MEMBERS TRY TO CONVERT DALIAN OUTCOME INTO NEGOTIATIONS BREAKTHROUGH

Geneva-based trade diplomats have stepped up the pace of discussions in an attempt to translate the political support for the Doha Round negotiations expressed last week by thirty trade ministers at Dalian, China, into an actual breakthrough in the deadlocked talks. However, some delegates question whether the meeting -- at which the ministers agreed on how to go about proceeding with the stalled talks on farm trade liberalisation, but on little else -- accomplished enough to unblock the troubled negotiations.

The Dalian meeting did partially diffuse the sense of frustration that some delegations were feeling, and provide negotiators with "some cause for hope" that Members would be able to agree on a framework deal on agriculture by the end of July. Even this, which would represent significantly less than what Members had originally been hoping for by that time, had seemed virtually impossible in the days before the 12-13 July 'mini-ministerial' gathering. The "July approximations" were originally supposed to be fairly well-developed outlines of an eventual deal to be adopted at the WTO's Hong Kong Ministerial Conference in December.

Negotiators maintain that a great deal of work needs to be done, not only to reach a workable deal on agriculture, but to communicate developments in what is an increasingly plurilateral process to the WTO's entire Membership.

FIPs+4 meeting informally in Geneva

At Dalian, the EU and the US agreed to use a compromise framework proposal on farm tariff reduction from the G-20 group of developing countries as a starting point for continuing the talks. Sources report that the Chair of the agriculture negotiations, Tim Groser, started a week of informal, so-called 'Room F' consultations on 18 July with selected delegations representing different interests in the talks -- the so-called five interested parties (FIPs), i.e., Australia, Brazil, the EU, India, and the US, along with Switzerland, Japan, China, and Indonesia -- to flesh out different aspects of the framework set out by the G-20. Delegates suggest that in order for it to become the sort of package that could revive the talks, Members would need to agree on a number of key aspects of the market access formula -- in particular the number and shape of the tiers into which developed and developing countries will classify products for the purposes of tariff reduction, the principle of substantially lower tariff cuts for developing countries, and some commitments on domestic support.

Ag link to NAMA, services could "unlock" talks or bedevil them

The links between agriculture and other negotiating areas appear to be posing a serious barrier to the talks. Several developing country delegations insist that they must see some of their demands met in the agriculture negotiations before they can make concessions on NAMA.

Countries seeking to shield their agriculture sectors from liberalisation, on the other hand, want to make subsidy and tariff reform conditional upon improved market access for their exports of services and industrial goods. Responding to demands that the EU reduce subsidies and open its markets to foreign farm products, French Foreign Minister Philippe Douste-Blazy told the press on 18 July that the EU "should not make concessions without being paid back in return." Nonetheless, this seems to be a minority view: the Chair of the NAMA talks postponed a week of meetings scheduled for 18-22 July to wait for any breakthroughs on agriculture (see related story, this issue).

Several negotiators from both developing and developed countries are emphatic that a preliminary agreement on agriculture is central to moving the talks forward. Unless Members can agree on agriculture, said one, "it is not clear what we would be working towards in Hong Kong -- what the basis and structure of our work would be." Pointing to the limited time between the end of the WTO's August-long holiday and the Ministerial Conference, a source observed that if Members cannot even agree on the outline of the structure of an agreement early enough to have sufficient time to flesh out the details, "how will we have full modalities [by Hong Kong]?"

If Members can reach a framework deal on agriculture, there would be cause for a measure of optimism about the overall negotiations. "An agreement on agriculture would unlock the talks on non-agricultural market access (NAMA)," said one delegate. She also suggested that such an agreement could conceivably lead to an overall improvement in the state of the talks in September, since more delegations would feel comfortable about making revised offers of market access in the services talks. Another was less sanguine, suggesting that it was "difficult to say" whether this would pave the way to rapid progress in other negotiating areas, although agreement on agriculture could hardly hurt.

Focus on S&D at and after Dalian

At Dalian, ministers paid more attention to the negotiations on special and differential treatment (S&D) than they had at previous such meetings. Sources at the Dalian meeting indicated that several delegations feel that it is increasingly urgent that Members reach agreement on the five agreement-specific S&D proposals from least-developed countries that are currently being discussed in the Committee on Trade and Development special session (CTD-SS). In their view, this would demonstrate tangible progress aimed at benefiting some of the WTO's poorest Members. To this end, CTD-SS Chair Faizel Ismail of South Africa started another round of informal consultations with a group of countries on 18 July.

In related news, India and China have vowed to resist attempts to differentiate between larger and smaller developing economies for the purposes of favourable treatment in the WTO. Indian Commerce and Industry Minister Kamal Nath signed an accord with his Chinese counterpart Bo Xilai prior to the Dalian gathering in which they emphasised that all developing countries should be treated equally, and accorded "effective special and differential treatment as mandated in the Doha agenda."

Several delegations concerned about transparency

Technical and political barriers posed by the talks aside, one trade diplomat pointed out that only 30-odd ministers were present in Dalian, and that all other Member delegations would have to consent to abide by even that limited agreement for it to be converted into concrete progress. This may be further complicated by concerns about transparency, as some delegations are said to be grumbling that they are being left inadequately informed about a process that is largely being determined in invitation-only meetings. In order to agree on anything, say sources, developing country delegations will need to be adequately informed about proceedings in all of the different discussions.

Time running out for agreement

Members will assess progress in the negotiations at a 21-22 July session of the Trade Negotiations Committee and the 27 and 29 July meetings of the General Council.

It is likely that intensive informal talks will continue through the end of July as they did a year ago, when Members finally agreed the 'July Package' that revived the Doha Round talks on 2 August 2004.

The week after Dalian saw yet more reaffirmations of political commitment to the multilateral trade talks from several key WTO Member governments. However, with the negotiations far behind schedule, expectations are dimming for Members to reach the sort of far-reaching deal in Hong Kong that would set the stage for the round to conclude in 2006. According to Financial Times trade analyst Alan Beattie, the most probable outcome in December seems increasingly to be "a last-minute rush of haggling... followed by a weak deal."

ICTSD will provide coverage of the consultations on agriculture and S&D in upcoming issues of BRIDGES Weekly.

For more coverage of the Dalian meeting, please see BRIDGES Monthly, June/July 2005.

ICTSD reporting; "Waning expectations: agreement on trade remains remote as time trickles away," FINANCIAL TIMES, 18 July 2005; "WTO: India, China oppose bid to divide developing countries," THE HINDU, 13 July 2005.