‘Dramatic’ WTO Farm Deal Close If Talks ‘Can Be Revived’

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A world trade deal that dramatically opens livestock markets in the European Union, Canada and Japan is within grasp, if talks that collapsed last month in Geneva can be revived.

U.S. Trade Representative Susan Schwab hinted at the scope of the deal in a July 30 news conference after nine days of intense negotiations ended in failure. “We had on the table dramatic market opening potential on the part of developed countries, some modest market opening potential on the part of the emerging markets,” Schwab said.

World Trade Director General Pascal Lamy visited India this week and will be in Washington next week to see if it is still possible to rescue the deal. In New Delhi, he told reporters he still believed there was chance to finish negotiations by the end of 2008 despite last month’s major setback.

The effort to wrap up the nearly seven-year-old Doha round of world trade talks foundered because of sharp differences between the United States and India over proposed terms of a “special safeguard mechanism” to protect poor farmers in developing countries from import surges.

Washington argued the safeguard demanded by New Delhi would roll back decades of trade liberalization by allowing tariffs to be hiked above currently bound levels in respond to normal trade growth, rather than an import surge.

U.S. officials have said they see no point in getting Schwab and other ministers together again as long as countries remain at loggerheads on that point.

EU WOULD OPEN BEEF, PORK AND POULTRY MARKETS
Still, in the months leading up to the Geneva meeting, negotiators agreed on the basic outline of a package that — at least in developed countries — met U.S. demands for new farm export opportunities in exchange for farm subsidy cuts.

Under the proposed deal, the European Union would designate beef, pork and poultry as “sensitive products” that it could shield from deep tariff cuts. But in exchange for sheltering those commodities, it would be required to establish “tariff-rate quotas” to let some product enter at zero or very low duties.

“The minimum poultry TRQ would be around 200,000 tons. That’s huge in terms of world poultry trade,” said one private sector agricultural analyst. A published figure of 290,000 tons for a new EU beef TRQ “sounds reasonable,” given the size of the market in the 27-nation economic bloc, the analyst said.

Whatever the exact size, it clearly whetted the appetite of Latin American beef exporters Argentina, Brazil, Uruguay and Paraguay, the analyst said.

Gregg Doud, chief economist with the National Cattlemen’s Beef Association, told Reuters he could not confirm specific details of the deal hashed out over several months and now at the risk of being lost. But “we stand to see solid gains if we can ever get this thing to bed. I am extremely comfortable with where we’re at in terms of market access,” Doud said.

The EU would also establish a significant pork TRQ as part of the deal. Nick Giordano, vice president of the National Pork Producers Council, said he could not provide any details because of the sensitive nature of the talks.

CANADA, JAPAN
The EU also appeared ready to make tariff concessions that would open its rice, wheat and corn markets to additional imports, the private sector agricultural analyst said.

Canada and Japan were expected to designate dairy as a sensitive product, requiring both countries to establish significant TRQs in those sectors.

Washington was expected to designate sugar as a sensitive product and compensate by allowing an additional 300,000 to 350,000 short tons of sugar in, another source said.

Japan was certain to designate rice as a sensitive product, requiring it to establish a significant new TRQ.

Tokyo also was expected to agree to beef, pork and poultry tariff cuts that would allow in additional product.

Canada appeared set to make tariff cuts that would have significantly liberalized its poultry sector.

Although Schwab and other trade ministers have called for the progress made in Geneva to be saved, the longer countries are away from the negotiating table the harder that becomes.

“The shelf life of texts like this tends to be pretty short and unless they continue to work and they continue to make progress, there’s a real chance of sliding backwards,” the agricultural analyst said.

(Editing by Marguerita Choy)

IJ Comment: Beef, poultry, pork and sugar aren’t exactly mainstream insurance industry concerns. But the success of the now moribund Doha Round of trade talks is. Their success or failure is dependent on finding acceptable compromises in the agricultural sector. India, joined by China, scuttled the last attempt to reach agreement, when it demanded protection for its millions of small farmers from foreign competition. But farm lobbies in Europe, the U.S. and Japan should also share the blame. If any progress is going to be made on liberalizing global trade regulations in the financial services sector, which includes insurance, the farm impasse has to be solved.