Success of Doha Round trade talks dependent on EU/US agreement on farm product import tariff cuts

Analysis/Comment
Success of Doha Round trade talks dependent on EU/US agreement on farm product import tariff cuts
By Michael Hennigan
Sep 15, 2005, 07:44

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WTO Director General Pascal Lamy

Wednesday was dominated by the focus of the UN Summit in New York on meeting commitments to Developing Countries and the Taoiseach (Prime Minister) Bertie Ahern said that

Ireland

would meet the target of providing 0.7% of GNI (Gross National Income) in overseas development aid by 2012. However, while he was trying to burnish his development credentials, he remains implacably opposed to a radical overhaul of the European Union's Common Agricultural Policy (CAP) as wealthy

Ireland

is the largest per capita beneficiary.

Meanwhile, World Trade Organization (WTO) Director General Pascal Lamy, urged the United States and the European Union (EU) to make concessions in farm negotiations, whose progress is key for a deal in global trade talks.

Both the EU and the United States have it within their powers to break the deadlock, and they both need to make progress in some areas to allow the rest to get moving, Lamy said at his first press conference, on Wednesday, at WTO headquarters in Geneva, since assuming office on September 1st.

Also on Wednesday, US President George W. Bush in a speech at the UN summit in New York on Wednesday said he was willing to eliminate all trade barriers if other countries did the same, issuing a challenge that could add momentum to the current talks on world trade.

In Washington, Rob Portman, the United States Trade Representative said: "We've both got our homework to do," after meetings with Peter Mandelson, the European Union's Trade Commissioner.

Farm negotiations have been stalled for months due to differences between the two biggest traders, and negotiators from other WTO members are waiting for the United States and the EU to indicate what they could offer on domestic farm subsidies and import tariffs respectively.

"They do have margins of maneuver which they have to use tactically to the maximum of their capacities ... The question is: when do they show their hand?" said Lamy.

With only three months before trade ministers are due to will meet in Hong Kong (Dec. 13-18) to agree an outline deal for the global trade talks, Lamy said progress on some points is needed urgently.

The negotiating roadmap of the new WTO Director-General is that the first evaluation of progress achieved from now should be made by mid-October, and specific results of the outline deal should be worked out by mid-November.

"The basic objective is to reach by Hong Kong a result that takes us two-thirds of the way to concluding the round in 2006," he said.

The so-called Doha Round of global trade talks, named after the Qatari capital where it was launched in 2001, has already missed its original December 2004 deadline.

"We are like a football team joining a training camp in view of intensive training ahead of a crucial match, and the crucial match starts on December 13th in Hong Kong," said Lamy. "It is going to be three months of continuing work in progress."

US and EU positions

Progress in the global negotiations to reduce trade barriers in goods as well as services, have been stalled because of the reluctance by the United States and the European Union to reduce tariffs on imported crops and subsidies for domestic farmers.

Large developing countries such as Brazil and India are demanding more access for their own farm products in exchange for lowering barriers to manufactured goods and services.

Despite President Bush's challenge on Wednesday to eliminate tarrifs and subsidies, both American and European leaders are reluctant to give up their farm protections.

The European Union has agreed to eliminate all export subsidies for farm products, but it still has high tariff barriers and it pays €51 billion a year in farm subsidies.

The United States has lower tariffs on most farm imports, but it has high barriers for products such as sugar and orange juice and it pays out billions of dollars in subsidies to producers of cotton, corn, beef and other commodities.

On Wednesday, Mr. Portman said the talks had been "very frank and constructive," adding that "we understand our responsibilities as the two great trading partners in the global economy."

Both he and Mr. Mandelson said that they supported an approach suggested in July by the Group of 20, a collection of large developing nations, which would categorise countries into five groups and let the less-developed ones reduce their barriers more slowly.

Peter Mandelson said the United States and Europe needed to offer "joint leadership" and said "it is essential that we build a common and coordinated platform."

However, the EU has said that it does not wish to reduce their internal subsidies more than the amount prescribed by the Common Agricultural Policy (CAP).

The CAP supports calls for reductions of up to 70 percent below the level that Europe is allowed under its current obligations to the World Trade Organization.

The US says that Europe must make deeper cuts. However, the US itself is under heavy pressure from Congress to maintain up to $19 billion a year in farm subsidies. The 2002 farm bill approved by Congress, greatly increased support payments for farmers and is set to expire at the end of 2007.

The Bush Administration has not yet indicated which farm subsidies they would promise to reduce, and farm state politicians are preparing to defend their local producers.

Rob Portman says that individual European countries should focus on the broader export opportunities in manufactured goods and lucrative services rather than on their fears about parochial interests.

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