TRADE: Mercosur Threatens to Block WTO Liberalisation Talks

By Gustavo Capdevila Reprint | | Print |

Gustavo Capdevila

GENEVA, Nov 1 2002 (IPS) - The four South American members of Mercosur (Southern Common Market) are threatening to obstruct the Doha Round of trade liberalising talks if the negotiations on agriculture under way at the World Trade Organisation (WTO) do not break out of their current stagnation.

"Unless meaningful results are attained in agriculture, the ‘Doha Development Agenda’ will be compromised," said Brazilian negotiator Luiz Seixas Correa, speaking on behalf of Mercosur in Friday’s session of the WTO Council for Trade in Services.

The Doha Round, launched last December by the WTO ministerial conference held in the Qatar capital, aims to expand trade liberalisation in agriculture, services, intellectual property and in the pending areas of the prior multilateral trade talks, known as the Uruguay Round (1986-1994).

But the key sector, as the negotiators themselves recognise, is farm trade, which has fallen behind in the overall process of opening markets internationally begun two decades ago. The Doha Round is slated to conclude Jan 1, 2005.

Mercosur (Argentina, Brazil, Paraguay and Uruguay) has noted the "clear lack of engagement in the agricultural negotiations on the part of some key WTO members," said Seixas.

In this context, said the Brazilian diplomat, the four Mercosur partners are convinced that if significant results are not achieved on farm trade, the Doha programme is in danger.

Developing countries criticise the industrialised nations for protecting their farmers with subsidies, which totalled 301 billion dollars in 2001, while maintaining obstacles to their markets for agricultural products of the developing South.

"It is inconceivable that, at this stage in the process of global trade negotiations, the most inefficient producers of agriculture commodities still find themselves in a position to have the large shares of export markets," said Seixas, speaking for Mercosur.

Negotiations on agriculture and services began in January 2000, as the Uruguay Round agreements had stipulated their renewal.

Talks on trade in services made significant progress over two and a half years, as the 145 WTO member nations corroborated Friday in Geneva.

Hamid Mamdouh, director of the WTO division on services, said the governments have outlined a positive scenario for the liberalisation of trade in services, which encompass telecommunications, finance, banking, health, education, tourism, transportation and others.

Ahmed Habib, negotiator for Pakistan, agreed, saying negotiations on services are "progressing well".

Brazil’s Seixas admitted that talks in that arena "have been progressing in a broadly satisfactory manner."

Seixas said he wished the same success for other areas, such as the implementation of issues pending since the Uruguay Round and the special and differentiated treatment that WTO system grants developing countries, given the sharp differences in power on the international market.

But in regards to farm trade, Mercosur charges that industrialised countries are not making as much effort as they have in the negotiations on services.

Services, as well as intellectual property and investment, provide great opportunities for industrialised countries to benefit, but very few for developing countries, commented Bhagirath Lal Das, India’s former chief trade negotiator in Geneva.

Farm trade, meanwhile, is the only sector with true possibilities for increasing revenues for developing countries from all regions, said Das in an article in the Suns bulletin, published by the non-governmental Third World Network.

Although the Mercosur threat marks the first threat to block the Doha negotiations, the Cairns Group, made up of 18 countries that champion farm trade liberalisation, had issued a similar warning in mid-October.

The declaration approved by the Cairns ministerial meeting, Oct 12 in Bolivia, contained similar wording to Mercosur’s: "Without a successful outcome in agriculture, the whole Doha process will be at risk."

Since the Cairns meeting took place, the panorama of the agricultural talks has been complicated by the decision the European Union (EU) took last week to put off reforms of its common agricultural policy (CAP), a programme of financial aid to the farmers of the 15-nation bloc.

The CAP reform process has been frozen until 2007 and in the following period, ending in 2013, the total EU budget outlays for agricultural subsidies will be adjusted based on inflation rates.

As such, in 11 years the EU farm subsidies will be an enormous sum, predicts Alfredo Chiaradia, chief negotiator at the WTO for Argentina, a member of the Cairns Group.

Chiaradia condemns the EU decision, saying it constitutes a victory for France, the country that has been most forceful in defending a system of farm production and trade "based on principles that we so strongly dispute."

The EU, the economic bloc that spends most to protect its farm trade, has not yet presented proposals to the WTO agricultural committee, where the talks are taking place, presided by Stuart Harbinson.

Harbinson’s mandate is to summarise the negotiation process on agricultural trade in a document to be distributed Dec 18 among all WTO member states.

But the first crucial deadline for the farm talks is Mar 31, 2003, when the countries will have already revealed their negotiating strategies, and will move to the phase of demands and offers with sights on an agreement by late 2004.

Also at the end of next March, the WTO council on services is slated to begin a new stage in negotiations. Given the progress made this week, those talks will take place in more advantageous conditions than the agricultural talks.

But as Mercosur made clear, advances in services and other areas could be dragged down by the stagnation of farm trade talks, as a final agreement can only be signed once consensus on all points has been reached.