Geneva, 30/07/2008 (Agence Europe) - After ten days of intense debate led by WTO Director general Pascal Lamy, the ministers of the 35 major trading powers that are the G7 (Australia, Brazil, China, India, Japan, the United States and the European Union) and the countries arguing the case of the main negotiating groups, such as Switzerland for the agricultural importers of the G10, Indonesia for the G33, countries defending special products, Kenya and Egypt for the African countries and Mauritius for the ACP countries, who have been meeting at the WTO since 21 July, have failed to bridge the gap between their positions and, so, were unable to agree on the broad thrust of an agreement on liberalising trade in agriculture and industrial goods (NAMA). Despite the draft compromise put on the table by Lamy on 25 July in an attempt to bring together the positions of the G7 then among the 153 member countries which brought an unhoped-for breakthrough in the Doha talks (see EUROPE 9712), ministers fell at an unexpected hurdle: the special safeguard mechanism (SSM), a system to protect developing countries, by means of increasing duties, from the effects of a surge in imports of one or more agricultural products. After 72 hours of discussions on this issue which ultimately proved vain, the G7 negotiators threw in the towel, aware that other sensitive issues to be settled, such as cotton subsidies, special products, geographical indications and sectoral agreements on industrial market access, would need too much time for them to be adequately discussed and bring about a comprehensive agreement.
SSM highlights differing interests of developing countries
From Monday evening, whether with the G7, with 35 ministers in Green room meetings or with the 153 members of the trade negotiations committee, the Geneva meeting degenerated into a veritable battleground with negotiators becoming embroiled in a blame game, each accusing the other of causing the deadlock. Three major players shared top billing: - the United States, which, after reluctantly accepting the Lamy compromise that they found difficult to swallow, refused to accept any reduction, which India so wanted, in the level at which the SSM would be triggered, for fear that the mechanism could be used for protectionist purposes; - and China and India, with the former reneguing on its commitments in the G7, particularly on the sectoral agreements chapter of the NAMA strand, and on agricultural market access, after it had accepted the Lamy compromise on Friday evening (see EUROPE 9713), and the latter, on behalf of a large coalition of about one hundred developing countries (G33, African Group, ACP and small and vulnerable economies) fighting tooth and nail for a lower SSM trigger level and a higher temporary increase in customs duties that what was on offer in the Lamy compromise. Like other developed countries, the EU was critical of the intransigence of South Africa and Argentina on the NAMA strand, where they sought the greatest possible flexibility in order to protect their industries and rejected the 25 July compromise.
While the SSM divided developing countries into two clear camps, one led by India, Indonesia and the Philippines, and the other by Costa Rica, Paraguay and Uruguay, with backing from the US, China's non-participation in the sectoral accords and its refusal to lower customs duties on certain sensitive products, such as cotton, sugar and rice, provoked a general outcry among developed countries and many developing countries. Despite the best efforts of Australia, Brazil and the EU in particular, the G7 ministers refused to budge on Tuesday, before throwing in the towel.
Lamy: US$135 billion in duty savings slipping through fingers of member countries
There was convergence on important issues, like sensitive products (beef, poultry, sugar, ethanol), tropical products and products suffering from tariff escalation which could be helped by better market access, Lamy acknowledged, speaking to press on Tuesday evening. “But there is no point in beating about the bush: this meeting has failed,” he accepted. “I had hoped that we could include the elimination of tariff peaks, duty-free quota-free market access for the least developed countries, the removal of export subsidies … in the final package, but some points were missing: the SSM, cotton, and issues related to TRIPS. Members have let a package representing savings (in terms of unpaid customs duties: Ed.) of over 130 billion for the world economy slip through their fingers: - 35 for agricultural products, 95 for industrial goods - to which developing countries would have contributed one third, but they would have derived two thirds of the savings,” he lamented. “There were differences of position on import volumes and on the level at which the SSM should be triggered. After 60 hours of negotiating, it has become clear that they could not be reconciled. An issue, like cotton, was not discussed. Things now need to calm down. What happened today is not going to strengthen the multilateral system but given its resistance, it may continue down this bumpy road”, Mr Lamy added, without providing any precisions regarding the follow-up to the process. Refraining from blaming any of the specific players, the Head of the WTO stressed the “collective responsibility” for the failure.
