Bridges Weekly Trade News Digest • Volume 10 • Number 31 • 27th September 2006
Cairns Group Unable To Break Doha Deadlock, Calls For Resumption Of Talks
Ministers and senior officials from the Cairns Group of farm exporters called on WTO Members to restart the frozen Doha Round trade talks no later than November, during a recent summit in Australia. However, they were unable to broker any new compromises to break the logjam, in spite of the presence of top representatives from the US, the EU and Japan. At the 20-22 September meeting, the 18-member group unveiled a programme of analytical work and lobbying aimed at getting the talks back on track.
The Doha Round negotiations have been suspended since late July, when ministers from key trading nations failed to reach a deal on tariff and subsidy cuts, primarily due to differences on farm trade (see BRIDGES Weekly, 26 July 2006). At the time, WTO Director-General Pascal Lamy said that countries would have to offer new concessions in order for the talks to resume.
"Five for five" compromise not acceptable to US, EU
Brussels has blamed Washington for offering insufficient cuts to its farm subsidies. The US counters that it would have done so if the EU had agreed to deeper reductions to its agricultural tariffs. At the meeting in Cairns, neither accepted a "five and five" compromise mooted by Australia. According to this, the EU would have slashed its farm tariffs by 5 percent more than the roughly 50 percent reduction it has informally proposed, while the US would have capped farm subsidies at a level USD 5 billion below its current offer of about USD 22.7 billion.
The US was singled out by several WTO Members, including Brazil and India, for failing to offer any new subsidy reductions in July. Nevertheless, US Trade Representative Susan Schwab insisted in Cairns that Washington’s proposal was "negotiable," and that the US was "prepared to do more in terms of cutting domestic support than we have on the table if and when there is significantly more market access on the table in agriculture."
In a communiqué released at the end of the summit, the Cairns Group ministers warned that "the round cannot be allowed to drift. Further delay adds to the risk that we lose the gains secured to date in the negotiations and the continued momentum for trade reform." They urged WTO Members to "take the necessary steps to resume negotiations no later than November." WTO chief Lamy made similar points in his address to the meeting, stressing that sufficient political will could bridge the negotiating gaps. This would, however, require governments to face down domestic opposition.
The ministers attributed the lack of agreement on agriculture ‘modalities’ — formulae and figures for tariff and subsidy cuts, as well as exceptions to them — to substantial differences on both domestic support and market access. They called for "deep policy reforms" to both, saying "the plain negotiating reality should also be clear: modest reforms in these areas will simply be insufficient to conclude a deal on agriculture or to unlock the benefits of the broader Doha agenda."
They urged the EU, the US, and the G-10 in particular to make "the necessary improvements to their offers on market access and domestic support, to establish the basis for the early resumption of negotiations."
The Cairns Group also adopted a work programme instructing their trade negotiators to work with other WTO Members to push for substantial increases in market access, and to participate in technical work on domestic support and export competition in preparation for the resumption of negotiations.
The work programme will also involve analytical and advocacy work aimed at influencing agricultural policy reforms in the US, the EU, and other major subsidisers.
Cairns Group to seek compromise on special products
The ministers also addressed the issue of market access flexibilities for developing countries.
Cairns Group members are on different sides of this highly contentious debate in the Doha Round negotiations. For instance, Indonesia and the Philippines are part of the G-33 group of developing countries, which wants to be able to shield at least 20 percent of farm products from the bulk of tariff cuts by designating them as ’special’ for food security, livelihood security, and rural development reasons. Other developing countries such as Malaysia and Thailand, however, want Members’ ability to designate such products to be much more restricted, fearing diminished export prospects. All four countries are part of the pivotal G-20 bloc.
The work programme adopted in Cairns instructs trade officials from the group to "contribute to building convergence" on the issue of special products, as well as on the ’special safeguard mechanism’ which developing countries will be able to use to protect farmers from import surges. They have also been asked to address the issue of how to liberalise trade in tropical products, an issue that has divided developing countries that receive trade preferences for such commodities and those that do not.
The G-33’s demands are even less palatable to Washington (not part of the Cairns Group). US officials have described them as a ‘black box’ that render it impossible to assess the true value of market access offers, and blamed the group’s proposals in part for their inability to come forward with deeper subsidy cuts in July.
Promises of flexibility — if other countries move first — are nothing new in the deadlocked Doha Round negotiations. Nevertheless, Bruno Julien, the EU’s ambassador to Australia, told the Weekend Australian newspaper during the summit in Cairns that the US appeared to have made a "further offer" on farm subsidies, albeit one without specifics. He said that EU Trade Commissioner Peter Mandelson would press his US counterparts for further details when in Washington from 27-28 September.
The Cairns Group ministers’ communiqué is available at http://www.cairnsgroup.org/meetings/20anniversary_communique.html.
ICTSD reporting; "Cairns group nations call for WTO talks to resume," REUTERS, 22 September 2006; "Latin American officials urge US, Europe to revive world trade talks," INTERNATIONAL HERALD TRIBUNE, 22 September 2006; "Europe to review US offer on farm deal," THE AUSTRALIAN, 23 September 2006; "Talks fail to crack world trade impasse," THE AGE, 22 September 2006; "US Still Flexible on Agriculture Trade Proposal, Official Says," WASHINGTON FILE, 22 September 2006; "US, EU alone can’t make deal for WTO-USTR Schwab," REUTERS, 26 September 2006.