Hopes revived on free trade talks

from The Age

Rich Miller and Michelle Grattan

GLOBAL trade ministers say they will restart talks on a free trade agreement, breathing life into the process without specifying how they will bridge their differences or setting a date for the resumption of full-scale negotiations.

"We're going back to the table, period. Nothing is resolved," French Trade Minister Christine Lagarde said in an interview in Davos, Switzerland, after the trade officials met on the sidelines of the annual meeting of the World Economic Forum. "We agreed we're getting back to work. That's all."

Negotiations on a global agreement among the 150 member governments of the World Trade Organisation broke down in July due to quarrels over farm subsidies and tariffs. At stake is an accord the World Bank reckons could lift millions from poverty worldwide and pump at least $96 billion into the global economy by knocking down barriers to trade in goods and services.

World leaders, including US President George Bush, German Chancellor Angela Merkel and Brazilian President Luiz Inacio Lula da Silva, have urged their negotiators in recent days to strike a deal, to avert the prospect of a protectionist wave.

British Prime Minister Tony Blair said yesterday failure to reach an agreement would be "catastrophic".

Corporate chieftains have also stepped up their calls for a breakthrough as fears mounted that the talks would collapse.

WTO chief Pascal Lamy told reporters yesterday that no date was set for the resumption of full-scale negotiations, and that ministers had left it up to him to decide when the time would be ripe to go ahead.

"It's a question of months rather than quarters" when the talks would resume, he said.

Trade Minister Warren Truss said there were now clear signs of new life in the stalled trade negotiations — and took some credit for Australia.

Australia's proposal had played a key part in encouraging the resumption of discussions, he said. "Our proposal was designed to achieve a further cut of at least $5 billion in domestic support by the United States and a further 5 per cent tariff cut by the European Union, on top of what was already proposed."

Mr Truss said there was a window of opportunity to make the necessary breakthroughs.

He was encouraged by the recent constructive engagement between the EU and the US "and that they both know they need to do more".

"We must unpack the black box of exclusions from tariff cuts for sensitive and special products, as well as define the necessary disciplines for domestic subsidies," he said.

He also cautioned against any push for a consensus on an unambitious agreement. "A satisfactory result for the Doha Round must develop real commercial trade opportunities," he said.

Trade officials hope to reach the broad outlines of an accord before President Bush's "fast-track" ability to negotiate trade deals expires at the end of June. That would put the Democrat-controlled Congress on the spot for scuttling an agreement if they don't renew Mr Bush's authority to strike a deal without fear of having it amended.

"The US will need trade promotion authority to implement an agreement," US Trade Representative Susan Schwab said. "A breakthrough would contribute to us gaining traction on that."

European Union Trade Commissioner Peter Mandelson said the EU was also willing to do more by expanding its cuts in agricultural tariffs to more than 49 per cent.

"We are ready to do this in a way that demonstrably gives new market access to all exporters and all products," he said.

Neither US nor EU trade officials have a completely free hand in the talks. The Bush Administration must reach a pact that will pass muster with a hostile Congress.

In the EU, French officials have resisted further concessions on opening agriculture trade. France holds presidential elections in April and May and farmers are a major voting bloc.

Mr Mandelson said some EU nations were worried that he was offering more concessions than had been mandated by his political masters. "I am not allowed to exceed my mandate," he told a meeting at the world forum.

"We're now in the endgame. This is going to end in success or failure in the next two to three months."