DAVOS MEET URGES NEW PUSH FOR DOHA DEAL, AMIDST ECONOMIC UNCERTAINTY

Some of the world's leading economies have called for another push for a deal in the long-running Doha Round of global trade negotiations, motivated this time by growing anxiety about the world economy.

Meeting on 26 January in the Swiss alpine resort of Davos, trade ministers from the US, the EU, Brazil, India, and a dozen other countries called for a 'mini-ministerial' meeting in March or April to strike a framework accord on cutting tariffs and farm subsidies, paving the way for concluding the struggling talks by the end of the year.

The timeline was proposed by WTO Director-General Pascal Lamy and accepted by everyone present, host Doris Leuthard, Switzerland's minister for the economy, told Reuters.

Getting horizontal

The renewed push for a 'modalities' deal is set to start in early February, when trade negotiators in Geneva are expected to receive new versions of draft deals, first on agriculture, then on industrial goods, from the chairs of the respective WTO negotiating committees.

Following some discussion in the two committees, these texts - if they prove reasonably acceptable, which is far from certain - will serve as the basis for a 'horizontal' process of negotiations in which WTO ambassadors and senior government trade officials will make trade-offs across the two sectors. If governments manage to narrow their differences enough this would culminate in a meeting of ministers, at which they will decide on the final, most contentious figures that will determine future subsidy and tariff levels.

"We've agreed that if the round is going to be done successfully, it needs to be done this year. It needs to be done on President Bush's watch," EU Trade Commissioner Peter Mandelson said in Davos. "But if we're going to do a deal on that timescale, then that points to a necessary breakthrough, which only ministers can do, at Easter or thereabouts." Australian Trade Minister Simon Crean, however, cautioned that the timing of a 'mini-ministerial' gathering would depend on whether governments' positions showed signs of converging.

A long line of missed deadlines has left trade officials reluctant to discuss specific dates and timeframes, leading them instead to refer to seasons and religious holidays. This year, Easter falls on 23 March.

The entire WTO Membership is expected to discuss the upcoming negotiating process at a 31 January meeting of the Trade Negotiations Committee. Officials from some smaller countries have privately expressed concern that a horizontal negotiating process on the forthcoming draft texts that takes place in invitation-only 'green room' meetings could fail to be sufficiently inclusive and transparent. Some delegations have suggested that the new texts could require further revision before the horizontal tradeoffs start, a notion to which the EU is notably opposed.

Market turmoil heightens urgency

Ministerial exhortations about the Doha Round have almost become an annual feature of the World Economic Forum's annual summit in Davos, with little discernible effect. Nevertheless, the ongoing turmoil in global financial markets and concerns that the US economy may be headed into a recession contributed to a heightened sense of urgency about concluding an accord.

Celso Amorim, Brazil's foreign minister, said that the "window of opportunity" he had referred to a year ago had now become a "window of necessity" for a Doha agreement. Pointing to the financial market instability that has followed the subprime mortgage crisis in the US, he expressed hope that "this is a moment that will bring to us a sense of urgency that this has to be done now."

"With the gloomy economic outlook in the developed countries, the conclusion of this round will be a shot in the arm for the global economy," added Indian Commerce Minister Kamal Nath.

There are two schools of thought on how crises of economic confidence affect trade negotiations. One holds that the Doha Round, launched amidst uncertainty only two months after the September 11, 2001 terrorist attacks, has languished precisely because the rude health of the global economy meant that governments did not truly feel the need for it: trade volumes grew rapidly even as the negotiations stagnated. The opposing school, however, suggests that fears about a recession will make US lawmakers even more reluctant to consider politically difficult concessions on farm subsidies and industrial tariffs.

In Davos, US Trade Representative Susan Schwab insisted that Washington remained committed to the multilateral trade talks. President George W. Bush mentioned the importance of the Doha Round during his final state of the union address earlier this week.

Although Brazil's Amorim has said that "differences are not so big any more in terms of numbers, sometimes they are bigger politically than in economic terms," countries will still need to make new concessions in order to make an agreement possible. Despite the optimistic rhetoric at the World Economic Forum meeting, veiled references hinted at the underlying divisions.

Amorim stressed that the new agriculture and non-agricultural market access (NAMA) texts must be "balanced," in a nod to complaints about the previous NAMA draft, released in July 2007. That text, argued countries including Brazil, India, and South Africa, would require developing nations to cut bound ceiling levels on industrial tariffs more deeply than industrialised countries, and was disproportionate to the level of liberalisation provided for in the companion agriculture text released at the same time. The US and the EU have countered that anything less by developing countries would be insufficient.

Indian minister Nath called for understanding of his country's 'sensitivities', a term he has repeatedly used when claiming New Delhi's inability to expose hundreds of millions of subsistence farmers to the full force of international competition. The US and other farm exporters - including some developing countries - have staunchly opposed demands from India, Indonesia, and the other members of the G-33 group to shelter some farm products from tariff cuts arising from the Doha Round.

Nath said that it was in rich countries' self-interest for a Doha deal to be good for developing countries, since emerging nations were now important drivers of the global economy. "The content of this round must deliver to healthy economies in Asia, in Africa, in the Pacific and in Latin America because that's the goose that's laying the golden egg," he said, according to the Inter Press Service news agency.

Maybe next year?

Although some ministers, including Switzerland's Leuthard, suggested that the Doha Round would fade into oblivion if not concluded this year, one Geneva-based trade diplomat told Bridges that 2009 was also a possibility. "Negotiators have their own pace of doing things, which is extremely slow," said the official. Nevertheless, the source saw some cause for hope that an agreement might be possible this year. While in the past, the 'technical talks' to which delegates retreated after missed deadlines were marked primarily by arguments, the last year had been marked by more conciliatory tones, and real progress on the "nitty-gritty."

Egyptian Trade Minister Rachid Mohamed Rachid sounded a more pessimistic note than his counterparts in Davos, questioning whether central players like the US, China, and India wanted a Doha deal. He called for the negotiations to be altered to consider new economic conditions, such as record food prices, reports Reuters. Egypt is a net importer of food.

Rachid also questioned the credibility of governments' annual incantations about the imperative to conclude the multilateral negotiations. "The Doha Round is raising fewer and fewer expectations because every year we keep saying if we don't do it the whole world will collapse, and every year we don't do it and the whole world gets better," he said.

ICTSD reporting; "World economy fears prompt trade deal push," REUTERS, 27 January 2008; "Trade powers eye new WTO push around Easter," REUTERS, 26 January 2008; "WTO chief sees higher risk of US protectionism on recession worries," XINHUA, 25 January 2008; "WTO ministers highlight necessity of concluding Doha Round in 2008," XINHUA, 26 January 2008; "Developing countries insist on balance," INTER PRESS SERVICE, 27 January 2008.