EU signals to member states no new WTO farm offer imminent

In advance of a major speech on the Doha round by European Union Trade Commissioner Peter Mandelson, the top EU official in Geneva this week told member states the that EU has no plans to put forward a new offer to reduce its farm tariffs, according to EU government sources.

EU Ambassador to the World Trade Organization Carlos Trojan told member state representatives on Jan. 18 that the EU agriculture offer from October 2005 remained on the table, and that it was a substantive offer. He reiterated that the offer is conditional on other members making offers in areas including industrial market access and services, according to these sources.

The EU argues that members including Brazil and India have so far not made offers that would result in real market access gains. Trojan told member states it was time for others to reciprocate the EU's offer by making substantial offers in industrial market access and services, and that EU member states should make clear that the EU agriculture offer is meaningful, these sources said.

Trojan spoke in response to comments from several member states, who took contrasting positions on whether the European Commission should signal new flexibility on agricultural market access to push the talks forward.

Specifically, Sweden, Denmark and the United Kingdom said the commission should be clear that if it receives credible offers from Brazil, India and others, it could respond with a new offer on agriculture. These members said the EU currently is not prepared to move if others move on services or non-agricultural market access.

But France and Italy replied that the EU should not prepare a new offer or send any signals of flexibility on agricultural market access, EU government sources said. These member states said the EU has already given too much in the negotiations while issues important to the EU have already fallen off the table or are in jeopardy because the EU has moved on agriculture without reciprocal action by others.

These sources predicted this debate would continue in Brussels today (Jan. 20) at a meeting of the 133 Committee on Trade.

One European government source speculated that Mandelson may soon ask member states for more flexibility with the argument that it will not be possible to get a Doha deal, something the EU is committed to reaching, without this flexibility.

In a Jan. 16 speech to the EU Parliament that followed a meeting last week with WTO Director General Pascal Lamy, Mandelson said he would give his views on the next steps that should be taken in the WTO talks in a Jan. 23 address in Berlin. He reiterated that the EU needs others to move on industrial market access and services as well as rules on antidumping and protections for foods with names of geographic indications (GIs).

At the same time, he suggested the EU would offer trade concessions for an outcome that enhances European growth and competitiveness. "In trade negotiations you get what you pay for; Europe won't be ready to pay for a round with nothing new on industrial market access, services, GIs or the other rules that lend strength to the multilateral way of managing our affairs."

However, Mandelson also said the EU could "grudgingly" accept a round with a "minimalist outcome" if this is what the rest of the world wants, although he said this would not help the global economy or reduce poverty. Many observers in other WTO delegations have speculated that the EU wants this outcome because it would then not have to accept significant cuts to farm tariffs.

The EU needs to engage with its partners to "gauge the real level of ambition" and see if other trading partners share the EUs vision of an economically meaningful, pro-development round, Mandelson said. He said he would be engaging "vigorously" with his counterparts to see if the energy is there for an ambitious outcome.

Mandelson made a similar point in his Jan. 12 meeting with Lamy, in which he said members must establish a better negotiating process, according to a commission spokesman. This could be achieved if others came forward with offers to reduce industrial tariffs and open services markets, the spokesman said. Without such engagement, he said, the talks are unlikely to be reinvigorated. Mandelson also told Lamy that he and others would make a series of bilateral contacts ahead of a Jan. 27-28 mini-ministerial on the margins of the Global Economic Forum in Davos, Switzerland.

U.S. Trade Representative Rob Portman and U.S. Agriculture Secretary Mike Johanns are both attending the Davos meeting, sources said. Ministers in the G6 of the U.S., EU, Brazil, India, Australia and Japan will meet Jan. 27 before the mini-ministerial featuring about 25 countries takes place, the commission source said. The G4 of the U.S., EU, Brazil and India will also meet the night of Jan. 27, another commission source said.

Delegation sources in Geneva said expectations for Davos are low, and most expect the meetings to focus on the process of the talks between now and April 30, when members are supposed to agree to specific negotiating modalities in agriculture and industrial market access according to the text agreed in Hong Kong. These sources said that April 30 deadline is widely expected to be missed, and many delegations are already expecting plans for a new end-of-July deadline for agreeing to modalities.

U.S. and EU officials were already meeting on the eve of Davos, as new EU Director General of Trade David Sullivan was in Washington this week, where he met U.S. Trade Representative Rob Portman, Deputy U.S. Trade Representatives Susan Schwab and Karan Bhatia, and new Chief U.S. Agriculture Negotiator Richard Crowder, according to government sources. A USTR spokeswoman said the meetings were generally designed so the new officials could meet one another, but said the Doha talks were also likely to come up.

The WTO negotiating group on agriculture also meets next week, but at press time its chairman had not announced an agenda.

In the Jan. 16 address to the EU Parliament, Mandelson warned there is a danger that the schedule agreed to at the Hong Kong ministerial will mean agreeing to commitments on agriculture and non-agricultural market access early in the negotiations, while "backloading" talks on services, rules and GIs. He said this has to be minimized to preserve the single undertaking of the Doha round, in which all parts of the talks move forward as one.

"We should not accept further feet-dragging either in services, in geographic indications or in the rule-making areas," Mandelson said.

European government sources said this refers to the fact that in Hong Kong, members set an April 30 deadline for agreeing to specific modalities in agriculture and non-agriculture, but put off final commitments on services until October 31. This has member states worried that they will have little leverage to get developing countries to accept real services openings since the terms of the agriculture talks will have already been decided.

However, some delegation sources this week noted that all of the deadlines in the Hong Kong text could be re-arranged, especially if the April 30 deadline is missed.

On rules, the Hong Kong text is even more vague. It calls for the chairman of the rules negotiations to prepare "early enough to assure a timely outcome within the context of the 2006 end date" for the Doha round, consolidated texts of the agreements on antidumping and subsidies and countervailing measures that could be used as a basis for the final stage of talks.

Negotiation on GIs have barely moved since the Doha talks were launched, as extending protections to foods is widely opposed by countries in the Western Hemisphere.