RITE OF SPRING: UNCERTAIN WEEKS AHEAD IN PUSH FOR DOHA DEAL

Trade officials in Geneva (and readers of this news bulletin) could be forgiven for feeling a sense of déjà vu. For the third year in a row, WTO Members have aimed to strike a framework Doha Round deal on agriculture and manufacturing trade by spring. For the third year in a row, they are in serious danger of failing to do so.

It is now clear that countries will not be able to reach a so-called modalities deal 'around Easter', with formulae and figures for tariff and subsidy cuts, as well as contentious exceptions to these. This does not come as a surprise to many delegates, who have said since January that the unofficial late-March target was overly optimistic.

What remains to be seen is whether Members will manage to bridge enough differences in the upcoming weeks to put ministers in a position where they would have a realistic chance of concluding an accord, say in April.

Their prospects for doing so took another hit this week, when competitive farm exporters complained that food consumption data provided by large importers including the EU, Japan, and the US would lead to even less market-opening than expected for 'sensitive' products such as rice and sugar. Argentina, Australia, Brazil, New Zealand, and Uruguay had awaited the data for months, and had accused the 'data suppliers' of dragging their feet (see BRIDGES Weekly, 5 March 2008).

As part of a potential Doha Round deal, all WTO Members will be allowed to make smaller-than-normal tariff cuts on some sensitive products, in exchange for expanded import quotas. The extent to which these quotas expand will be based on domestic consumption - which is why consumption data from target markets is so significant.

A further wrinkle to the data issue comes from importers' desire to designate products at the more detailed 8-digit level under the 'harmonised system' of tariffs. This would allow them to use their finite entitlement of 'sensitive' farm products to pinpoint protection across a broader range of more specific products (protecting only certain cuts of beef rather than beef in general, leaving them free to protect certain types of cheese, for instance).

However, most countries do not possess domestic consumption data at that level of detail. Hence the need for estimates based on various methods, some of them contested, which was a major part of the recent data provision exercise.

The Cairns Group of agricultural exporters had pushed for using broader 6-digit classifications, for which data tend to be available (obviating the need for estimates).

Though technical issues related to domestic food consumption seem arcane, they are of crucial commercial importance. Whether sensitive products are designated at the 6-digit or 8-digit level, or how processed products are included in the calculation of domestic consumption, could result in substantially different market access gains, exporters claim.

One delegate from a Cairns Group country recently told Bridges that "all our gains from the round [in agricultural market access] will be delivered via sensitive products." This was why the group wanted greater clarity on precisely what it stood to gain in terms of agricultural market opening before making concessions elsewhere in the talks, the official explained.

Argentina and the other exporters have said that they would need time to examine the data further, as well as to discuss them with Canada, the EU, Japan, Norway, Switzerland, and the US.
For the past month, Members have been negotiating on the basis of draft deals circulated on 8 February by the chairs of the negotiating committees on agriculture and non-agricultural market access (NAMA).
Déjà vu notwithstanding, Members are better equipped now to agree on subsidy and tariff cuts than they have been in the past two years, as demonstrated in particular by the agriculture text. The text reflected real and necessary progress not made prior to last year on a wide range of lower-profile technical issues in the talks. It also provided a variety of specific options for unresolved matters, thus making it simpler for countries to assess how they stood to be affected.

However, the unresolved issues in the agriculture text remain numerous, led by the 'headline numbers' for future tariff and subsidy levels. And although there has been limited progress towards exploring compromises on some of these issues, chair Ambassador Crawford Falconer (New Zealand) said on 10 March that it was not enough for him to produce a revised version of his February text.

Meanwhile, deep divisions persist on the industrial goods trade text, with delegates reporting few signs of change whatsoever (see BRIDGES Weekly, 5 March 2008).

In theory, discussions on the two texts are supposed to lead to a 'horizontal' process during which senior officials will cross-sectoral tradeoffs between agriculture and NAMA, ultimately culminating in a ministerial-level meeting to hammer out an accord on a limited number of high-profile issues.

But with the slow progress, the timing of a horizontal process, let along a ministers' meeting, is unclear. A revised agriculture text, with greatly reduced numbers of 'square brackets' on issues requiring resolution would be a prerequisite for such a meeting.

How much more time countries have left to thrash out remaining issues is the subject of some disagreement among the WTO Membership.

At the 10 March meeting of the agriculture negotiations committee, the EU said that Falconer should circulate a revised text before the Easter weekend of 21-23 March, using his own judgment to determine where agreement might lie on unresolved issues. This would be followed by horizontal negotiations with "breakout groups" to focus on agriculture and NAMA individually, enabling ministers to strike a modalities deal by the end of April. EU officials have said that this is necessary in order to conclude the round this year.

Many other delegations, however, insisted that "substance," not artificial deadlines, should guide the talks, rather than artificial deadlines. They said that further revisions of the chair's text should be based on what is actually discussed, not conjecture.

Brazil, like Falconer himself, noted that progress in the talks was crucial to the credibility of the ongoing 'Room E' negotiation process.

The agriculture and NAMA negotiating committees are both scheduled to meet at the end of the week. Sources say that WTO Director-General Pascal Lamy is set to convene a 'green room' meeting of ambassadors from selected delegations on 13 March, in an attempt to determine how to proceed.

In London last week following bilateral talks, Indian Commerce Minister Kamal Nath and EU Trade Commissioner Peter Mandelson both expressed hope that ministers could strike a modalities deal in April, reports Reuters. Nath cautioned that the number of unresolved issues must be "brought down to 15 or so [from 130] for ministers to sit down and take a decision." Mandelson said that making the "progress required in Geneva for a ministerial meeting to take place" was "doable."

If it does not prove doable, however, the script from the last two years suggests what might happen: the target for a modalities deal would slowly slide, first into June, and then to the weeks before the WTO's August summer holiday. Without an agreement, the talks could drift into autumn and the US election season, and then towards 2009, and an ever-more uncertain fate.

ICTSD reporting; "EU and India hope for key trade meeting soon," REUTERS, 7 March 2008.