TRADE: CAFTA Could Kick Start Stalled WTO Talks

By Gustavo Capdevila Reprint | | Print |

Gustavo Capdevila

GENEVA, Jul 28 2005 (IPS) - The approval of the Central American Trade Agreement (CAFTA) by the U.S. House of Representatives early Thursday could breathe new life into the Doha Round of WTO negotiations, say some observers.

The controversial trade pact’s successful clearing of the final hurdle in the United States – it had already been passed by the Senate on Jun. 30 and will now go to President George W. Bush, one of its staunchest supporters, for signing – could serve as "an important sign" for the Doha Round, a Latin American negotiator who preferred to remain anonymous told IPS.

CAFTA is aimed at liberalising trade and eliminating tariffs between the United States and the Central American countries of Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua, along with the Caribbean nation of the Dominican Republic.

The subregional agreement will eliminate trade barriers immediately on 80 percent of U.S.-made goods and 50 percent of agricultural products, and the rest within a few years.

It is still pending approval by the legislatures of Costa Rica and Nicaragua, where it has faced fierce opposition from social movements and producers organisations.

CAFTA has been criticised as a pact between highly unequal partners, given that the gross domestic product (GDP) of the five Central American nations is equivalent to just 0.5 percent of the United States’ GDP.

The crucial vote on the agreement in the U.S. House of Representatives came during an equally critical week in the WTO (World Trade Organisation) Doha Round of negotiations, initiated in the Qatari capital in 2001.

While the WTO had hoped for a breakthrough in the talks by the end of July, intensive lower level discussions earlier this week failed to result in an outline agreement for entering into the second phase of negotiations.

They can now merely hope that enough progress will be made at the next scheduled meetings in September and in subsequent months to be able to hammer out an agreement at the 6th WTO Ministerial Conference, scheduled for December in Hong Kong.

Nevertheless, this forced postponement until September could allow the United States to re-enter the talks with renewed momentum, now that the Bush administration has managed to push CAFTA through Congress, noted the WTO negotiator.

Specifically, the U.S. delegation to the WTO could help break the deadlock in negotiations on agricultural trade, the issue that has kept the Doha Round from moving forward, he said.

There is an especially good likelihood that the United States will be willing to make concessions on "blue box" agricultural subsidies, the term used for state support for farmers accompanied by programmes aimed at limiting production.

This contribution from the United States could work as a "trigger" to break the European Union’s "intransigence" on the critical issue of market access, which primarily involves the reduction of import tariffs and is currently stalling progress in negotiations on agricultural trade and in the Doha Round as a whole, the source said.

The subordination of all other issues to the theme of agriculture is illustrated by the negotiations to slash import tariffs on industrial goods, he noted.

None of the major developing countries with large agricultural sectors, such as Brazil, Argentina or Thailand, is going to give an inch on industrial tariffs without first ensuring an acceptable deal for agricultural trade, he added.

The other Doha Round issues will be left pending for the same reason, as was demonstrated Wednesday at the WTO General Council session held to analyse the progress – or lack thereof – made in the talks.

There have been few advances regarding demands put forward by different countries, such as the European Union’s attempt to have "geographic indications" – which identify the country of origin of a product – expanded to include goods other than wines and liquors, the only ones currently addressed within the WTO.

Nor has it been possible to find the "permanent solution" demanded by the developing countries regarding adequate access to medications for countries without the capacity to produce them.

This matter is being debated in the context of the WTO Agreement on Trade-Related Aspects of International Property Rights (TRIPs) and has led to clashes between the industrialised countries, home to the world’s major pharmaceutical companies, and the developing nations.

The Cuban delegation stressed that millions of people are dying of AIDS because they do not have access to AIDS drugs, and that an urgent solution is needed to deal with this problem.

The WTO General Council will be holding its last meeting on Friday before recessing for the month of August. The meeting will address reports from negotiations on the most heavily disputed issues, such as agriculture, industrial tariffs, services and the pending application of measures to benefit the developing countries.

The WTO and the vast majority of negotiators from its 148 member states acknowledge that very little is likely to result from Friday’s session.