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News : International Last Updated: Apr 24, 2009 - 5:31:05 PM


Doha Trade Round Talks: Road to successful agreement littered with "potholes"; US Chamber of Commerce says deal has potential to deliver benefits to Ireland’s industrial and services sectors
By Finfacts Team
Jul 27, 2008 - 4:19:33 PM

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EU Trade Commissioner Peter Mandelson speaking at a press conference in Geneva on Friday, July 25, 2008. On his right is EU Agriculture and Rural Development Commissioner Mariann Fischer Boel.

Doha Round Trade Talks: The European Trade Commissioner warned Sunday that the road to a successful Doha Round trade deal in Geneva, is littered with "potholes" despite signs of a developing consensus. Also on Sunday, African and Caribbean countries were under pressure to reach a deal on bananas and remove one roadblock to an overall agreement. The US Chamber of Commerce in Ireland said that a successful conclusion to the current WTO negotiations has the potential to deliver positive benefits to Ireland’s industrial and services sectors whileTánaiste Mary Coughlan has said the Irish Government, under pressure from the Irish Farmers' Association  (IFA), is unhappy with the compromise proposal currently being considered as the basis for a future global trade deal.

"There is no guarantee that the fragile package that began to emerge on Friday night will survive," EU Trade Commissioner Peter Mandelson wrote in his daily blog on the trade talks.

Key players in the negotiations had expressed optimism on Saturday on the progress of the talks on the services sector but were due on Sunday afternoon to consider issues concerning farming and industrial products.

At the on cross-border services trade, the EU signalled that it was willing to set a quota of 80,000 temporary visas for skilled workers and the US said it would discuss the issue with Congress.

Greater temporary access for senior business professionals, particularly in software and IT consulting, is a key demand of India, which has emerged as one of the most sceptical countries in the talks.

 

"There are any number of potential potholes in the road," Mandelson said, citing the determination of India and other countries with millions of people who depend on subsistence agriculture to hold out for stronger safeguards against farm imports.

However, India's Commerce and Industry Minister Kamal Nath said on Saturday: "The process of engagement is continuing, and this process will continue again tomorrow. So I'm optimistic."

Mandelson said that the "fiery" Indian negotiator had taken a tough line against the United States, Australia and other agriculture exporters on this issue, while the EU was seeking to play a "bridging" role between the two sides.

"I have a feeling that this issue will go to the wire," Mandelson wrote.

A five-hour meeting on Friday between the seven negotiating partners at the core of the talks –India, China, Japan, Australia, Brazil, the US and the EU – had agreed to move forward on the basis of a plan proposed by Pascal Lamy, the World Trade Organisation’s Director-General. But negotiators stressed that the plan provided only the broad basis for an agreement, and that big differences remained. Lamy proposed that tariffs on beef imports should fall by 23 per cent and some 290,000 tonnes of beef would be allowed into the EU at lower tariff rates.But the Irish Government wants a portion of this extra 290,000 tonnes quota to be restricted to low grade manufacturing beef imports rather than quality frozen beef that could compete with Irish beef in its main export markets within the EU.

Celso Amorim, Brazil’s Foreign Minister, said he thought the chances of a framework deal in the next few days had risen from 50 per cent to 65 per cent.

Susan Schwab, US Trade Representative, said: “We have a tentative agreement on a path forward.” But she added: “There are a number of significant issues to be resolved . . . I think the biggest concern we have is that a handful of large emerging markets threaten this round for the rest of us.”

Pascal Lamy’s proposal permits developing countries to shield 12 per cent of their agricultural products from big cuts in import tariffs, in order to protect smallholder farmers producing staple foods. It also allows them a “special safeguard mechanism” to protect such farmers with emergency tariff increases if faced with a sudden surge in imports.

The plan also allows developing nations to protect some industrial sectors from across-the-board cuts in import tariffs. The proposal, supported by the group of seven big negotiating partners, was put to a wider meeting of 30-35 WTO members. Officials reported that most countries accepted it as a basis for discussion, although several – including Argentina, which wants more leeway to protect its manufacturers – continued to have reservations. Talks about the proposal are due to continue.

Celso Amorim, Brazil’s Foreign Minister

US Chamber of Commerce in Ireland: WTO Will Benefit Ireland’s Industrial and Services Sectors

A successful conclusion to the current WTO negotiations has the potential to deliver positive benefits to Ireland’s industrial and services sectors, which employ more than 90 percent of Ireland’s workers and have attracted the lion’s share of foreign direct investment, the American Chamber of Commerce in Ireland said on Sunday. Nearly 600 US firms operate in these two sectors, directly employing 100,000 people and indirectly employing some 250,000.

