World Trade talks suspended but not yet dead

Posted: 8 August 2006

Recent events in the Middle East have overshadowed the collapse last week of the efforts to reach agreement at the World Trade talks held in the Qatar capital of Doha, which hosted the so-called Doha Round of negotiations in 2001. But, says Martin Khor, the Doha talks are not dead, only facing what is likely to be a long period of 'hibernation'.

The failure of the 'big six' members (the US, European Union, Brazil, India, Japan, and Australia) to make progress on trade liberalisation of agricultural and industrial goods led to the suspension of all negotiations across the board.

The talks had been facing many obstacles for some time. Still, the decision to suspend all talks indefinitely came as a big shock.

Although much of the world media proclaimed the death of the Doha Round, in fact the negotiations have only been 'suspended' and could revive at any time when the time is ripe.

The WTO and its predecessor, the General Agreement on Tariffs and Trade, have had many 'collapses' before, with dire predictions of doom, but in each case the trade negotiations revived.

Farm subsidies

The immediate cause of the latest breakdown was the refusal of the US to improve its current offer to cut its allowable amount of trade-distorting agricultural domestic subsidies.

The US proposed that this level be a maximum of US$22.7 billion. But other WTO members argued it had to go down much further since the US spent slightly below US$20 billion on these subsidies last year. The G20 developing countries want the US to reduce it to $12 billion.

It was expected that the US would agree to cut the $22.7 billion level by at least a few billion dollars, as a gesture if nothing else.

But it did not offer to cut by any amount, and this angered the other five WTO members, which decided not only to call the meeting off but to suspend talks on the entire spectrum of issues.

Blame game

The blame game then began, with most countries blaming the US, while the US blamed the European Union and the developing countries for not agreeing to open their markets enough to make it worthwhile for the US to do more on subsidies.

Meanwhile the Indian Commerce Minister Kamal Nath said the breakdown showed a gap not only of numbers (of how much to cut subsidies and tariffs) but more importantly a gap in mindset between developed and developing countries on what the Round means for development.

While there are the predictions of doom for the WTO, in fact the talks could revive at any time, especially if the US can announce an intention to make a new subsidies offer. This could happen after the US Congressional elections on 7 November, or even earlier.

Thus while the WTO talks have ceased being in the 'active' mode, it is on 'standby'. A few more months of inaction could change the mode to 'hibernation', and that could last many months or even years.

It is unlikely there will be a switch to a 'shut down' mode. In any case, the regular work of the WTO (including its trade review process and the dispute cases) will continue.

Source: This is a shortened version of an article from Third World Network Features, 8th August 2006.

Martin Khor is Director of the Third World Network.

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