EU blamed for WTO ‘crisis’

WTO director general Pascal Lamy will take charge of global trade talks after the EU was blamed for yet another breakdown in negotiations last week.

Lamy said that the failure to reach an agreement in Geneva left the Doha round “in crisis”, and that he would try to broker a compromise “as soon as possible”.

Three-days of talks in Switzerland ended in stalemate, with the main trading blocs – the EU, the US, Brazil, India, Australia and Japan – sticking to the positions they reached during the last round of talks in December.

Farm subsidies remained the key sticking point, with the US in particular refusing to countenance any reduction unless EU farm tariffs are slashed by 75 per cent.

Developing nations, led by Brazil and India, want EU tariffs cut by 54 per cent – compared to 39 per cent offered by the EU – and EU trade commissioner Peter Mandelson said that he was prepared to move closer to this figure, providing concessions came on industrial goods.

Developing nations said they were prepared to open up their markets, but would not agree to cut tariffs by as much as the EU wanted, leaving the talks deadlocked.

Mandelson’s comments also won him no supporters back home, with France in particular repeating that the British commissioner had no mandate to cut agricultural tariffs any further.

Lamy has now been called upon to act as a “catalyst” to kickstart negotiations, in the hope that a solution can be found by the end of the year.

“I will not beat about the bush,” Lamy told WTO members. “We are now in a crisis. We are far from the necessary convergence to be able to establish [agreements] in agriculture and non-agricultural market access, despite all the hard work put in by everyone.”

“This is serious, not only for the agriculture and industrial tariffs, but also obviously for the round as a whole if we want to conclude it by the end of this year.”

But Lamy said that despite the apparent intransigence of the main players, “no one appears to want to throw in the towel”.

“Everyone is still committed to finishing the round this year. Everybody agrees with this deadline. So the question now facing us is how we deal with the situation.”

Lamy will now begin a series of one-on-one meetings with diplomats from all the main players – possibly including heads of state and government – in the hope that he can achieve a breakthrough where round-table negotiations could not.

But with all WTO members insisting that the basis of any negotiations should remain “bottom-up” – based on each country’s existing position rather than on any new proposals put forward by Lamy – the director general’s hands could remain tied.

Many smaller WTO members believe that any attempts to broker an deal will fail as long as the so-called G-6, the six main trading blocs, refuse to negotiate, and as long as agricultural issues continue to dominate talks.

Negotiations are meant to cover a wide-range of issues, including opening up markets for industrial goods and services, but farm tariffs have overshadowed the talks from the outset. 

Lamy’s task will be made all the harder after the widespread recriminations following the collapse of the talks on July 1.

Australia’s prime minister John Howard blamed the EU and Japan for the deadlock, but praised the US for putting more ambitious proposals on the table.

“The Americans, to their credit, got the ball rolling, and unless there’s an adequate response from the Europeans it won’t happen,” he said on Australian radio.

News that the major powers are trying to bypass negotiations in order to force through a trade deal at the World Trade Organisation (WTO) has met with an angry response from trade justice campaigners.

The decision to ask Lamy to take a more direct role in the negotiations was also criticised by some NGOs.

UK-based War on Want accused Lamy of an “anti-development bias” for suggesting that deal could be reached if developing countries agreed to cut their tariffs on industrial goods.

“When this round was launched in Doha five years ago, we were told it would be the first ever development round,” said John Hilary, policy director at the NGO.

“Instead it has turned into a nightmare for development, with the EU and USA refusing to address their agricultural subsidies and developing countries being relentlessly pressured to open up their own markets.”

“Rather than forcing through this deal against the interests of the poor, the WTO should bury the current talks and build a genuine development agenda instead.”

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