Doha Round In Crisis, Says Lamy

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

03 July 2006

‘We are now in crisis,’ said WTO Director-General Pascal Lamy at the weekend after three days of Doha Round discussions between Europe, the US and key developing nations saw no progress in breaking down entrenched positions on tariff issues, particularly farm subsidies.

Said the WTO: 'Ministers have failed to narrow their differences on the “modalities” or template agreements that are needed to compile detailed cuts in tariffs and agricultural subsidies, and members have asked Director-General Pascal Lamy to try to broker a compromise “as soon as possible”. Members also shared his assessment that the negotiations are now in crisis.'

A formal meeting on 1 July 2006 of the Trade Negotiations Committee, which comprises the entire WTO membership, brought to an end about three days of discussions among a representative group of ministers. No progress was made in trying to narrow the gaps on formulas for reducing tariffs and subsidies, various flexibilities, and other disciplines that would be in the “modalities”.

Members agreed that Mr Lamy should consult members intensively and widely in order to establish “modalities” urgently — the term several used was to “facilitate” and act as a “catalyst”. He agreed with them that members will remain the main actors, and the principles will continue to be “bottom-up” (input coming from members rather than from above), transparent and include all members. The consultations will be based on the draft texts in agriculture and non-agricultural market access. The director-general will report back to the members as soon as possible.

In statements, members said they remain committed to completing the negotiations by the end of the year; but this meeting had been widely seen as a 'make or break' occasion', largely due to the expiry of President Bush's 'fast-track' trade agreement authority in mid-2007. It is thought unlikely that the Congress will agree to extend the authority, and there is almost no chance that a Doha Round agreement would be ratified by Congress. If agreement at the WTO is not reached this year, it will become all but impossible.

The “modalities” are needed so that countries can list their new commitments to reduce tariffs on thousands of products and to cut farm subsidies. The lists will be in documents known as “schedules” that will run to several hundred pages per country and to tens of thousands of pages for the whole membership. These lists will take several months for each member to compile and in each case for other members to examine and possibly negotiate.

“I will not beat about the bush,” Mr Lamy told delegates in an informal meeting that immediately preceded the formal meeting. “We are now in a crisis. We are far from the necessary convergence to be able to establish modalities in agriculture and NAMA [non-agricultural market access], despite all the hard work put in by everyone.”

He reported that he had continued consultations since the informal meeting on 30 June with delegations, coalitions and the group of six key players known as the G-6 (Australia, Brazil, the EU, India, Japan and the US).

“However, the fear that I expressed for you yesterday — that a real negotiation might not take place — seems to be the reality facing us. This is serious, not only for the agriculture and industrial tariffs, but also obviously for the round as a whole if we want to conclude it by the end of this year.”

The news was not all bad. Mr Lamy said he had witnessed no acrimony in his consultations. And “no one … appears to want to throw in the towel. Everyone is still committed to finishing the round this year. Everybody agrees with this deadline. So the question now facing us is how we deal with the situation.”

Shuttle diplomacy, high level contacts, use of modern communications and testing numbers lie ahead for the director-general, he told a press conference afterwards. The gaps are not unbridgeable and there is no panic despite the crisis, he said.

Asked about timing, Mr Lamy said he had just received the mandate and would reflect on how to proceed. “I’m in a hurry and if the G-6 members are also in a hurry, so much the better,” he told journalists.

Asked whether he will produce a draft text, he replied that there is enough text on the table — what is needed is numbers.

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