China

 
At the end of July 29, Lamy announced that ministers’ efforts of long hours and hard negotiations failed to produce result on the 9th day of WTO trade talks. Today, he has called a formal Trade Negotiations Committe meeting to provide a forum for comment from members, but he advises nations to allow the “dust to settle” before re-addressing next steps for moving past this hump.

“It is no use beating around the bush. This meeting has collapsed. Members have not been able to bridge their differences,”

Lamy said to reporters. He however refused to allow disappointment of the outcome from this series of talks eclipse the progress made, saying that this round produced twice to thrice more achieved in any other multilateral trade negotiations. Of the 20 topics on a “to-do” list, 18 of them saw progress, though discrepancies on the 19th — the special safeguard mechanism for developing countries — could not be resolved. “After more than 36 hours trying to find bridges between these two positions, today it became clear that the differences were irreconcilable. The remaining issues, including cotton, were not even negotiated.”

Lamy remains confident that the Doha Round will continue despite this past week’s failed efforts. For complete coverage on his formal statement yesterday, go to the WTO site.

BBC news is reporting that multilateral trade talks in Geneva have ended without consensus. The epicenter of the rift blocking resolution was that of market access. While the US and EU push for greater access to provide services to the fast emerging economies of India and China, the two developing countries are instead focused on fighting growing disparities between their wealthy and poor populations by pushing for better access to US and EU agricultural markets.

In response to US complaints that India and China are being too restrictive with their markets and overprotective of their farmers, India’s Minister of Commerce Nath responded by saying, “The US is looking at enhancing its commercial interests whereas I am looking at protecting the livelihood of farmers.” Chinese Commerce Minister Chen agrees, and backed him up by relaying that the US was “asking a price as high as heaven.”

Is Nath getting at something? Where are we drawing the line? Are we really prioritizing commercial opportunity over social responsibility? Can we really justify that the poorest populations of developing countries should help us recover costs in the face of a recession that is impacting the global community? Why aren’t we applying more pressure on India’s software industry, or China’s manufacturing industry to be fairer about more evenly spreading things around?

And, it was reported that the US, India, and China were unable to agree on tariff thresholds for farm import rules that would buffer farmers from unforseen economic hardships like price drops and import surges. The US and EU would of course protest to eating these costs, meanwhile forking over top dollar for goods that have been hiked up in response to rising fuel and food prices, and overall inflation.

Interestingly, analysts of this BBC article are anticipating that this collapsed round of trade talks signals the beginning of the end of multilateral trade agreements. They instead expect that “nations may pursue dual agreements with partner nations, preferring to focus on their own requirements rather than a more common negotiating goal.” Is this really the case? Even less will be accomplished if everyone takes on a free-for-all attitude. It will be less about intentions or contributions and more about who you know.

. . . will provide an update and/or formal statement as trade ministers officially close the round.

 
Blaming developing countries for the failure of Doha Round trade negotiations is counter-productive to global trade relations and WTO efforts, China said July 28 via its official news outlet, Xinhua Press. China’s ambassador to the WTO, Sun Zhenyu, represented the country’s interests on Monday, saying: “They have to remember that this is a Development Round. If they cover all their sensitivities for themselves, and keeping on putting threats on developing countries, I think we are going nowhere.”

USTR Schwab agrees: “We are very much concerned about the direction that a couple of countries are taking,” she said during a break on the eighth day of World Trade Organization talks.

So what’s all the spin-up about? China is firing back against the US, freely naming it an accusation-flinging obstacle, which has been implicating that countries with emerging economies (like India, China) are responsible for having thrown ”the entire Doha Round into the gravest jeopardy.” With so much sensitivity surrounding these trade talks, it’s been too easy for both sides to become distracted from the matter at hand.

This “fragile” agreement seeks to limit European farm subsidies to 80% and US subsidies to 70%, while Latin American agricultural goods are brought up to speed by benefitting from tariff cuts. The two areas blocking the DR from reaching successful progress are agriculture, and non-agricultural market access (NAMA). Contentious issues within these areas clogging the pipelines include: US cotton subsidies, special safeguard mechanisms (SSMs) for developing countries, and the establishment of new tariff rate quotas.

India’s Commerce Minister Kamal Nath has also worked this past week to vehemently rebut US charges that India is holding up talks: “Who’s holding up this round I think are the large developed countries… who are looking for commercial interests and enhancing prosperity rather than looking for content which reduces poverty.” AFP reported today that Nath was “optimistic” that a deal could be reached, but that nevertheless, India has “serious concerns, starting from trade distorting subsidies going into the non-mentioning of cotton.”

While the US and China are prodding each other over market access and cotton subsidies (Schwab’s stab: “Unfortunately, a few emerging markets have decided they somehow want to rebalance [the agreement] in favor of one or another issue”), the EU and Latin America came to an agreement on Sunday to cut the EU’s import duty on bananas to 114 euros ($179) /tonne by 2016. In the interim, the import duty will be cut to 148 euros (from 176) in 2009.

Alas, Cameroon trade minister Luc Magloire Atangana Mbarga waved a red flag, saying the current banana deal’s a no-go. He warned that lowering EU import tarriffs could devastate “banana output.” This of course comes from a country whose largest employer and political peace relies predominantly on bananas.

Some other opinions on the table:

Australia. Trade Minister Simon Crean understands the “degree of frustration” associated with global trade discussions, but advises that trade ministers “not lose sight of the objectives.” 

France. Not shy about disclosing that “the project currently on the table is not acceptable as it stands.” Sarkozy reportedly called European Commission head Jose Manuel Barroso to voice dissatisfaction on the deal over the weekend.

Italy. Prime Minister Silvio Berlusconi expressed concerns over “the absence of progress.”

Speaking to the progress of trade talks, WTO Director-General Pascal Lemy admitted that much convergence has emerged in the past week among country ministers. So much so, that the discussion adjournment has been postponed to Tuesday or Wednesday, but was originally slated for Saturday.

 
In revving up for next week’s planned WTO trade liberation talks (opening Monday in Geneva), US trade officials stated this past Thursday that China will critcally impact the direction and outcome of these talks, voicing concerns that China has a “particular obligation” to make concessions on matters of trade.  One issue of particular importance is the benefit China has reaped from opening their trade system, which US Trade Rep Susan Schwab estimates at “hundreds of billions of dollars.” She went on to prescribe that China fulfill its obligation to “give back to the Doha Round“

Because of the weight it carries in the global trade arena, international players are really looking for China to ”step up and play a leadership role,” which means planning for actions that will offset deepening economic disparities.

In Geneva, 30 countries will convene to pick up the pieces of the flailing Doha Round, which was launched several years ago in the Qatari capital. Shortly after this launch, China experienced a sharp rise in its exports. “Without [China’s] contribution it is impossible to imagine a successful conclusion to the Doha Round,” Schwab says. Her estimation of the situation is described as “cautiously optimistic,” focusing on “good conversations” the US has recently had with Chinese officials. Still, the US is hopeful that China understands the gravity of the Doha Round’s need for its willingness to be a good team player.

“I think a deal is eminently doable … it is doable next week.” Stay tuned for new developments coming soon.