GENEVA — Tensions between industrial powers and major emerging nations are escalating before a crucial meeting of trade ministers from some 35 countries on Monday to seek a breakthrough in the Doha Round of global trade talks.
This story first appeared in the July 15, 2008 issue of WWD. Subscribe Today.
The latest revised blueprints for the two key segments of the talks — farm and nonagricultural market access, or NAMA, were circulated Thursday to give negotiators time to review and narrow differences and issues before the ministerial session. “These revised texts set the stage for a decisive moment in the Doha Round,” said Pascal Lamy, director-general of the World Trade Organization, which is sponsoring the round.
The trade liberalization talks started in 2001 but have been marked by conflict. The aim was to help ease global poverty by having industrialized nations open their agricultural markets and, in return, developing nations would allow greater access for manufactured goods. Lowering tariffs on textiles and apparel, among other goods, is a key sticking point.
With economic challenges worsening in the world economy, a deal to open trade in agriculture and manufacturing “means more growth, better prospects for development and a more stable and predictable trading system,” he said.
Despite the rising tensions, he estimated there was a better than 50 percent chance that a breakthrough deal on lowering tariff and other trade barriers could be reached.
The options “are pretty clear and straightforward,” Lamy told reporters. He noted that “if we get to modalities” — formulas for tariff cuts — then 85 percent of the results of the Doha round would have been reached, and a deal would help ensure that “collective insurance against protectionism is there.”
The latest blueprints did not change the core structure of a draft circulated in May, but include changes that affect imports of textiles and apparel into the U.S. and European Union from poor developing countries that currently benefit from preferential access terms.
The U.S. “is willing to contribute to a strong outcome,” but “it’s time the world’s largest and fastest-growing economies make market-opening contributions commensurate with their increasing participation and role in the world economy,” said a spokeswoman for U.S. Trade Representative Susan Schwab. The USTR met with Lamy in Geneva on July 3.
Efforts to clinch a deal failed in 2006 and 2007 because of major differences between rich and emerging nations on farm trade and industrial goods. However, top envoys said the gridlock over how much to lower tariffs for industrial goods, including textiles and apparel, has overtaken agriculture — with the exception of the highly sensitive issue of cotton subsidies — as the most contentious segment of the talks.
“Agriculture is paradise compared to the Nonagricultural Market Access talks,” said Luzius Wasescha, Switzerland’s WTO ambassador, whose country is seen as protectionist on farm trade but liberal on industrial trade.
“It’s difficult to get an agreement” on the basis of the new NAMA blueprint, said an ambassador from an EU member state, who complained the new NAMA draft provides the possibility for emerging nations to seek “even more flexibilities” to shelter their industries from international competition.
William Lakin, director-general of the European Apparel & Textiles Organization, also known as Euratex, said under the proposals the difference between applied tariffs for rich and emerging countries is “so unbalanced” that Euratex exporters would be “getting practically nothing in return.”
Michèle Anselme, secretary general of Eurocoton, which represents 15 national associations, said under the NAMA blueprint European countries would reduce their duties by more than half, but in exchange “get nothing” because of the flexibilities for emerging countries.
“In present state, we prefer no agreement, as we have nothing to gain,” Anselme said.
The new NAMA text has increased the time frame for lowering duties on textiles and apparel imports from developing nations that benefit from preferential access to the U.S. and EU to 10 years from a range of eight to 10. The revised draft also provides the possibility to expand the number of categories to 33 from 25 of goods imported to the U.S. that would be subject to the lowest tariff levels. Products that could be added in the U.S. include men’s and boy’s overcoats as well as women’s and girls jackets and blazers knitted or crocheted of cotton.
Under the same arrangement, textiles and apparel imported to the EU could increase to 41 from 20 products. Several trade ambassadors from major apparel exporting nations said the extended list was likely to get the green light. The text also calls for five sensitive apparel categories from Sri Lanka and Pakistan to have duties reduced by the U.S. after five years instead of 10.
But in a heated NAMA session on Monday, Chinese Ambassador Sun Zhenyu and senior envoys from Pakistan and Sri Lanka objected to the proposal to extend the list of products because it would impact many key product manufactured in their countries. Emerging countries said in the industrial goods negotiations they want what rich nations are trying to secure in agriculture — sheltering “sensitive” products from deep tariff cuts.
The Bush administration and U.S. industry groups, such as the National Association of Manufacturers, insist that so-called “formula-plus” sectorial deals are necessary.
“The latest revision shows little change and reflects the deep divides that still remain,” said John Engler, chief executive officer of NAM. “We remain disappointed in the unchanged developing-country formula and flexibility provisions contained in this draft. There cannot be a Doha Round without substantial trade liberalization in manufacturing and services, and the new text continues to make that liberalization difficult, but not impossible.”