WTO chief under pressure

Lamy says, however, the talks are now in a crisis.

According to a report in the Southern African Regional Poverty Network, a WTO meeting in Geneva aimed at writing a “user manual” of formulas to cut duties on farm and industrial goods, as well as agricultural aid, ended on Sunday with no progress as governments refused to make any new concessions.

The failure practically sealed the fate of the five-year-old talks, which the World Bank says would pump at least $96 billion into the global economy.

“The chances for concluding this round by the end of the year have dwindled to the single digits,” said Jeffrey Schott, a fellow at the Institute for International Economics and a former US negotiator.

“If you’re a crusty old trade hand like myself, you say the round needs to fail before it succeeds. But this time may be different,” because the WTO was more complex and the Bush administration would lose its negotiating authority next year, Schott said.

Governments have asked Lamy to act as a “catalyst” to help them broker a deal, stopping short of giving him a mandate to word an agreement himself.

Initially, that means he must find a consensus among the US, the EU, Brazil, India, Australia and Japan before seeking support from the other governments.

“Nobody wants to walk away from this,” said Gary Campkin, head of international trade at the London-based Confederation of British Industry.

“Perhaps it’s the final act of the drama before the real push. If Lamy can get the six leading negotiators to move in the next two weeks, then the end of July (deadline) is still do-able,” he said.

The WTO’s governments have a July 31 deadline to submit their legally binding commodity and product-specific pledges for lowering import duties and subsidies. The negotiations have already failed twice, first in December in Hong Kong and again in April.

Still, completing the final accord this year would make this round of talks shorter than the last, which began in 1986 and ended in 1994.

Unless negotiators “turn things around in the next two weeks, we will not reach a breakthrough by summer and then we will be facing defeat”, EU trade commissioner Peter Mandelson said three days ago.

With other issues ‘ such as opening commercial services to foreign competition, easing red tape at customs, paring aid to fishing fleets that undermine marine stocks, and improving rules on anti-dumping duties ‘ also due for completion by the end of July, there would be a “traffic jam” in the talks, Lamy said.

The WTO chief faced “a colossal task”, French Trade Minister, Christine Lagarde, said on Sunday.

Brazil and India have balked at calls by the EU and US to lower their customs tariffs on consumer and industrial goods, which they say are needed to protect developing businesses.

Developing countries are exasperated at the extent of reduction in industrial tariffs demanded by developed states, with such cuts posing a threat to industrial development in developing states.

On the table is a demand for tariff cuts of up to 70 percent on industrial goods, while developed states are offering a 25 percent cut on agricultural goods.

Indian Trade Minister Kamal Nath left the talks, saying that without new offers, including one from the US to trim spending to its farmers, there was no point in meeting again this month.

US trade representative Susan Schwab said the meeting had hit “an impasse” because there were so many “loopholes” that allowed both rich and emerging economies to shield certain commodities from tariff cuts.

Mandelson has said he is prepared to move “towards, and close to” the average tariff cuts on farm products proposed by Brazil and India, while the US says its October offer to slash agricultural spending and import duties is sufficient.

“Over the last few weeks, the US has been painted into a corner,” Carsten Fink, a senior World Bank economist, said.

“Its offer was one of the more constructive ones and the US has made clear it’s willing to negotiate. The EU’s only recently shown any willingness to do so.”

Some ministers, including Brazilian Foreign Minister Celso Amorim, have suggested that heads of state should try to push the talks forward.

An opportunity may come on July 15-17 when the Group of Eight states meet in St Petersburg.

“The only way this works is if there is some kind of steamroller manoeuvre,” said Lori Wallach, president of Global Trade Watch, an activist group in Washington critical of the WTO talks. ‘New Ziana.

July 2006
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