World trade ball in US court, say developing countries

By Dipankar De Sarkar, IANS

Geneva : Negotiators from developing countries that rejected US demands on them to make huge tariff cuts in industrial goods said the ball is now in Washington’s court to help revive the stalled Doha Round of global trade talks.

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A large number of developing countries – led by Argentina, Brazil, India and South Africa – Tuesday rejected a key negotiating text at the World Trade Organization here on grounds that they were being asked to make bigger tariff cuts in industrial goods than the United States was prepared to make.

According to senior WTO officials who spoke Wednesday, the rejection came in the form of an intervention by the South African ambassador to the WTO during negotiations on the text on Non-Agricultural Market Access, or NAMA, prepared by Canada’s ambassador Don Stephenson, who chairs the NAMA negotiations.

“The picture should become clearer next week after a meeting in Pretoria, South Africa, between India, Brazil and South Africa,” the official added.

Tuesday’s rejection has already prompted Sean Spicer, spokesman for US Trade Representative Susan Schwab, to warn: “This proposal could signal the end of the Doha round. While the US and others have shown a clear commitment to moving towards a successful outcome, this text marks a significant move in the wrong direction.”

But negotiators from developing countries said the opposite was true.

“Our proposal is aimed at encouraging constructive engagement, and reiterating the mandate agreed under the Doha Round” that rich nations should make greater reductions in their protection than developing countries, said one diplomat.

“Ours is not an effort to destabilise or derail the negotiations. The portents of any breakdown are in Washington. The onus is on the US to put the talks back on track,” he added.

The Doha negotiations were launched in 2001 with the aim of promoting free trade and ensuring that world trade was governed by a set of rules that benefited poor countries.

One recent stumbling block towards agreement has been that the US Trade Promotion Authority (TPA), a piece of legislation that sets out the mandate for US trade negotiators, lapsed in June and has not been renewed ahead of general elections due next year.

The Democratic Party, which is thought to favour trade protections, is not likely to give its approval to the pro-free trade Republican Party in its bid to renew the TPA ahead of elections that may bring the Democrats to power.

As a result of the US political stalemate, there is a growing view among many diplomats and non-government observers in Geneva that the US Trade Representative does not really enjoy the negotiating authority of the US government. In this view, the deadlock in the international trade talks partly results from the domestic political stalemate in the US.

Although details of Tuesday’s South African intervention were not immediately available, one account holds that it was made on behalf of several large groups of developing countries, including the NAMA 11, the Group of 20, the African, Caribbean and Pacific (ACP) group, and the Africa group. If true, these countries together would form the majority of the WTO’s 151 member-countries.

Their main objection is over what they perceive as two levels of imbalance in the negotiations.

“There is firstly the imbalance between what is being proposed in the negotiating text on agriculture and what is in the NAMA text,” said one senior diplomat.

The position of the G-20 – an economically powerful grouping of 23 large developing countries that has changed the course of the trade talks – is that agreement on industrial goods must follow an accord in agriculture. But an agricultural agreement has been held up by the refusal of the US and some European countries to lower the high levels of subsidies they dole out to their agricultural sectors – supporting both domestic production as well as exports.

In turn, the US and EU want developing countries to do more in opening up their markets in industrial goods but developing countries say they cannot do that without movement on agriculture – the employer of the majority of the world’s poor population whom the Doha Round is meant to benefit.

The second area of “structural imbalance” is in the NAMA text itself. Under current tariff ranges proposed in Stephenson’s NAMA text, developing countries will end up making bigger tariff cuts than the US, which will retain a 33 per cent average tariff rate, as compared to less than 15 for some developing countries.

“There is a great deal of dissatisfaction among the Small and Vulnerable Economies with the NAMA text, which is seen as extremely tilted towards developed countries,” said another diplomat who did not wish to be named.

Small and Vulnerable Economies are a group of countries that are among the poorest, but face reductions of 50 to 70 percent on their tariff rates in the Stephenson text.