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Europe

EU Calls for Balanced Deal at Crunch World Trade Talks

EU Commission Chief Barroso urged trade ministers from more than 30 nations meeting for make-or-break talks in Geneva Monday to reach a balanced deal, warning that emerging economies too had to make a major contribution.

Two cows

Will rich and developing nations come this close on agricultural issues to forge a deal?

After nearly seven years of unsuccessful haggling, trade ministers from three dozen rich, poor and emerging economies will try to bridge massive differences on farm subsidies, import tariffs and accessibility of markets at a meeting in Geneva which opens Monday, July 21.

Called the Doha Development Agenda or Doha round, named after the Qatari capital where the world trade talks were first launched with great fanfare and hope in 2001, the negotiations have been jammed for years.

At the heart of the deadlock lie developing nations' demand for lower farm subsidies and agricultural tariffs in the rich world. In return, industrialized countries are pressing that developing countries reduce import duties and make their markets more accessible to imported services and manufactured goods.

Both sides have been slow to move away from their entrenched positions and make concessions.

"Now or Never"

The Geneva meeting is marked by a sense of urgency given the fact that from next January, the United States will have a new administration and a new Congress whose attitudes toward trade liberalization are at this point uncertain.

"It has never been more important for WTO members to move forward on the Doha Development Agenda," World Bank President Robert Zoellick said in a statement before the talks. "It is now or never," said Zoellick, who as former US trade representative helped launch the Doha round in 2001.

In a statement in Brussels, Jose Manuel Barroso said the talks were "perhaps the last great opportunity" to conclude the Doha round.

A sugar plantation in Brazil

European farmers are against lowering duties on imports such as sugar from Brazil

"For those negotiations to succeed, the other developed countries and the emerging economies in the WTO also have to make a major contribution. The overall result has to be balanced and ambitious," Barroso said. "Europe cannot be the sole banker of this deal."

Germany urges emerging economies to do more

The view was echoed by Germany's Economy Minister Michael Glos who called on emerging global powerhouses to stop hiding behind developing countries' demands in a newspaper article.

"Major emerging countries like Brazil, India and China do not have the right to entrench their positions in the name of developing countries," Glos wrote in the Monday edition of business daily Financial Times Deutschland.

"To my mind, it is indispensable that the major emerging (markets) assume their responsibilities in the global trade system," he wrote. "They too must guarantee real improvements in access to (their) markets," he said, adding that concessions must go both ways.

German Industry Federation Chief Juergen Thumann told another business daily, Handelsblatt that a deal could only be achieved if both sides were willing to make compromises.

"As long as certain key participants see the World Trade Organization summit as a one-way street, agreement is unlikely," he said.

One of the main sticking points is the level of farm support that rich nations dole out to their farmers. Rich countries are concerned that proposals to allow developing countries to protect their fledgling industries from the full impact of tariff cuts could allow them to shield entire sectors from market opening.

EU divided

However, the EU's own position in the talks has been undermined by a public row between French President Nicolas Sarkozy and EU Trade Commissioner Peter Mandelson.

France, backed by Ireland, believes that Mandelson has made too many concessions on agriculture to emerging economies without getting much in return.

On Friday, French Trade Minister Anne-Marie Idrac said after a meeting with EU counterparts that they had agreed that the WTO talks needed a "new balance" to take better account of concessions Brussels had already put on the table.

A farm in the US

Critics say only rich countries stand to benefit from WTO proposals on farm subsidies

"The general sentiment is that Europe has exhausted its room for manoeuvre in the agricultural sector and can go no further," she said.

Critics however point out that rich countries are the only ones who stand to profit from the current negotiations.

"Industrialized nations demand from developing nations that they reduce their customs duties on imports. But the industrialized nations are only offering in return to cut farm subsidies up to a level which is still more than what they're actually spending right now," said Tobias Reichert, expert on world trade for non-government group, Germanwatch.

As an example, he pointed out that the US is meant to limit its agricultural subsidies to 13 billion euros a year as foreseen by the WTO proposals -- more than what the country currently shells out.

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