India, China and other countries comment on WTO Talks Collapse

WTO Talks Collapse Despite Progress on a List of Issues

July 29 - WTO Director-General Pascal Lamy announced after long hours of hard talking that ministers have failed in their effort to agree on blueprint agreements in agriculture and industrial products. He told a press conference after speaking to members that out of a to-do list of 20 topics, 18 had seen positions converge but the gaps could not narrow on the 19th — the special safeguard mechanism for developing countries.

He said he would call a formal meeting of the Trade Negotiations Committee the following day for members to comment but he suggested they should wait for the “dust to settle” before deciding how to move ahead.

“It is no use beating around the bush. This meeting has collapsed. Members have not been able to bridge their differences,” he told journalists later.

So close ...

The talks’ failure does not mean the end of the Doha Round. Mr Lamy told an informal meeting of the Trade Negotiations Committee that he remains convinced that what is on the table represents twice or three times more than has been achieved in any previous multilateral trade negotiation. Much was achieved in these meetings, he said.

They began on Monday 21 July and ran late into the night and through the weekend. But in a sequence of meetings following the “concentric circles” structure, he told participants that there was no escaping the fact that ministers had been unable to bridge their differences on one key issue, the special safeguard mechanism in farm products for developing countries.

Today’s meetings included a group of seven ministers, followed by the Green Room session of about 30 representative delegations (with 20 ministers still present) and finally in the informal meeting of the full membership.

The membership will be given a chance to comment when the formal Trade Negotiations Committee meeting takes place on Wednesday 30 July.

But still on the table are the draft agriculture and non-agricultural “modalities” texts (containing formulas for cutting tariffs and agricultural subsidies, flexibilities for making different cuts, and related rules and disciplines), he reported. Ministers’ positions had converged on many issues, he said.

To-do list almost done

He told a press conference afterwards that out of a “to-do list” of 20 topics, 18 had seen positions converge but the gaps could not narrow on the 19th — the special safeguard mechanism for developing countries, which would allow developing countries to raise tariffs temporarily in order to deal with import surges and price falls.

The difference boiled down to some wanting a high “trigger” (a large import surge needed to trigger the tariff increase) in order to avoid the safeguard being triggered by normal trade growth, while others wanted a lower trigger so that the safeguard could be easier to use and more useful, he said.

“After more than 36 hours trying to find bridges between these two positions, today it became clear that the differences were irreconcilable. The remaining issues, including cotton, were not even negotiated.”

Disappointment

He said he was personally disappointed. “I had hoped to come to you today with good news,” he told journalists. “The good news would have been that after a whole week of extenuating negotiations, after hours and hours of seniors officials and ministers meetings, we had converged on a final package comprising the issues that all of us care about.

“I was hoping to say that we had slashed and capped the level of trade distorting subsidies like never before. I was hoping to announce that beef, sugar, ethanol, tropical products or products suffering from tariff escalation [higher tariffs on processed products than raw materials] would now see an improvement of their market access worldwide.

“I was hoping to tell you that tariff peaks on industrial products of interest for developing countries had been slashed, that least developed countries would consolidate duty-free and quota-free market access in the WTO, that exports support in the form of subsidies, state trading enterprises, exports credits or food aid had been removed.

“All this was ready for a final package but some important pieces were missing. The special safeguard measure for developing countries to counter surges in food imports and cotton, not to talk about the issues of GIs [geographical indications] and biodiversity [the intellectual property proposals on geographical indications and patent reforms related to genetic materials and traditional knowledge]. And the list goes on.”

Mr Lamy gave a rough estimate of the economic cost of the failure.

“What members have let slip through their fingers is a package 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.”

Next?

Mr Lamy turned to the future. “What happens to the package already on the table? what happens with the Round?

“We will need to let the dust settle. It is probably difficult to look too far into the future at this point. WTO members will need to have a sober look at if and how they bring the pieces back together.

“This is certainly not going to strengthen the multilateral trading system; it will not improve the system which has provided all its members an insurance policy against protectionism over the last 60 years.

“But I hope the system is resilient and will be able to resist the bumpy road ahead of us.

