Davos Summit Makes Progress On WTO Doha Round

by Ulrika Lomas, for LawAndTax-News.com, Brussels

31 January 2006

Despite a combative statement from EU Trade Commissioner Peter Mendelsohn and a depressing message from WTO chief Pascal Lamy ahead of unofficial trade talks at the Davos Economic Forum over the weekend, it seems that progress was in fact made, with countries agreeing to try to make joint progress in co-operative talks rather than continuing to trade offers and counter-offers.

Speaking in Berlin last week, Mr Mandelson said: "Europe is ready to give more than others. But it is not willing to get nothing in return. It is out of the question that we consider another move in agriculture without a much clearer picture of the final result of the negotiation and a real commitment by others to open their markets further."

Pascal Lamy said before the summit that Davos would not yield progress on Doha talks: "Mini-ministerials like this are not official WTO meetings so nothing can be agreed; but there is an opportunity for ministers representing a wide variety of positions to exchange views on how we can move forward. Given the timing of this meeting it might be useful to review the timetable for 2006 which was agreed in Hong Kong."

The 25 trade ministers meeting in Davos in fact promised to raise the tempo of multilateral talks by simultaneously discussing liberalization by major developing countries like Brazil, India and China and deeper cuts in farm protection by the EU, the US and Japan.

Both Mr Mandelson and Rob Portman, US trade representative, agreed a new mood had been evident among the ministers.

The last official WTO meeting, in Hong Kong last month, saw the US and the EU agreeing to end agricultural export subsidies by 2013, with the EU promising to make substantial cuts by 2010. For the US this didn't mean much, since it hardly uses agricultural export subsidies; and for the EU, which had already planned to eliminate most export subsidies, it will apply to only about US$3bn of payments annually. The US agreed to end cotton export subsidies by the end of 2006, something seen as important for African countries, but refused immediate action on direct cotton farm subsidies which amount to more than $4bn annually.

The main achievement of the meeting was a programme to grant the WTO's 32 least-developed countries duty- and quota-free access to the most-developed countries' markets, which was adopted with exemptions for 3% of the rich countries' products. 3% doesn't sound much, but it applies to tariff lines, not volumes or value, and includes many key items such as some types of textile. Developing countries wanted fewer exemptions.

Although the Hong Kong meeting avoided the ignominious collapse of the last major WTO summit in Cancun in 2003, due to support from the important group of developing countries led by Brazil and India, the major goals of the Doha Round still appeared very ambitious.

The Hong Kong meeting agreed to complete draft conclusions for the Round by the end of April, 2006, allowing completion of the Round by the end of the year, which gives a few crucial months for President Bush to gain approval of the package from Congress before his fast-track trade promotion authority expires in July, 2007. It is not thought likely that Congress will renew it.

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