All quiet at WTO but war of words continues outside

It was a very quiet day at the WTO today, as few diplomats turned up at the building following the breakdown of the Doha negotiations on Monday.

But the war of words continued outside, as the European Union and the United States continued to trade barbed comments on each other's performance in the recent days' meetings that had led to the suspension of the Doha talks.

At the WTO, a meeting of the Trade Facilitation negotiating group proceeded, despite the decision that all negotiations under the Doha work programme be suspended.

The go-ahead was probably due to the fact the group's meeting had started on Monday morning, before the informal heads of delegation (HOD) meeting in the afternoon that had agreed to the suspension.

Also, the decision on suspension of negotiations has not yet been officially taken, since the HOD meeting was an informal one.

A formal decision is expected to be taken by the General Council on Thursday. At that meeting, WTO delegations are also expected to present their views on the current situation and the possible ways ahead. By that time, they should have recovered from the sudden shock of the collapse of the G6 meeting and the proposed suspension of all negotiations related to the Doha programme.

At the WTO, an informal meeting on the report of the task force on aid for trade also went ahead on Tuesday afternoon.

The WTO director-general Pascal Lamy, who is also chair of the Trade Negotiations Committee, at Monday's HOD meeting made a statement which in its more operational part had said:

"Faced with this persistent impasse, I believe that the only course of action I can recommend is to suspend the negotiations across the Round as a whole to enable the serious reflection by participants which is clearly necessary. Time-out to review the situation, examine available options and review positions.

"In practical terms, this means that all work in all Negotiating Groups should now be suspended, and the same applies to the deadlines that various groups were facing. It also means that the progress made to date on the various elements of the negotiating agenda is put on hold, pending the resumption of the negotiations when the negotiating environment is right.

"Significant progress has been made in all areas of the negotiations, and we must try together to reduce the risk that it unravels.

"This is what I will suggest at the General Council meeting on Thursday. I do not intend to propose any new deadlines or a date for resumption of activity in the Negotiating Groups. This can only come when the conditions exist to permit renewed progress, and this means changes in entrenched positions. The ball is clearly in your court."

On Tuesday, several delegations of developing countries were meeting informally in small groups to discuss the sudden turn of events and how they should respond to it.

Ministers and officials of some countries returning home from Geneva also gave their views to their home constituencies.

The EU and US escalated their public war of words, which had started with sharp exchanges at press briefings in Geneva on Monday.

A statement by the United States' WTO Mission in Geneva accused the European Union (EU) of issuing a "false and misleading" statement blaming it for the suspension of global free trade talks. The US hoped that the EU's blamesmanship would not jeopardise the few chances left we have of reviving the talks.

"Yesterday's statement by the European Union alleging that the United States failed to show flexibility ... and attempting to divert blame for the stalemate is false and misleading," it said. "During recent discussions, it became clear that the EU was in fact offering even less market access than originally thought."

The US also criticized the EU the statement of simultaneously announcing an "improved" offer on tariffs, or market access, and then removing it from the negotiating table.

"The United States has sought to conduct this negotiation without resorting to blamesmanship and finger pointing," it said. "We are deeply disappointed that the EU failed to exhibit similar restraint and hope that this will not jeopardise the few chances we have left to save the Doha round."

Meanwhile, the EU's Trade Commissioner Peter Mandelson, back in Brussels, on 25 July made remarks saying "the gaps between us were not great" and that with goodwill there should have been a deal.

Referring to the EU's offers and the US officials' comments on it (made on Monday), he said: "To raise our envisaged average farm tariff cut from 39% to 50% is hardly putting "nothing on the table". Other negotiators, to a greater or lesser extent, also showed flexibility on areas where they had acute defensive concerns, be it in agriculture or industrial tariffs.

"The EU could not, I think, have made more effort and put more into making these talks a success. We have shored them up not once, but at least four times: in Cancun, by agreeing to limit their scope; subsequently, by offering to eliminate all export subsidies, in Geneva in July 2004, and by pushing for a robust Framework Agreement; in Hong Kong, by agreeing on a date for the elimination of export subsidies; and again, in the last few months, by showing we could put more currency on the table.

"To listen to some in Geneva yesterday, you would have thought that Europe had simply sat on its hands.

"But the United States, I regret to say, showed no flexibility at all in the end on the issue of domestic subsidies in agriculture. I regret this, although I do understand the domestic political considerations which influenced the United States' negotiating position.

"As a result, the United States have been asking too much from others in exchange for doing too little themselves. This is not my definition of leadership. And now, the United States seems to be saying to the rest of the world: "we are right, you are isolated".

Mandelson added: "Also wrong is the idea that the WTO is there to create a tariff free world in farm trade, and that farm reforms in rich countries must be paid for, dollar for dollar, by reduced tariffs in developing country farm markets.

"The WTO is first and foremost an instrument to foster and lock in reforms. Attempts to create a new market access exchange rate for this to happen will never be accepted."

Mandelson also proposed that a "development package" go ahead at the WTO despite the suspension of the talks.

"As a starting point, we should extract from the rubble of the negotiation a significant development package and frontload it, creating an early harvest for the most needy developing countries.

"What should this consist of? First we should push ahead with the Aid for Trade package because developing countries' capacity constraints remain unchanged. Second, we should continue to put together a new agreement on trade facilitation, which is linked to aid for trade and will be a focus of our trade related assistance in the years ahead.

"Third, we should put in place the new Integrated Framework for technical assistance to trade for the LDCs and get it up and running. Fourth, the Hong Kong agreement on duty free quota free market access should be fully implemented outside of the Round and possibly improved.

"Fifth, we should also pursue specific proposals on Special and Differential Treatment on a fast track and stand alone basis, adapting existing WTO agreements in this way. Sixth, we should continue to work on making origin rules more development friendly. Seventh, we should see if we can put in place improvements on the dispute settlement understanding to make it easier for developing countries to use. This in summary is a seven point action plan for salvaging or extending the development agenda."

Meanwhile, the Indian Commerce Minister Kamal Nath, briefed the media on his return to Delhi, saying that there can be no compromise on the interests of farmers or infant industry in the current Doha Round of multilateral trade negotiations, adding that trade should be looked at through the prism of development.

He said that at the recent WTO meetings, India and other developing countries had stressed the need to have substantial and effective cuts in trade distorting domestic support of the developed countries.

He said that the G6 meeting found no convergence on the core issues of substantial reduction of trade distorting support and other development issues. It has, therefore, been decided to suspend negotiations, he said.

In NAMA (non-agricultural market access), developing countries are being asked to reduce their duties to levels which would threaten their infant industries. "We cannot agree to reduction of duties on industrial goods without adequate safeguards", he said.

Repeating what he had told the informal HOD meeting in Geneva on Monday, Kamal Nath said: "This Round is not about the perpetuation of the structural flaws in global trade especially in agriculture. This Round is not about developing countries opening their markets for developed countries for their subsidised agricultural products.

"This Round is not about negotiating livelihood security and subsistence of hundreds of millions of farmers. This Round is not about preventing the emergence of industries in developing countries. This Round is about opening new markets for developing countries especially in developed countries."