Davos brings global trade deal ‘in sight’

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Around 30 trade ministers from the world’s largest economies breathed new life into-global trade negotiations by agreeing to restart talks in Geneva. 

Ministers agreed in Davos to send their negotiators back to the bargaining table, in hopes that a breakthrough mihgt be clinched before the US trade promotion authority (TPA) expires on 30 June 2007. This “fast-track” authority will be necessary to implement the deal in the US without Congress being able to amend it clause by clause, emptying it of its content. 

It is however increasingly unlikely that any deal would be finalised before this date, but US authorities believe that even the new Democratic Congress could renew President Bush’s negotiating authority if there is enough on the table. 

The 30 trade ministers voiced optimism that progress could be achieved in the coming months, by focussing on product-by-product negotiations rather than on “top-line numbers” as has been the case so far, according to the International Herald Tribune. 

This approach is intended to detract attention from numbers thus far held onto stubbornly by WTO members, such as the US demand that the EU cut its average farm tariffs by 66%; the G20 group of developing countries’ request for these to be cut by 54%; Trade Commissioner Peter Mandelson’s claim that he could go to 51% at most, and France’s hardline position that the EU’s initial proposal of a 39% cut is a “red line”. 

Ministers would then decide whether the resulting aggregate numbers are worth a final push at a meeting of all WTO members in Geneva.

WTO chief Pascal Lamy said: "The landing zone is in sight," adding that he would return to Geneva to oversee fresh discussions at negotiator level and call ministers together again when enough progress has been made. But, he cautioned: "It won't be tomorrow." 

"I believe we are back in business," Trade Commissioner Peter Mandelson said, adding: "Either way, this is going to end in success or failure in the next two to three months." He warned: "It would be a terrible misjudgement if we allow what we have now to slip away," saying: "The alternative is not a better deal, but no deal at all." 

He reiterated that the EU is "ready to get within close reach of the average farm tariff cut demanded by G20 developing countries. And we are ready to do this in a way that demonstrably gives new market access to all exporters and all products. No loopholes." 

While British Prime Minister Tony Blair was optimistic, saying a deal was now "more likely than not", French Trade Minister Christine Lagarde played down the significance of the decision to restart talks. "We're going back to the table, period. Nothing is resolved,'' she said, reproaching Mandelson for "mistaking his desires for realities" when he mentioned the possibility of a breakthrough "in the coming weeks". 

US Trade Representative Susan Schwab said: "I emerge from these meetings with a real sense of optimism but also sense of realism about all the work ahead of us." She said that negotiators would now have to achieve a breakthrough that can convince Congress as well as US farmers that there is enough in the package for them. "It has to be more than a lowest-common-denominator deal that doesn't generate trade flows," she insisted, saying that the real debate on whether Congress would renew the President’s fast track negotiating authority would begin only once the outlines of a deal emerge. "What could be an amorphous debate about TPA would become a very focused debate about whether the United States is going to embrace a multilateral agreement that our trading partners are ready to embrace," she added. 

European Central Bank President Jean-Claude Trichet said that a failure of the Doha Round would be "a very big risk" to world growth in 2007, particularly for the EU. "Intra-EU trade is going fast. Extra-EU trade is going faster. The first danger is that the current trade round would not succeed," he explained. 

Brazil's Foreign Minister Celso Amorim said that he was ready to get down to business immediately. "If Pascal (Lamy) wants to lock us in a room and leave us until we have the numbers, I am ready to do that today or tomorrow," he joked, adding that he thought a breakthrough would be achieved by the end of March or early April and that definitive numbers could be agreed by the end of June. 

Egyptian Trade Minister Rachid Mohammed Rachid appeared less optimistic, saying: "This is the third Davos meeting of trade ministers in succession that has had the same talks and still nothing has happened." 

Brazil's President Luiz Inácio Lula da Silva also warned: "If we want to give a signal to the poorest countries that they will have a chance in the 21st century, the United States, the United Kingdom, France and Germany must make concessions," adding: “We have to get them to understand, or there will be no accord." 

Aftab Alam Khan, head of ActionAid's trade campaign remains convinced that any deal will be bad for developing countries: "However the new talks are framed, poor countries will still be asked to throw open their economies in return for peanuts from the trade superpowers," he said, reiterating his call for them to "stay away from the negotiating table and resist pressure to sign up to a final deal that will only decimate jobs and exacerbate poverty". 

Trade ministers from 30 key nations agreed to restart multilateral trade negotiations frozen since July 2006, as they met on the sidelines of the annual World Economic Forum in Davos on 27 January 2007. 

The deadlock had been caused by the failure of EU and US negotiators to agree on the depth of cuts that should be applied to their agricultural tariffs and subsidies and by developing countries' subsequent refusal to open up their markets to industrial goods and services. 

  • 30 January 2007: US President George W. Bush will give a major address on economic policy, calling on Congress to extend the Trade Promotion Authority (TPA) for an extra year. 
  • 30 June 2007: Current US TPA expires. 
  • EURACTIV invites its readers to react to this story - what do you think the prospects are for a meaningful international trade pact? Please send your comments and reactions to: letters@euractiv.com  .

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