DOHA NEGOTIATIONS TO START AGAIN NEXT WEEK IN GENEVA, DAVOS

Negotiations at the WTO are set to start up again next week, as trade diplomats return to Geneva a month after the December 2005 Hong Kong Ministerial Conference. The task before them is formidable. Ministers' main decision at the December meeting was simply to keep talking: in order to avert another Cancun-style collapse, they simply put off discussions on the most contentious issues in the Doha Round negotiations -- specific numbers and tariff structures for reducing subsidies and tariffs -- and gave themselves until the end of April to reach agreement on them.

It is to these politically and technically complex issues that negotiators must now turn their attention. Some delegates already suggest that this April deadline for finalising 'full modalities' is improbably early, and that June or July would be a more realistic timeline. If an agreement is not reached by July -- as it stands, the Hong Kong Ministerial Declaration calls for Members to translate these modalities into draft commitment schedules by the end of that month -- trade sources suggest that it will be difficult for them to meet their stated goal of concluding the Doha Round by the end of the year.

First up is a week of intensive formal and informal agriculture meetings, set to kick off on 23 January. The equally intractable talks on non-agricultural market access (NAMA) follow close behind, with discussions scheduled for 2-3 February.

The overall state of the negotiations will be reviewed by representatives from some 25-30 Member governments at a 'mini-ministerial' meeting on 27-28 January, which will take place on the sidelines of the five-day World Economic Forum summit in Davos, Switzerland. Indian Commerce Minister Kamal Nath has indicated that this will be followed by bilateral and other gatherings among Australia, Brazil, India, the EU, and the US (the 'five interested parties,' or FIPs), as well as Japan.

Familiar clouds have already begun to gather over the talks. A number of developing country sources have said that rapid movement in the talks would only be possible if the EU were to offer deeper cuts to its farm tariffs. On the other hand, in a speech to European Parliament members on 16 January, EU Trade Commissioner Peter Mandelson blamed the G-20 in particular for failing to offer new concessions on NAMA and services, and said that the EU would be willing to let the negotiations fail rather than "pay for a round with nothing new on industrial market access, services, geographical indications, or the other rules that lend strength to the multilateral way of managing out international affairs." Although most Member governments continue to insist that they have not lowered their ambitions for a far-reaching, comprehensive Doha Round agreement, Mandelson said that if the EU's trading partners did not make the offers that it expected, "Europe could settle -- reluctantly, grudgingly, at the end of the day -- for a minimalist outcome" to the round.

An immense amount of complex, technical work must be done -- and quickly -- in order for Members to reach full modalities in agriculture and NAMA by the 30 April deadline.

Agriculture

In Hong Kong, Members agreed to eliminate all forms of agricultural export subsidies by 2013, with a "substantial part" of this to be frontloaded during the implementation period. They must now develop disciplines on 'parallel' export support such as export credit schemes, food aid, and state trading enterprises "as part of the modalities," according to the Hong Kong Declaration.

Specifics about far more controversial domestic subsidy and tariff cuts -- on which Members are intensely divided -- were scarcely discussed, apart from a decision to classify subsidy levels into three tiers and tariffs into four tiers for the purposes of reduction.

The EU's offer of an average farm tariff cut of 46 percent -- others argue that it would amount to 39 percent -- has been criticised as too low by the US, the Cairns Group of farm exporters and the G-20. However, some EU member states, most vocally France, have slammed it for already being too high. It is not clear whether Mandelson's negotiating mandate from EU member states will allow him to offer further access to EU agricultural markets, even though several developing countries believe that this is necessary in order to move the round forward.

Although the rifts on market access have overshadowed the discussions on domestic subsidies, some countries would like the US to deepen the 53 percent cut it is willing to make to its overall permissible level of trade-distorting support. This, they argue, is necessary to ensure that Washington would be obliged to reduce the amount of money that it actually spends on such grants.

NAMA

Members agreed in Hong Kong to a 'Swiss formula' for tariff reductions, which would cut higher tariffs more steeply than lower ones. However, they must now agree on the number and value of the coefficients to be associated with it -- even more than the structure of the formula, the level of these coefficients will determine the extent of Members' tariff cuts. They also need to agree on precisely what flexibilities to accord to developing countries when applying the formula, as well as the specifics of the 'non-linear mark-up' approach that they have adopted for unbound tariff lines.

Countries will also have to agree on how to operationalise Paragraph 24 of the Hong Kong Ministerial Declaration, which provides for the level of ambition in market access for agriculture and NAMA to be "comparably high" as well as "consistent with the principle of special and differential treatment (S&D)."

Other negotiating areas face different deadlines. For instance, the services annex of the Hong Kong Declaration exhorts Members to submit plurilateral requests for market access by 28 February -- a little over a month from now. On specific development issues such as the numerous proposals to strengthen S&D provisions in WTO agreements, they are expected to come up with recommendations by December 2006.

The unofficial deadline looming over the Doha Round talks is not the end of 2006, but rather the mid-2007 expiry of US President George W. Bush's 'trade promotion authority (TPA).' After the expiry of the Bush Administration's 'fast track' mandate, it will become unable to submit any Doha Round deal to Congress for a simple yes-or-no vote without the risk of facing demands for major amendments. Bush would have to notify Congress of his intention to submit an agreement for approval around the end of March, some 90 days before the expiry of the TPA. Some delegates believe that full modalities would have to be finalised by July for the round to be concluded in time for this, in order to allow for the time-consuming work of translating agreed reductions into adoptable agreements. In contrast, Mandelson appeared to accord the mid-2007 'deadline' less importance in his Monday speech, saying that he was "not inclined to sacrifice quality for speed."

One trade observer suggested that it would be useful to have some sort of framework for organising technical work, so as to keep negotiators on track towards the deadlines. Members' political positions are expected to become more clear over the next two weeks: mini-ministerial meetings have, in the past, served to provide guidance to Geneva-based talks.

"30 countries' trade officials to resume talks: Nath," HINDUSTANTIMES.COM, 15 January 2006; "WTO drive for early 2006 deal faces test in Davos," REUTERS, 17 January 2006.