Frustration for all negotiators… and 'blame game' between Susan Schwab and Kamal Nath
On Tuesday evening the European Commissioner for trade, Peter Mandelson stated, “This is a setback for the international trading system, greater than just the lost trading opportunities. It is a collective failure whose consequences will be felt disproportionately by those who are most vulnerable in the world economy”. Simon Crean from Australia, Susan Schwab from the US, Celso Amorim, Brazil, Kamal Nath, India, Mari Pangestu from Indonesia, Akira Amari, Japan, Luc Magloire Mbarga, Cameroon, speaking on behalf of the ACP, Uhuru Kenyatta, Kenya, speaking on behalf of the African group, Mamadou Sanou, Burkina Faso, speaking for the C-4 (cotton) and all the other negotiator ministers expressed their disappointment, consternation and frustration to the press on Tuesday evening. Chen Deming from China broke the media silence through a press release without naming anyone responsible for the le « tragic failure” and “inability of two countries to bridge the gap between their positions”. Phil Goff from New Zealand did not hesitate in accusing the US and India, who mutually accused each other on Wednesday morning. Mr Nath recognised India's responsibility “on behalf of the 100 developing countries”.
Ms Idrac calls on Commission to in future, take into account absence of consensus at Council
In a press release published on the outcome of the failure, José Manuel Barroso, expressed his “profound disappointment”. He did, however, pay homage to Commissioners Mandelson and Boel and their teams. The president of the European Commission stated that, “We worked for a fair and balanced deal that would have created a win-win situation for all sides. Such a deal would have given the world economy a much welcome boost. We did absolutely everything we cold to reconcile the different views and find compromise. The present failure does not remove the case for progress, most obviously for the benefit of developing countries”. Mr Barroso added that he would recommend the EU27 to analyse this result and “prepare for re-engagement with our major partners at the appropriate time”.
Following a final meeting of EU trade ministers on Tuesday evening, the French Secretary of State for Trade, Anne-Marie Idrac, affirmed that, “over the last few days, I have been unable to observe a consensus around the table on elements that have been raised day after day. I think that this absence of consensus will need to be taken into account in the stages that follow”. Ms Idrac also pointed out, “the need to obtain, in exchange for the EU's agricultural efforts, results that are economically acceptable and which can be explained politically”. During the General Affairs Council bringing trade ministers together last Saturday, the EU27 was unable to hide its differences on Mr Lamy's draft compromise. Some member states: France, Hungary, Lithuania at the head of them, as well as Greece, Ireland and Italy to a lesser extent, opposed it. Anne Marie Idrac and Michel Barnier, the minister for agriculture, informed EUROPE, before they left for Paris on Wednesday morning, that they would continue their efforts in the “months and years to come” to reach “a balanced, ambitious and reciprocal agreement”. Mr Barnier insisted that this had, “always been France's concern as an EU member state and in its capacity of French presidency”. Ms Idrac said that she had been congratulated by all her counterparts for her “vigilant approach” to her work throughout the conference.
Susan Schwab “on safer ground at home” that Peter Mandelson
On Tuesday, France denied that it had not respected the principle of neutrality, necessary for exercising the Presidency of the Council of the EU, by opposing Pascal Lamy's draft compromise. In response to criticism of the most recent interventions made by the president of France, Nicolas Sarkozy, who, after telephoning Mr Barroso, attempted to get Peter Mandelson to Paris on Sunday to get him to explain himself), Mr Barnier declared, “we are keen to preside in an impartial and rigorous manner, but in such a serious matter, it is unthinkable that France does not give its opinion”. Interviewed by EUROPE, members of the delegations supporting Mr Lamy's draft compromise criticised the lack of neutrality displayed by representatives of the French government. President Sarkozy will meet on Monday with the Head of the WTO, as well as with German Chancellor, Angela Merkel and British Prime Minister, Gordon Brown, who support the draft compromise, despite Berlin having supported Paris on the geographical indications dossier (EUROPE 9713). Under pressure from a US Congress with a Democrat majority that is rather hostile to “unbridled” free-trade, Susan Schwab herself acknowledged on Wednesday morning to the press that she was “on safer ground at home” than her counterpart Peter Mandelson, “given the declarations from Nicolas Sarkozy”. (E.H./trans/rt/rh)