MIND THE GAPS: DIVISIONS PERSIST AS AG, NAMA CHAIRS AND G-4 STEP UP SEARCH FOR COMPROMISE

Trade negotiators at the WTO are saying that it is "now or never" for the troubled Doha Round talks, and that the next two months will either see a framework agreement or a prolonged breakdown.

WTO Director-General Pascal Lamy on 6 June once again called on Member delegations to soften their negotiating stances, "so that effective bargaining can take place." He said that meetings over the upcoming weeks would be crucial for efforts to agree on 'modalities' for determining tariff and subsidy cuts in the agriculture and industrial goods talks.

The negotiations are effectively being driven forward by two parallel but related processes: efforts by the chairs of the Doha Round negotiating groups on agriculture and non-agricultural market access (NAMA) to prepare new draft agreement texts based on Members' input, and a series of meetings outside the WTO among various combinations of influential trading powers, most importantly the 'G-4' of the US, Brazil, India, and the EU.

Sources expect the agriculture and NAMA chairs to issue draft modalities texts with formulae and figures for tariff and subsidy cuts later this month. Ambassador Crawford Falconer (New Zealand) and his NAMA counterpart Ambassador Don Stephenson (Canada) are coordinating closely on the timing and content of their papers. However, it is not clear whether they will release them before or after a 19-22 June meeting in Potsdam near Berlin, where G-4 ministers will try to iron out their differences. The latter is thought to be more likely -- the more signals the chairs receive from Members, the less they will have to speculate about where an acceptable compromise might lie. However, the chairs will press forward with their consultations and papers even if the G-4 do not manage to agree on anything.

In an attempt to try to drum up support for bringing the Doha Round to conclusion, Lamy is set to attend the 6-8 June summit of heads of state from the Group of Eight (G8) industrialised nations in Heiligendamm, Germany. He told the informal session of the Trade Negotiations Committee on 6 June that he would send the leaders there "a strong message that we need their active support in order to achieve the successful and balanced outcome everyone is seeking." Representatives from five key developing countries - Brazil, China, India, Mexico, and South Africa - will be present for part of the summit in Germany.

The WTO chief may feel a sense of déja vu as he travels to the Baltic Sea resort to call on the G8 to work towards an accord. Last July, he went to the group's summit in St. Petersburg to urge them to make concessions at the WTO. However, despite of the leaders' call for progress, he was forced to suspend the Doha Round only two weeks later, when talks broke down primarily over differences on farm trade (see BRIDGES Weekly, 19 July 2006).

In any event, prospects for a deal now appear brighter than they have in recent months, according to several Geneva-based delegates. They suggest that various countries have hinted at yielding on long-held demands in the deadlocked farm trade negotiations -- the hints alone represent a welcome change (see related story, this issue). One negotiator went so far as to call this the "best moment... in terms of Members' engagement" on the entire range of issues in four years of working on the talks. Despite the improved atmospherics in the agriculture talks, sources warn that many issues still need to be resolved.

As for NAMA, negotiators say that even the mood music has not improved. Ongoing talks this week have largely seen delegations repeat their standard bargaining positions. Developing countries such as Brazil and India complain that the US and the EU are still asking them to make tariff cuts that are disproportionate to what they are willing to undertake themselves. At a meeting on 6 June, Brazilian Ambassador Clodoaldo Hugueney emphatically dismissed the demands made by the EU and the US. Capping industrialised tariffs at 10 percent for rich countries and 15 percent for poor ones "is not attainable, is not possible, and it's out," he said, stressing that developing countries should not have to make larger liberalisation-related adjustments than developed ones.

Alongside the chair-led discussions in Geneva, G-4 representatives have been meeting with each other to discuss different hypothetical tradeoffs. Trade and agriculture ministers from the EU and the US met in Brussels on 1 June. The following day, US Trade Representative Susan Schwab traveled to London to meet with Brazilian officials led by Foreign Minister Celso Amorim. Brazil and India reiterated their call for farm subsidy reform by developed countries during Brazilian President Luiz Inacio Lula da Silva's visit to New Delhi earlier this week.

Senior officials from all of the G-4 countries appear set to meet in Paris the week before the ministerial-level meeting in Potsdam. The near-total secrecy about the G-4's specific discussions has led some observers to wonder whether they are in the process of putting together a compromise, or simply trying to manage the political fallout from an eventual collapse.

In an interview published in the daily O Estado de Sao Paulo newspaper on 4 June, Amorim said that Members had moved closer to reaching a Doha Round accord even though much ground remained to be covered. He insisted that would not agree to anything that would "de-industrialise" Brazil and its Mercosur bloc. He said that the US and Brazil were now "closer to a possible convergence" in the farm trade talks, though subsidies remained unresolved. The G-4 meeting in Postdam would be "decisive," he added.

EU Trade Commissioner Peter Mandelson offered a less optimistic take on recent developments, though he stressed the importance of the upcoming month. "What I am seeing in the last week is both a slight hardening of position, but also a lowering of ambition, both on the part of the US and of the developing countries, Brazil and India,'' he said in a 5 June interview, reports Bloomberg. Mandelson suggested that this could force Brussels to weaken its own offer - even though what he termed the bloc's "maximalist" offer still falls short of the 54 percent average farm tariff cut proposed by the G-20, not to mention the 66 percent favoured by the US.

Once the agriculture and NAMA chairs produce their draft modalities texts - with or without joint input from the G-4 - they will be submitted to Members for comments, and potentially revised based on the response. If consensus seems within reach, Lamy could summon ministers to Geneva for a meeting in late July to try to hammer out the final details of a modalities deal prior to the WTO's August holiday.

Some sources speculate that if Members react unfavourably to the chairs' texts, Lamy himself might try to propose a compromise. For his part, the WTO director-general reiterated that the multilateral TNC, open to all Members, would remain at the head of the talks. He indicated that he we would convene more such meetings over the coming weeks, in addition to his consultations with individual delegations and ministers.

It is widely believed that governments need to reach a modalities deal before August to wrap up the talks by the end of this year. Should the latter not happen, the round may remain frozen till at least 2010: US leaders will be loath to make controversial concessions ahead of next year's presidential elections. Indian politicians will face a similar problem during the general election campaign in 2009.

ICTSD reporting; "Não vamos desindustrializar o Brasil," O ESTADO DE SAO PAULO, 4 June 2007; "US, India, Brazil Lower WTO Deal Ambitions, EU Says," BLOOMBERG,5 June 2007; "Brazil wants WTO deal without 'de-industrialising' Mercosur," DPA, 4 June 2007; "Guest countries go to G8 summit with united front, Brazil says," DPA, 6 June 2007; "WTO Hope G-8 Words Help Talks This Time," ASSOCIATED PRESS, 6 June 2007.

ICTSD reporting.