TRADE: United They Talk, So Far

TRADE: United They Talk, So Far
By Ravi Kanth Devarakonda

GENEVA, Jul 30 (IPS) - Unprecedented unity among a large majority of developing countries has put paid to aggressive attempts by rich countries to tilt the balance in the precarious Doha trade negotiations in their favour.
Southern nations are pressing for development to be placed at the heart of the multilateral trading system in any agreement, trade diplomats say.
"This is a development round and our groups will be assessing any outcome of the negotiations on the basis of the commitment undertaken in Doha to put development at the heart of the multilateral trading system," representatives of 110 countries from the South said in a joint statement last week at the crucial trade negotiations committee (TNC) meeting that oversees the trade negotiations.
Differences between North and South erupted over the draft compromise proposals put forward by the chair for industrial goods negotiations Ambassador Don Stephenson of Canada. Developing countries were asked under these proposals to agree to steep tariff-cutting commitments for industrial products in advance of an unfinished outcome over the agriculture proposals.
The rich countries supported Stephenson's proposals on reducing import duties by developing countries on import of industrial goods but demanded even more aggressive cuts. U.S. ambassador to the World Trade Organisation Peter Allgeier said that while Washington is prepared to work on basis of the chair's text, it would continue to demand steeper cuts.
"My country will never accept the draft text of modalities in NAMA as a basis to continue negotiations today, tomorrow, or in September if the current draft text on industrials continues to be on the table," Argentina's trade envoy to the WTO Ambassador Alberto Juan Dumont told IPS.
He said that agriculture which is at the core of the Doha agenda has now become "the adjustment variable vis-à-vis the level of ambition sought to be imposed on developing countries in non-agricultural market access (NAMA).
"The draft (on how to cut tariffs for industrials) is actually reversing the order of priorities set out in the Doha negotiations and, consequently, widening the gap between the disciplines applied to agriculture -- still with high levels of protection and distortions -- and those ones applied to NAMA, where import duties are moderate and only applied in simple ad valorem terms."
At issue is whether members will conclude work first on agriculture based on the unfinished proposals put forward by the chair for those negotiations, Ambassador Crawford Falconer of New Zealand, before approaching the commitments on market access for industrials.
In fact, the chair for agriculture negotiations kept several issues such as flexibilities for developing countries undecided, saying more work is needed in those areas. These include special safeguard mechanisms to help poor farmers.
But in areas such as trade-distorting domestic subsidies, reducing cotton subsidies, and export subsidies, the chair presented a set of proposals which many members from both industrialised and developing countries pronounced as a good first step to work on in September. Crawford proposed that the U.S. must bring down its domestic farm subsidies to between 13 and 16.4 billion dollars, and agree to tightened disciplines to ensure that it does not overpay its rich farmers.
On Friday, a WTO compliance panel of judges ruled that Washington has failed to implement the dispute settlement body recommendations to cut down cotton subsidies, in a dispute raised by Brazil which challenged Washington to prove that it complied with the ruling by the trade body in 2004.
Against this backdrop, the chair's recommendations received moderate praise from many members. "You have captured well the progress, or the lack of it, on all aspects of the agriculture negotiations, with the attendant nuances. You have shown a mirror to us collectively, warts and all, and asked us to reflect on how and where we want to take the negotiations," said the Indian ambassador Ujal Singh Bhatia.
"Clearly, there are many gaps in the agriculture draft but at least a sincere attempt is made to capture all the proposals," he told IPS.
The United States, which is at the core of the difficulties in the Doha agriculture negotiations because of its intransigent positions on cutting down its domestic farm subsidies, said it will not agree to a figure of 13 billion dollars for its domestic subsidies as proposed by the chair.
The U.S. said it will require close to 17 billion dollars for subsidy payments though it spent only 10.58 billion dollars in 2006. It also wants a peace clause to ensure that no trade disputes are raised against the implementation of its subsidy commitments.
While the agriculture draft is more or less agreed as an acceptable basis to continue the negotiations, the draft on industrial tariff-cutting proposals caused a near revolt from developing countries who were angry that the chair chose to present what they called partisan benchmarks.
The proposals on industrial goods would require the United States and the European Union to reduce their import tariffs on industrial goods from 3.9 and 3.3 percent respectively to something below 3 percent, while developing countries would have to go down from over 30 percent to less than 12 percent.
"It is clear who would be making the greater contribution," Brazilian Ambassador Clodoaldo Hugueney told IPS, while his Indian counterpart Ambassador Bhatia said the developed countries position had created "an extremely piquant situation which has sharply polarised the negotiations. It will require all of us to exercise enormous restraint to bring the negotiations back to a semblance of balance."
The draft modalities text on NAMA which has nearly horizontally divided membership cast a massive cloud of uncertainty now over all other areas of negotiations, and it is not clear whether there can be any agreement in September when members commence work after the summer recess, several diplomats say.
Argentina, Venezuela, Cuba and Bolivia made it clear in unambiguous terms that they will not work on the basis of Stephenson's benchmarks on industrial goods, while many other developing countries -- India, Brazil, South Africa and several others -- warned that without removing the fundamental flaws in the NAMA text it would be difficult to achieve any progress.
WTO chief Pascal Lamy, however, attempted to put a brave face on the impending gloomy situation by telling members that the draft texts "are not negotiated or agreed texts." He said it is for members to "negotiate at a more concrete, intense and specific level."
In the face of a storm of opposition, the WTO chief said the draft texts modalities "are only another step in the process and they will have to be revised in the light of the views expressed by participants." (END/2007)