Commission seeks to end trade-talk deadlock

Senior trade negotiators to discuss Commission proposal in Geneva at the end of May.

The European Commission has launched a new bid to break the deadlock in the Doha round of world trade talks with a proposed compromise on slashing industrial tariffs. Senior trade negotiators are scheduled to meet at the World Trade Organization (WTO) in Geneva on 31 May to discuss the proposal. 

The deadlock is also expected to figure prominently on the agenda of a G8 summit in Deauville, France, on 26-27 May. EU officials made it clear that they view the next few months as critical for the Doha round, which has been under negotiation for close to a decade.

Jean-Luc Demarty, the director-general of the Commission’s trade department, told senior negotiators in Geneva on Friday (29 April) that the situation was “very serious”. A call by Pascal Lamy, the director-general of the WTO, to “consider the consequences of throwing away ten years of work” was “timely and necessary”, he said. Lamy had submitted a bleak assessment that spelled out the various blockages.

Brazil, China and India are resisting demands by developed countries, led by the United States, to cut tariffs on entire categories of industrial goods. They argue that under the parameters of the negotiations on non-agricultural market access (NAMA), developing countries have the choice whether to open up particular sectors of industry. They also say that the in-depth liberalisation implied in NAMA has not been matched by rich countries opening up their agricultural sectors – the issue over which the WTO’s last ministerial negotiation collapsed in 2008.

Deeper tariff cuts

The Americans say that it makes no sense for the sectoral NAMA talks to exclude middle-income countries that also happen to be competitive exporters, a position which Demarty called “logical and legitimate”. The “sectoral initiative” under the NAMA talks envisages deeper tariff cuts – possibly down to zero – in 14 sectors, including automotive, chemicals, electronics, industrial machinery and textiles.

A critical mass of participating countries is required for the initiative to take off, but the methodology is in dispute. Demarty said: “It is clear that without an ambitious result on sectorals – particularly as regards the economically significant sectors of chemicals, machinery and electronics – it will not be possible to conclude the round in its current form.”

The EU proposal would provide flexibility and transitional arrangements for most developing countries and allow them to exclude certain goods in a given sector from full liberalisation. At the same time, the competitive exporters among them – such as Brazil, China and India – would have to make binding commitments to in-depth liberalisation.

In his submission, Lamy warned that a deal on the Doha round would be “do-able” this year were it not for differences on NAMA, which he said was “not bridgeable today”. The differences, he said, were “blocking progress and putting into serious doubt the conclusion of the round this year. This is a grave situation for the round and for all of the efforts and aspirations it embodies”, he said.

Demarty, by contrast, said that through its compromise proposal the EU had “tried to demonstrate that it is technically and realistically possible to bridge the gaps if the political will is there”. Ron Kirk, the US trade representative, said that the US was “committed” to considering “any option that is reasonably likely to break the logjam”.

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