WTO Roundup

8 October 2008

G7 fails to find consensus on SSM

Senior officials from seven major trading powers have failed this month in a last-ditch attempt to hammer out their differences on an agricultural safeguard mechanism for developing countries, a controversial trade tool that triggered the collapse of world trade talks in Geneva at the end of July. Some consider this was the final opportunity for the so-called G-7, which includes Australia, Brazil, China, the EU, India, Japan and the US, to demonstrate its value as a negotiating group outside of the multilateral process. The G-7 aimed to reach a consensus on outstanding issues in the talks, which they then planned to present to the broader WTO Membership. But such a level of agreement was not achieved when talks ended abruptly on September 20, after India reportedly refused to sign off on a compromise deal on the Special Safeguard Mechanism (SSM) that all of the other G-7 members had indicated they could accept.

Officials aimed to revive Doha Round

Senior officials from the G-7 had met in Geneva in early September in a bid to restart WTO negotiations and push for a breakthrough before the end of the year. Officials met to discuss technical solutions to unresolved questions from July’s Mini-ministerial on September 10. Sources close to the talks said that a “pragmatic mood” characterised the meetings and that although members still faced difficult compromises, they were unusually upbeat about the potential for progress. (1)

WTO Director General Pascal Lamy echoed this optimism during a meeting of the United Nations Conference on Trade and Development (UNCTAD) on September 16. “I am convinced that a deal is still possible,” he said. “I still believe that with yet another push we can reach our target. This belief if not obstinacy. It is based on what remains on the table and what remains to be done,” he added. (2)

Lamy “ready” to restart ministerial talks

During the same UNCTAD meeting, Lamy revealed that he was “ready” to convene a fresh ministerial meeting to reach agreement on the Doha Round modalities. However, the Director General acknowledged that the task would be diffi cult and that time was short. He offered no indication when ministers might convene, but it was widely believed that the US elections on November 4 mark a cut-off point for agreeing modalities. The G-7’s failure to subsequently fi nd consensus means that it is now highly unlikely that WTO Director General Pascal Lamy will summon trade ministers back to Geneva this autumn.

Members tackled SSM headache

Many believed that outstanding technical issues needed to be resolved before ministers could re-engage in the political trade-offs needed for a fi nal Doha deal. The deadlock on SSM revolved around when, and to what extent, developing countries could use the mechanism, which would allow developing countries to raise tariffs temporarily when import volumes increase or prices fall suddenly. A modified EU proposal from July 2008 framed the exchanges on the SSM, sources said. The EU proposal used a ‘tiered’ approach, meaning that countries would be allowed to impose greaterduties in the event of larger import surges. (3)

According to EU trade Commissioner Peter Mandelson earlier in the month, there were “some cautiously encouraging signs of fl exibility” in the talks on SSM but stressed that it was still too soon to know if a deal could be done. “It is still early days and we will need to see if senior offi cials are given the leeway they will certainly need to tease out a technical solution which satisfi es all parties,” Mandelson told members of the European Parliament on September 15. (4) However, many countries – including key players in the SSM debate - remained unhappy that they have not been included in the exclusive talks, claiming any progress is therefore limited.

Litigation springs from Doha collapse

The failure of the Doha talks in July has had a knock-on effect for individual long-standing trade issues, notably for bananas and cotton. Following the failure to broker a compromise on the EU’s import regime for bananas with Latin American producers in July, Ecuador and the US have resorted to litigation once again. The pair has requested the adoption of panel reports by the WTO Dispute Settlement Body, which found fault with the EU’s system of preferences and demanded tariff reductions in May of this year. The EU launched an appeal to overturn the rulings on August 28, claiming it has “devoted huge energy over recent months to fi nding a mutually agreed settlement to the long-running dispute.” (5)

In a similar vein, Brazil has asked the WTO for permission to impose sanctions on US goods as retaliation against the US cotton subsidy regime. Brazil submitted a formal request to impose some US$4 billion in penalties on August 25. Brazil had previously negotiated retaliatory sanctions against the US in 2005 but had been willing to put them on hold as hopes were raised of a Doha deal that would discipline trade distorting cotton subsidies.

EU-Ghana trade deal challenges illegal logging

Meanwhile, the EU and Ghana have clinched a deal in early September aimed at reducing illegal timber harvesting in the West African nation. The agreement, signed in the margins of a foreign aid conference in Accra on September 3, obliges Ghana to establish a transparent licensing scheme for EU-bound timber exports that certifi es that the goods have been legally harvested. The aim is to promote better enforcement of forest management by both civil society and the private sector and to give Ghanaian timber a competitive edge in the European market.

The deal is the fi rst of what Brussels hopes will be a series of so-called Voluntary Partnership Agreements (VPAs) with timber producing developing countries. The EU is currently engaged in similar talks with Cameroon, the Republic of Congo, Malaysia and Indonesia while more informal talks have begun with countries including Côte d’Ivoire, Gabon and Liberia.

1. See: G-7 talks continue: Lamy could summon ministers ‘within weeks’, Bridges Weekly, Volume 12, Number 30, September 17 2008, www.ictsd.net/news/bridgesweekly

2. To read the full speech see: Lamy ready to call ministers back to Geneva, WTO News: Speeches – Pascal Lamy, September 16 2008, www.wto.org

3. See G-7 fails to fi nd consensus on SSM, Bridges Weekly Trade News Digest, Volume 12, Number 31, September 25 2008.

4. See: Some flexibility over WTO impasse, Reuters, September 15 2008.

5. EU appeals against WTO banana rulings, Thomson Financial News, August 28 2008.

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