BRAZIL AND INDIA TO G-7: WILL CUT NAMA TARIFFS IF EU, US CUT AG TARIFFS AND SUBSIDIES

Brazil and India surprised representatives from the Group of Seven (G-7) rich countries at a 2-3 December summit in London when they unexpectedly offered to expand access to their industrial goods and services markets -- if the US and the EU make deeper cuts to their farm subsidies and tariffs.

The two developing countries and the EU have been blaming each other for the current impasse in the Doha Round negotiations. Brazil and India have argued that the EU's demands on non-agricultural market access (NAMA) and services are out of proportion to what it is willing to offer on its own farm tariffs (see BRIDGES Weekly, 2 November 2005). The EU has hit back by criticising Brazil and India for not having made NAMA or services proposals of their own.

Brazil and India claim that they have already informally indicated to the US and the EU that they would consider halving their ceiling levels for industrial tariffs as part of the round. This would force reductions in the tariffs applied on several products in both countries. On 3 December, India told the G-7 summit that it would be willing to go beyond this 50 percent reduction from 'bound levels' if the US and the EU took steps to further liberalise their agricultural markets. Brazil too suggested that it too would be open to giving further ground on industrial tariffs, albeit with similar conditionalities.

The G-7 ministers also agreed to increase aid for trade spending to USD 4 billion. The UK was said to be considering a request from Brazil for a special meeting of the G-8 with five leading emerging economies before the WTO's 13-18 December Ministerial Conference in an attempt to make some breakthroughs in the Doha Round talks.

"Brazil and India surprise G-7 on trade," INTERNATIONAL HERALD TRIBUNE, 4 December 2005; "India ready to halve bound tariffs," FINANCIAL EXPRESS, 6 December 2005; "Brazil, India offer trade concessions at G7," REUTERS, 3 December 2005; "US urges EU farm trade move on Brazil, India offer," REUTERS, 5 December 2005.

KYOTO PROTOCOL MEETING UNABLE TO REACH AGREEMENT ON FUTURE

At the first Meeting of the Parties to the Kyoto Protocol (COP/MOP-1), scheduled for 28 November - 9 December in Montreal, representatives from about 140 countries have been debating a second phase of the climate change control mechanism, which would establish emissions reduction targets after the agreement's expiry in 2012. However, discussions are hampered by disagreement between those who back further targets and non-parties to the agreement, such as the US and Australia, which oppose such caps.

Although agreement on the future of the protocol remained elusive, parties managed to approve a series of decisions aimed at simplifying the implementation of the global pact, which was adopted in 1997 but only came into force this year. These include the establishment of a Joint Implementation Supervisory Board, a mechanism that allows industrialised countries to earn carbon allowances they can count against their own reduction commitments by investing in low-emission projects in other developed countries. Delegates also finalised details of the Clean Development Mechanism, a system that similarly rewards them for investing in sustainable development projects in developing countries.

Campaigners want to see governments commit to fresh emission reduction targets. Businesses also want clear long-term climate rules as soon as possible to guide investment plans. The US made clear at the meeting that it would not be part of any new binding agreement after 2012, and would continue to support voluntary efforts to curb global warming through new technology.

Some EU Parliament representatives have wondered aloud whether countries that do not sign on to the Kyoto Protocol's binding limits are effectively giving their businesses a subsidy that could be subject to redress in the form of countervailing duties or border tax adjustments (BTAs) under WTO rules (see BRIDGES Trade BioRes, 18 March 2005). If countries cannot find a common approach for the post-2012 phase, BTAs may become a significant issue in the future.

ICTSD reporting: "Developing countries: pay us to save rainforests," MONGABAY.COM, 27 November 2005; "Montreal climate conference adopts 'rule book' of the Kyoto Protocol," UN FRAMEWORK CONVENTION ON CLIMATE CHANGE, 30 November 2005; "U.N. talks adopt Kyoto rules on global warming," REUTERS, 30 November 2005; "Australia says 'son of Kyoto' deal not possible," REUTERS, 1 December 2005.