Attempts to piece together the shattered global trade talks got off to the worst possible start on Tuesday as the European Union and the United States blamed each other for the abrupt end to almost five years of hard negotiations.
In an atmosphere thick with recrimination, the world’s two leading trading blocs sought to avoid being held responsible for what — unless there is a new willingness to compromise — will prove to be the end of the Doha round of liberalisation. Peter Mandelson, Europe’s trade commissioner, said Washington was asking ”too much from others in exchange for doing too little themselves. This is not my definition of leadership”.
The United States, Mandelson added, had welched on the deal struck by G8 leaders in St Petersburg nine days ago that all sides would need to concede more to prevent the round from collapsing. The EU and the developing countries had been willing to show flexibility; the US had balked at cutting subsidies to farmers.
Not so, said the US. Its mission in Geneva issued a statement calling the EU’s accusations ”false and misleading”. Brussels, the US said, was trying to use ”loopholes” to wriggle out of opening up its agricultural market to competition from the more efficient producers on the other side of the Atlantic. ”The United States took the leaders’ mandates for flexibility in St Petersburg seriously. But the US cannot, and will not, negotiate with itself.”
Against that background, it was little wonder that few on Tuesday shared the view of Pascal Lamy, the World Trade Organisation’s director general, that it was not the end of a long and bumpy road from Doha in November 2001 but merely a basketball-style ”time out”. The Indian industry and commerce minister, Kamal Nath, gave an early indication of the way the wind was blowing when he said his country would be seeking to strike bilateral trade deals with the EU and Japan.
Some see this trend as now inexorable, given that even while the multilateral negotiations were inching forward, smaller groups of countries were cutting smaller regional deals. A fear that the global trading system will fragment was hanging heavily over the WTO on Tuesday.
Lamy has called for a period of reflection, but there is concern that, in the absence of a deal, the organisation will become the court for settling disputes between increasingly hostile blocs.
Not that the Geneva breakdown was a cause for universal woe. Development charities were divided over the impact of the collapse. Oxfam said it was a ”tragic outcome”; Christian Aid called it a ”terrible blow”. War on Want, however, said it was good news because the deal on the table would have harmed poor countries. Greenpeace said the opportunity should be seized build a trading system based on ”equity and sustainablility”.
Mandelson said the global political class also appeared to have mixed feelings about the crisis. ”For some people, it is as if a close relative has been put into a deep coma as a result of the breakdown — and dependent only on life support as the round now is. But if that fragile condition of our patient isn’t worrying enough, you realise, then, that some of the medical services in attendance on your patient are divided, not only about how to revive the patient, but whether they really want to.”
The first attempt to salvage something from the wreckage will come on Friday when British Prime Minister Tony Blair holds talks in Washington with US President George Bush. Having invested considerable political capital in a successful conclusion to the Doha Round, Blair will tell Bush that the multilateral trading system is being put in jeopardy by a squabble over a few billion dollars. And that the absence of a deal will mean putting the interests of agriculture — a small percentage of global trade and an even smaller percentage of the US and European economies — before those of the bigger manufacturing and service sectors.
But history has repeated itself. Agriculture was the sticking point in the Uruguay Round, which lasted for seven years between 1986 and 1993, and optimists on Tuesday noted that all rounds had one apparently terminal crisis before negotiators saw the light. But life has moved on since it temporarily collapsed in 1990. The Doha Round is more complex; the WTO has more members; and the bigger developing countries — India, Brazil and China — now insist on a seat with the EU, the US and Japan at the top table.
Indeed, one theory is that the collapse of the talks on Sunday night was inevitable after a bilateral meeting between India and the US 24 hours earlier, at which New Delhi insisted that the G20 group of developing nations would designate 20% of their agricultural goods as ”special products”, thereby protecting them from foreign imports. That would have taken the potentially lucrative Chinese market out of play for American farmers.
The British prime minister is now — albeit reluctantly — preparing the ground for a plan B. In the event that the differences between the WTO’s 149 members prove irreconcilable, Blair will seek agreement on a special deal for the poorest countries to help them export to western markets. Should even this prove impossible, he will pressurise the EU to act unilaterally.
Mandelson on Tuesday outlined a seven-point development package — an indication of his belief that the talks are now in deep trouble. Brussels thinks talks cannot possibly resume until after the US mid-term elections in November, and are effectively dead unless Bush is prepared to veto any attempt by Congress to extend or roll over the 2002 Farm Bill.
The EU believes the US legislation, which is due for renewal next year, is at the root cause of many of the Doha round’s problems because of the high level of subsidies it provides. A new Farm Bill would last five years and would entrench unfair subsidies — supposed to be eliminated in the current talks — and thus put a global deal beyond reach. Mandelson urged Bush to wield the veto. ”To make such an announcement would, give a very powerful signal of his commitment to this round and all it supports.”
This would mean, however, taking on an increasingly belligerent Congress. Bill Thomas, chairperson of the influential ways and means committee in the House of Representatives, summed up the mood. No deal, he said, was better than a bad deal, adding: ”I, for one, am tired of listening to those who should be leaders, pay lip service to free trade, while blaming others who practise it.” – Guardian Unlimited Â