Proposals Issued for WTO Doha Deal

Article

Mediators in the core agriculture and industrial goods negotiations at the World Trade Organization (WTO) issued new proposals on Monday, clearing the way for a meeting of ministers to clinch an outline trade deal.

The revised proposals, or texts, trigger a process of further negotiation, trade-offs between farming and manufacturing and ultimately a meeting of ministers to take the tough political decisions on the headline cuts in tariffs and subsidies.

The revised texts had been delayed for months as negotiators struggled with a series of highly technical issues, leaving diplomats and officials shaking their heads at yet another missed deadline in the Doha round.

“We are prepared to make the tough political choices necessary to conclude an agreement, as others will need to do as well,” said Gretchen Hamel, a spokeswoman for the U.S. Trade Representative.

“The U.S. is committed to concluding a successful Doha Round this year that achieves new market access for agricultural and industrial products and services in both developed and emerging market economies,” Hamel said in a first reaction to the revised proposals.

CONFIDENCE BOOST
The Doha round has stumbled since its launch in 2001 to boost the world economy and help developing countries grow by tearing down barriers to world trade. But as negotiations picked up, the WTO’s 152 members agreed this year to conclude the round by the end of 2008.

Success would inject confidence into a world economy buffeted by the credit crunch and demonstrate the international community’s ability to work together as it tackles other problems such as the food crisis and climate change.

Failure would see the round risk years of further delay as a new administration takes office in Washington next year, the EU executive Commission is changed and India votes in an election.

New Zealand’s WTO ambassador Crawford Falconer, who chairs the farm talks, said there were relatively few “hot spots” left in the talks and progress could be made on remaining issues when negotiators meet to review the text on May 26.

Economists and development advocates argue about the benefits of a deal. One study in 2003 said a Doha deal could increase global income by $520 billion and lift an additional 144 million people out of poverty. But a World Bank study in 2005 put the gains by 2015 at only $96 billion, of which the developing countries’ share was only $16 billion.

The outlines of a deal are already clear. The United States would cut its farm subsidies, blamed by poor countries for squeezing their farmers out of the market — a sensitive issue at time of food shortages in the developing world.

The European Union would open its protected market for food by cutting agricultural tariffs, giving developing country food exporters such as Brazil new opportunities. And developing countries would cut their industrial tariffs, opening their markets to manufactures in rich countries.

“I think that what we have on the table already is an outline deal which is worth at least two to three times in value to the global economy what was provided by the previous Uruguay round,” said EU trade chief Peter Mandelson. “I think the key trade-offs are there for us to make.”

The negotiations are not just about rich versus poor. Developing countries such as Chile and Costa Rica are eyeing the potential of South-South trade, and the United States would like a bigger share of the EU food market.

But the North-South divide has dominated the talks, with poor countries arguing that the Doha round’s development mandate requires rich countries to make bigger sacrifices, while allowing them to shelter their farmers and fledgling industries from the full force of tariff cuts.

Rich countries however want to see real gains in market access in developing countries in order to sell a deal at home.

U.S. businessmen have criticized proposals — retained in the latest industry text — to give China up to 18 years to phase in any tariff cuts. “We will be looking to see how the world’s largest and fastest growing economies are going to make market-opening contributions commensurate with their increasing participation and role in the world economy,” said Hamel.