“For my part I will continue to serve this organization and its members as best as I can and devote my efforts to a fairer trading system.”

India, China and other countries comment on WTO Talks Collapse

While India and China insisted on protection for their poor farmers against a surge of imports from the rich countries, whose farm goods exports are heavily subsidised, the US, facing an economic downturn, was not ready to yield ground.

China blamed ''selfish" wealthy Western countries for the failure, while Japan pointed the finger at India and China, the two fastest growing economies. Japan blamed the two growing economic powers for not shouldering greater responsibilities in the WTO.

China's official Xinhua news agency said the negotiations at Geneva collapsed because the United States and the European Union were not prepared to scrap huge subsidies they pay their farmers.

Not only that the US and the EU were protective of their farm lobbies, they also put huge pressure on poor countries to cut tariffs on industrial imports and throw open their financial services markets to Western banks and insurers.

"This selfishness and short-sighted behaviour has directly caused the failure of this WTO ministerial meeting, which will have a number of serious consequences," Xinhua said.
Chinese commerce minister Chen Deming also gently chided India for what he called the "tragic failure'' of the talks.

He said talks had floundered over differences between two countries – meaning US and India - over a proposal to help poor farmers cope with import surges.

The US tried to stretch too far in harping on better access for service sector and lower tariffs for manufactured goods and better farm-market access (i.e., lower tariffs on food products) while not matching cuts in its trade-distorting subsidies. The farm lobby in the US has the muscle power to see that the US Congress pass a new $300 billion farm bill over President Bush's veto.

Americans anyway were getting a better deal from a Doha deal that gave their industrial goods and services better access to emerging markets.

But, New Delhi has dismissed the idea that India had been obstructionist.

Commerce and industry minister Kamal Nath rued the collapse of the talks, but, he said there was nothing much to discuss as the US and the EU stood firm on not negotiating their stand.

''It is unfortunate that in a development round we could not move because of the issue of livelihood security. G 33 and the developing countries are concerned about the issues which affect the poor and subsistence farmers," he said.

Kamal Nath said the higher threshold on which Washington insisted would risk ''the livelihood of millions of farmers" in his country.

''I kept saying 'No, I don't agree' at every point, I come from a country where 300 million people live on $1 a day and 700 million people live on $2 a day. So it is natural for me, and in fact incumbent upon me, to see that our agricultural interests are not compromised. You don't require rocket science to decide between livelihood and commercial interests," Kamal Nath was quoted as saying.

Kamal Nath said he still had faith in the institution of WTO, adding, all work that has been put in will remain intact and we will take this up and move forward.

Amidst a blame game by the bigger players like the US and the emerging giants like China and India, smaller countries like the Philippines said they would suffer most.

''It's a fight among what the United States wants, what China wants, what the US wants of other big countries - and it is difficult for a third country like us," Eduardo Ermita, executive secretary to Philippines trade minister, said.

A worried India Inc blamed the US, the European Union, India and Brazil for the collapse of the trade talks

''The the big loser now was multilateralism. The responsibility should be shared jointly by India, Brazil, the US and the European Union,'' said TK Bhaumik, chairman of the economic affairs panel of the Associated Chambers of Commerce and Industry.

''It is a big setback for multilateralism and it is now clear that multilateralism has no future," Bhaumik said.

The WTO has clearly failed to clear the several fault-lines running through the talks – negotiators failed to reconcile the different political and economic priorities of the body's 153 members.

The mood has, in fact, turned to bilateralism and China, especially has formed new links with other WTO members, especially developing countries.

Chile and Australia also signed the latest two-way deal in Canberra, shortly after the WTO talks broke down.

Australian foreign minister Stephen Smith, however, said his country would let the dust settle on global talks and then try to work a way forward.

A failure of the talks would also affect a global deal on more complex issues like climate change and soaring food and energy prices.

The developed and developing nations have been at loggerheads ever since the WTO talks began in Doha in 2001_ The latest round comes at a time when inflation is high and global economy is sagging.

A successful conclusion of the Doha Round of trade talks was expected to give a $100 billion boost to global commerce.