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Trade ministers begin make-or-break WTO talks

21st July 2008

By: Reuters

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Top trade officials begin a make-or-break session of world trade talks on Monday, haunted by failed efforts in 2006 and 2007 and concern over whether the United States can deliver on a deal.

World Bank President Robert Zoellick has called the meeting "now or never" for the Doha round, which was launched nearly seven years ago with goals to cut farm subsidies and tariffs and to help developing countries prosper through trade.

The talks also cover manufactured goods and services, areas where rich countries like the United States and the European Union hope to make gains that will help them sell politically painful farm trade reforms at home.

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"Most of the world's farmers live in developing countries. They continue to be burdened by gigantic trade-distorting subsidies and prohibitive market access barriers in developed countries. Addressing these distortions effectively is the most important unfinished task in the WTO," developing country negotiating groups said in a joint statement on Sunday.

Brazil's Foreign Minister Celso Amorim, sounding a hopeful note, said this week's meeting could produce a new draft text of a deal in the agriculture and manufactured goods talks.

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A paper crafted by World Trade Organization Director General Pascal Lamy "should appear on Friday," Amorim said, after a developing country meeting on Sunday.

PAST FAILURES, FUTURE UNCERTAINTY

The Doha round, launched in a moment of global solidarity after the Sept. 11 attacks on the United States, has been notable mainly for its meltdowns since then.

In July 2006, Lamy "suspended" the negotiations for what turned out to be about six months after major players showed no sign of converging toward a farm trade deal.

One year later, the talks suffered another setback at a meeting in Potsdam, Germany, that showed deep divisions remained between India and Brazil and the United States and the EU over how to reform agriculture and manufactured goods trade.

This week's talks are overshadowed by uncertainty over whether the U.S. negotiators can deliver on any deal reached in the waning months of the Bush administration.

U.S. lawmakers recently approved new farm legislation that could greatly boost farm subsidies if prices fall.

Also, the White House's authority to submit trade pacts to Congress for a straight up-or-down vote without any amendments expired over one year ago.

Developing countries are pushing in the talks for deep cuts in rich country farm subsidy and tariffs, which they believe have hurt their farmers for years.

But the United States and the EU say they can only sell a deal that gives them meaningful new export opportunities and developing countries have been resisting that.

The main pressure on Brussels at this point in the negotiations is to limit the number of "sensitive" products it shields from deep tariffs cuts.

The United States has high tariffs for farm products such as sugar, dairy products, tobacco and meat, but is being mainly being asked to dramatically cut its current WTO spending ceiling for trade-distorting farm subsidies.

The latest WTO proposals call for a cut of about 70 percent in U.S. trade-distorting subsidies to $13 billion to $16.4 billion. But current U.S. spending is already about half that at $7 billion thanks to soaring food prices.

So big developing countries like India and Brazil want either cuts in actual support, or at least a narrowing of the gap between the actual level and the ceiling.


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