WTO MEMBERS LOOKING TO DAVOS FOR GUIDANCE ON HOW TO PROCEED

Trade negotiators are turning their eyes to Davos, where ministers from around 30 of the WTO's most influential Member countries will meet later this week to discuss the struggling Doha Round negotiations.

Delegates appear uncertain about what to expect from the gathering, which will take place on 27 January during the World Economic Forum summit there. One said he was "hoping to get a political message that the round is alive and kicking." Such a message would mean "clear ministerial instruction" to intensify negotiations, he clarified.

WTO Director-General Pascal Lamy told a 22 January 'green room' meeting of ambassadors representing some two dozen key countries and groups that ministers would have to decide in Davos how to proceed after the gathering of business and political leaders. He said that central players such as the US and the EU needed to clarify their domestic political situations to other countries, according to sources.

The following day, Lamy told a conference organised by the Brussels-based European Policy Centre that he did not expect the political leaders attending the 'mini-ministerial' meeting to engage in substantive negotiations. Instead, he expressed hope that they would transmit their increased "sense of engagement" to negotiators, stressing that the "window of opportunity [for reaching a deal] is rather small," due to the end-June expiry of the Bush administration's trade promotion authority.

Rumours of EU-US deal on agriculture denied

Hopes for the Davos 'mini-ministerial' rose significantly over the past week, amidst rumours that the EU and the US were close to reaching an agreement on farm tariffs and subsidies, the issues on which the negotiations have foundered.

A 22 January report in the Financial Times newspaper said that weeks of discussions among senior US and EU officials had yielded the fragile outline of a deal, under which Brussels would boost its average farm tariff cut offer to roughly 54 percent while Washington would agree to lower the cap on its trade-distorting domestic farm support to about USD 17 billion. The article stressed that the tentative bargain was not finalised, and that it was unclear as to whether it could win political backing on either side of the Atlantic.

Officials in both Washington and Brussels, for their part, denied that a deal was imminent. "While we are making progress, there is no deal at hand," said Sean Spicer, a spokesperson for the US trade representative's office. "The numbers reported were completely false."

Sounding somewhat more positive about the amount of progress made, EU Trade Commissioner Peter Mandelson told the New York Times that "we are in the endgame, but we are not in a situation where we have the outlines of an agreement." US Trade Representative Susan Schwab, however, said that "the contours of a deal" remained "many weeks away."

Senior agriculture negotiators from the US and the EU have been discussing a wide range of issues, most recently last week in Washington. These include the 'sensitive products' that Members will be able to slate for reduced tariff cuts in exchange for creating new import quotas. This is particularly contentious, since there are some commodities, such as beef and dairy products, in which the US is especially eager to boost exports, but the EU would like to keep import growth to a minimum.

Schwab recently suggested that a greater understanding of the various product-specific exceptions and rules for tariff and subsidy cuts - and less of a focus on the overall average percentage reductions - might help negotiators better understand what is on offer, and thus enable them cobble together a package that is not politically explosive (see BRIDGES Weekly, 17 January 2007). Sources report that negotiators have been discussing hypothetical bargains in terms of numbers and other details - what concessions from the US would require what EU concessions, and vice versa.

Asked about the numbers in the press reports, Brazilian Foreign Minister Celso Amorim, whose country heads the G-20 bloc, told the Folha de Sao Paulo daily that they "went in the right direction," though it was not clear whether they would be sufficient even if true. The G-20 favours an average tariff cut of 54 percent, but has asked the US to cap its farm subsidies closer to USD 12 billion. Amorim also mentioned that ironing out the details - such as product-specific subsidy caps and the treatment of sensitive products - would be tricky.

One Geneva-based trade diplomat observed that too much publicity about numbers too soon would be a sure way to kill off any prospective deal, since opposition from the US Congress and EU member states would be fatal.

French daily Le Monde reported on 23 January that Paris was doing everything it could to dissuade Mandelson from offering new concessions in the trade talks -- against the wishes of the German government, which currently holds the EU presidency. The article suggested that French officials were incensed by the terms of the rumoured deal, since upcoming presidential elections in April have left them reluctant to touch the issue of farm reform.

France leads a bloc of 14 EU member states that have consistently threatened to scupper a WTO agriculture deal that they deem unsatisfactory. However, France alone would not be able to exercise a veto, according to an expert quoted by the newspaper, since the vote would take place under the EU's qualified majority system.

Geneva-based negotiators intrigued

Talk of a potential EU-US agreement featured prominently in discussions during a 'fireside chat' organised by agriculture negotiations Chair Ambassador Crawford Falconer (New Zealand) on 23 January. At this informal gathering of ambassadors from about two dozen countries, sources report that representatives from the EU and the US said that they had been talking in an attempt to better understand each others' positions, but had not advanced as far as the newspapers were suggesting.

Other countries expressed satisfaction that progress had been made, but some anxiety about the prospect of a deal that did not include them. They urged the US and the EU to move as soon as possible to more inclusive multilateral talks.

"They're talking seriously, they're talking detail," one delegate told Bridges later. "But in terms of a breakthrough, I don't think so. There's no breakthrough yet." Another wondered out loud whether countries might be trying to use the media to put pressure on each other - notably, for instance, on the US to relax its demands on agricultural market access.

Falconer has not yet scheduled the next meeting, but delegates expect a transparency session open to all Member delegations to be held soon.

Future process starting to take shape?

WTO spokesperson Keith Rockwell on 24 January tried to downplay expectations for what the Davos mini-ministerial would do for the Doha Round. "This will be a meeting about process. This will not be a meeting about breakthroughs," he told the Associated Press. "We hope the contacts between the ministers at this meeting will move the negotiations forward. We would like to see greater clarity in terms of objectives."

Meanwhile, some ideas for how to take the informal negotiations forward have started to circulate in Geneva.

Sources report that the chair of the non-agricultural market access (NAMA) negotiations, Ambassador Don Stephenson (Canada), recently organised a dinner meeting with a dozen or so delegates to discuss how to proceed with discussions. One possibility he suggested was to follow the example of the agriculture chair, and hold informal 'fireside chats' with two dozen ambassadors. Another idea would be to hold a series of small group consultations with 5 or 6 countries, expanding to up to 12 delegations, as needed.

The same sources say that Falconer has floated the concept of similar small-group meetings in the farm trade talks, and that the EU did so at a recent meeting on trade facilitation. However, developing countries expressed reservations about the idea, suggesting that it could compromise transparency and inclusiveness.

ICTSD reporting; "WTO Chief to Leave Members to Draft Deal," ASSOCIATED PRESS, 23 January 2007; "European Trade Negotiator Sees Some Hope," NEW YORK TIMES, 23 January 2007; "Brasil vê propostas da UE e dos EUA na direção certa," FOLHA DE SAO PAULO, 23 January 2007; "La France bloque la relance des négociations à l'OMC," LE MONDE, 23 January 2007; "Doha Round consensus 'many weeks away' - US," 23 January 2007; "WTO Sets Low Ambitions for WEF Meeting," ASSOCIATED PRESS, 24 January 2007; "US and EU near agriculture trade deal," FINANCIAL TIMES, 22 January 2007.