Geneva, 03/07/2006 (Agence Europe) - Not having reached an agreement after three days of discussions for finding a compromise on modalities for the liberalisation of agriculture and manufactured goods (NAMA), around thirty ministers for trade from the WTO group meeting in Geneva on 29 July - 2 July at the request of WTO Director General Pascal Lamy, threw in the sponge even before their meeting was scheduled to end. Divergences were still too great, particularly at the G-6, the group bringing together the main trade powers in the world (European Union, US, Brazil, India, Australia and Japan) and where ministers agreed at the end of their meeting to give Mr Lamy a mandate for playing a catalyst role in unblocking the situation. This will not involve Mr Lamy himself proposing a draft compromise but rather an initiative for him to intervene at a G-6 governmental level to explain the urgency of the situation. The thirty ministers or so meeting this week might meet up at the end of July, a date on which a compromise has to be found if a total failure in the round is to be avoided.
Consultations at the highest G-6 level for Mr Lamy
The WTO director general explained to the press at the end of a meeting in the Green Room of the Trade Negotiations Committee on Saturday afternoon that “the result of the discussions is quite clear. There has been no progress and consequently we have been plunged into crisis. This feeling was more than widely shared by all participants”. Mr Lamy asserted, however, that “the gaps are not unbridgeable. It's a crisis but not yet panic”. He also indicated that “we decided in the TNC that we needed a different mode of operation…this is why members mandated me to play the role of a facilitator and a catalyst of a possible agreement”. Mr Lamy added, “this will require a lot of commitment, diplomacy, consultation at the highest level, assessments and figures and “ifs and buts” to reduce the differences between the major actors as soon as possible”. The WTO director general indicated that “the plans have not changed: more reductions of subsidies and new trade possibilities in terms of market access are necessary”. He also underlined that his first task would consist of helping the G-6 agree on “consensus figures” that are lacking in the draft texts already on the table. Mr Lamy warned that, “I concluded from the discussions in the Green Room and in the group meetings that a number of mandates needed to be rechecked at the highest levels. I am now in a different mode, all this will involve constraint and discretion. I will not be able to be totally transparent about these high level talks I will be having”. The final deadline, however, will have to be respected at the end of July so that the G-6 reaches a compromise as soon as possible, two more weeks at the most for leaving time to the other member counties to assess this possible agreement. Asked about the possibility of leaving it up to the G-8 (the seven most industrialised countries and Russia, meeting for a summit in mid-July: Editor's note) to unblock things, Mr Lamy said that this grouping did not constitute the “most suitable geometry for dealing with a world trade problem”.
Mandelson says two weeks remain to find G-6 compromise
At the end of the Green Room meeting Trade Commissioner Peter Mandelson said that “it has not been a success or a disaster” but warned that if they did not change direction in the next two weeks they would not have a breakthrough this summer and “the economic and political costs of failure should be ringing alarm bells in the ears of governments” of member countries, particularly at the G-6, which according to Mandelson hold the keys to the negotiations. In an allusion to the possibility of the WTO director general writing the compromise text himself, Mr Mandelson explained, “that's why we need to change our methods…Mr Lamy has to be proactive. He has to be the catalyst but not the author of any deal”. In effect, as demonstrated by the reticence of most actors with regard to the “magic 20-20-20 formula” (EUROPE 9223), no-one wants to see Mr Lamy having to elaborate a draft compromise. Presenting an agreement, firstly between the G-6 members, as the only way out of the crisis, Mr Mandelson, through his promises of flexibility on agricultural market access, came out from under the sights of the Union's partners at the WTO to call for the US to rapidly present a substantially better offer on internal subsidies. He called on his counterpart, Susan Schwab, to present a plan for reducing internal subsidies that would go from below the maximum aid ceiling of $15 bn a year (the emerging countries of the G-20 are calling for a ceiling of 12 bn), as opposed to the 22 bn Washington put on the table.
Mr Mandelson explained that what the Americans “are proposing in theory as their ceiling for expenditure in the future is over $3 bn more than they are spending at the moment”. He asked whether “that is a bold proposal”.
Addressing the press shortly after Mr Mandelson, the Swiss minister for the economy, Joseph Deiss also called on the Americans and emerging countries to make the necessary concessions. Mr Deiss regretted that the main allies of the Union, countries that are very defensive over agriculture, the net agricultural importing countries of the G-10 (Switzerland, Japan, South Korea and Norway) “were not, however, prepared to make big sacrifices by getting closer to the Union's position on agricultural market access”.
