PROSPECTS FOR DOHA ACCORD DIM, AS WTO HEADS INTO SUMMER RECESS

Prospects for salvaging an accord in the Doha Round of global trade talks remain dim as the WTO heads into its annual August recess, even though Director-General Pascal Lamy insists that a deal is within governments' grasp, should they be willing to make it.

Member delegations should return to Geneva in September "ready to engage in intensive negotiations", Lamy chief told them at meetings of the Trade Negotiations Committee and General Council late last week.

These talks will be based on the potential compromises outlined in draft agreement texts by the chairs of the negotiating committees on agriculture and non-agricultural market access (NAMA). Governments have been asked to spend August reflecting on the worth of the tradeoffs set out in the two texts, and return to WTO headquarters prepared to work towards the concessions necessary to finalise a deal (see BRIDGES Weekly, 18 July 2007).

Not all delegations are comfortable with proceeding from the parameters for tariff and subsidy reduction identified in the texts. Most Members gave a guarded welcome to the agriculture draft prepared by Chair Ambassador Crawford Falconer (New Zealand), despite various qualms. In contrast, several developing countries were heavily critical of the NAMA text, saying that the tariff cuts it sought from them were disproportionate both to the demands it made of industrialised nations and to the farm subsidy reform on offer in the agriculture paper. Argentina and Venezuela went so far as to say that they could not accept the NAMA text as a basis for talks in September.

As if to underline the sharp polarisation of the manufacturing tariffs debate, some industrialised states including the US, the EU, Canada, and New Zealand argued that the NAMA text drafted by Chair Ambassador Don Stephenson (Canada) actually let developing countries off too easily.

Ag should set ambition in other areas: G-20

The 'exchange rate' between potential Doha outcomes on agriculture and NAMA has featured prominently in the debate on the two draft agreement texts, specifically, the extent to which 'ambition' - WTO-speak for the depth of tariff and subsidy cuts - in rich-country farm reform should lead that for industrial tariff cuts by developing nations.

At the 26 July meeting of the TNC, the G-20 bloc of developing countries, which normally focuses its remarks on farm trade, stressed that "the ambition in agriculture must determine the negotiations in other areas - and not the other way around."

The NAMA-11 group, a developing country alliance in the industrial goods talks that includes South Africa, Brazil, India, and Argentina, has also insisted that substantial reform of trade-distorting agriculture policies by rich countries should be the yardstick against which industrial tariff liberalisation is measured.

In effect, these groups are telling the US and the EU: do little more than pretend to reform your farm subsidies by reducing spending limits to well above current or planned expenditures, and we will do little more than pretend to cut our industrial tariffs.

A wide array of developing country groups accounting for a large majority of the WTO's 151 Members -- the G-20, the G-33, the African, Caribbean, and Pacific (ACP) states, the least-developed country group, the African Group, the small and vulnerable economies, the NAMA-11, and the 'cotton four' - issued a statement saying that major reductions to trade-distorting farm support in rich countries were "central to delivering on the development dimension of the round." So-called 'green box' subsidies deemed not to distort trade or production - which make up the bulk of payments to EU and US farmers - are not facing the axe as part of the Doha Round.

The US, for its part, claims that the NAMA text's cap of between 19 to 23 percent on most developing country industrial tariffs is disproportionate to the $13 billion or $16.4 billion ceiling on trade-distorting farm support provided for in Falconer's paper.

Washington has come under particularly heavy fire for refusing to cap trade-distorting agriculture subsidies at a level close to the $11 billion it spent last year - its formal offer has been a $22.5 billion ceiling, with $17 billion broached informally.
Work in other areas necessary

Whether any overlap exists between Members' so-called 'red lines' on agriculture or NAMA - the absolute minimum beyond which each would walk away from the negotiating table - remains to be determined in September and beyond. Virtually any accord would require most major governments to back down from oft-repeated public statements, and effectively acknowledge that they had merely been jockeying for position all along.

Nevertheless, Lamy emphasised that in autumn, Members would have to also work on other issues in the talks, such as services, rules and trade facilitation, in order to set the stage for concluding the round.

During last week's TNC meeting, some delegations outlined their priorities for fall, should signs of an agreement on agriculture and NAMA begin to emerge.

India said that in conjunction with the finalisation of agriculture and NAMA modalities, there should be "a parallel green room process to enable Members, particularly those involved in the plurilateral request-offer negotiations, to clearly indicate how they propose to respond to the requests put on them." This would be combined with work on special treatment for least-developed countries, domestic regulation, and a date for a new round of market access offers, to "form the core of the services text to be formalised in the TNC."

The EU and the US also called for some sort of services document to be adopted alongside a framework agriculture and NAMA agreement. Both have expressed dissatisfaction with the negotiations' focus on agriculture, and to a lesser extent industrial trade, echoing complaints from their respective services industries that there is little of value on the Doha bargaining table.

