GENEVA — The prospects for a political breakthrough in the Doha global trade talks remain “up in the air” nearly two months after world leaders agreed to revive the round, senior diplomats and industry experts said.
It still boils down to whether the major powers can resolve their differences and broker a deal on agriculture, they said.
The shape of a deal on how to lower agricultural subsidies and tariffs, if and when it emerges, is also expected to determine to a large extent the parameters of how deep countries are prepared to slash their duties on industrial goods, including textiles and apparel.
The talks, which started in Doha, Qatar, in November 2001, collapsed in late July because of major differences over agriculture primarily among the U.S., European Union, India, Brazil, Japan and Australia.
“Progress is being made, albeit at a slow pace,” Pascal Lamy, World Trade Organization director general, told top envoys from 150 countries last week.
He said the talks need to “accelerate” if the round is to reach a successful conclusion and added that he remained confident that “a breakthrough is achievable in the near term.”
The talks resumed in late January, following the personal input of President Bush and his counterparts from Brazil, South Africa, Germany and the U.K.
Trade analysts said it is difficult to determine how an agreement would be greeted politically in key places like Washington, Brussels, New Delhi and Beijing until the outlines of a broad deal surfaces and how it’s received from the influential groups and lobbyists with competing interests in agriculture, industrial goods and services.
With much of the focus still on agriculture, representatives of U.S. manufacturing and services interests have voiced concerns that a lopsided deal might be hammered out in which their sectors wind up a sideshow.
Frank Vargo, vice president of the National Association of Manufacturers, said if there is no effective market-opening, tariff-cutting deal on industrial goods “there will be no Doha round.”
“There has to be a lot of market access in [Non-Agricultural Market Access], otherwise it will not work,” Vargo said.
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Robert Vastine, president of the U.S. Coalition of Service Industries, said, “Any breakthrough that occurs must include a good package for services.”
The scenario being drawn up in closed-door, high-level talks, top trade diplomats said, is aimed at securing a breakthrough during the current European Union region under the helm of German Chancellor Angela Merkel, who is strongly pro-Doha, which ends June 30, the same time as President Bush’s Trade Promotion Authority expires.
A breakthrough is seen as a must by Washington insiders and senior administration officials to help convince an increasingly skeptical Congress to renew TPA, which gives the president the authority to negotiate trade deals without Congress having the ability to add amendments.
“The chances of a breakthrough still largely rest on the shoulders of the U.S. and the European Union, and a few other key players, in particular India and Brazil, said a WTO ambassador from a large developing country.
U.S Trade Representative Susan Schwab has been globe-trotting to key capitals, with a consistent message that for a package deal to fall in place that the Bush administration can sell to Congress, it must include market-access concessions on exports of goods and services.
But trading partners of the U.S., such as India and Brazil, have countered that the level of concessions they are prepared to offer would mirror how much the U.S., and even more so the EU, is prepared to go in lowering its farm tariffs and domestic support for American farmers.
In the talks, developing countries, under the agreed principle of less than full reciprocity, would make smaller concessions compared with rich industrialized countries. However, the insistence by China and its adversary Taiwan that it be given special treatment as a recently acceded member, known as RAM, of the WTO is also rapidly moving up the priority agenda of the U.S. and of other Western powers.
Some of the RAM demands include additional five-year phase-in periods for industrial tariff cuts than other developing nations, greater flexibility in number of tariff lines of industrial goods and bigger exemptions from cuts than other developing nations for certain products.
Asked about China’s RAM status demands, a senior U.S. trade official said on condition of anonymity, “That will be a tough sell.”
Vargo said China has to participate in a “robust formula” and provide greater market access. He said the concessions China made to join the WTO were the cost of entry and a form of repayment for the years “of free riding” on the global trade system, and noted the mood on Capitol Hill concerning China “is not good” over the bilateral trade deficit, the widespread use of subsidies and the currency issue.
EU Trade Commissioner Peter Mandelson has stressed that in exchange for lowering its barriers in agriculture, the 27 member-country bloc wants to see developing countries come forward with ambitious tariff reductions in industrial goods and services.
In the industrial tariffs, Lamy told a forum in India last week that there is the chance to “address tariff peaks, high tariffs and tariff escalation remaining in developing countries” in a plan being floated called the Swiss formula.
Munir Ahmad, executive director of the International Textiles & Clothing Bureau, is optimistic about the prospects of NAMA in the round.
“The notion of acceptance of the Swiss formula by developing countries is in itself a revolutionary step and has the potential to cut in deep and provide liberalization of their economies,” Ahmad said. “This will happen and will equally reduce tariffs in rich countries, including peaks.”
However, this assessment is not shared by labor union leaders.
“The gateway issue is non-agricultural market access against agriculture,” said Guy Ryder, general secretary of the Brussels-based International Trade Union Confederation. “Our trade union view is…that the price being asked of developing countries in terms of NAMA concessions are liable to far outweigh whatever gains are on offer in terms of agricultural liberalization and market access.”
Rudi Dicks, co-coordinator of the Congress of South African Trade Unions, said, “We’re quite worried that they might take subsidy cuts by the U.S. and the EU in exchange for more cuts in industrial tariffs.”
He said with South Africa’s 26 percent unemployment rate, a Doha deal that could result in cuts in applied tariff by up to 71 percent would pose major risks in many sectors, including apparel, which in recent years has lost 70,000 jobs due to the flood of cheap imports from China and other low-cost Asian producers.
Moreover, some of the poorest nations in the WTO talks, such as West African cotton exporters Mali, Burkina Faso, Benin and Chad, that there needs to be an ambitious result on cotton that slashes trade-distorting subsidies or there will be no conclusion of the round.
This message was echoed during a high-level WTO meeting on cotton last week and the assessment shared by top envoys from rich and developing countries, including the chairman of the agriculture talks, Ambassador Crawford Falconer of New Zealand, trade officials said.
Peter Allgeier, deputy USTR, said the most significant near-term step that could be ensured on behalf of cotton in Doha would be “to complete the agriculture modalities with substantial reductions in tariffs and subsidies.”
Least developed countries like apparel exporter Bangladesh would like rich nations to go the extra mile and grant them duty-free and quota-free access across the board.
“We would like it to be full 100 percent as quickly as possible,” said Toufiq Ali, Bangladesh’s WTO ambassador.
Envoys of some of the poorest nations that don’t have duty-free preferential access to the U.S. market, such as poor sub-Saharan African nations under the Africa Growth & Opportunity Act, fear if some lines are excluded it may be in areas where their principal exports are, such as apparel.