The Custom-House

Friday in Geneva

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:

Thursday in Geneva

This was the first day of the latest Doha Round meeting of the WTO trade ministers.  Today was meant to be a day for informal contacts between ministers and delegations, a day for coalition groupings to meet and discuss their plans.

A lot of discussion in recent days has focused on the so-called "triangular" approach to an agreement.  This involves (1) a reduction in U.S. agricultural subsidies, (2) a reduction in E.U. tariffs, and (3) a reduction in developing country industrial tariffs. 

On the 28th, WTO Director-General Pascal Lamy characterized this:

"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 agricultural tariff proposal is a 54% average reduction:

The US has proposed a 67 per cent average cut in farm tariffs, well above the EU's original 39 per cent offer and the 54 per cent suggested by the Group of 20 emerging market nations, including India. But two groups of nations with heavily protected farmers - the rich G10, including Japan and Switzerland, and the poorer G33, including India and Indonesia - have demanded exemptions for a range of products.

(Head of WTO outlines terms for possible Doha accord , Alan Beattie, Frances Williams and,Delphine Strauss, Financial Times, June 28)

A G6 meeting today between the key participants, the U.S., E.U., Japan, Australia, Brazil and India, doesn't appear to have been productive.  As reported in The Age (Deadlock continues in global trade talks , June 30):

The Doha Ministerial today

In yesterday's (June 28) Trade Negotiations Committee briefing, WTO Director-General Pascal Lamy indicated that Thursday "is left open for members to consult among themselves as many of their ministers and other delegates arrive in Geneva."  (Lamy outlines schedule for ‘moment-of-truth’ meetings , WTO, June 28)

The most detailed information I have on what might happen today, and why it may be important, is from this Martin Khor story Sequencing the WTO "Ministerial" and Scenarios of the Stages it has to Clear (Third World Network, June 27):

Lamy's plan

Pascal Lamy, the WTO Director-General,  described a preliminary schedule for this week's Doha Round negotiations today at an informal meeting of the WTO's Doha Round Trade Negotiations Committee (this is the committee established to oversee the Doha Round negotiations for the WTO).

The WTO web site has a press release,  and links to the text of his remarks and audio from the press conference that followed the meeting: Lamy outlines schedule for ‘moment-of-truth’ meetings (WTO website, June 28).

Here's the plan:

This week's Doha Round ministerial meeting

In a couple of days WTO trade ministers will gather to see if they can get the Doha Round trade negotiations moving.   

This week's object is to reach an agreement on sets of general principles or "modalities" for agricultural reform and industrial tariff reform.  The remainder of the year would then be barely enough time to fill in the details.

Two items the past week describe the mechanics of a meeting like this:

NY/NJ Port Security

Christian Becker (Homeland Security Watch) says the June 19 issue of the New Yorker has a good article on port security in New York and New Jersey: New Yorker story profiles port security in NY/NJ  (June 15) 

The author, William Finnegan, pays special attention to the relationship between organized crime and port security.

The article itself isn't on line.  Becker links to, and has a short extract from, a question and answer session with Finnegan.  Becker's excerpt from the Q&A describes a case in which an Al Qaeda operative tried to develop a relationship with a textile importer, in order to facilitate the delivery of explosives to a US port in a container.

Beer and battleships

In the early 1920s, the State Department began to review proposed U.S. loans in foreign countries to make sure these didn't undercut U.S. diplomatic objectives.

A 50-50 chance for Doha

The Australian Trade Minister, Mark Vaile, thinks the Doha Round has a 50-50 chance: Bush move gives Doha new life.  (Tim Colebatch and Orietta Guerrera, The Age, June 24):

The Bush Administration's recent efforts have been helpful, but:

What does the Doha Round have to offer?

The European Commission offers links to five studies of potential benefits from the Doha Round: Doha Round: Some Recent Economic Studies.

Links incude Anderson and Martin (World Bank); Polaski (Carnegie institute); Hertel and Keeney (Purdue University); CEPII (Paris leading institute in international economics); Copenhagen Economics; IFPRI (Washington based institute), Swedish National Board of Trade; Australian Productivity Commission, along with brief commentary.

Bhagwati & Ikenson

Jonathan Dingel went to yesterday's Cato Institute trade policy forum with Jagdish Bhagwati and Daniel Ikenson.  He reports over at Trade Diversion: Bhagwati & Ikenson on unilateral liberalization . 

Among other things, he provides an interesting insight into Bhagwati's perceptions of the difference between the approaches of former USTR Portman,  and our new USTR Schwab.