FOLLOWING G8 SUMMIT, G-6 MINISTERS TO RENEW PUSH FOR DOHA ROUND DEAL

Ministers from key WTO Member countries agreed on 17 July to meet twice over the next two weeks in a last-ditch attempt to reach an accord in the troubled Doha Round negotiations. Their meeting in Geneva was convened the day after heads of state from the Group of Eight (G8) industrialised nations decided to try to salvage a deal before the middle of August.

Top officials from the EU, the US, Australia, Brazil, India, and Japan -- the so-called G-6 group of central players in the negotiations -- will return to WTO headquarters to meet on 23-24 July, and again at the end of that week on 28-29 July. Ministers from all but Australia were present at the 17 July meeting in Geneva.

Following the meeting, US Trade Representative Susan Schwab said that negotiators would now return home "to see what sort of flexibility to bring back to the table." Brazilian Foreign Minister Celso Amorim added that they needed to figure out "how we put numbers in that flexibility."

The ministers arrived directly from St. Petersburg, where earlier in the day WTO Director-General Pascal Lamy bluntly warned heads of state from both the G8 and key developing countries that the success or failure of the round lay primarily in their hands. "The deadlock in which we are caught will lead us to failure very soon if you do not give your ministers further room for negotiation," he said. He urged them to "put in an added effort" in order to preserve the multilateral trading system.

A day prior to its joint 'outreach' meeting with the developing countries, the G-8 -- Canada, France, Germany, Italy, Japan, Russia, the UK, and the US -- had issued a statement on trade in which they called for an "agreement on negotiating modalities on agriculture and industrial tariffs within a month." These modalities would include formulae and figures for tariff and subsidy cuts, as well as exceptions to them.

Lamy: countries want too much in return for concessions

The WTO chief told the leaders from the G8 countries, the EU, Brazil, India, China, Mexico, and South Africa that his intense shuttle diplomacy since the beginning of July, centred on the G-6, had revealed only "marginal" shifts in Members' views on reducing farm subsidies, agricultural tariffs, and duties on industrial goods (see BRIDGES Weekly, 3 July 2006). He has long maintained that a deal would require the US to offer more on the first, the EU on the second, and developing countries on the third of this 'triangle' of issues.

He said that the positions revealed during his consultations "have yet to mark out a landing zone" for the 'triangle.' Therefore, he concluded, "you must be willing to revise the instructions that you have given your ministers."

The differences that separate them are "not insurmountable," Lamy added, suggesting that they were of the order of "a few percentage points in addition to the concessions already proposed." The issue, however, is how much countries will demand in return for making the necessary moves. "Quite frankly," he told them, "the price you have set for these concessions is too high."

Lamy acknowledged that governments would pay a political price for moderating longstanding demands. He urged them to "weigh this cost [of a compromise] against the cost of a failure" in the talks. Failure would mean jettisoning the proposals already on the negotiating table, he said, describing them as sufficient to make the Doha Round "potentially worth two to three times more than the preceding [rounds of] negotiations." He cautioned that a collapse would also be a blow to the development prospects of poor countries, and could give rise to a wave of protectionism.

G8 issues communiqué on trade

In its communiqué on trade, dated 16 July, the G8 leaders welcomed the consultative process started by Lamy in the wake of Members' failure to reach a modalities deal during high-profile meetings in Geneva at the end of June. They called upon him "to report to the WTO Membership as soon as possible." They reiterated their commitment to the Doha Round negotiations. The statement also hailed the importance of aid for trade, describing it as "a necessary complement to a successful outcome of the Doha Round." It said "we expect spending on aid for trade to increase to USD 4 billion," though it was not clear what figure this was in relation to. Some existing pledges of trade-related assistance already exceed this amount.

Notably, the document specified that "the round should deliver real cuts in tariffs, effective cuts in subsidies and real new trade flows," echoing comments made by Lamy at the end of June (see BRIDGES Weekly, 28 June 2006). These phrases are generally understood to imply reductions that cut substantially into currently-applied tariff and subsidy levels. One developing country WTO ambassador told Bridges that this could have the inappropriate effect of requiring poor Members to make adjustments to their industrial sectors that were larger -- instead of smaller -- than those deemed acceptable by developed countries. Furthermore, it would neglect a decade of autonomous tariff liberalisation by many developing countries, accompanied by vast increases in imports. "The triangle is not equilateral," the envoy said. "How can you equate job losses in developing countries with cutting payments to large inefficient farm producers?"

Waiting for the G-6

According to press reports from St. Petersburg, most of the G8 and developing country heads of state present there suggested that they were willing to push harder for a breakthrough, including Brazilian President Luiz Inacio 'Lula' da Silva, US President George W. Bush, Japanese Prime Minister Junichiro Koizumi, and European Commission President Jose Manuel Barroso. "I am ready to instruct my minister responsible for the negotiations to show the necessary flexibility with a view to reaching an ambitious and balanced outcome," said Lula, describing the crisis as "political rather than technical."

However, the Financial Times said that French President Jacques Chirac insisted that Brussels could go no further, barring a "very important counter-offer" by the US -- a potent reminder of the EU's internal fault lines.

Nevertheless, sources indicate that at an 18 July 'green room' meeting to report on the meetings in St. Petersburg and Geneva, Lamy told ambassadors from about 30 Member delegations that all of the leaders at the summit had said that they were willing to be flexible. The one month period referred to by the G8 governments is viewed as an indication of the sense of urgency they are feel about the negotiations.

Although Lamy said that he would continue to meet with all groups of Members, negotiators are looking to the G-6 ministerial meetings scheduled for the next two weekends for a breakthrough. The second will overlap with a scheduled session of the General Council, the WTO's top permanent decision-making body. One source suggested that the US in particular must decide about how much market access it will really need in return for its farm subsidy cuts.

"Only the G-6 can solve the impasse in the negotiations," said one senior trade diplomat. "Only they can provide some impetus. Everyone is waiting with bated breath for movement from the G-6."

The G8 statement on trade is available online at http://en.g8russia.ru/docs/16.html.

ICTSD reporting; "Emergency talks on Doha follow Lamy warning," FINANCIAL TIMES, 18 July 2006; "Trade powers pick up pace of WTO rescue push," REUTERS, 17 July 2006; "Brazil admits WTO 'flexibility' if matched by G8," MERCOPRESS, 17 July 2006; "G-8, emerging powers mobilise to save Doha," ZEE NEWS, 17 July 2006; "Lamy makes heads spin at Doha Round," THE AGE, 19 July 2006; "Ministers Agree on New Schedule for High-Level Meetings on Doha Talks," WTO REPORTER, 18 July 2006.