The timeline for reaching a final agreement is severely constrained because, under the US trade promotion act (TPA) of 2002 which expires mid 2007, Congress must either accept or refuse the end result of the negotiations. Past that date, Congress will resume its power to amend the agreement as much as it wants, severely diminishing chances of acceptation. In order for the text to be presented to Congress in time, a final text must be reached before the end of 2006, which means that full modalities for agricultural and industrial trade opening must be reached before the end of July, when the WTO closes for the summer break.
Agricultural and industrial market opening:
There is a common understanding that agreement must be reached on these points before other important issues, such as services liberalisation, trade facilitation and the revision of WTO rules on anti-dumping, can be tackled. The key players in the debate are the EU, US and the G20 group of developing countries. Their demands are interlinked and each player will have to make a step towards the other if an agreement is to be reached:
- Cuts on agricultural subsidies: The US will have to commit to further cuts in trade-distorting subsidies if it wishes to achieve an ambitious result to the discussions.
- Increase in agricultural market access: Both the US and the G20 are demanding that the EU increase its commitment to reducing agricultural tariffs. So far the EU has promised an average cut of 39%, bringing its average agricultural tariff down to 12%, but has signalled that it could move ‘significantly’ (although not the whole way) towards the G20’s request of an average cut of 54% if both the G20 and US improve their own offers in other areas.
- Reducing industrial tariffs: The EU and the US will not make any additional commitments as long as emerging developing countries, such as Brazil, India and China, do not commit to giving real access to their manufactures – and also to their services - markets. The Ministerial meeting on June 28th 2006 will mainly attempt to achieve a broad agreement on these issues.
Respecting the “Development agenda”:
Although the main debate has stalled on the issues of agricultural and industrial trade liberalisation, many studies point to the fact that the main gains for developing countries will be derived from services liberalisation and trade facilitation, which still need to be discussed.