US blamed for inflexibility as WTO talks collapse
Tuesday, July 25, 2006, 11:20
Most experts and officials think Congress unlikely to renew that authority, rendering any near-term agreement impossible. The impasse led Pascal Lamy, director-general of the World Trade Organization, to suspend the five-year-old talks aimed at dismantling market barriers and stimulating global economic growth. The WTO had aimed to seal an accord this year. „The US was unwilling to accept or even acknowledge the flexibility of others shown in the room,” EU Trade Commissioner Peter Mandelson told a news conference in Geneva yesterday, after two days of talks. This action has led to the round being suspended. The WTO is trying to cobble together an accord that would provide at least $96 billion in global tariff reductions, lower subsidies and savings on freight costs. The stumbling "Doha round" of trade negotiations fell into indefinite suspension after last-ditch talks ended in recrimination. An emergency meeting in collapsed over irreconcilable differences about farm-liberalization. The US continued to argue for big cuts in farm import tariffs to open up markets for its farmers, a demand fiercely rejected by the EU, Japan and India, which said the US had first to go further in offering to cut agricultural subsidies.
When negotiations began in 2001, the goal was an agreement estimated by the World Bank to be worth $800 billion - about the size of South Korea's economy. The deal scuttled today would have been worth about as much as Romania's economy. „This is a major setback,” Brazilian Foreign Minister Celso Amorim told journalists. „We are as near to a disaster as we can imagine.” Months may pass before negotiators resume their discussions, he said.
„We will certainly not conclude the round this year as we were mandated to do,” Lamy said at a news conference. „We are in dire straits.” The US didn't sweeten its offer to scale back spending on its farmers because trade partners were more concerned with protecting sensitive commodities such as beef with exemptions from tariff cuts, US Trade Representative Susan Schwab said. She brushed off the other governments' assertions that the US is to blame for the breakdown in talks. „It's very clear that the United States is in very, very good company,” Schwab said by telephone to reporters in Washington. „The countries that have tended to be finger-pointing at this point are the ones that are reluctant to act in terms of market access.” Lamy has demanded more flexibility from larger governments, calling concessions by the EU, the U.S., India and Brazil vital to the talks. He says the US must impose tougher limits on aid to farmers, the EU has to cut its protective tariffs on commodity imports and India and Brazil should slash customs duties on industrial goods.
After last week's meeting of the Group of Eight industrialized nations -- during which G-8 leaders asked Lamy to find a way to break the stalemate by mid-August – each government „except for the U.S.” indicated it would be more accommodating in yesterday's meeting, Mandelson said. The administration of George W. Bush believes it is „entitled to compensation dollar for dollar, for the farm subsidies they lose, from developing countries in the form of new market access,” Mandelson said. Until the US recognizes that it must overhaul its farm-aid policies, „I don't see how we can resume” the talks, he said. The US was the sole government among the six not to improve its offer, Indian Commerce Minister Kamal Nath said. „It's very clear that the EU made a movement, and everybody put something on the table except for one country, who said we can't see anything on the table,” he told reporters.
The EU has offered to trim its farm tariffs by an average of 50%, near the 51% cut demanded by a group of developing countries led by Brazil and India. The 25-nation bloc also says it wants to shield 8% of tariff lines from the highest duty cuts. For its part, the US says the highest tariffs on farm goods should fall by 70% and only 1% of products be protected from duty cuts. Still, the US has declined to lower the more than $22 billion limit in annual payments that it set last year in the talks. The US now spends as much as $19 billion a year on farm support. Nath said the concept of the so-called Doha Round of discussions „is inverted” because it asks poor nations to pay for cuts to market-distorting subsidies that „shouldn't be there to start with. This round is not about opening up markets in developing countries, to displace farmers and give industrialized countries access to agricultural markets.”
The previous round of talks known as the Uruguay Round, which started in 1986, caved in at a summit in Brussels in December 1990. At that time, governments told Arthur Dunkel, then the head of the WTO's predecessor, the General Agreement on Tariffs and Trade, to look for ways to bridge their differences. Dunkel put forward a text a year later that eventually led to an accord in 1993, signed in 1994. The Doha Round „is not dead, but it's definitely between intensive care and the crematorium,” Nath said. German Economy Minister Michael Glos agreed. „The current crisis doesn't mean the definite end of the Doha Round,” he said in a statement. „The month of August should be used to revisit internal positions and to draw the balance in Geneva in the autumn. It is too early to ring the death knell on the Doha Round.” The Dec. 31 deadline for completing the trade round has been dictated by the 2007 expiry of special US presidential powers to negotiate on trade.
„If they're not able to get their act together in the next few weeks, an agreement could be delayed until at least 2008 or more likely 2009,” said Adrian van den Hoven, director of international relations at European employers' federation Unice in Brussels. Once the Bush administration's negotiating authority ends, „people don't want to have to engage in lobbying with Congress” if that power isn't extended, he said. WTO members are likely to file more trade complaints against each other if the Doha Round crumbles, Lamy said. „There will be all the more litigation,” he said. „We have to be prepared for that, if the round were to fail definitively. No doubt about that.” While today's collapse is „very serious,” previous trade rounds and high-level WTO meetings also „broke down on a temporary basis, but every time we have overcome this,” said Japanese Agriculture Minister Shoichi Nakagawa. The Doha round, which began in November 2001, will now enter indefinite suspension unless and until a consensus in the World Trade Organization's 149 member countries can be found to revive it. (Bloomberg, Financial Times)