Another North-South Doha Deadlock

♠ Posted by Emmanuel in at 6/21/2007 09:15:00 PM
Recently, I called the Doha round of WTO trade negotiations the Freddy Krueger of trade deals while voicing a lack of optimism for the meeting in Potsdam among the G4--the EU, US, Brazil, and India. It turns out that my pessimism was well-placed. You can safely re-bury Freddy/Doha and wait for yet another sequel. The Potsdam talks were killed off early as the North-South divide was left intact with the North being unwilling to budge on agricultural subsidies and the South on tariffs on manufactured goods. Unlike previous Doha stalemates, this particular discussion may have greater repercussions since Bush's fast-track authority over trade deals--which allows him to negotiate trade deals and have the US Congress vote on it unchanged--expires at the end of the month. There are few signs that Bush will successfully get this authority extended, meaning that future trade deals struck are subject to congressional amendment, possibly delaying matters further. The Financial Times offers this summary:

The chance of a global trade deal being clinched before President George W. Bush leaves the White House shrank dramatically on Thursday with talks between core negotiating partners collapsing again in division and acrimony.

In a near-exact repeat of events last summer, talks in Potsdam, Germany, between the four partners at the centre of the so-called Doha round of negotiations – the EU, US, Brazil and India – broke up with sides still far apart on cutting agricultural subsidies and goods tariffs.

The collapse makes it unlikely that an outline deal can be agreed before the summer, a step necessary to complete a detailed agreement by the end of the year. With the US presidential race starting in earnest next year, many in the talks believe the political sensitivities in any deal mean no agreement can be concluded until there is a new incumbent in the White House.

Kamal Nath, the Indian trade minister, accused the rich countries of arrogance and inflexibility. He told the Financial Times: “It is not just a question of figures. It is a question of attitude. The US does not realise that the world has changed.” The US and the EU said Brazil and India offered no serious access to manufactured goods markets in return for proposed reductions in US farm subsidies and European agricultural tariffs.

The failure of the so-called G4 to broker an outline deal will throw the ball back to the entire membership of the World Trade Organisation in Geneva, where the chairmen of the farm and industrial goods talks are preparing draft versions of a deal. But trade officials were pessimistic...

Unlike last year’s collapse, when the US found itself isolated, the EU on Thursday joined the Americans in demanding bigger cuts in goods tariffs. Peter Mandelson, EU trade commissioner, told reporters: “It emerged from the discussion on [industrial goods] that we would not be able to point to any substantive or commercially meaningful changes in the tariffs of the emerging economies.” He said Mr Nath unilaterally declared the talks over without consultation.

The four parties to the Potsdam talks were US Trade Representative Susan Schwab, EU Trade Commissioner Peter Mandelson, Brazilian Foreign Minister Celso Amorim, and Indian Commerce Minister Kamal Nath. I have been yet unable to find the official statements of Amorim and Nath. So, first up is Schwab, who has a lengthy commentary on the matter on the USTR website. Notice the common US/EU refrain that this is not a north-south disagreement. Their implication is that Brazil and India are, in so many words, obstructionists whose bargaining positions may not be representative of other developing nations':
We regret the outcome of this week's talks. We had high hopes for Potsdam and the ability of the G4 to reach convergence. [Agricultural] Sec. Johanns and I came with a full mandate to deal, and in spite of real progress, particularly progress made by the senior officials in the last many months, including I might add progress on all three agricultural pillars--in spite of that progress, there were more barriers put up to the dialogue than the talks could sustain.

Now the United States is not giving up on the Doha Round, and we continue to be supportive not just of the Doha Round but obviously of the World Trade Organization. At some point, though, when you realize that not everyone in the room has the same intention, and you have to give up.

The G4 may not ever be able to reach closure, but that certainly does not mean the end of the round. And in fact, I look forward to going to Geneva at some point and engage with the negotiation chairs with Pascal Lamy with likeminded countries [i.e., not Brazil and India], developed and developing countries that want to see a successful, ambitious end to this round.

Some may want to portray this as a north/south breakdown [like yours truly]. But resorting to that kind of rhetoric masks the lack of new trade flows that would be generated by what is currently on the table, and this is particularly true in the manufacturing side [natch]...

But this is not a north/south breakdown. Unfortunately, the bigget losers from the current status of the negotiations will be the dozens and dozens of developing countries who need to be exporting not just ot the mature markets of the developed world, but also to the markets of the advanced developing countries--and that includes countries like Brazil, like Indian [sic], like China, among the fastest-growing countries in the world.
Next up is Mandelson on this latest stalemate:

On the big numbers the triangle of domestic support, AMA [agricultural market access], NAMA [non-agricultural market access], we have not, as I already said, reached convergence. But - and this is my personal view, I firmly believe we have a broad landing range in agriculture which is fair and forthcoming to developing countries and takes to the limit what the EU can do. We have moved, moved, and moved again in the last year or so in different parts of the agricultural negotiation and as I and Commissioner Fischer Boel have made clear we had a final move left in us to reach a balanced, equitable, ambitious conclusion.

