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TRADE: WTO Offers New Proposal to Break Deadlock

Emad Mekay

WASHINGTON, Jul 17 2007 (IPS) - The World Trade Organisation (WTO) proposed a new plan Tuesday to unlock global trade talks that have stalled over farm subsidies in rich countries and reluctance by poor nations to further open their markets for Western goods and services without reciprocation from industrialised nations.

But analysts who studied the new text warned that it still leaves rich countries’ trade protections largely intact, while giving poor nations little in return.

The drafts circulated today form the basis for what might be the formulas for cutting tariffs and trade-distorting agricultural subsidies under the Doha round of trade talks. They were written by agriculture negotiations chairman Crawford Falconer and non-agricultural market access (NAMA) chairman Don Stephenson.

The Doha round, which was launched in the Qatari capital in 2001, involves negotiations including trade in services, trade and environment, anti-dumping, fishery subsidies, specific development issues, trade related intellectual property and trade facilitation.

The talks have chronically stalemated despite repeated efforts by the United States and the European Union to force an agreement in several meetings.

But the new text tries to skirts the major issues and proposes caps on trade-distorting agricultural support of 13-16.4 billion dollars in the United States, less than the current 19 billion dollars. It suggests 16.5 to 27.6 billion euros for the European Union. Both were greeted as positive but not enough.

“This is a step in the right direction, but this is very unlikely to bite into actual spending,” said Celine Charveriat of Oxfam’s Make Trade Fair campaign.

“On average, the US spent 15.4 billion dollars between 1995 and 2005. Unless severe caps are put on specific products, these new figures would mean that dumping of cheap produce, which is so damaging to developing countries, will not be eliminated,” she added.

Under the new plan, developing countries, with very large agricultural populations, will have to make deeper cuts to their farm tariffs than rich countries did during the previous round. But some countries will be partly exempted.

The text also calls for faster and deeper mandatory cuts in the controversial U.S. cotton subsidies, a long-time demand by cotton producers in poor nations, especially in Africa

“We acknowledge progress in the agricultural text, which goes further than what the EU and U.S. have proposed so far, though as always the devil will be in the detail of negotiations still to come,” said Celine Charveriat of Oxfam’s Make Trade Fair campaign.

“To put this in perspective, there are 3 billion rural people in the developing world, most of them trying to survive on farms of less than 2 hectares. In addition, one billion new jobs must be created over the next decade, most of them in developing countries, which is more than double what the global economy currently produces,” said Charveriat.

Analysts who looked at the text noted that under the Non-Agricultural Market Access (NAMA) negotiations, a developing country like Brazil will have to make tariff cuts more than twice those of the United States. This means that it is poor nations that will shoulder the greatest burden of the WTO plan.

U.S. businesses reacted to the NAMA provisions by saying that the offer did not go far enough.

“This framework provides a focal point for debate,” said Frank Vargo of the National Association of Manufacturers. “However, it is clear that the U.S. must press hard for substantial cuts in foreign tariffs and a lot of work remains before the trade liberalisation we seek is reached.”

The group said that the proposed tariff cutting formula range was not adequate because there is no mention of the U.S. proposal for a non-tariff barrier agreement on cars, something that the U.S. domestic auto industry has strenuously lobbied for.

But several civil society groups saw the as a new attempt to breathe life into a dead project.

Some 90 non-governmental organisations from more than 35 countries, both developed and developing, sent letters Tuesday to their trade officials urging them to “acknowledge the failure of the Doha Round”.

They also called for a two-year moratorium on talks to make room for “a necessary to rethink the model and process of global trade negotiations.”

The proponents of the new text say they were anticipating such opposition but still called the deal a breakthrough.

“Finding such compromise is always difficult and no delegation will get all it wants,” said said Director-General Pascal Lamy in a statement who called the deal “an impressive package”.

“But these texts are representative of members’ views and constitute a fair and reasonable basis for reaching ambitious, balanced and development-oriented agreements.”

Over more than six years of the Doha round talks, WTO member countries had already agreed to remove all forms of export subsidies in agriculture, to eradicate barriers to trade on 97 percent of least developed country exports, and pledged to reduce red tape and bureaucratic delays in customs procedures.

But agriculture and NAMA issues remained sticking points that led to the failure of several rounds of talks.

Rich and poor nations still differ on the extent of tariff cuts, reductions in trade distorting domestic farm subsidies and the degree of flexibility to be extended to developing countries in opening their markets to greater competition from imports.

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