Paul Rellis
Paul Rellis, President of the American Chamber and Managing Director of Microsoft Ireland,
said that while there was still tough negotiations ahead, Ireland stood to gain particularly from the services liberalisation aspect of the current negotiations, pointing out that internationally traded areas of financial, computer and other business services contribute over 296,000 high quality jobs and €50 billion worth of exports to the Irish economy.

“Global trade figures for 2007 show that Ireland is now the tenth largest exporter of services internationally with exports of €64.8 billion or 43% of Irish exports. Much of this success has been based on the liberalisation of cross-border trade achieved at through the Uruguay Round of WTO negotiations. Indeed, Irish services exports have increased tenfold over the last decade as a result. This performance is all the more impressive when it is considered that exports of manufactured goods only grew by 250% during the same period”, he said.

Rellis added that the future health of the Irish economy is heavily dependent on the services sector and that the gains obtained from a further opening of trade in services will exceed those obtained from an opening of trade in manufactured goods and will almost certainly offset any losses in other sectors. “In fact, in can be argued that the damage done to the domestic and world economies by failure to reach agreement on the Doha round would do far greater damage to the food and agriculture sectors than would agreement based on the current EU negotiating position”, he said.

“The ability to trade on world markets is essential for Ireland’s continued economic success. We are an open economy that exports 85% of everything we produce. As a small island economy it is not just about having access to markets that counts. It is about having a genuinely fair chance on a really level playing field that will matter most over time.

“Irish and European exports depend on WTO disciplines and access to growing markets such as China, India, South-East Asia, and South America. Without a functioning multilateral framework of rules, businesses operating in the international arena face tortuous and complex rules, high costs, unpredictability and national discrimination. A strong rules-based multilateral trading system is indispensable”,
he said.

Coughlan denied Government pandering too much to the IFA

Speaking on RTÉ radio today, Tánaiste Mary Coughlan said the "parameters of a deal" now existed following talks last night, but that agreement was "a long way from a final deal".

Coughlan said discussions had taken place on Sunday on the services issue and there had been "good progress" in that area.  She said some 43 per cent of Ireland's exports were from the services sector, including the banking and financial services sector.

In the farming sector, she said the Government had articulated its "unhappiness" in this area.  But she noted that the only agicultural product which now had "sensitive" status in the talks was beef.

Coughlan denied that the Government was pandering too much to the IFA in the WTO negotiations and neglecting the interests of the wider economy, which would benefit considerably from a WTO deal. “I am here to ensure there is a balanced deal for the betterment of Ireland inc. and that is what I have to do. When we see an overall deal then we can make a final decision with the government,” she said.

The IFA President Pádraig Walshe met Taoiseach Brian Cowen in Tullamore on Saturday afternoon as livestock farmers gathered in the town demanding the veto to block WTO cuts.

Following the meeting, Walshe said he had re-iterated to the Taoiseach the damage to farmers, the food industry (the food industry is in a muddle as to whether it will gain or lose from a deal but has been forced to support the IFA's campaign)) and rural Ireland in the WTO deal on the table in Geneva.

Walshe said the veto decision was in the Taoiseach’s hands and the livestock industry could not be sold out for Mandelson’s promises on services.

"At this afternoon’s meeting, I reminded the Taoiseach that he said on June 3rd “the WTO deal would require agriculture to bear a disproportionate burden while delivering little in other sectors and is therefore unacceptable to the Government,” Walshe said.

Following the Lisbon Treaty fiasco, if Ireland was to veto agreement approved by the other 152 WTO members, the country would revert to a tinpot status, which is a bigger risk for many Irish people than it is for the multimillionaire Laois farmer and IFA President Pádraig Walshe.

SEE: Irish Farmers and Sacred Cows

US and EU cuts in overall trade-distorting domestic support, cuts in developed countries’ highest tariffs; maximum tariffs for developed countries’ non-sensitive products

The WTO said on Saturday, that as members continued to examine this new “package” on Day Six of these ministerial-level talks, a group of ministers participated in a services signalling conference, postponed from Thursday 24 July.

The new numbers are proposed compromises on a handful of major issues in the agriculture and industrial products negotiations. They are the result of discussions the previous day first among a group of seven ministers and then the larger representative group of about 30 ministers (the so-called Green Room).

