WTO spokesperson Keith Rockwell briefing journalists after the morning's Trade Negotiations Committee in Geneva, July 21,2008.

Doha Trade Round Talks: A week of tense trade talks began on Monday at the World Trade Organisation (WTO) in Geneva, with most sides reported to be professing willingness to compromise but saying that others had to take the lead. In Ireland where the powerful Irish Farmers' Association (IFA), which mainly represents the interests of rich farmers, is setting the agenda for the two biggest political parties, the Irish Exporters Association (IEA) has warned the Government not to sacrifice the wider interests of the Irish economy in order to protect farmers. Agricultural produce account for 3% of Irish exports, whereas industrial and services exports account for 97%.

The European Union began the trade talks with an offer of reducing its farm tariffs by 60%, in a challenge to developing countries to make concessions.

The offer from the European Trade Commissioner, Peter Mandelson, was intended to trigger some progress in the Doha trade round, which began seven years ago.

Europe had previously offered a maximum of 54% tariff reductions, but Mandelson’s spokesman, Peter Power, said the higher figure could be achieved by including a range of tropical products.

But other officials are reported to have said that the figure appeared to be a recalculation of the Commission’s existing offer, and added that the real problem was the EU’s desire to shield some of its farmers from across-the-board tariff cuts.

Mandelson has been the target of criticism from Nicolas Sarkozy, France’s president, as well as from farming interests in Germany, Ireland and Poland, for offering up-front concessions on agriculture in the hope of winning good deals later on for EU manufacturers and service industries.

“Unless there’s an agreement that every member-state can sign up for, he needs to go back and do some rethinking,” Dick Roche, Ireland’s European affairs minister said last week.

On Monday, writing in the Financial Times, Patrick Messerlin, Director of the Groupe d’Economie Mondiale at Sciences Po in Paris, said that two dangerous prejudices are threatening the talks in Geneva.

The first is the view that the Doha round would bring small benefits – merely $50bn (€32bn, £25bn) to $70bn – in the industrial sector. After two decades of tariff cuts, the average industrial tariff is roughly 7% for the 34 economies that account for 95% of world trade and gross domestic product. No wonder additional cuts will not generate large economic gains.

But stopping short here would be a terrible mistake. If, today, these 34 apply mostly moderate industrial tariffs, most of them have never made the commitment that they will keep these tariffs at current levels. Only eight have done so – Canada, the European Union, Japan, the US, China, Hong Kong, Macao and Taiwan.

Messerlin wrote that the other 26 - from Brazil to India, from Australia to South Korea, represent 40% of the gross domestic product of the rich countries and 30% of world trade can – at any time and without providing compensation to their WTO trading partners – more than triple their industrial tariffs (from roughly 8% to 28% on average). This is because the tariffs of these 26 have not been “bound” at the WTO. Only WTO-bound tariffs cannot be increased without compensating affected trading partners – in short, only “binding” can deliver the certainty that business people cherish.

Messerlin asks why are the voices against a Doha deal in agriculture so strong in Paris, Dublin and elsewhere?

He says that the losers are well organised around a core group of products and large farms that, it should be recalled, grab in the French case roughly two-thirds of the €10bn ($16bn, £8bn) paid out each year in total subsidies. By contrast, the French farmers who would gain from a Doha agreement operate in fragmented markets and receive little support – counterbalancing their weak political influence with higher economic efficiency.

The other large winners from a Doha deal in agriculture would be the producers of processed food. European producers face barriers to market access in the rest of the world higher on average than the European barriers imposed on imports of processed food.

In Ireland, the IFA has skillfully enlisted Irish food companies to support its campaign for protections. Ireland's biggest beef processor Larry Goodman is also the biggest beneficiary of direct payments provided by the Common Agricultural Policy. European taxpayers provide him with more than €10,000 each week to support his 1,600 acre estate. The amount would still be payable if nothing was produced on the estate.

IBEC, the principal Irish business lobby group, has had a low profile on the talks because of the diversity of its member company interests.

IBEC told Finfacts on Monday that it may have a release out later in the week, depending on how talks progress.

In 2003, IBEC called on the Irish Government not to go to the talks with a “one dimensional strategy” of defending the Irish farming sector to the detriment of all other important Irish sectors (pharmaceuticals, chemicals, ICT, financial services etc).

“For some time, IBEC has been directly urging the Irish Government – and the EU through direct submissions on the Lisbon Process, Convention on the Future of Europe etc - to put competitiveness issues at the very top of all agendas. As a small open trading economy, our pursuit of greater Irish competitiveness cannot be done in isolation from world trade – on the contrary, we firmly believe competitiveness can be transformed into new Irish jobs and economic activity more effectively and quickly with the help of the trade dividends flowing from a successful Doha Round,” the then IBEC Director of Trade commented.

On Monday, the Irish Exporters Association said that  a deal to open trade in agricultural produce, industrial goods and services, means more growth for Irish Exporters, better prospects for trade development outside the EU, and a more predictable global trading system.

Any exercising of the Irish veto if the agriculture package is unacceptable will come afterwards when the WTO Doha deal comes back for ratification within the EU.

John Whelan CEO of the Irish Exporters Association stated; “In these difficult economic times ,  there is strong expectations amongst Irish exporters  that the WTO Doha deal  if conclude this week will greatly improve access for Irish  goods and services abroad.”

He went on to say;

“The justification for excluding agricultural products from trade liberalisation cannot be sustained in the long term, if we are to continue to expect market access for all our industrial good and services, in these same countries ”

The I.E.A. statement went on to emphasise the magnitude of the reliance on different sectors of Irish exports;

Exports in 2007 were as follows; 

>Agricultural Produce - €5,013 million

>Forestry & Fishing produce - €444 million

>Industrial Goods - €83,124 million

>Service Exports - €65,650 million

Agricultural produce accounts for 3% of Irish exports, whereas industrial and services exports account for 97%

John Whelan further commented: “Taoiseach Brian Cowan, when considering the outcome of this weeks WTO DOHA negotiations, must take into account the 97% of Irish Exports that are non- agricultural and what a successful conclusion of the Doha deal will mean to them. This must be weighted carefully against any potential loses in the agricultural export sector, before any decision is made on the use of a veto ”