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GLOBAL TRADE DAILY WTO TALKS IN GENEVA TRADE ON THE EDGE Negotiators struggle on Doha terms EU Trade Commissioner Peter Mandelson: Patterns of trade are changing. GENEVA – Trade negotiators are engaged in intense daily discussions in Geneva in a last-ditch effort to reach a global trade agreement over the next few weeks. Having missed a self-imposed deadline of April 30 to agree on modalities – specific formulas and time frames – for agriculture and industrial tariffs negotiation, pressure has intensified to produce an outcome by mid-June. Without an agreement on modalities, members cannot submit schedules of tariff cuts because they don't have a formula on which to base the cuts. And without the schedules, there can be no agreements. Some four-and-a-half years have passed since the Round was first launched in Doha, Qatar. If members have not been able to reach an agreement over that time, the chance of reaching one within six weeks appears slim – unless, of course, there is a sudden burst of political will. "We have to have real, tangible, meaningful, substantial progress through May and June if we are going to get things done here by summer – which is what we have to do to get the schedules together," said a US trade official at an April 21 briefing in Geneva. Pascal Lamy, Director General of the World Trade Organisation, said: "We may have missed the deadline, but we are not in deadlock." He added: "Genuine and important progress has been made, but not fast enough to allow us to reach agreement on modalities by the end of the month." Later, WTO spokesman Keith Rockwell told ATI: "The obvious inability to reach the deadline is disappointing, but not in itself a catastrophe. The good news is that we have a textbased approach in agriculture to work on. Work has been intensified to finish it in coming weeks." Instead of having a weekly meeting, agriculture negotiations will work through continuously until they find common ground. A trade source in Geneva told ATI: "You are seeing governments negotiating in earnest on concrete numbers which we have only seen in the last couple of months. If it was six months ago, we would be more sanguine about the prospects. It is now very late in the day." The Trade Watch source said that, even if the big players reach agreement, all 149 WTO members need to accept it. "Everyone needs to feel that they have ownership of the outcome. There is a lot that needs to be done. We have three to six weeks – that is it," the source said. Until an agreement in agriculture is reached, negotiations on industrial goods and services are unable to move forward. One source explained that members are waiting to see what they can get in agriculture before making other offers. Of course, agriculture is no longer the main driver of world trade. EU Trade Commissioner Peter Mandelson says the biggest development gains would not come from agricultural liberalisation. "Lasting economic and social development requires a broad basis for growth. Agriculture is not, in fact, where developing countries would receive the largest of earliest benefits. Patterns of international trade are changing." Indeed, although Korea, Japan, and China are now among the world's largest exporters of industrial goods, they have clung stubbornly to protect their diminishing agriculture sectors. Mandelson says high-tech exports from developing countries have actually increased 20 per cent a year since 1980, twice as fast as in industrialised countries. The share of high-tech exports in the developing countries’ total is now around one fifth. Meanwhile, the share of agricultural products in trade in goods by developing countries has dropped from 42 per cent in 1970 to 11 per cent today. "So my starting point, as always, is that for Doha to succeed we need a balanced ambition in all areas of negotiation, and a proportionate contribution from all players in the talks. We PROSPECTS of a breakthrough in the Doha Round of World Trade Organisation talks aimed at preserving and enhancing the global multilateral trading system are diminishing, with negotiators missing a self-imposed deadline. Failure would lead to a greater rush for bilateral Free Trade Agreements which, with their conflicting ground rules, especially in terms of rules of origin, could see the real costs of international trade escalate. The language of Doha is stilted and the subject itself hardly the stuff of light dinner party conversation, but what does emerge from Geneva talks will have immense potential repercussions for world economies. In our special report on the state of global trade (pages 9-16), we examine the geographic fault zones which have already emerged as governments rush to fill the void left by a failure of world leaders to reach settlement. Increasingly, growth in cross-border trade is limited largely to neighbouring countries within geographic zones – a trend which should concern every trader and manufacturer . . . need a Round that unlocks the door to the development process across the full range of economic activity – agriculture, goods and services," says Mandelson. So far, each country is sticking to its position and waiting very much to the last minute, according to Geneva trade sources. Each country knows that it has to offer more – and this is especially true of the so-called "triangular central element". The US must do more to cut domestic subsidies to US farmers, while the Europeans must increase access to their agriculture market, and India and Brazil must open up their industrial goods access further. "Everyone knows what he has to do to move forward, but each is waiting for the other guy to move first," said the source. The US is putting the blame squarely on the EU. But Mandelson counters that the US is making "high sounding, unrealistic demands". Speaking to an audience in Finland last month, Mandelson said all the main players, including the EU, are required to do more and “must be ready to supplement existing offers if all the pieces of the puzzle are to fall together.” The Doha Round is scheduled to conclude in December – a deadline effectively required by the scheduled expiration in mid-2007 of the US President's Trade Promotion Authority (TPA). Under TPA, Congress restricts itself only to approve or reject a negotiated trade agreement, within strict time limits and without amendments. Missing the April 30 deadline simply makes achieving successful conclusion by December that much more difficult, said the US source, because the technical work involved in drafting the trade treaty would require several ➔ CONTINUED PAGE 11 ASIA TODAY INTERNATIONAL MAY 2006 | 9
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