Brussels, 19/01/2007 (Agence Europe) - Thirty-odd trade ministers will be meeting in Davos, Switzerland, on 27 January, on the fringes of the World Economic Forum (24-28 January) to try and breathe new life into the Doha trade round, formally suspended in July 2006. The political situation is still quite complex with the situation concerning the Trade Promotion Authority (TPA) in the United States and the debate surrounding renewal of the Farm Bill and the negotiating mandate for the Bush Administration from the US Congress, on the one hand, and the French presidential elections at the end of April and the start of May 2007 on the other. Not to mention work on a compromise on modalities in farming and the NAMA (statistics and other provisions) among the big G6 trading powers (the EU, United States, Brazil, India, Australia and Japan) in order to break the deadlock for all the Doha talks, which lies in the hands of the EU and the United States. Against this backdrop, the optimism expressed at the start of the new year by the EU and the US after the visit to Washington of a European Commission delegation headed by Jose Manuel Barroso, the President of the Commission (see EUROPE 9340), has not yet been turned into concrete action.
After a meeting with his US counterpart Susan Schwab, EU Trade Commissioner Peter Mandelson welcomed convergence between the two sides. More prudently, Schwab, the US Trade Representative, warned that the contents take priority over the calendar. Neither side could announce any EU-US farm deal based on hard facts. On 9 January, the Washington Trade Daily (a specialist press agency) said that the two sides were considering the following compromise on farming under Davos: a cut in US domestic aid of between 17 and 23 billion dollars (the EU is calling for a cut of 8 billion dollars); an average cut in customs duty slightly higher than the 54% proposed by the G20 emerging economies (a figure that the Commission interprets as amounting to a cut of just over 51%, not taking into account farm customs duty of less than 2% and excluding tropical products); and setting the number of sensitive products at 4% of tariff lines.
Interviewed by EUROPE on Friday, Peter Power, a spokesperson for Peter Mandelson, said the Commission did not recognise the figures mentioned by the Washington Trade Daily, particularly the alleged cut in US domestic farm support. Power said there would not be any breakthrough at Davos as the trading powers were still some way off any specific details of a farm compromise, but they would continue to work towards a solution. His comments are totally in line with the line taken by Susan Schwab last week after a meeting in Washington with the Director General of the World Trade Organisation, Pascal Lamy. When asked whether they were close to a breakthrough, she said no and that a long road still needed to be followed before a deal was reached, but they were definitely making progress.
A week ahead of the Davos summit, there is little clarity. Unofficial sources suggest that Washington does not yet have any unilateral offer on domestic support to put on the table, and the European Union and the United States continue to seriously disagree on how sensitive products should actually be dealt with, despite agreeing on the number of sensitive products. The US Congress, now controlled by the Democrats, is unlikely to accept a reduction in EU customs duties of less than 60%. But the Bush Administration may attempt to strike agreement at the G6 on modalities that would benefit the US, in order to get Congress to renew the United States' negotiating mandate, which expires at the end of June 2007. Some serious efforts will have to be made before the G6 can arrive at a compromise to save the Doha Round. (eh)