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WTO Talks Fail At Potsdam

by Ulrika Lomas,, Brussels

25 June 2007

Although World Trade Organisation Director-General Pascal Lamy told the G8 Summit earlier this month that an interim Doha Round agreement was now “within reach”, a crucial meeting between four leading WTO members in Potsdam last week failed to resolve outstanding farm subsidy issues.

The US, the EU, Brazil and India had met to see if they could reach a common platform over agricultural trade. Although these four held no mandate for the remainder of the WTO's 150 members, success at Potsdam would have given a green light for the conclusion of the Round. Before the meeting EU Trade Commissioner Peter Mandelson said: '(Potsdam) cannot finish the Doha Round, but it will determine if Doha can be finished.'

Blaming India for the failure of the talks, he said: 'It emerged . . . . . . that we would not be able to point to any substantive or commercially meaningful changes in the tariffs of the emerging economies, as a reasonable return on what we are paying into the round.'

Needless to say, Indian Trade Minister Kamal Nath blamed the US for the collapse of the talks.

Although the EU said officially (for Mr Sarkozy's ears, no doubt) that it had not changed its negotiating position, officials present at the talks said that the EU had in fact increased its offer of tariff cuts to 70% from the previously offered 60%. India however apparently held firm to its demand that 20% of its import tariffs (all the important ones, that is to say) should remain in place.

Brazilian Foreign Minister Celso Amorim said afterwards that the Indian and Brazilian delegations had left the talks: 'It was useless to continue the discussion given what was on the table,' he told a press conference.

During his G8 speech, Pascal Lamy had said: "Contacts, discussions and negotiations have picked up considerably over the last two months, and while my diagnosis remains cautious, I think that an agreement is now within our reach. I do not mean a final agreement on all of the twenty topics included in the list agreed upon when the negotiations were launched in 2001 and which remain inextricably linked to each other, but an interim agreement which would pave the way towards a final agreement in 6 to 9 months' time."

Lamy said that the components of this interim agreement were identified long ago: the amount of the reductions in trade-distorting agricultural subsidies; the amount of the reductions in agricultural tariffs and in industrial tariffs. These three elements are the centrepiece of the negotiations. "They also happen to be the most politically sensitive," he observed.

However, he noted that: "The reason why I think an agreement is within our reach is that your positions have moved closer to each other. There remain a number of significant differences, it is true: but with an added political effort from each and every one of you, we should be able to cover the remaining ground."

According to Lamy, the additional concessions needed, whether subsidy reductions or increased imports or exports, amounted roughly to a few billion dollars or euros.

Lamy urged the G8 governments to avoid weighing out the final concessions "on an apothecary's weight-balance," and to focus on the overall world economic landscape and on the enormous risks involved in failure. "Not only for the WTO, which you all need, but also for one of the few systems of international cooperation to have emerged as strong as ever from the turbulence of the 1990s."

"The exceptionally favourable economic cycle we are currently experiencing is not immune to threats, including the threat of protectionism," he stated. "Nothing could be worse than a failure for the developing countries - whose stakes in world growth are now high – and hence for the rest of you as well."

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