USTR Susan Schwab.

Less than two months after ministers from key powers gave the go-ahead for the Doha global liberalization talks to again move into serious talks in search...

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WWD Sourcing Horizons issue 03/18/2008

GENEVA — Less than two months after ministers from key powers gave the go-ahead for the Doha global liberalization talks to again move into serious talks in search of a breakthrough, increased uncertainty is clouding the prospects that a successful deal can be clinched this year to lower market barriers, including for textiles and apparel.

This story first appeared in the March 18, 2008 issue of WWD. Subscribe Today.

U.S. Trade Representative Susan Schwab recently said there’s still a “decent chance” of reaching a deal this year, but stipulated this would only be possible if major emerging economy nations such as India, Brazil and China were prepared to come forward with meaningful market-opening offers.

Similarly, European Union Trade Commissioner Peter Mandelson warned a group of poor developing countries late last month: “We will work all hours to achieve a fair and balance outcome. But I now fear that Doha is facing a high risk of failure, the first failure ever for a multilateral trade round. That would not be a good signal for the global economy, which needs the confidence boost and the insurance against protectionism. It would not be a good signal for the workers and jobs in all of our economies that would grow from new trade.”

In late January, World Trade Organization director-general Pascal Lamy, after meeting with ministers from 16 major trading powers, including the U.S., European Union, Brazil and India, on the sidelines of the World Economic Forum in Davos, Switzerland, made the assessment that “a deal is eminently doable and must be done” in 2008.

In pursuit of this objective, Lamy made plans to call trade ministers to Geneva by mid-April to craft a blueprint on lowering subsidies and tariffs on farm products and industrial goods that would also pave the way for subsequent accords covering market access for commercial services, trade rules such as antidumping and trade facilitation such as harmonized Customs procedures.

But what followed was a lack of progress, despite negotiations in Geneva on agriculture and industrial goods on plans put forward by the chairmen of the sector talks on Feb. 8, and that has sapped the Davos optimism.

“There are still intensive negotiations, but there’s no dramatic breakthrough,” said Ambassador Crawford Falconer, the New Zealand chairman of the agriculture talks.

Ambassador Don Stephenson, the Canadian chairman of the negotiations on industrial goods, also known as Non-Agricultural Market Access, said Friday he was “very encouraged” by new ideas in the talks. But diplomats said no deal was in sight and not likely to take shape until talks on agriculture moved at a faster pace.

The absence of concrete movement also has pushed back the prospects of revised blueprints until after the Easter break, senior diplomats said. Trade envoys said if no advances are made by top negotiators, it’s not likely ministers will meet in mid-April as initially planned.

Closed-door talks last week in London between the U.S., the EU and Brazil over the industrial-tariff formula, while not striking a deal, has revived hopes in this segment.

But the major powers are apart on any deeper market-opening accords, a priority for the U.S. A high-level U.S. official, who requested anonymity, said Lamy was not likely to call ministers “unless there’s significant progress.”

An ambassador from a major developing country, also speaking anonymously, said, “We take things week by week, but its obvious to all that the more delays, the more complex it becomes politically.”

Demands by China that it be given more favorable terms in the industrial goods segment because it only joined the WTO in December 2001 has drawn fire from the U.S., the EU, Japan and other industrialized and developing powers. The industrial blueprint formula calls for maximum tariffs being lowered to 8 to 9 percent for rich nations and 19 to 23 percent for the key developing nations.

“Clearly, it’s a little bit laughable from our perspective that a country like China has capacity to take advantage of developing country status when in all intents and purposes it’s not,” said Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition, which represents U.S. textile producers.

A senior Chinese official, who did not want to be named, countered: “If one looks at the level of liberalization and the quality of China’s market opening commitments they would no longer be able to laugh.”

Tantillo also was apprehensive over the approach of the U.S. in the talks and said they were entering a dangerous phase. The Bush administration is in its waning days and looking for a legacy, and, “We’re very concerned it may make substantial concessions just to get a [Doha] agreement.”

However, John Weekes, a former Canadian chief trade negotiator and WTO ambassador, said: “I think we can get a substantial breakthrough this year, but I doubt negotiations can be finalized in their entirety in 2008.”

Similarly, Munir Ahmad, executive director of the Geneva-based International Textiles & Clothing Bureau, which represents apparel and textile exporters in developing countries such as Brazil, China, Argentina and Bangladesh, said, “It appears to be difficult. But if there’s political will, it’s possible to wrap it up this year. But I’m doubtful.”

Meanwhile, Schwab and Mandelson have both upped the stakes in recent days by conveying to their counterparts in key developing countries that there would be no final deal on agriculture or industrial goods unless there also was significant market opening on services.