on market access and domestic support issues. At the most recent such gathering on 29 November, he engaged in a ‘what if’ hypothetical exercise to probe the extent to which Members might be flexible if their partners also shifted their positions.

Falconer reportedly asked whether the US would consider capping its trade-distorting farm subsidies at USD 15 billion along with rules on how some of the money could be spent, if the EU agreed to cut farm tariffs by an average of 60 percent with disciplines on countries’ ability to shield products from tariff reduction. Both would represent substantial changes: Washington’s existing offer would limit these subsidies to USD 22.5 billion, still higher than the approximately USD 19.7 billion that it actually doled out last year. The EU has officially proposed tariff cuts worth approximately 39 percent; it has hinted at going as high as 50 percent but not yet tabled any formal offers explaining how it would do so.

Sources report that the US said little about the hypothetical scenario. The EU criticized it for demanding too much of Brussels and too little of Washington. India, too, said that the scenario was not appropriately balanced, arguing that it would not be in a position to finalise disciplines governing its ability to shield ’special products’ from tariff cuts without knowing the future ceiling on rich country farm subsidies. Brazil, for its part, said that the idea was interesting and could inform future discussions on the subject. One delegate said that Falconer accomplished his stated goal of making delegations ‘uncomfortable’ about their current negotiating stances.

At time of writing, Falconer was set to hold another ‘fireside chat’ on 6 December. NAMA chair Stephenson has tentatively scheduled a meeting from 22-24 January. However, he has acknowledged that if Members are to agree on a framework for a future NAMA deal by March, discussions on ambition-defining issues such as the formula and flexibilities for developing countries will have to start from earlier in the month. Sources say that although he did not indicate how this could happen, he suggested that one option could be to hold similar ‘fireside chats.’

Ministers to meet in January, but when?

Speaking in Brussels on 6 December, EU Trade Commissioner Peter Mandelson called for ministers from influential WTO Members to meet in early January to try to get the Doha Round negotiations back on track. Although a ‘mini-ministerial’ meeting is already due to take place on the sidelines of the World Economic Forum in Davos from 24-28 January, Reuters reports that the EU trade chief would like an earlier chance to kickstart the talks. "I hope a more focused ministerial meeting will be possible before [Davos]," he said.

Senior Indian trade official Gopal Pillai has also suggested that waiting until the end of January to try to revive the talks could well be too long. "We need to push the talks fast as time is running out," he said last week.

However, Lamy believes that the conditions necessary for a successful ministerial-level meeting are not yet in place, since Members’ positions remain largely unchanged. "For the moment there is still a bit of work to do to get the ministers around the table," he told a news conference in Paris on 6 December.

ICTSD reporting; "WTO talks may resume by Jan; deal possible: Pillai," Press Trust of India, 1 December 2006; "WTO chief says trade deal still possible by end-2007," REUTERS, 6 December 2006; "WTO DG urges parliaments to promote Doha round of talks," ITAR TASS, 2 December 2006; "WTO talks suspension has created disquiet: Lamy," REUTERS, 1 December 2006; "Trade talks heading for ‘total failure’, says WTO chief," SUNDAY TELEGRAPH, 3 December 2006.