But we cannot negotiate with ourselves. It remained totally unclear from our discussions whether there is a comparable landing range in industrial goods, without which it would not be possible to find a reasonable trade off. We were asked to put our last best agriculture offer on the table in the knowledge that this would not attract anything in return within the scope of our negotiation mandate and within the concept of proportional effort by all G4 members.

This is a development round. The developing countries - but only those in a position to do so - should make less effort and receive more than the developed countries. In the case of the poorest they should only receive from a successful trade round.

But, while in Europe, we are prepared to pay a lot - and more than others - we cannot do so for next to nothing in return. It emerged from the discussion on NAMA that we would not be able to point to any substantive or commercially meaningful changes in the tariffs of the emerging economies, as a reasonable return on what we are paying into the round.

I would have hoped that this would have not been the last word exchanged in the G4 meeting today. But, quite simply, there was nowhere else I could take it under the circumstances. The last plenary this afternoon did not happen as planned. I regret that. We will not resume I will report back to the EU Member States on Monday and of course share every available information and encouragement with the WTO's membership in Geneva.

This is not a North South showdown [see?]. It is not only we who want something out of the round. Both the developed world and the fast growing competitive countries of the developing world must create trade-offs for the most needy. These are the countries who should not be overlooked otherwise they will never cease being the most needy.

That means lowering tariffs in the developed world and proportionally, over time, reducing them in developing countries who are in a position to do so. Something, incidentally, that will help spur their own economic reform and future growth.

Lastly, let's hand over the mike to WTO Director-General Pascal Lamy, who moves the discussions back to Geneva for multilateral talks [see, I told, you--Freddy Krueger, etc.]:
G4 Members (US, EU, Brazil and India) have been meeting in Potsdam to try to bridge gaps in their negotiating positions. Prior convergence among these Members would have been helpful to pave the way towards multilateral convergence. But helpful does not mean indispensable. This negotiation is an endeavour among the 150 Members of the WTO.

The negotiating process is driven by the Chairs of the negotiating groups, who have responsibility to table compromise texts in their respective areas.

I now call on the members of the G4 to contribute to the multilateral negotiating process, which will continue as of today in Geneva.
Dear readers, please provide links to official statements by Amorim and Nath if you can find them for I have come up dry thus far. What's next? I still see this round being completed, but a long way down the line. As the FT suggests, perhaps after the next US president is elected. The Uruguay round which led to the GATT becoming the WTO took seven years; this one may last even longer. While Doha may be on the backburner, the WTO soldiers on--just as the EU did after France and the Netherlands voted down the EU constitution in 2005. Obladi-oblada, life goes on.

UPDATE 1: There are signs of an emerging rift between Brazil/India and other developing countries. The so-called G90+ and the African, Caribbean and Pacific (ACP) groups are voicing concern that they are not adequately informed of goings-on in G4 negotiations. However, neither do they say that the US/EU position is more palatable to them as Schwab and Mandelson imply. From Agence-France Presse:
Developing countries in the World Trade Organisation expressed annoyance on Thursday at being excluded from talks in Germany between the four key players in the global commerce body...

Brazil and India both count as developing countries, but Jamaica's ambassador on behalf of the G90 Plus group said the two states alone could not negotiate on everyone's behalf and that other developing economies felt out of the loop.

"The majority of members have little or no knowledge of the progress and content of the G4 process," said Gail Mathurin, whose country also heads the Africa-Caribbean-Pacific (ACP) group of 78 mostly former European colonies.

"Although two of the G4 are developing countries, they cannot be expected to carry the responsibility of representing the views of all developing countries," she added.

The G90 Plus urged a greater role for full multilateral discussions to resolve the impasse in the WTO's Doha round of global trade talks, rather than talks between select groups of countries.

"The multilateral system cannot be used to rubber stamp and legitimise decisions made by a few," the group said in a statement.

It called for "full participation of all members in discussion and in preparing the drafts and final texts."

The group also voiced concern that "development concerns have been left behind in the rush to agree a deal in the Doha Round."

"Content cannot be sacrificed for timelines," it added.

Negotiations to conclude a trade liberalisation deal, which is mainly meant to provide an economic boost for developing nations, have missed several deadlines since their launch in the Qatari capital in late 2001.
UPDATE 2: Tony Blair has made a phone call to Brazil's President Lula in a last-minute effort:
Outgoing U.K. Prime Minister Tony Blair called Brazilian President Luiz Inacio Lula da Silva Friday to urge a strong last-ditch effort to save the Doha round of World Trade Organization talks from possible failure, Brazil presidential spokesman Marcelo Baumbach said.

In a 20-minute phone call, Blair reportedly told Lula that the next 48 hours would be decisive for the success of the talks and requested that the Brazilian president intercede in favor of agreement.

The call came a day after authorities from the WTO's four most-powerful members - the U.S., the European Union, Brazil and India - announced they had failed to reach a preliminary agreement that would cement the basis for the Doha round.

During Friday's conversation, Blair reportedly urged Lula to accept a reduction in industrial import tariffs to an average of 12.7% from 35%. Brazil has offered to accept a reduction to 16%.

According to Baumbach, Lula said that the steeper tariff reduction proposal was very ambitious and would require the U.S. and the E.U. to make a better offer for Brazilian agricultural goods.

"The key now is in political dialogue and an improvement in the offers from wealthy economies," the spokesman said.