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TRADE: Fears That G4 Meet Will Shift Burden to Developing World

Ravi Kanth Devarakonda

GENEVA, Jun 19 2007 (IPS) - As trade ministers of the Group of Four – European Union, United States, Brazil and India – launched a make-or-break effort in the Doha Round of negotiations Tuesday in Potsdam, Germany, developing countries worry that their concerns won’t be adequately addressed, say trade envoys.

The five-day G4 trade summit in Potsdam will attempt to resolve the differences on a range of complex issues in the Doha Development Agenda, launched by the World Trade Organisation ministerial conference in the Qatar capital in 2001 on the explicit promise to help developing countries to export more farm and industrial goods and services to rich countries.

“This [Potsdam] meeting of G4 negotiators cannot finish the Doha Round, but it will determine if Doha can be finished,” said Peter Mandelson, the EU trade commissioner, in a statement Monday, suggesting that if there is an understanding among the four it can pave the way for a breakthrough in subsequent talks.

However, there is growing concern that the Potsdam meeting might lower the level of ambition on development issues whilst squeezing developing countries to deliver more, say trade negotiators here.

In tandem with the Brazilian foreign minister Celso Amorim and the WTO chief Pascal Lamy, the EU commissioner is pushing for a possible July meeting of select trade ministers to finalise what are known as the “full modalities” that will indicate the depth and breadth of cuts in agricultural import tariffs and farm subsidies, and import duties on industrial products.

Mandelson also plans to convene a ministerial meeting immediately after deciding the modalities in order to press the ministers to make pledges on access for services in which the industrialised countries have some high ambitions, according to sources close to the high-level discussions.

Over the last several weeks, senior G4 trade officials met in London and Paris to explore ways to narrow differences among them in the complex matrix of Doha agriculture, industrials and services packages.

The officials gathered in Paris last week to prepare the ground for the Potsdam ministerial meeting by listing the difficult issues on which they can agree and those that will require their ministers’ intervention.

These meetings are completely confidential, making it difficult to gauge the level of progress in resolving various issues, with “transparency” being the biggest casualty.

Even during an outreach meeting convened by Brazil with its G20 developing country coalition members Monday, there was not much light thrown on how the four are approaching issues such as cutting farm subsidies in the United States or additional market access for farm products in the EU markets, said a trade envoy from South America, requesting anonymity.

“Brazil has not provided us detailed information other than saying there are far too many issues that need to be sorted out by the four ministers… But many members are apprehensive whether some side deals are being struck between the key players,” he said.

Ahead of the Potsdam meeting, G20 trade ministers held a one-day meet in Geneva last week with the NAMA-11 coalition, which is named for the “non-agricultural market access” negotiations. Its members seek to put a developmental dimension in opening their markets to industrial goods.

The developing country trade ministers spelt out unequivocally that much would depend on whether the United States agrees to far-reaching commitments to reduce its agricultural supports.

“The U.S. has to deliver in its OTDS [overall trade-distorting domestic support] by demonstrating commitment to real and effective cuts, which would have to be pared down to below 13 billion dollars if there is to be a successful outcome at the Potsdam meeting,” India’s trade minister Kamal Nath told IPS.

Over the course of the Doha Round, which has gone far beyond the Jan. 1, 2005 deadline, the industrialised countries succeeded in transforming the negotiations from an avowedly developmental round into purely market-prying, “mercantilist” negotiations, he argued.

The South African trade minister, Mandisi Mpahlwa, leader of the NAMA-11 coalition, says he has yet to see any bold intention on the part of the rich countries to correct the historical distortions in global farm trade. But they want developing countries, which are still struggling to industrialise, to slash their industrial tariffs much more than what they themselves are prepared to offer, he told IPS.

In a strong statement at the end of the G20 meeting Monday, the trade ministers said: “the centre of gravity in domestic support should reflect the commitment to real and effective cuts,” adding, “this is especially so in relation to the OTDS, for which a ‘low-teen’ number [implying less than 13 billion dollars for the U.S. farm subsidies] reflects the only possible outcome and the position of an overwhelming majority of members.”

However, the United States continues to stall, maintaining it is ready to cut its farm subsidies, provided other industrialised and developing countries show greater intention to open their markets for farm products, and developing countries for industrial goods.

In its last proposal, issued in 2005, Washington said it could reduce its farm subsidies to a level little over 22 billion dollars, which effectively leaves its subsidy payments untouched, as its current overall domestic farm subsidies amount to about 12 billion dollars.

Only last week, Canada challenged the United States at the WTO by calling for a dispute settlement panel to rule on farm subsidies, saying the U.S. violated its subsidy reduction commitments agreed during the previous Uruguay Round of negotiations.

WTO Director-General Pascal Lamy insists the U.S. will have to deliver on further reductions in its domestic support, the EU and other industrialised countries like Japan and Switzerland on further market-opening for farm products, and the big emerging economies like India, Brazil and South Africa on more access for industrial goods.

He proposed this “triangle” formula to break the deadlock in the Doha trade negotiations.

But many trade envoys from developing countries privately described Lamy’s formula as “disingenuous” because it shifts the burden away from industrialised countries to developing countries by emphasising market access, instead of their developmental concerns.

Against this backdrop, they are not optimistic that the Potsdam meeting will deliver many benefits for the developing world. “They are not creative enough in finding solutions to conclude the Doha Developmental Agenda negotiations… but they are very creative in describing how and why a change in the terms of engagement is needed,” says one multilateral trade analyst in Geneva.