EU’s Mandelson looks beyond Doha

Nearly seven years of on-off World Trade Organization negotiations suffered yet another setback in July when talks between ministers collapsed amid recriminations. Talks resume in Geneva this week, the latest in a long line of last-ditch rescue attempts for the WTO’s Doha round. But trade experts are skeptical about the chances of a deal -- one put it at no more than 10% -- given the acrimony of July’s breakdown plus the proximity of elections in the United States and India, both of which were blamed for the flop.

“I feel as if we have a priceless, wafer-thin vase of great craftsmanship in our hands but which now has to be carried from here over a very slippery floor,” Mandelson said last week. “One false move and the whole thing could crash into many pieces,” he told the European Parliament.

Failure now would end already dwindling hopes of settling the core of the DohaUS presidential election. After that, all bets are off. Most officials say that, at best, the talks would be suspended. At worst, Doha could be the first multilateral trade round to collapse, a gloomy signal for other global projects such as fighting climate change. Such a failure would be a blow to Mandelson, who criss-crossed the planet after previous flare-ups to urge other trade powers not to give up on Doha. round -- how to open up trade in farm and manufactured goods -- before the

His predecessor as EU trade chief, Pascal Lamy -- now head of the WTO -- was one of the main proponents behind the launch in 2001 of the WTO’s Doha round, aimed at bringing down barriers to exports of goods and services. The 27-nation EU, itself a symbol of multilateralism, is the world’s biggest trading bloc. It has long made the WTO round a priority of its international policy.

 
DRESSING-DOWN

In his drive to get Doha done before his term ends in November 2009, Mandelson has endured public dressings-down by French presidents Jacques Chirac -- champion of Europe’s farmers -- and Nicolas Sarkozy, who wants more protection for European companies and jobs. Sarkozy has accused the British commissioner of naivety in his free-market views.

This year, Irish farmers angry at the prospect of more competition from outside Europe burned images of Mandelson in protest at his WTO strategy. But the sharper the criticism, the more Mandelson has defended the need for a WTO deal -- not just in terms of the new market openings it would create for European exporters, but also, he says, because it would lock emerging export powers such as India and China into the world trading system.

“He took risks and chances that many of his predecessors would have had great trouble in doing. For example, to fight with Sarkozy at a time when the French held the EU presidency, that was quite something,” said Fredrik Erixon, a director at the European Centre for International Political Economy. But Mandelson can do little now to heal the rifts that stand in the way of a Doha deal, and if there is no last-minute compromise in the technical-level talks in Geneva, he has few other opportunities to leave his mark on EU trade policy. In 2006, he launched a plan for trade agreements with some of Asia’s biggest and fastest-growing economies as a form of insurance policy against the risk of a WTO flop.

Of those, only a deal with South Korea looks within reach before the 2009 Commission handover -- if a compromise can be found on the sensitive issue of cars. But mass demonstrations in Seoul this year against a US trade deal rocked Korea’s new government, making it nervous about future agreements. Negotiations with India and other emerging South East Asian economies are moving only slowly, while talks on a deal with a group of Gulf states remain stuck after nearly 20 years.

Foot-dragging by the leftist leaders of Bolivia and Ecuador means tying up talks quickly for a trade deal with Colombia and Peru would require the EU to drop its preferred option of a region-to-region pact with the Andean Community group. Also to be resolved are EU trade deals with former colonies in Africa and other regions that have been bogged down in disputes over how best to use trade for development ends. But Mandelson knows the perils of rushing deals.

In 2004, Lamy failed in a last-ditch push for a trade deal with the Mercosur countries of South America, chief among them Brazil and Argentina. An EU-Mercosur deal remains on hold pending the fate of the WTO talks.

 
LEGACY

Mandelson’s real legacy, supporters say, may be his refusal to heed calls to put up new trade barriers from France, Italy and other EU countries demanding more protection for their manufacturers against the rise of Asia’s export powers.

“When he came in, a lot of people would have argued that the EU was more protectionist than the US and now you can’t put a cigarette paper between them,” said Syed Kamall, a British Conservative member of the European Parliament and trade expert. “That’s partly because the US has grown more protectionist. But Mandelson has stood up to people like Sarkozy and that is very important to those of us who believe in free trade.”

Others say Mandelson may yet have a trick up his sleeve. Joe Guinan, a trade specialist with the German Marshall Fund think-tank, referred to rumors in Brussels that a hard core of WTO members may agree a global deal based on the Doha round, simply leaving out those who refuse to sign up. “It wouldn’t surprise me if someone with a clear ambition to leave Brussels with a legacy would try something ambitious like that,” Guinan said. (Reuters)