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):
A trade and diplomatic source said the meeting produced no tangible results, noting that US Trade Representative Susan Schwab turned down other nations' calls for deeper cuts in domestic agricultural subsidies.
During the day conflicting press statements pointed to internal disagreements within the E.U. The E.U. Trade Commissioner, Peter Mandelson. sounded conciliatory, but was contradicted by the French Trade Minister and the Austrian Agriculture Minister (Talks on trade treaty off to shaky start, Jane Wardell, AP via Business Week, June 29):
Mandelson said the 25-nation bloc was "prepared, if the circumstances are right, significantly to improve our offer in agriculture market access, moving towards and close to what the G-20 have asked for."
However, French Trade Minister Christine Lagarde said Mandelson was given no authorization at an EU meeting earlier Thursday to improve upon Europe's existing offer of a 39 percent cut in allowed levels of farm tariffs -- well below the 54 percent demanded by the G-20, led by Brazil and India.
"It would be a major error to suggest a further opening in market access," added French Agriculture Minister Dominique Bussereau. "That's a trap and we want to make sure the commission avoids falling into that trap."
Austrian Agriculture Minister Josef Proell said moving toward the proposal of the G-20, "is not possible for EU farmers." Austria currently holds the EU presidency.
Brussels does not need a formal mandate from member states to negotiate on trade issues and France could only block a deal after it was put to the WTO's members for ratification -- but the division does not bode well for the start of formal talks Friday.
Another story covering the same EU ground: EU split on trade as WTO starts marathon negotiations (Roundup) (Monsters and critics, June 29)
A group of 11 large developing countries balked at industrial tariff concessions requested by the U.S. and E.U. (Poor nations set high bar on industry goods at WTO , Reuters, June 29)
A group of big developing countries said on Thursday they would only cut their tariffs for industrial imports by a lot less than reductions sought by the European Union and the United States....
The 11 big developing countries -- including Brazil, India, Indonesia, Egypt and South Africa....
Under an agreement already reached at the WTO, industrial tariffs will be cut according to a so-called 'Swiss' formula under which the number of the coefficient acts as both the ceiling for future duties and determines the depth of cuts.
The United States and the EU want a coefficient of 15 for developing countries and 10 for developed countries, saying numbers above 15 would deny new access for their exporters to some of the world's fastest-growing markets.
On Wednesday, the WTO's Director-General Pascal Lamy suggested a coefficient of 20 could be part of a possible solution to unblock the negotiations.
A senior U.S. trade official said on Thursday that figure "certainly doesn't work for us."
"Every single point above a coefficient of 15 exponentially diminishes the amount of liberalisation that even developing countries would get on products of interest to them in other developing country markets," the official said.
Moreover, developing countries rejected a suggestion from the WTO Director-General that a $20 billion cap on U.S. trade distorting subsidies might be part of a deal: Interim Doha deal proves elusive (Frances Williams, Financial Times, June 29). Celso Amorim, Brazil's Foreign Minister:
He also rejected the “three times 20” overall bargain suggested by Pascal Lamy, director-general of the World Trade Organisation. This would link the G20 proposal on farm tariffs to a $20bn ceiling on US farm subsidies and a formula coefficient of 20 (roughly speaking, a maximum tariff of 20) for imports of industrial goods into developing countries.
“Certainly $20bn as a ceiling will not work,” he said, noting that this would imply an increase from current US farm spending. G20 members, which include India, China, Indonesia, could not accept the sweeping cuts in industrial tariffs implied by a coefficient of 20, he added.
The G1o is a group of net importers of agricultural products that would like to protect tariff protection for their farmers.
The Swiss Economics Minister Joseph Deiss is representing their interests in Geneva this week. Today he indicated a willingness to compromise, somewhat, but indicated that, realistically, the key initiatives in the talks would come from elsewhere: Deiss calls for give and take at WTO talks (Simon Bradley, Swissinfo, June 29):
Speaking in Geneva as ministers began make-or-break talks at the World Trade Organisation, Deiss signalled that the G10 group of net agricultural importers could be prepared to make concessions.
But he said the group was determined to defend its position on crucial issues such as market access....
Deiss said progress in the Doha Round depended on the main players working together more.
"If the United States, European Union and leading G20 countries can't do so, then it's very difficult for others to make proposals to advance the negotiations," he told swissinfo....Ministers from the G10 have reconfirmed their willingness to find answers to the agriculture negotiations with an outcome acceptable to all participants.
While seeking a balanced result for all three pillars, market access is clearly the most sensitive issue for the G10 countries.
"The G10 and Switzerland continue to oppose tariff capping on agricultural products and hope to reach agreement on exceptions for farm goods considered 'sensitive'," explained the economics minister.
The argument focuses on how many products should be considered sensitive. The EU says it should be eight per cent of tariff lines. The US and the G20 have offered one per cent, while the G10 wants 15 per cent.
Deiss explained that the calculation of average tariff cuts and the list of "sensitive" products were closely interlinked and they had to be negotiated together....
Deiss also indicated that the G20 "54%" agricultural tariff proposal was unacceptable: G10 rules out Lamy’s farm talks suggestion (Reuters via India's Financial Express, June 29)
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