Bridges Weekly Trade News Digest • Volume 11 • Number 3 • 31st January 2007

Doha Negotiations Set To Pick Up Despite Lack Of New Offers

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The faltering Doha Round trade talks appear set to pick up. At the time of going to press (31 January), WTO Director-General Pascal Lamy was in a heads-of-delegation meeting in Geneva. This comes hot on the heels of an agreement by trade ministers from leading Member countries to push for an accord, despite not having made any concrete progress towards a deadlock-breaking compromise at a gathering last weekend.

Sources expect Lamy to call for resuming full-scale regular negotiations. The round has been suspended since last July, primarily over deep divisions on farm trade. Officials have continued to meet informally since then, especially after a ’soft’ relaunch of discussions in November (see BRIDGES Weekly, 22 November 2006).

At a 27 January meeting on the sidelines of the World Economic Forum summit in Davos, ministers from nearly 30 countries called for a resumption of full-scale negotiations. Lamy said there that he would monitor progress in the intensified negotiations, and convene a ministerial-level gathering to take political decisions if and when it became appropriate. "It won’t be tomorrow," he cautioned, maintaining that the round remained "doable."

Resuming regular activity in Geneva would mean that the negotiating groups would once again start holding regularly-scheduled meetings, in either formal or off-the-record mode, suggest sources. The pace of informal discussions over the past two months had been largely left up to the chairs of each group. Negotiators suggested that Lamy would tread cautiously while announcing a resumption, particularly since no country has openly changed its bargaining position since the July suspension.

Meanwhile, White House officials have indicated that US President George W. Bush will this week call on Congress to renew his ‘trade promotion authority’ (TPA) mandate, currently set to expire at the end of June. Extending it is widely believed to be essential to concluding the Doha Round in the foreseeable future. US trade officials say that a breakthrough in the negotiations by spring would help win Congressional support for TPA renewal. Also in Washington this week, the administration is expected to table its proposals for future farm spending, which will weigh heavily on farm subsidy negotiations at the WTO.

Although UK Prime Minister Tony Blair took the political signals from Davos to mean that an accord is "now more likely than not," Egypt’s foreign minister, Rachid Mohammed Rachid, noted that similar noises from the past two years had not amounted to anything. Business groups have in the past week urged political leaders around the world to successfully conclude the negotiations.

EU Trade Commissioner Peter Mandelson said that talks were "back in business" and "in the endgame." "This is going to end in success or failure in the next two to three months," he stressed.

Mandelson travelled to Geneva after the summit, as did his US counterpart Susan Schwab and Brazilian Foreign Minister Celso Amorim, for meetings with each other as well as with Lamy.

Focus shifts to ‘reverse engineering’

For the past year, the head of the WTO has said that the basic ingredients of a Doha deal are clear: the US must agree to deeper cuts to its ceiling on trade-distorting farm subsidies; the EU, to offer more agricultural market access; and developing countries, such as Brazil and India, to further reduce their industrial tariffs.

In Davos, ministers seemed to agree that the approach negotiators had been taking - first to negotiate ‘headline’ percentage figures for overall tariff and subsidy cuts, and only then discuss exemptions - had failed to produce a deal, especially on agriculture.

In recent weeks, negotiators from several countries have been attempting the reverse: to flesh out details about the various exemptions and rules that will determine the actual extent to which market access will grow and subsidy spending be restrained, and then use them to "reverse engineer" an overall accord.

US Trade Representative Susan Schwab told reporters in Geneva on 30 January that the new "focus on key sensitivities and key priorities and then reverse engineering [them] into top line number is a promising approach," one that "has a chance of success" (see BRIDGES Weekly, 17 January 2007). She stressed, however, that a great deal of technical work still remained to be done for the contours of a possible deal to become apparent.

Swiss Economics Minister Doris Leuthard, who chaired the ‘mini-ministerial’ in Davos, said that participants had agreed on the need for bilateral and plurilateral consultations for such technical work, particularly among the major players in the negotiations. This would be accompanied by transparency to ensure that other Members’ concerns do not go unaddressed, she added.

While in Geneva, Schwab described how the results of such meetings could be multilateralised. One option would be an "informal expansion of concentric circles where you start widening the circles of discussion" to cover increasing numbers of countries. The other would involve the regular WTO negotiating groups.

Broad differences appear to persist between the US and the EU in the agriculture negotiations. In Davos and Geneva, Mandelson repeatedly expressed the belief that the "emerging landing zone" for an accord would be around the G-20’s proposal, "even if we [the EU] cannot meet it precisely." "Bidding for more would assuredly commit us to failure," he said.

The G-20’s proposed 54 percent average farm tariff cut is well below the 66 percent average cut sought by the US, though still higher than anything Brussels has offered. Asked about the EU trade chief’s remarks, Schwab said "I don’t think we know where a landing zone is."

A crucial set of ‘non-headline’ figures for many developing countries will be the number and treatment of ’special’ farm products that they will be allowed to slate for gentler tariff cuts based on food security, livelihood security, and rural development concerns. G-33 ministers present in Davos called for placing the concerns of poor, small-scale farmers "at the forefront of all concerns". They stressed that "developing countries need time and policy space to improve their poor farmers’ productivity and incomes, and to curtail the risk of dislocation from agriculture from unmanageable agricultural trade liberalisation."

Trade diplomats sceptical

Although Geneva-based trade diplomats say that they have been given a firm mandate to "try to bring the round to closure," many doubt that the major players will be able to bring themselves to a compromise in the time available. Some developing country ambassadors shared scepticism that the US and the EU would be able to take the steps necessary for a deal. Nevertheless, the pace - if not necessarily the substance - of negotiations in Geneva seems set to intensify.

While governments wait for a breakthrough, two top Congressional Democrats in Washington have indicated that they would be open to renewing the Bush administration’s trade promotion authority. Senator Max Baucus of Montana and Representative Charlie Rangel of New York issued a joint statement on 30 January saying that they would be willing to extend the negotiating mandate if it were modified to include assistance for affected workers, congressional consultation requirements, and stronger provisions on enforcement, labour rights, and the environment. The two senior lawmakers chair the Congressional committees that have jurisdiction over all US trade policy.

Rangel underlined his desire to cooperate with Republicans so that TPA renewal can win support in Congress, reports Reuters. "If we don’t give trade promotion authority [to the White House], we’ve got to have a good reason for not giving it," he told a committee hearing.

ICTSD reporting; "House Democrat seeks way forward on trade," REUTERS, 30 January 2007; "White House urges renewal of Bush trade authority," REUTERS, 29 January; "Democrats Say They Intend to Reshape Bush’s Trade Authority," DOW JONES, 30 January 2007; "Ministers agree to resume WTO talks; Blair upbeat," REUTERS, 29 January 2007; "World trade negotiators ‘back in business’," REUTERS, 27 January 2007; "Ministers inject fresh life into Doha talks," FINANCIAL TIMES, 28 January 2007; "Plan to Revive Trade Talks Is Offered in Davos," NEW YORK TIMES, 28 January 2007.