Global trade talks in jeopardy

By: | at 08:00 PM | International Trade  

Global trade talks, aimed at helping to lift millions of people from poverty, have turned rancorous after picking up speed with poor countries making tough demands that the United States says could wreck a deal.

Washington said the demands by developing nations could signal the end of the Doha round of talks, launched nearly six years ago to cut poverty and boost the global economy by opening up world trade.

“I don’t know if this is the last bluff before a big push or if the game is already over,” Pascal Kerneis, head of the European Services Forum representing European services companies, said.

“The blame game now is quite obviously already there but it’s not fair to say the EU and US have not moved.”

The US comments capped weeks of frustration by Washington which believes developing countries were not making enough concessions to produce a deal at the World Trade Organization (WTO) that could be sold politically at home.

Washington says it has moved on agriculture but has not seen a decent response on industry from developing countries. These say in turn a US move on farming is unclear or inadequate and say their development needs should override any concessions they make in industry.

The broad outlines of a deal would require the United States to cut its trade-distorting farm subsidies, the European Union and other rich countries to cut tariffs on food imports, and developing countries to open up their markets for industrial goods by cutting tariffs.


At the same time the Doha talks were conceived as a development round, and developing countries say the negotiations must reflect that original mandate.

The poorest countries, and new WTO members who made big concessions upon joining, are right to expect special treatment, said trade analyst and former WTO spokesman David Woods.

“But to try to meet their problems by generalized exceptions that cover everyone would be a negation of the whole purpose of a trade negotiation,” he told Reuters.

For America, the payoff for the cuts in farm support demanded by poor countries, environmentalists and development activists would be greater access for US manufactured goods and services in developing countries.

For bigger developing countries such as Brazil and Argentina, the big prize is new markets for their food exports.

But many developing countries are wary of opening up their own food markets too fast, because they fear it could put the livelihoods of millions of subsistence farmers at risk.

And developing countries are also reluctant to open their markets for manufactures to the full force of competition in case their fledgling industries go under.

In recent weeks, negotiations in Geneva have concentrated on agriculture and industry on the basis of papers produced in July by WTO mediators, with talks in farming in particular picking up momentum.

The idea is that talks around these texts would allow the mediators to issue revisions at the end of this month or early in November that could form the foundation of a broader deal including services and other aspects of trade.

Washington has agreed to cap its farm subsidies in line with the agricultural text, but it has not said exactly where in the implied range of $13-16.4 billion the new ceiling would fall.

It says this offer requires all the WTO’s 151 members to accept the ranges for tariffs and subsidies in both the agriculture and industry texts as the basis for negotiation.

But developing countries say the tariff cuts they would have to make in the industry text are out of line with the mandate, which requires developed countries to make bigger reductions, and this needs further discussion.

South Africa restated this principle of “less than full reciprocity” in a paper to the WTO’s general council on behalf of other developing countries, which prompted the tough reaction from the United States.

The paper also emphasized the centrality of agriculture for the talks, and underlined the need for “flexibilities” or opt-outs


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