No deal for Doha. Deja vu

By Jess Halliday

- Last updated on GMT

Related tags: World trade organization, International trade

Spirits are low after the Doha trade talks in Geneva collapsed yesterday following an intense nine days of negotiations and are high unlikely to be resumed before January 2009 or later.

The Doha Development talks, so called because they were launched in the Qatari capital in 2001, have ended in stalemate in the last three years. The ultimate goal is to free up global trade by cutting agricultural and industrial tariffs and reducing farm subsidies, with a particular emphasis on benefits to developing countries.

A conclusion would certainly be welcome in the current climate of high food and fuel prices, which is most keenly felt by poor populations in developing countries. The OECD and FAO’s Agricultural Outlook for 2008 to 2017, published in May, said​that the evolution of agricultural, commodity and food prices "hinges importantly on future policy developments".

The talks that began on 21 July have been seen as the last chance to reach an agreement allow time for the US Congress to give its approval before Americans go to the polls in the presidential elections in November.

“It is no use beating around the bush. This meeting has collapsed. Members have not been able to bridge their differences​,” WTO director-general Pascal Lamy said yesterday.

The indefatigable Lamy, who has remained upbeat about Doha’s potential even through its grimmest hours, said it would be wise to wait for the “dust to settle” ​before moving ahead.

Some commentators have said, however, that postponing until after the US elections (and maybe even after European Parliament elections and European Commission nomination in November 2009) would be no bad thing, as it would mean there would be some new faces around the negotiating table.

Despite voicing his personal disappointment, Lamy, true to form, drew attention to what has been achieved in Geneva. He said that what is now on the table is two or three times more than has been achieved in any previous multilateral trade negotiation.

Indeed, trade ministers worked their way through a to-do list of 20 topics – and it was only when they reached number 18, on the special safeguard mechanism for developing countries, that they encountered an insurmountable obstacle.

The safeguard barrier would allow developing countries to temporarily raise tariffs temporarily in order to deal with import surges and price falls.Some countries (including the US) held out for a high import surge to trigger the tariff increase, so as to prevent the safeguard being put in place as a result of normal trade growth.

Others, however, wanted a lower trigger so that the safeguard could be easier to use and more useful.

Indian trade minister Kamal Nath said: “I am not willing to negotiate the livelihood security of millions of farmers.” ​In India, 700m people presently live on less than US$2 a day. “After more than 36 hours trying to find bridges between these two positions, [on Tuesday] it became clear that the differences were irreconcilable,”​ said Lamy. “The remaining issues, including cotton, were not even negotiated.”

Draft agriculture and non-agricultural modalities texts, are still on the table. These containing formulas for cutting tariffs and agricultural subsidies, flexibilities for making different cuts, and related rules and disciplines.

The cost of failure

After the close of the meeting, Lamy spelled out the economic impact of what participants had let go, as a result of not reaching agreement.

The package, he said, would have been worth more than $130 billion in tariff saving annually by the end of the implementation period, with $35 billion saving in agriculture and $95 billion in industrial goods.

“With developing countries contributing one third and benefiting from two thirds of the overall gains [this would be] a true development round … with a rebalancing of the rules of the trading system in favour of developing countries.”

Mariann Fischer Boel, the EU’s​European Commissioner for Agriculture and Rural Development, said that without an agreement there will be less stability in international trading.

“We will be operating in uncertain waters now, ahead of the next wave of reform for the years after 2013.”

She said that the possibility of a “tough but fair deal”​ was within grasp, and questioned whether “everyone involved really understands how serious a lost opportunity this is.”

The consequences of the failure, compared with the value of the volume trigger for the special safeguard mechanism, “is totally out of proportion”.

“If we can’t manage trade, how are we going to manage climate change?”

Related topics: Policy

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