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Anger welling amid WTO trade talks

©

Latest update : 2008-07-21

Animosity has been on the rise as the world's trade ministers meet to nail down an agreement in Geneva. The Brazilian minister angered Washington when he likened the arguments put forward by rich countries to Nazi propaganda.

This is make or break time for the World Trade Organisation (WTO). Trade ministers from around 30 countries will meet in Geneva from July 21 in a bid to end deadlocked negotiations aimed at lowering global trade barriers.

 

Cuts in tariffs and agricultural subsidies are the WTO's main targets, but also the most hotly disputed points in the Doha round of talks, which was originally scheduled to end in 2003.

 

Negotiators for the world's leading economic powers have displayed cautious optimism in the lead up to the meeting. "I think the chances for a breakthrough are improving, but that breakthrough is not yet in the bag," said European Trade Commissioner Peter Mandelson, who will be representing the EU's 27 member states at the meeting.

 
"The mood is not good"
 

The confident façade barely hides the numerous cracks between entrenched groups of WTO member states. "The mood is not good," Simon Evenett told FRANCE 24 from Switzerland. A professor of international trade and economic development at the University of St. Gallen, he added: "[WTO director-general] Pascal Lamy thinks the chances of an agreement are about 50%. I might be a little more pessimistic."

 

French President Nicolas Sarkozy, who holds the rotating presidency of the EU for six months, has warned that he would block a deal based on the WTO's current agricultural proposals. Under the proposed deal, the EU would cut its farm subsidies by 75% to 85% and its tariffs on agricultural products by 54% on average. "As things stand, we are wide off the mark," Sarkozy told the European Parliament on July 10. "Europe has done every effort and cannot keep making efforts if other regions in the world are not ready to move forward."

 

On June 30, the French president had sparked a public row with Mandelson when he said: "M. Lamy and M. Mandelson would like us to accept an agreement under which Europe would undertake to cut its agricultural production by 20% and its agricultural exports by 10%. This is 100,000 job cuts and I will not let it happen."

 

According to Evenett, Sarkozy's threat is to be taken "very seriously". "The French want to limit the level of liberalisation on agricultural products in the Doha round and they have been successful at it so far," he said.

 

At a meeting in Brussels on Friday, European ministers agreed that the EU position in Geneva should be to "obtain a new balance in the concessions that the Union has already made," according to French Minister for Trade Anne-Marie Idrac. She added: "The general sentiment is that Europe has exhausted its room for manoeuvre in the agricultural sector and can go no further."

 

The opening of the Geneva meeting coincides with Sarkozy's trip to Ireland, where the EU reform treaty was rejected in a referendum last month after the Irish agri-business sector voiced fears that a WTO agreement would lead to thousands of job cuts there.

 
Lower tariffs and farm subsidies
 

The promoters of a global trade agreement hope that two areas of conflict will be cleared in the coming week.

 

On agricultural markets, negotiators will try to achieve an acceptable balance between cuts in farm subsidies in rich countries, considered to give US and European agricultural products an unfair advantage, and tariff reductions in developed and emerging countries. Under the current proposal, poorer countries would not be requested to lower their trade barriers.

 

Regarding industrial products, the WTO is aiming to obtain lower tariffs in emerging countries such as China and India. Myriads of parallel negotiations are underway to find a global agreement on those issues, including a complex set of exceptions and implementation delays.

 

A 12-year-old row over European tariffs on bananas exemplifies how difficult those negotiations can be. "This issue of bananas cuts to the heart of the free trade debate: people like the WTO say these tariffs are very unfair on certain countries, particularly developing countries," said FRANCE 24 business journalist Owen Fairclough.

 

Similar disputes have been simmering in various economic sectors. "The best we can expect for the coming week is a general framework on agricultural goods and industrial products, which could lead to a final agreement next year," Evenett said.

 

If negotiators fail to reach a deal this month, most analysts agree that the talks will be frozen for at least one year, until the US, Indian and European elections are over. Even then, it is unclear whether one of them will be willing to take the lead and revive the Doha round of negotiations.

 

Meanwhile, a growing number of voices question the very need for trade liberalisation.

 

Philippe Pinta, who chairs the economic commission of the French farmers' union FNSEA, told FRANCE 24 that "nothing is acceptable" in the current WTO proposals, especially in an era of rising food prices. "Deregulation would be foolish at a time when we are told that financial markets should be regulated,” he said. “Is food not more important than finance?"

 

 

Date created : 2008-07-21

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