GENEVA — The chances of getting the derailed Doha Round global trade talks back on track after their dramatic meltdown in July will require a combination of effective diplomacy and an the political will of key countries to drop entrenched positions, senior diplomats and industry executives said.
The talks were suspended because rich and advanced developing countries could not bridge their differences over cutting subsidies and tariffs for agricultural products, and lowering duties for industrial goods, including textiles and apparel.
There have been few signs since then of a radical policy shift among vital players such as the U.S., the European Union and the Brazilian-led G20, which includes India and China, that could turn things around.
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A ministerial meeting of the G20 in Rio de Janeiro on Sept. 9, which was also attended by World Trade Organization director-general Pascal Lamy, U.S. Trade Representative Susan Schwab and EU Trade Commissioner Peter Mandelson, failed to achieve anything that can be interpreted as positive.
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Lamy, who is taking what some WTO ambassadors consider “a quiet, cautious” approach in light of the July debacle, underscored in a keynote speech at the meeting that WTO members “need to rethink” their positions on agriculture so that existing differences can be worked out.
Schwab has said she is seeking “a new way forward,” but the sour state of trade relations between the EU and U.S. over agriculture is not helping things, said a senior trade diplomat close to both camps who did not want to be identified.
In a statement, the G20 said the current positions of rich countries “do not provide an adequate basis for leading the negotiations to a successful conclusion.”
“I think the probabilities of closing the round in the next 12 months are low,” said Michael Samuels, president of Washington trade consultant Samuels International Associates.
Samuels, a former U.S. ambassador to the General Agreement on Tariffs and Trade, the WTO’s predecessor, said in a phone interview, “I don’t see the dynamics in the negotiations moving forward quickly.”
There is also a growing awareness that the alternative to a global deal is increased protectionist pressures, a possible escalation in trade litigation and discriminatory bilateral or regional trade agreements.
“It is hard to believe that the world can let the time and effort already invested in the Doha negotiations go to waste, especially when it is universally recognized that the alternative of regional or bilateral liberalization is a poor substitute for market opening on a multilateral basis,” said Munir Ahmad, executive director of the International Textiles & Clothing Bureau.
Ahmad said he’s convinced the Doha negotiations “are bound to succeed” in the long run.
Despite a batch of high-level international meetings, WTO trade diplomats say there is little prospect of the talks seriously picking up until after the U.S. Congressional elections in November.
In the meantime, there is widespread concern in trade circles that if the political desire cannot be mustered to salvage the talks, the round could drift aimlessly.
But some senior Western WTO trade envoys believe a window of opportunity exists to advance the talks between November and the end of March, which, if taken advantage of, could enhance the prospects of the Bush administration’s securing approval from Congress for an extension of Trade Promotion Authority, which expires at the end of June. Most experts said Bush would need TPA, which allows him to negotiate trade pacts without the prospect of congressional amendments, to reach a Doha deal.
Frank Vargo, vice president for international affairs at the National Association of Manufacturers, said in a phone interview, “If we don’t see significant progress by March, there is a risk of seeing slippage in the Doha Round for a number of years.”
However, Vargo said until there is movement by the EU on market access for farm products, the U.S. on domestic agricultural subsidies and developing countries on lowering barriers for industrial goods, “there’s little point in going back to the table.”
“We can’t agree to an outcome that does not include substantial liberalization for industrial goods,” he said.
Asked if a final deal could be hammered out by the end of 2007, Vargo said, “If there is political will to reach deep into pockets, yes.”
The position of manufacturing dynamo China has come in for some heavy criticism.
“China has been dragging its feet,” Vargo said. “They have not been part of the solution. Now, they have to contribute.”
Schwab said in an interview in WWD this week that China needs to step up to the plate on Doha.
A senior Western trade diplomat, who spoke on the condition of anonymity, said the outcome in the November U.S. congressional elections and the presidential election in France next spring could pose some serious problems.
“A change in the balance of power in the U.S. House of Representatives could make things more complicated,” said the envoy, adding that a legitimate worry is that a shift in political power could result in “new strings attached.”
Vargo said NAM intends to “push hard” for the extension of TPA. He stressed that an extension is needed in case there is progress in Doha or the U.S. is left to negotiate free trade agreements with its major trading partners.
Consultant Samuels said of a possible extension of TPA, “It’s difficult to know what the administration does until it knows the shape of Congress.”
On the textiles and apparel front, any future debate could focus on the idea of allowing poor African and Central American countries, which will likely lose market share from an erosion of their preferential trade status in key markets such as the U.S. under a Doha deal, to keep these advantages for a longer period.
At the heart of this concept is to phase in the reduction in tariffs over a longer period than would be agreed to under a formula cut. This is what happened under GATT, where global quotas were phased out over 10 years and the WTO was created.
Some developing countries that are not beneficiaries of preferences in the U.S. market, but are heavily dependent on textile and apparel exports to the U.S., want to be included in such a deal.
“We can agree to such a solution if some consideration is given to our demands to be included in the level of access for these products,” said Gomi Senadhira, Sri Lanka’s ambassador to the WTO.
The alternative is a reduction in tariffs without a longer phaseout, something the poorest countries cannot accept, envoys said.