Pressure mounts for global trade accord

By Frances Williams in Geneva
Published: July 20

http://www.ft.com/cms/s/0/c6ddc0a0-567e-11dd-8686-000077b07658.html


History suggests that talk of “do-or-die” surrounding the meeting of trade ministers that starts Monday in Geneva deserves to be greeted with weary cynicism.

Ever since the collapse of the World Trade Organisation’s ministerial conference in Cancún, Mexico, in 2003, the organisation’s 152 members have been trying to agree a framework deal in the Doha global trade talks.

EDITOR’S CHOICE
Mandelson warns on trade talks failure - Jul-17
Comment: How the food crisis could solve Doha - Jun-22
Hopes rise for global trade talks - May-20
Lamy confident of trade deal this year - Jan-27
Davos 2008: WTO chief optimistic on trade agreement - Jan-25
US claims negotiator snubbed in Brussels - Jan-21

On each occasion ministers warn that failure risks sinking the round. Yet days, weeks or months later the negotiations resume.

Still, there are good reasons for believing that this really is, in the words of Pascal Lamy, WTO director-general, the “moment of truth” for the seven-year-old round, launched in Doha in 2001 following the September 11 attacks on the US.

The looming US presidential election in November rules out serious negotiations after the WTO’s traditional August break. Concluding a global trade pact is unlikely to be high on the priority list of a new US administration, Democrat or Republican, faced with rising protectionist sentiment.

Nor is next year’s political calendar favourable to trade talks, with changes in the executive of the European Commission and a general election in India, a key participant in the round.
Mr Lamy argues that “freezing” what is currently on the Doha table to pick up again in a year or two is simply not an option. He is not alone in believing that if a deal is not done now the round will be abandoned as future trade talks respond to a changed global agenda.

A lot is on the table already, including agreement in principle to big cuts in rich-country farm subsidies that hurt producers in poor nations, and lower tariffs on agricultural and industrial goods.

Also in the works are prospective deals on liberalising trade in services, easing customs procedures, disciplining fishing subsidies and revising anti-dumping and intellectual property rules.

WTO economists estimate the Doha round could be worth two or three times as much to the global economy as the 1986-94 Uruguay round, which may have added hundreds of billions to world income.

As Peter Mandelson, EU trade commissioner, pointed out last week, failure in Geneva would hit multilateral accords on climate change, food prices and energy security.

Even so, it is by no means certain that the ministers in Geneva this week will conclude a framework agreement on lowering trade barriers to agricultural and industrial goods, needed to pave the way for completion of the broader Doha talks by the end of the year. The word most commonly heard on the lips of negotiators last week was “do-able” – but Mr Lamy himself put the odds of success below his “comfort zone” of more than 70-80 per cent.

This time the major stumbling blocks may not be the “headline” numbers on agricultural trade. Both the US (on subsidies) and the EU (on tariffs) have indicated they can move, if they get extra market access in fast-growing emerging economies for their own exports of goods and services.

But rich and poor nations are far apart on how much developing countries should cut industrial tariffs, and big differences remain on the amount of discretion developing countries will have to maintain high protective barriers on certain farm and industrial goods.

There are also unresolved disputes over cotton and tropical products, notably bananas, with the potential to derail any accord. Since the WTO works by consensus, a single veto could bring the Doha edifice crashing down, perhaps this time to remain in ruins.