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Doha Round faces collapse as talks are suspended

The East African Standard (Nairobi) | May 2, 2006

PanAfrica: Doha Round Faces Collapse As Talks Are Suspended

Standard Reporter

Ongoing Doha Round of the World Trade Organisation moved closer to hitting a dead end following the rescheduling of a key ministerial meeting that was due to start last weekend.

The decision to suspend the meeting, which was to run until the end of this week, was made after the negotiators failed to get critical concessions from key member states such as the United States, the European Union, Brazil and India.

At the centre of the negotiations is the push for the US and the EU to remove the market distorting farm subsidies that have made it difficult for poor countries to compete in the global agricultural markets. There is also the question of market accessibility with much of the European and American markets protected by high tariffs.

On their part, the industrialised states are demanding that the big developing countries including Brazil and India bring down the level of protection they have accorded their industries at home.

Agricultural liberalisation

All parties insist they have given enough concession while at the same time pointing an accusing finger at other parties for being intransigent in the negotiations.

The EU claims that the US is not prepared to reform its own agricultural sector while the US is urging the EU to make major concessions of its own.

Informally, the US and the EU are furious with the posturing of some of the developing countries who stand to benefit most from agricultural liberalisation but who are in alliance with the world’s poorest countries in refusing to make any trade concessions of their own.

EU Commissioner of Trade Peter Mandelson says despite promises of cutback, the level of agricultural subsidies in the US stands at an all time high.

The US is in turn pointing an accusing finger at Europe over its failure to yield on the tariffs and quota systems it uses to guard its market from external penetration.

Back home, EU negotiators are facing stiff opposition from national governments who accuse them of giving away too much in return for nothing. For four years, trade ministers have struggled to reach agreement over these issues without much success.

Protectionist trade blocs

The so-called Doha Development Round, which was launched in the Gulf Arab state of Qatar in November 2001, aimed to demonstrate that economic cooperation, not terrorism, was the way to rebuild trust between the world’s rich and poor.

Now a deadline set by the US Congress - which will no longer allow the US President unfettered negotiating authority after July 2007 - has put the talks in jeopardy.

Most trade experts believe that if a tentative deal cannot be agreed in the next few months, there will not be time to complete the details and gain approval in the US.

If this happens, it would be the first time that the world trade talks have stalled, and may lead to a world, which is increasingly divided into protectionist trade blocs.

Already the trade focus has shifted in the US to a series of bilateral deals with US allies, and the EU is negotiating economic partnership agreements with its former colonies in the ACP (African, Caribbean and Pacific) group. But such agreements give an enormous advantage to the rich countries, who have much more leverage to fashion such agreements in their favour.

However, analysts and the key countries are divided on how to revive the trade round. One possibility is to reduce ambitions in order to complete the trade round in time.

Six-month extension

With the latest round of hiccups, some experts argue that the only way to save the trade talks is to agree at least a six-month extension of the Congressional trade deadline.

But this is looking unlikely, with the Democrats poised to take control of at least one Congressional House in the November mid-term elections.

Even a modest US trade deal with six central American nations only passed the House of Representatives by a single vote. And some development charities say that the talks are so flawed that it would better if they were abandoned completely.

Underlying the trade deadlock is the problem of who will actually gain from the planned trade liberalisation. Recent research by the World Bank suggests that the gains from opening up agricultural trade would accrue mainly to a few of the better-off developing countries such as Brazil, Thailand and Argentina.

Many of the poorest countries would gain little, and fear that rapid market opening could undermine the livelihoods of their own poor farmers.