As this sample of headlines suggests, there wasn't much progress today:
- Global trade talks stalled and on verge of collapsing. (James Kanter, International Herald Tribune);
- Lamy warns WTO talks face crisis (Richard Waddington and Sophie Walker, Reuters);
- WTO round on the ropes as ministers launch talks (Richard Waddington and William Schomberg, Reuters);
- WTO: Global trade talks at a crisis (Bangkok Post);
- WTO talks appear to be heading for failure (The Hindu);
- WTO nations at loggerheads over trade barriers (Jonathan Fowler, Mail and Guardian online, S. Africa);
- Divisions continue to hamper trade talks (AP via Boston Globe);
- WTO talks in crisis as US rejects farm suppport cuts (Shada Islam, Monsters and Critics);
- WTO talks fail to make breakthrough (Richard Waddington and Sophie Walker, Reuters).
Negotiators and trade ministers have been unable to break into the iron triangle of subsidy, ag tariff, and industrial goods tariff concessions.
The E.U. Trade Commissioner, Peter Mandelson, made some interesting comments about the "EU 'landing ground'" at an informal Trade Negotiating Committee (TNC) meeting this morning: Mandelson sets out EU “landing ground” for farm/manufacturing deal (June 30) - according to the abstract:
In it he sets out what the EU believes constitutes a realistic “landing zone” for the Doha negotiation on farm tariff cuts, trade-distorting farm subsidies and industrial tariff cuts. He urges all sides to show further flexibility. Insisting that the EU will try to get as close as possible to the G20 proposal for farm tariff cuts, he says that the same level of ambition must also apply for US domestic trade-distorting farm subsidy cuts which must come down – not as far as to the $12 billion ceiling demanded by developing countries but “considerably”. Mandelson argues that a “real cuts for real cuts” scenario demands that such an agreement is completed by the G20 advanced developing countries offering
a formula for industrial tariff cuts with a coefficient of “15, not 20”.
For context, let me start by quoting WTO Director-General Pascal Lamy's comment on his perspective about the key to an agreement:
"If I was looking for a magic number . . . I would probably look around 20." He said this would mean the US adopting a $20bn ceiling for farm subsidies, developing countries cutting industrial tariffs to no more than 20 per cent and adoption of the G20's suggestion on farm tariffs.
The G20 proposal was an average cut of 54%, so Mandelson appears to be saying that, given conessions by its negotiating partners, the EU could move from its current offer of 39%, towards (but not to) 54%.
This industrial tariff coefficient refers to the coefficient in a simple Swiss formula, which relates the original tariff to the new tariff. The formula is:
New tariff = (C*"Old tariff") / (C+"old tariff"), where C is this coefficient of 15 or 20. The larger the coefficient, the smaller the tariff reductions.
Internal conflicts are making it complicated to interpret the EU negotiating posture. The Kantor story (Global trade talks stalled and on verge of collapsing.) in the list above, is very good, and provides details on the EU's difficulties:
The dispute between France and Mandelson, which flared Thursday, was an early sign that last-ditch efforts to reach an outline agreement to cut tariffs and subsidies across the world were getting stuck.
The squabbling also was further evidence of the bitter battle at the heart of Europe over whether to reduce traditional protections for industries like farming and textiles, which are struggling to compete with countries with low-cost labor, and to instead seek advantages for more competitive sectors in manufacturing and services.
After meeting in Geneva with trade ministers from 25 member states, Mandelson said the EU was prepared to "significantly improve" offers on tariff reductions on farm products to levels that would be close to what big, developing countries like Brazil are demanding - in the range of 50 percent.
"There is no room to maneuver in that direction," the French trade minister, Christine Lagarde, said minutes later during another news conference. Instead, France was holding fast to a prior EU proposal to cut tariffs by no more than about 38 percent. Further cuts were "a path we are not prepared to take," she said.
The French agriculture minister, Dominique Bussereau, said that the German chancellor, Angela Merkel, supported the French position, showing that "France is not alone."
On Monday, Merkel asked for "massive improvement" from the EU negotiating partners on industrial tariffs. But it was not possible Friday to confirm whether Merkel's position was that the EU had no further room to cut its own farm tariffs.
By itself, France does not have the power during the negotiations to stop Mandelson from seeking whatever agreement that he thinks is best for Europe. But Mandelson will need to avoid alienating big agricultural producers like France and Ireland because, EU officials said, a final deal would probably require a unanimous vote among EU members.
While France put up a formidable front, trade diplomats said there could be one way out of the impasse in which France compromised on tariffs in exchange for the chance to more effectively promote its specialized foods overseas. Strangely, posters displayed at the EU building in Geneva that advertise French drinks like Champagne, cassis and anisette could provide a clue to what - among other concessions on farm products - might help to soften the French position.
Many of these local brands have what are called "geographical indications," and France is particularly keen to protect the designations for products made by modern-day French agricultural producers.
Lagarde acknowledged that preserving brands that are linked with territories was on her agenda in Geneva.
Geographical indicators "can serve everybody, not just in Europe but even in the United States," she said, adding that she had lobbied American politicians on the issue and told them that marketing "peanuts from Georgia" would be a good way to help keep a U.S. product competitive overseas.
The sparring between Mandelson and Lagarde was an echo of events last year, when Philippe Douste-Blazy, the French foreign minister, sought to force Mandelson to seek approval from the 25 EU members before making any fresh offers at the trade talks. EU foreign ministers rejected that proposal.
Mandelson also faced pressure last year from France and Italy to shut off European markets to cheap undergarments and shoes from China. Mandelson bowed to their demands for protection, but insisted on gradual protections in the case of shoemakers.
Mandelson said Thursday that he was not reinterpreting his mandate. Instead, he said, his interests were in preserving thousands of European jobs, and he warned all parties to the talks that "the price of insisting on everything you want is failure."
Speaking alongside Mandelson, the Austrian agriculture minister, Josef Pröll, turned the spotlight toward Washington. Pröll said it was time "especially for the United States to put their money where their mouth is" by slashing the subsidies that it pays farmers, payments that result in overproduction of rice and other crops.
One discouraging piece of news - there are no more meetings of the G6 (US, EU, Japan, Australia, India, and China) scheduled for the weekend. Richard Waddington and Sophie Walker report (WTO talks fail to make breakthrough , Reuters, July 1)
But there will be no further negotiations this weekend in Geneva between the G6, which has been regarded as a key sounding board for any new proposals because of the wide range of trading interests represented by the countries.
Asked whether the six had decided that they were not going to get a deal this weekend, Nath [Kamal Nath, the Indian Commerce and Industry Minister - Ben] replied. "Yes, we know that. In any case I am getting a flight ... tomorrow."
A session of the full 149-state WTO, initially set for Saturday morning, has been postponed, although groups of ministers will continue to meet.
But a senior diplomat from a G6 country told Reuters that the Saturday session would discuss possible next steps, although no dates would be set for future ministerial meetings.
It's not clear from the story what meeting this senior diplomat is referring to.
This post was revised on June 30 and July 1.
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