Schwabb expresses hope for Doha despite daunting challenges

U.S. Trade Representative Susan Schwab last Friday (July 7) insisted the only Doha deal the U.S. will accept is an ambitious one, and stressed that this requires a definition of how sensitive agriculture products will be treated so that members will know exactly how much market access they are to get. Schwab acknowledged the failure of ministers to make any progress in Geneva, but insisted it is still possible to conclude the Doha round before the expiration of U.S. fast-track authority next summer.

Speaking to Inside U.S. Trade after her speech, Schwab indicated that she would most likely travel to St. Petersburg for the G-8 meeting. But at press time, it remained unclear if she would make the trip.

A powerful signal from G-8 leaders that trade negotiators should "get back to the negotiating table and get this job done" could be helpful, Schwab said following a speech to the ABCDoha Coalition. But she also added that a political shot in the arm alone would not be enough to complete the talks. The most daunting prospect about completing the Doha round, Schwab said, is that if members reach a political consensus there will still be a "huge amount of detail" to work out.

In the agriculture talks, she noted that there are a large number of moving parts to figure out, and she noted that the second round of services offers will not be submitted until July 31. Many Geneva sources have expressed skepticism that those offers will be meaningful if the agriculture talks remain deadlocked.

Schwab stated that there are no current plans for a G-6 meeting, a "green room" meeting of trade negotiators, or a ministerial open to all WTO members, but that she would not be surprised if trade negotiators returned to Geneva at the end of July.

Asked why she remained convinced that an ambitious Doha outcome along the lines of the U.S. demands was possible, Schwab contrasted the public rhetoric of trade officials with private conversations, which she suggested were more conciliatory. "You'd be amazed at the difference in positions that countries and trade negotiators take when they're sitting in a large room as opposed to a small room as opposed to one-on-one," she said.

Schwab also suggested that members might change their positions now that it is clear the Doha round is nearing a collapse. She said some countries may have arrived in Geneva unconvinced that the round could fail, and that it might have been necessary to "get to the edge of the precipice and look out over the precipice and see that yes, in fact this could fail."

However, she acknowledged negotiators are running out of time because of the end of fast track next June, which she indicated would probably not be extended. Schwab also said that some countries would like the Doha round "to go away," and separately criticized the EU and India for their positions in the talks.

Schwab said the U.S. remains willing to adjust its position on domestic support, and said the U.S. signaled this in Geneva. But she said this flexibility remained contingent on more market access.

An "implicit balance" exists between market access and domestic support in the agriculture talks, Schwab said. This "balance is not sacrosanct and it can be modified, but only with good reason," she said.

Schwab stressed that more ambitious agricultural market access offers from the EU and advanced developing countries including Brazil, India and China must be a part of this equation. Commodity groups will resist subsidy reductions and import sensitive industries will resist tariff cuts, and the only way to counter-act that politically, Schwab said, is for their to be an ambitious market access package that creates new export sales for U.S. farmers, business and service providers.

Schwab criticized India and other advanced developing countries for trying to "hide behind" other least developed countries, so that they benefit from U.S. offers to reduce domestic support but do not have to give up anything in return. Schwab drew a clear distinction between her expectations of these countries and her expectations for least developing countries, which she said should "be given a pass in these negotiations."

According to Schwab, proposals on market access, such as the flexibility signaled by the EU last week in Geneva, are often obscured by exemptions that render much of their potential value meaningless. While cuts in domestic support are clearly structured, Schwab stated that in market access there is only a "black box" of loopholes. Until the definition and scope and treatment of sensitive products and special products and special safeguard mechanisms becomes clear, "we really don't know what tariff reductions in agriculture mean," she said.

"All WTO members need to stretch, and all need to focus on eliminating the black box so we can get on with the rest of the negotiations, and if that means new proposals, so be it," she said.

Schwab said the U.S. would also continue to push ahead with bilateral and regional trade agreements, as well as bilateral WTO accession deals with Vietnam and Russia.

Schwab stated that both President Bush and President Putin hope to conclude the bilateral WTO accession deal with Russia before the G-8 meeting in St. Petersburg.

Schwab refused to handicap whether the Russian-U.S. bilateral talks would be concluded by the G-8 summit, which has been seen as a deadline. But she said there have been real improvements in Russia's protection of intellectual property rights, a key sticking point in the talks. Schwab stated that Russia realizes it is in its own best interest to adopt internationally recognized rules and procedures on IPR.

"President Putin has spoken specifically about this and there have been some real improvements in terms of their treatment and protection of intellectual property," Schwab said. "We're not there yet, but they're doing it and they're doing it for their own sake."