An update on the WTO talks: some progress

from Report on Business, Canada

Agreement on the global trade pact could ad anywhere between $60 to $300 billion to the world's economy. - Kale

by JULIANE VON REPPERT-BISMARCK

GENEVA — World trade ministers appear to be finally making progress in seeking a sweeping new global trade agreement.

Although critical to a deal, disputes in several areas still did not prevent a sense of optimism over the multiyear process as officials continued week-long negotiations at the World Trade Organization in Geneva yesterday.

"We're closer to an outcome than we've ever been before," New Zealand Trade Minister Phil Goff told reporters after an evening session of talks. "People have differences. We need to work through those differences."

Protection for farmers in developing countries, U.S. cotton subsidies, European Union banana duties and industrial exports to China were still holding up a deal that has been seven years in the making, diplomats said yesterday at the end of a day spent in one-on-one and group negotiations.

U.S. Trade Representative Susan Schwab and negotiators from China warned a deal can still unravel given extreme sensitivity over opening up trade in national staples such as food and industrial products. Decisions at the WTO are made by consensus and can break down if one country dissents.

Tensions have been high during the past week, with rich nations refusing farm aid cuts and developing countries wanting to keep industrial tariffs in place. Brazil's negotiator, Celso Amorim, angered many by denouncing rich-country tactics as worthy of Nazi propaganda chief Joseph Goebbels, and Indian Industry Minister Kamal Nath almost walked out of a meeting.

A compromise plan drafted by WTO chief Pascal Lamy on Friday averted a breakdown that could have postponed a WTO deal for several years. According to this plan, the EU would cut trade-distorting farm subsidies by 80 per cent and the United States by 70 per cent, bringing the U.S. aid ceiling to about $14.5-billion (U.S.) from more than $48-billion now.

The plan would allow developed and developing countries to exempt parts of their farm sectors from high tariff cuts. It also suggests sudden import surges should trigger temporary tariff hikes, a move designed to protect vulnerable farm sectors.

The compromise would allow developing countries such as China and India room to protect to a limited extent industries such as textiles and car production - markets the United States and EU want to tap.

Negotiators praised the plan for averting disaster. On Saturday, ministers unveiled for the first time promises to open up global-services trade that makes up almost three quarters of gross domestic product in rich countries - from telecoms and banking to energy and the booming global shipping sector.

Yet negotiators still want changes to the farm and industrial trade plan. More than 80 countries, including China and India, are calling for stronger protection against sudden surges in farm imports.

Diplomats - many showing signs of exhaustion - spoke of horse trading going on behind closed doors. European negotiators are considering a financial sweetener for Caribbean banana planters hurt by European import tariffs, according to trade officials and diplomats.

The United States is resisting pressure from poor African cotton farmers to cut its annual $2-billion in cotton subsidies, calling on China to first admit U.S. cotton, a trade official said.

Brazil - the world's biggest ethanol producer - is pushing for access to the United States and Europe's booming biofuel markets. Beijing's negotiators are at odds with EU car and textile exporters who want cuts to steep Chinese tariffs.

Representatives of Canadian poultry and dairy farmers insist exemptions to tariff cuts available to developed economies be broadened from the 4 per cent currently on the table to 7.3 per cent.

"Any deviation from our position would be extremely negative for poultry and dairy farmers and for rural areas of Canada," said Peter Clarke, Director of the Canadian Egg Marketing Agency.

Barring the collapse of talks, ministers are expected to reach an agreement by Thursday. But the shape of any final treaty is still unclear and unlikely to emerge before the end of 2008. Services, trade and other issues must be formalized. U.S. commitments must pass congress, while France and Italy have threatened to veto a deal that threatens European farmers.

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