However, India has complained that developed countries' own market access offers are wanting. It told Members last week that "developed countries need to provide clear signals of market openings in sectors and modes of interest to developing countries, particularly mode 4 [temporary cross-border labour movement]," in keeping with past promises.

India suggested that it could "only envisage losses in both [agriculture and NAMA], and would need to balance… accounts through possible gains in other areas." Such gains, it said, could come from services, rules, and a modification of WTO intellectual property rights protections to make it mandatory for patent applicants to disclose the use of any biological resources or associated traditional knowledge in their inventions.

EU Ambassador Eckart Guth singled out the importance of geographical indications - Brussels wants to see the extra level of protection accorded to wines and spirits associated with particular places (like Champagne) to be extended to other products, such as Parma ham.

Notably, US Ambassador Peter Allgeier reiterated a controversial demand for a new 'peace clause', declaring that "it is only logical that Members who are in compliance with their domestic [farm] support obligations should not be subject to dispute settlement action over such measures." Under the previous such clause, which expired at the beginning of 2004, farm subsidies conforming to WTO spending limits were shielded from potential disputes - even if they distorted world prices and caused 'serious prejudice' to trading partners, and would thus normally be prohibited by multilateral trade rules. Many developing countries and agriculture exporters are adamantly opposed to a new peace clause.

US political obstacles loom large

Although they might differ on whether or not the negotiations ought to be rushed, trade diplomats widely share the belief that the Doha Round needs to be concluded by early 2008, or else face a lengthy hibernation period due to elections in the US and India.

However, even if negotiators manage to wrap up a deal at WTO headquarters, it will still need to be ratified by Member governments.

This could prove especially complicated in the US: the George W. Bush administration's 'trade promotion authority' (TPA) expired with the end of June, and with it, the ability to negotiate trade agreements and submit them to Congress for a yes-or-no vote without amendments. Other governments want the White House to have this mandate in order to ensure that US lawmakers cannot pick apart already-agreed trade deals, as they would otherwise be able to do.

Moreover, many other countries view the prospects for TPA renewal as a barometer of Washington's seriousness as a credible negotiator in the Doha Round, even though technically speaking, 'fast-track' authority is only required when Congress is actually ratifying agreements.

Although the Republican White House has indicated that it wants a new TPA mandate, it is far from clear whether it can convince the Democrat-controlled Congress to agree. Indeed, senior Democratic lawmakers in late June said that renewing fast-track authority was not among their "legislative priorities," giving voice to growing ambivalence and outright opposition within the party to trade liberalisation. US labour groups, which remain influential in Democratic circles, do not support TPA extension.

With the Bush administration's dismal approval ratings and less-than-cordial relationship with Congress, it may even be unable to sell lawmakers on a Doha-specific TPA to ratify a WTO deal. However, some analysts think that Democrats would be more wary of rejecting a multilateral accord than the bilateral ones they openly oppose.

Another potential roadblock for a Doha accord emerged last week, when the House of Representatives, the lower chamber of Congress, voted to largely continue and expand lavish agriculture subsidy practices over the next five years.

The farm bill approved by the House on 27 July faces revision in the Senate as well as a veto threat from the White House, which has called for modest reductions in order to insulate farm spending from challenges at the WTO (see BRIDGES Weekly, 7 February 2007).

Nevertheless, the recent House vote serves to underline that attempts at major subsidy reform, whether via the Doha Round talks or elsewhere, will have a rough ride in Congress. Earlier last week, House representatives from both parties rejected a proposal led by Ron Kind (Democrat-Wisconsin) to dramatically reorient spending away from traditional subsidy programmes towards income insurance, conservation, nutrition, and rural development initiatives.

The ongoing process to write a new farm bill has been seen, in conjunction with the Doha Round negotiations, as a window of opportunity for reforming US agriculture support. Once the farm bill is finalised, the political cost of cutting promised subsidies in order to comply with new WTO obligations will increase even more.

Negotiations on agriculture are set to start from 3 September at WTO headquarters, with a range of open and invitation-only meetings, along with informal consultations. NAMA talks are expected to start the following week.

International advocacy group Oxfam argues that a changed attitude on the part of industrialised countries will be necessary for these talks to have a chance of yielding a compromise that supports development concerns, reports Reuters. "Rich countries ... must stop treating development-friendly policies as a concession. Development should be front and center in these talks, otherwise the resulting deal will not help to reduce poverty," said Bernice Romero, Oxfam International's policy director.

ICTSD reporting; "House Passes Farm Bill, Expanding Food Stamps," NEW YORK TIMES, 28 July 2007; "US, Britain optimistic for global trade," REUTERS, 31 July 2007.