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Last chance saloon for world trade

Heather Stewart

The future of the WTO is in the balance unless nations rich and poor reach a deal soon.

"MAKE NO mistake about it, it's hard work" — that was George W. Bush's assessment last week of the task facing the world's Trade Ministers as they jet into Geneva to inject fresh urgency into the flagging "Doha round" of trade talks, launched in 2001 with the declared aim of levelling the playing field for poor countries and helping them trade their way out of poverty.

The Ministers are running out of time. Mr. Bush's so-called Trade Promotion Authority — his power to negotiate trade deals on behalf of Congress — expires in July next year. With his dismal poll ratings, and a rash of protectionist rhetoric on Capitol Hill, few observers believe his authority will be extended. If no deal has been reached by then, the Doha round will effectively die, threatening the future of the World Trade Organisation, and wasting the best opportunity for more than a decade to open up the world's markets to countries long excluded.

Pascal Lamy, WTO chief, has set the start of July as the deadline for sketching the outlines of a deal, if the details are to be finalised before Mr. Bush's negotiating power expires. But with just days to go, the gap between the great trading blocs remains wide. The text of a draft deal on agriculture markets, published on June 22, contained 760 pairs of brackets, each of which will be fought over in the coming weeks.

Cutting a deal to create a fairer international marketplace is unfinished business from last year's push by G8 nations to "make poverty history." As well as increasing aid, and writing off some of the debts of developing countries, world leaders promised an "ambitious" outcome to the Doha round.

But anti-poverty campaigners say the proposals on the table are far from the radical dismantling of protectionist barriers they had hoped for. Despite the G8's warm words, a major WTO summit in Hong Kong last December, meant to wrap up the talks, ended without agreement on any of the most contentious issues, most critically the size of the barriers the European Union and the United States are allowed to keep around their heavily subsidised farmers — the subject of many of those troublesome brackets.

Six months on, the Geneva-based negotiators who have been working on the outlines of a deal are still a long way apart. The U.S., in particular, has infuriated developing countries, and the EU, by demanding cuts of up to 90 per cent in the import tariffs other countries charge on farm products, goods and services — the three major areas of negotiation.

"The US is taking this very aggressive stance that it wants real market access for its farmers, for its industrial producers, and for its services sector," says Rashid Kaukab, of the Geneva-based think-tank, South Centre. Meanwhile, the offers the U.S. and the EU (through Peter Mandelson) have made on reducing their own support for farmers move little further than reforms they had already signed up to before they came to the negotiating table. Mr. Kaukab describes their proposals as a "used coin," which they are using to try to extract more concessions.

American negotiators, led by U.S. Trade Representative Susan Schwab, have also been accused of failing to take seriously proposals from groups such as the G33 coalition of developing economies with large agricultural sectors. They want the right to protect "special products," which are critical to the livelihoods of poor farmers, and to be able to invoke emergency safeguards if cut-price imports of key farm products suddenly surge. These issues are peripheral to the complex negotiations on tariff-cuts, but central for some countries.

There were rumours in Geneva this weekend that after Mr. Bush's intervention, the U.S. could be preparing to shift its position. Only a significant retreat would satisfy developing countries. But with U.S. farming and industrial interests demanding better access to fast-growing markets such as Brazil and India, it would be hard for U.S. negotiators to sell the more modest deal which seems to be the most likely recipe for agreement. Mr. Mandelson, who six months ago was perceived as posing a major roadblock to a deal, has stuck to his guns, defending the CAP while helping to soothe the concerns of developing countries by supporting their opposition to ambitious U.S. demands.

Mr. Mandelson says he is encouraged by Mr. Bush's intervention — but the onus was still on the U.S. to make concessions. "I'm more confident, because I think major players are more focused than before, at the highest levels of government, but we need some indication of flexibility from the US before developing countries can move," he said.

Trade negotiations are a complex mix of high politics and dizzying technical detail. This week, as the technocrats hand over to their political masters, the negotiations will move to the stage of arm-twisting, horse-trading and bullying familiar to the veterans of past rounds.

"There will be a lot of behind-the-scenes meetings: this will be a fluid, fluctuating situation," says Kaukab, himself a former Pakistani trade negotiator. Developing countries in particular, which often have much smaller negotiating teams than their richer counterparts, can come under severe pressure from stronger WTO members to sign up to whatever is on the table, or risk being blamed for the talks falling apart — and even for the collapse of the entire global trading system.

All 149 WTO members will have to decide whether no deal is better than what is on offer this week.

- Guardian Newspapers Limited 2006

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