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Time Crunch Spurs New Doha Trade Talks

Top negotiators from more than 150 countries are gearing up for a new diplomatic offensive in an attempt to achieve a breakthrough deal in the Doha global...

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WWD Sourcing Horizons issue 05/13/2008

GENEVA — Top negotiators from more than 150 countries are gearing up for a new diplomatic offensive in an attempt to achieve a breakthrough deal in the Doha global trade talks aimed at reducing tariffs and other trade barriers, but the prospects of whether a deal can be clinched are unclear.

This story first appeared in the May 13, 2008 issue of WWD.  Subscribe Today.

“We need to head for a ministerial in May or June,” European Union trade commissioner Peter Mandelson said last week. “We cannot take future trade growth for granted. A trade deal doesn’t just drive tariffs down, it stops them from going up and is therefore an insurance against protectionism.”

U.S. Trade Representative Susan Schwab also said last week that President Bush’s commitment to the Doha Round “is unequivocal” and the administration is focused on achieving a strong finish and continues to press for an ambitious and balanced outcome.

“My schedule continues to take me wherever there are trade ministers interested in finding that elusive breakthrough,” said Schwab, adding that the big question for Doha “is whether the emerging markets like China, India and Brazil are willing to make contributions to global market opening commensurate with their growth rates and levels of development.”

World Trade Organization director-general Pascal Lamy told the trade body’s General Council last Wednesday that, “If we are to meet the collective target we have of concluding the round by the end of 2008…we have only a few weeks, not months or semesters, in which to establish modalities. This is a very tight schedule, but it is still doable.”

Referring to the global economic crisis, Lamy said the reasons for concluding the Doha Round this year “are visible to all of us and they are becoming more critical by the day.”

“A WTO deal could help soften the impact of high prices by tackling the systemic distortions in the international market for food,” he said. “We all aim to substantially lower barriers to trade in agricultural products and diminish levels of trade-distorting subsidies, particularly in developed countries that have hampered food production and investment in agriculture in many developing countries. The overall outcome would be less distortion in world markets and increased international trade, leading to more rapid and efficient adjustment by supply to changes in demand.”

Previous efforts to secure a breakthrough deal failed in 2006 and 2007. However, WTO trade diplomats stress there is a genuine eagerness in key capitals, but whether a deal falls in place, or not, by July is a political call.

Munir Ahmad, executive director of the International Textiles & Clothing Bureau, said, “In my view, the technical talks are all done, but politically I don’t know if the will is there, or not, to go for a close on the round.”

If no breakthrough is secured by the end of July, “the round will not die, but it will certainly go into a coma,” said a senior WTO diplomat, who spoke on condition of nonattribution.

On the other hand, a breakthrough in July would keep the round going into 2009 and provide the impetus for a new regime in Washington to push for a close, the same official said.

Besides the critical agriculture talks, negotiators anticipate the biggest hurdle to be the Non-Agricultural Market Access, or NAMA, segment, which includes apparel and textiles. But continued difficulties between rich and developing countries over how to proceed to lower barriers to trade in agriculture, despite some advances in recent weeks, continue to hold back momentum.

As a result, the slippage has pushed back tentative plans that envisioned trade ministers coming to Geneva next week to try and thrash out a deal.

A WTO spokesman told reporters last week, “It will be extremely difficult under these time constraints…to have a ministerial meeting in May.”

Trade ambassadors say movement in crucial areas has not met expectations and many do not foresee Lamy calling ministers to Geneva before June, and some venture such a meeting may take place in July.

Mandelson said there was a need for greater speed in the talks and called for new draft of blueprints to be put forward on agriculture and industrial goods no later than mid-May. These blueprints, of which the latest revised versions were put forward in February, include parameters on how to cut subsidies and tariffs in farm products and duties and other barriers in industrial goods, including textiles and apparel.

Narrowing these differences down to a minimum is seen as necessary before calling ministers to Geneva to work on a breakthrough deal that would pave the way for a global trade deal. Emerging countries such as Brazil, India and Argentina want to see deeper subsidy and tariff cuts from rich nations, while the U.S. and the EU counter the market-opening offers from dynamic developing countries fall short of the expectations of their exporters and key industries.

“The current text on agriculture and industrial market access falls short in achieving the level of liberalization that is needed,” said the American Business Coalition for Doha, an umbrella group of major corporations and industry groups such as the U.S Chamber of Commerce and the National Foreign Trade Council.

Similarly, textile and apparel industry groups in the U.S. and EU insist that what’s on the table from emerging countries will effectively provide little, if any, new market access.

“It will not open new markets,” said Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition.

Tantillo said nonreciprocal provisions in the text for developing countries such as China and India “will deny us real market access in these markets for the next 10 to 15 years, while we open ours.”

Michele Tronconi, president of the European Apparel & Textile Organization, or Euratex, in a letter to Mandelson said the WTO proposals “offer no improvement of substance for European textile and apparel exporters, but would cut EU tariffs to a bare bone.”

“What we see today on the negotiating table equates to a blank check for fast-growing emerging countries (such as Brazil, India, China and Argentina), which would make null and void any application of the tariff-cutting formula, as a result of the à la carte approach built into the provisions under negotiation,” Tronconi said.

The NAMA text calls for rich-nation maximum tariffs being lowered to 8 to 9 percent and emerging developing nations to 19 to 23 percent.

Developing countries under pressure from the U.S. to agree to scrap all duties on selected industrial sectors such as chemicals and electronics are threatening to demand the scrapping of all duties on textiles and apparel.

A European textile executive with close ties to U.S. industry, speaking on condition of anonymity, said, “The U.S. may be tempted to carve out certain peak textile and apparel tariffs out of a deal if they do not get symmetry in market access in Trade Promotion Authority.”

The U.S. began the talks under TPA, also known as fast-track, giving the President certain authority to negotiate trade deals.

Asked about this scenario being bandied about, Tantillo said, “I don’t think we’re at that point yet. But there have been strong warnings sent to the administration in the last year. There is language in the TPA that says textiles have to get full reciprocity as part of these talks.”

He added that some members of Congress have indicated they would be “prepared to block” a WTO deal if textiles did not get full reciprocity.

But a senior Indian trade official who asked not to be named said any such move by the U.S. “would break the round.”

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