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


Doha world trade talks collapse; Demands from India and China for protections for their large farming bases were opposed by other Developing Countries, the EU and US
By Finfacts Team
Jul 30, 2008 - 5:54:57 AM

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After a gruelling round of talks finishing around 2am Tuesday morning, Kamal Nath, India's Minister for Commerce and Industry, updates waiting journalists.

The Doha world trade talks at the World Trade Organization (WTO) headquarters in Geneva, collapsed on Tuesday after seven years of on-again, off-again negotiations, in the latest sign of the growing strength of India and China on the world stage but their demands for protections for their large farming bases was opposed by other developing countries.

Facing an election next year,  Kamal Nath, the Indian Minister for Commerce and Industry, demanded  a “special safeguard mechanism” for the 600 million small farmers who had crucially swung support to the ruling Congress Party at the last election. Nath wanted protection for certain agricultural products, notably pepper and oilseeds, that would allow India to impose punitive tariff increases in the event of import surges.

India was opposed not only by the United States and the EU but by developing nations in Latin America, including Brazil, Uruguay and Argentina, which see Asia as an important potential export market for meat, grain and oilseeds. Rice-exporting Thailand also opposed the Indian demand.

India was supported by China, which also has a a large farming base and it wanted protection for its rice and soya bean farmers.

Susan Schwab, US Trade Representative, said the US remained committed to the Doha Round. “This is not a time to talk about collapse,” she said. “The US commitments remain on the table.”

Schwab challenged assertions by some developing countries that the United States had been the chief obstacle to concluding a deal.

She said,“It is unconscionable that we could have come out with an outcome that rolled the global trading system back not by one year or 5 years but by 30 years.”

Schwab also said that it would be possible to help developing nations address surges in imports in ways that could not “be used as a tool of blatant protectionism.”

Peter Mandelson, European Union Trade Commissioner, said: ”I realise that you will ask who is to blame for this failure. The answer of course is that it is a collective failure.”

WTO Director-General Pascal Lamyannounced after long hours of hard talking that ministers had failed in their effort to agree on blueprint agreements in agriculture and industrial products. He told a press conference after speaking to members that out of a to-do list of 20 topics, 18 had seen positions converge but the gaps could not narrow on the 19th — the special safeguard mechanism for developing countries, which would allow developing countries to raise tariffs temporarily in order to deal with import surges and price falls.

He said he would call a formal meeting of the Trade Negotiations Committee for members to comment but he suggested they should wait for the “dust to settle” before deciding how to move ahead.

“It is no use beating around the bush. This meeting has collapsed. Members have not been able to bridge their differences,” he told journalists later.

The talks’ failure does not mean the end of the Doha Round. Lamy told an informal meeting of the Trade Negotiations Committee that he remains convinced that what is on the table represents twice or three times more than has been achieved in any previous multilateral trade negotiation. Much was achieved in these meetings, he said.

The difference boiled down to some wanting a high“trigger” (a large import surge needed to trigger the tariff increase) in order to avoid the safeguard being triggered by normal trade growth, while others wanted a lower trigger so that the safeguard could be easier to use and more useful, he said.

“After more than 36 hours trying to find bridges between these two positions, today it became clear that the differences were irreconcilable. The remaining issues, including cotton, were not even negotiated.”

Susan Schwab, US Trade Representative, in dejected mood as she leaves the WTO following the collapse of the talks.

Disappointment

Lamy said he was personally disappointed. “I had hoped to come to you today with good news,” he told journalists. “The good news would have been that after a whole week of extenuating negotiations, after hours and hours of seniors officials and ministers meetings, we had converged on a final package comprising the issues that all of us care about.

“I was hoping to say that we had slashed and capped the level of trade distorting subsidies like never before. I was hoping to announce that beef, sugar, ethanol, tropical products or products suffering from tariff escalation [higher tariffs on processed products than raw materials] would now see an improvement of their market access worldwide.

“I was hoping to tell you that tariff peaks on industrial products of interest for developing countries had been slashed, that least developed countries would consolidate duty-free and quota-free market access in the WTO, that exports support in the form of subsidies, state trading enterprises, exports credits or food aid had been removed.

“All this was ready for a final package but some important pieces were missing. The special safeguard measure for developing countries to counter surges in food imports and cotton, not to talk about the issues of GIs [geographical indications] and biodiversity [the intellectual property proposals on geographical indications and patent reforms related to genetic materials and traditional knowledge]. And the list goes on.”

Lamy gave a rough estimate of the economic cost of the failure.

“What members have let slip through their fingers is a package worth more than $130 billion in tariff saving annually by the end of the implementation period, with $35 billion saving in agriculture and $95 billion in industrial goods.

“With developing countries contributing one third and benefiting from two thirds of the overall gains [this would be] a true development round … with a rebalancing of the rules of the trading system in favour of developing countries.”

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