Global Trends by Martin Khor

Monday 24 October 2005

“Blame game” after setback in WTO talks

The World Trade Organisation talks suffered a setback last week when a meeting of five powerful Ministers closed abruptly when deep divisions became evident.  A “blame game” is now being played, as the WTO Ministerial meeting in December looks less likely to succeed.



There was quite a lot of drama at the World Trade Organisation last week when a much anticipated meeting of Ministers of five major countries fell apart and brought the global trade talks to the brink of a crisis.

This was followed by a “blame game” in which each party tried to shift the responsibility of failure to someone else.

At stake is the success of the WTO’s Ministerial conference in Hong Kong in mid-December and the conclusion of the negotiations known as the Doha Round.  A deal must be made by December 2006, to allow the United States Congress to approve the treaty in mid-2007 before the US President’s present authority on trade deals expires.

The setback came last Wednesday night when a meeting on agriculture involving Ministers of the US, European Union (EU), Brazil, India and Australia ended abruptly after failing to make any progress. 

“It may not have been a collapse, but it was close to a collapse,” said one diplomat who took part.

The meeting was attended by the US Trade Representative Robert Portman, EU Trade Commissioner Peter Mandelson, Brazilian Foreign Minister Celso Amorim, Indian Commerce Minister Kamal Nath and Australian Trade Minister Mark Valle.

The next day, Portman and Mandelson gave a downbeat assessment on where the Doha talks now stand.

Portman said “it is now difficult to envision success for Hong Kong and the conclusion of the Round by 2006.”  He put the blame squarely on the EU.

Mandelson warned that if there are no results within two weeks “in all areas”, it would be time to scale down expectations for the Hong Kong Ministerial.  He wanted agreements not only in agriculture but also on liberalizing industrial products and services.

Mandelson was repeating the EU’s theme that unless developing countries give in by sharply reducing their industrial tariffs and opening their services sectors to foreign firms, the EU could not cut its agriculture tariffs by much.

Many see this as a posture to enable the EU to blame others (especially the developing countries) for any failure that may occur.

But neither Brazil or India or the US would have any of it.  All three agreed, in separate press briefings, that progress had to be made in agriculture first before there could be headway in the other two areas.  The blame was passed back to the EU.

Said Amorim:  “I prefer to speak not of a deadlock but a padlock.  And the key of that padlock is in the EU’s hands.”

The Wednesday meeting floundered mainly because of the inability of the EU to make any new offers in reducing its agriculture tariffs, which are very high in some products.   Mandelson said he was facing resistance from the French.

Other Ministers criticized the EU, saying there was little point for continuing the meeting if this was the case.

Referring to the EU stance, Amorim told the media: “We would be wary of any attempt to make a smokescreen to prevent an advance on agriculture.”

The Indian Minister, Kamal Nath, insisted that India could not agree to any higher tariff cuts than what his group had offered, otherwise his country’s farmers would be affected. He rejected the US demand that developing countries cut deeply their tariffs for farm goods.

But the next day, Portman again stressed the US wanted not only the EU but also developing countries to open up their agricultural markets.

Mandelson, on the other hand, put on the defensive, hit back. He wanted “formulas and methods” in place on industrial products and services by Hong Kong, or else “we will not have anything.”  

His implicit meaning: the Hong Kong Ministerial meeting is set to fail, and he won’t take the blame.

Meanwhile, the Africa, Caribbean and Pacific (ACP) Group, comprising over 80 developing countries, issued a new challenge last Friday.

They expressed unhappiness about being left out of the talks, which had been confined to the big countries.

They insisted that the big countries should not push the burden of the trade Round onto developing countries by forcing them to open their markets to imports that would damage their small farmers and firms.

And they proposed their own tariff reduction formula, which differed from the others, by requiring developing countries to cut their agricultural tariffs by relatively lower rates.

With so many divisions and on so many issues still dogging the delegations with less than two months to go, fewer people now foresee a successful result at the WTO conference in Hong Kong in mid-December.