Ei-iE

"Moment of truth" at the WTO

published 6 June 2008 updated 6 June 2008

The Director General of the World Trade Organization, Pascal Lamy, says negotiations aimed at liberalizing the trade in agriculture, industrial products and services have progressed to their final critical stage.

Speaking to the OECD Ministerial Council meeting in Paris on June 5, Lamy said the talks have reached a decisive “moment of truth.”

“We all know we have little time, but we all know that what remains to be done is achievable and limited, compared to what we have already managed to build together through these last seven years of negotiations,” Lamy said.

While Lamy remains optimistic that a deal can be reached within a matter of weeks, there are growing signs that countries are moving farther apart on key issues.

On June 2, the chair of the non-agricultural market access (NAMA) negotiations, Canada’s Don Stephenson, suspended further talks, telling negotiators that a future meeting would be held only if there was a serious attempt to move towards a compromise.

Speaking to reporters in Geneva, Stephenson said that since the release of his revised proposals, “things actually got worse rather than better, that's to say we got farther from a text which could be put before ministers rather than closer.”

Developing countries – including Argentina, Brazil, India, and South Africa – say the revised proposals would force them to cut their manufacturing tariffs deeper than that required of the industrialized world.

United States Trade Representative Susan Schwab, however, blamed Brazil, India and China for the impasse, warning that “unless the emerging markets make real contributions in terms of cutting tariffs, we will not generate the economic growth and development that was the purpose of the Doha Round from the beginning.”

The European Union’s Trade Commission, Peter Mandelson, joined Schwab in her criticism of the leading developing countries, but also said the United States needed to go further in reducing its farm subsidies.

Meanwhile, Mandelson is facing growing divisions within the EU itself, with France, Ireland, Poland, and Lithuania saying the current texts on agriculture and industrial products are “totally unacceptable.”

In a joint statement issued June 3, France’s Foreign Minister Bernard Kouchner and Irish Foreign Minister Micheál Martin said they have “serious concerns at the lack of balance in the negotiations at this critical stage in the process.”

“Recent developments, in particular the publication of revised negotiating texts on agriculture and non-agricultural market access (NAMA), have been very disappointing,” the two ministers stated. “These have failed to introduce the required balance into the negotiations. EU agriculture continues to bear a disproportionate burden.”

While the focus of the talks continues to be on agriculture and NAMA, negotiators are also attempting to reach a deal to liberalize the trade in services, including education services.

In May, the chair of the WTO services negotiations, Ferdinand de Mateo of Mexico, released a revised report < http://www.wto.org/english/news_e/news08_e/serv_may08_e.htm > intended to guide discussions around the General Agreement on Trade in Services (GATS).

At a meeting of the Council on Trade in Services held to discuss the report, however, strong disagreements arose over a contentious proposal from a group of industrialized countries to increase the number of service sectors covered by the GATS.

According to a bracketed section of the text, members would be required to take commitments to liberalize services that “reflect current levels of market access and national treatment and provide new market access and national treatment in cases where significant trade impediments exist.”

Many developing country officials say that goes too far in requiring countries to bind existing market access and national treatment, and runs contrary to GATS provisions allowing countries determine the extent, scope and timing of their liberalization commitments.

EI’s trade consultant, David Robinson, says the proposal could have serious implications for sensitive sectors like education.

“Not many countries have taken commitments on education services, but many already allow offshore education providers to enter and operate,” notes Robinson. “This proposal would force them to make that access a legally-binding commitment in the GATS. But this can seriously reduce the policy space that governments may need and takes away their regulatory flexibility.”

If negotiators can break the impasse in agriculture and NAMA, a separate, one-day services “pledging” conference will take place during a ministerial meeting that may be held as early as the last week of June. The key players in the services talks will be asked to publicly indicate what improvements they are prepared to make in their existing offers.

WTO members made their original market access offers in 2003, with revised offers planned for the end of July 2006. However, that deadline passed after the Doha talks were suspended.

Education remains one of the least committed sectors in the GATS, but a group of countries led by New Zealand and Australia are pressing developing nations to open up their education “markets” in the current round of talks.