“The package will remain on the table as a contribution toward our work” WTO Director-General Pascal Lamy reported to members in the informal Trade Negotiations Committee, where the full membership can oversee the “concentric circles” of small and large meetings.

“But as you will recognize, this is by no means the full picture of our task. There remain many elements not in this package which are dear to many of you and therefore need to be tackled urgently in order to find the overall political balance. This is necessary because as I have said to you, there is no such thing as partial modalities.”

“Modalities” is the term used to describe the blueprint agreements in agriculture and non-agricultural market access, including formulas for cutting tariffs and agricultural subsidies, which will then be applied to individual products and support programmes.

The new figures include proposed compromises on key issues members have been discussing over the past few days:

  • in agriculture: the US and EU cuts in overall trade-distorting domestic support, cuts in developed countries’ highest tariffs; maximum tariffs for developed countries’ non-sensitive products, how many sensitive products (which would be shielded from the full force of tariff cuts) and the size of quotas with lower tariffs for these products; developing countries’ special products (which would also be shielded from tariff cuts but without quotas), including how many, the size of the cuts and whether some would escape cuts completely; the new special safeguard mechanism for developing countries (temporary increases in tariffs to deal with import surges or price falls), including whether in some cases the raised tariff could go above present legally bound maximums; whether the present special safeguard should be phased out

  • in non-agricultural market access: the tariff-cutting formula and variations (or “flexibilities”) for developing countries; provisions that would prevent entire sectors from being shielded from tariff cuts; and wording on provisions for free or freer trade in entire sectors.

While members consider these proposals, chairs of the agriculture and non-agricultural market access talks will hold more technical consultations on a number of remaining issues, which members will turn to next.

“The next step in our consultative process therefore is to address these other issues,” Lamy said.

He listed as examples, in agriculture: cotton, preference erosion (the weakening of the advantage that preferential tariffs give when general tariffs are lowered), tropical products, bound in-quota tariffs (legally bound limits on tariffs for quantities within quotas), tariff simplification (particularly converting most if not all tariffs to simple percentages of the price), developing country sensitive products.

For industrial products, the issues include preference erosion, issues concerning countries that recently joined the WTO and have introduced reforms as part of the membership agreements, and provisions for Venezuela, which wants to be treated as a small and vulnerable economy — meaning its tariffs would be bound at an average level — because its imports are concentrated among a small number of products, which in turn has implications on it applying the same tariff cutting treatment as larger developing countries.

Lamy said he would report on further consultations when the full membership meet again on Monday. 

African and Caribbean countries were under pressure on Sunday to reach a deal on bananas and remove a major impediment to progress in the trade talks.

The European Union and Latin American banana producers agreed early on Sunday to cut the EU's import duty to €114 a tonne by 2016 after an initial cut to €148 in 2009 from €176.

The proposal must be approved by former European colonies in Africa, the Caribbean and Pacific (ACP) as well as EU member countries such as France and Spain, whose farmers in the Caribbean territories and the Canary Islands also grow bananas.

The WTO talks began last Monday and are likely to run into the middle of the coming week.

Discussion

All of the speakers — about 30 — either said the new package should be accepted, however painful some parts of it might be, or that it was an acceptable starting point for further negotiation.

Some chose to focus only on the proposals’ importance. One delegation said that it is disturbed by some aspects of the package but even more disturbed by the prospect that attempts to change it might destroy it. “If we make the wrong decision now, we would fail. Period,” this delegation said. Another warned that attempts to alter the carefully-balanced package would be “playing with fire.”

However some had more serious reservations, ranging from problems with individual parts of the package to complaints that the agriculture and non-agricultural proposals are unbalanced.

One of the issues raised most was the new special safeguard mechanism for developing countries, particularly when this raises tariffs above pre-Doha Round (or Uruguay Round) legally bound maximums.

In Saturday’s meeting, the debate was between two groups of developing countries, one group arguing for the need to protect their poor farmers, another arguing that their poor farmers need to export to other developing countries.

The first group said the conditions are too tight — to exceed the pre-Doha round ceilings would require an import surge of 40 per cent more than a base level, and the size of the tariff increase would be limited to 15 per cent of the tariff or 15 percentage points above the tariff, whichever is greater. Some other developing countries took the opposite view — that the package should be accepted because they oppose tariffs rising above the carefully negotiated Uruguay Round maximums at all.

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