US inflexibility
Unable to reduce their demands on agricultural market access or to agree to more constraints on internal subsidies, the US, in the eyes of their partners is responsible for the failure at Geneva. Addressing the press at the end of the last Green Room meeting, Ms Schwab and the representative for agriculture, Mike Johanns, nevertheless, reaffirmed their support for a “robust and ambitious result” in the Doha negotiations. Defending the “audacity” of their agricultural offer last October, particularly on domestic support, US negotiators put the failure in Geneva down to their partners and pointed the finger at them for seeking too many exemptions on market agricultural customs duties, which is responsible for the disagreement with the Union, G-10, G-20 and developing countries. In a reference to the categories for agricultural subsidies defined in the boxes, Ms Schwab affirmed that, “WTO jargon mentions the amber box, the blue box and the green box but when it is about exemptions for more market access, we should really be speaking about a 'black box'”. She also denounced the protection against increased liberalisation of trade on sensitive products for developed countries, special products, special treatment and the special safeguard mechanism for developing countries. Affirming that provisions for developing countries, the “3 S”, would allow some of them to deduct between 93%-99% off their tariff lines on trade liberalisation, Mr Johanns again called on US partner countries to make more market access concessions, which he regarded as the “key to the round”. US negotiators also stressed the importance Congress attached to obtaining concrete results in terms of global market access for the USA
Developing world refuses to negotiate its survival
During a joint press conference for the G-20 groups (emerging countries) (countries that are “friends to special products”) and the G-90 (developing countries including the ACP, LDC countries, African and vulnerable economies), chief negotiators again unanimously underlined that the developing world should not have to “be the avant-guard” in negotiations on liberalising world trade. The Head of Brazilian diplomacy, Celso Amorim, indicated that “those who have the most to offer, are the rich countries” and should strive to reduce their agricultural domestic support. Amorim explicitly targeted US internal support and said that “before the complaint Brazil lodged against the US at the WTO on cotton, we knew that subsidies were immoral. Now they are illegal, therefore, let's get rid of them”.
The Indian minister for trade, Kamal Nath called on the rich counties to “take advantage of the reflection period”. In a reference to exemptions to increased market access and the “3 S” he also said that they did not have to renegotiate what had been negotiated at Hong Kong. Mari Elka Pangestu the Indonesian minister for trade and the G-33 coordinator said, “it's not about erosion of market access”. Mr Nath affirmed, “we won't negotiate subsistence and livelihood security”. He then reaffirmed that developing countries would not agree to a less than total reciprocity on reducing custom duties on NAMA. Although he was pleased that the Union had proved flexible on agricultural market access the Indian minister, nevertheless, called on the Europeans to “move a little bit more” and provide more clarification on sensitive products.
The Zambian minister for trade and the Head of the LDCs, Dipak Patel, said, “the leaders of rich countries should be ashamed of their big promises made to the most vulnerable countries and having reneged on them less than six months later”. In the Green Room discussions Patel attempted to obtain guarantees on the length of phasing out exemptions (3%) requested of Hong Kong by the US and Japan, on market access without custom duties or quotas on all LDC country products (development package).
The cotton-producing countries of the C-4 (Benin, Mali, Togo and Chad) also made their voices heard once more. "We are not going to allow ourselves to be marginalised. The question of the survival of our populations must be taken into account. There must be an end to internal support and export subsidies", demanded the Beninese trade Minister, Moudjaidou Soumanou.
France and Ireland strongly oppose new offer
At a meeting, on Saturday morning, of the 133 Committee, which is made up of experts on trade issues, several Member States of the Union spoke of their concerns related to Mr Mandelson's professed intentions of coming as far as possible into line with the offer of the G-20 on access to the agricultural market. In the view of France and Ireland, both staunch opponents of this, acceding to the G-20's demand for an average reduction of 51.6% for agricultural customs duty for the developed countries, compared to the 46% drop in applied tariffs proposed in the European offer of October 2005, would constitute making a "new offer" on agriculture. Like France and Ireland, several Member States (Greece, Portugal, Spain, Hungary, Austria and Cyprus) take the view that by proposing such a compromise with nothing in return on the part of the United States on internal support and of the G-20 on NAMA, Mr Mandelson has exceeded the bounds of his mandate by making a new unilateral offer. Certain delegations (Italy, Spain, Greece, Poland and Hungary) also spoke of their concerns on market access for fruit and Mediterranean products. The European negotiators, Mr Mandelson and Agriculture Commissioner Mariann Fischer Boel, do at least still enjoy the indefatigable support of the United Kingdom, Estonia, Sweden, Denmark and Slovakia.