Thursday, August 07, 2008

Efforts Begin to Salvage WTO Deal

For all the debts that will never be paid due to the rocket-high requirements of the IFIs... The end of the WTO could actually mark the start of something new or pave way for more imposing tyrants.


GENEVA: As efforts begin to salvage a deal from the wreckage of last month's global trade talks, experts say the first task is to untangle the confusion around a farm safeguard that became a stumbling block.

The World Trade Organization's director general, Pascal Lamy, said the talks, now in their seventh year, were near agreement on 90 percent of the agenda, especially in the core areas of agriculture and industrial goods. For many WTO members, it would be frustrating to discard that progress because of a dispute about a technical but important measure to help poor farmers withstand a flood of imports.

"Almost everything was right for a conclusion when we had this impasse between the United States and India," the president of Brazil, Luiz InĂ¡cio Lula da Silva, said Thursday in Beijing. "If we don't get back to the talks, and if we don't clinch a deal in the coming months, it will take four or five years more, and that would be a huge loss for everyone."

A senior U.S. trade official, Warren Maruyama, said Wednesday that the differences between the United States and big emerging countries like India and China were too complex to be resolved quickly. He said there was no point bringing ministers back together until such issues like the safeguard had been sorted out. But trade diplomats point to several factors suggesting that the negotiations, part of the so-called Doha round of talks, could be resumed soon even if a final deal must wait until after the U.S. elections:

The U.S. trade representative, Susan Schwab, emphasized after the talks collapsed that U.S. offers remained on the table.

WTO members largely refrained from apportioning blame, keeping the diplomatic atmosphere clear for the next move.

India, which fought for more safeguards to protect its farmers, needs a Doha deal for them to be introduced.

Trade officials have said they expect some trade diplomacy on the sidelines of the Olympics, where the president of Brazil will be joined by President George W. Bush and other leaders.

In addition, Lamy, the WTO director general, can review U.S. and Indian positions when he visits Delhi next week and Washington the week after.

The fight over the proposed "special safeguard mechanism," which derailed last month's talks, was not only unexpected but also missed the point, according to some trade experts.

Big developing countries like India and Indonesia wanted a measure to let them raise tariffs to protect their millions of subsistence farmers from a flood of subsidized imports. Exporters - including not only the United States but also developing countries like Uruguay or Costa Rica - said the measure must not conflict with the broader aim of opening markets.

Safeguards are an established part of the trade arsenal, going back to the foundation of the WTO's predecessor, the General Agreement on Tariffs and Trade, in 1947. They allow a country to raise tariffs temporarily to counter a surge in imports that threatens to damage domestic industry.

In recent years, India has been the most prolific user of existing safeguards, applying them 15 times from March 1995 to June 2008, out of a total 164 cases by 39 members, according to WTO figures.

All WTO members have the right to raise their tariffs to the maximum rates, which are negotiated at the WTO, whenever they want, as Brazil did last year with textiles to counter an influx of imports. What a safeguard does is allow a country to raise its tariffs temporarily above the ceiling.

The discussion was complicated last month when developing countries like India and Indonesia said they could apply the new safeguard even to products on which they did not have to cut maximum tariff rates in the Doha round.

The Indonesian trade minister, Marie Pangestu, said the safeguard would only be invoked in emergencies, not as a regular measure. But the implication is that for such products, the safeguard could raise tariffs above the current levels, which were agreed 15 years ago. That would leave exporters, rich and poor, worse off than today.

The talks then deadlocked on whether, and under what circumstances importers, could exceed those ceilings.

Still, the outlines of a possible compromise on safeguards are discernible, trade experts have said. The question is not whether countries can exceed the previous ceilings but whether they are prepared to make new commitments.

If a safeguard created in the Doha round is limited to tariff cuts agreed to in the round, it would be difficult for exporters to reject because WTO members already accept that a sudden influx of imports can hurt farmers. But if developing-country importers do not want to limit the new safeguard to new tariff cuts in the Doha round, they will have to convince exporters why and agree on clearly defined conditions for its use.

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