Despite optimism from World Trade Organisation officials that new negotiating drafts presented on 19 and 20 May will act as a “springboard” towards achieving a global trade pact, the EU and its major trading partners have reacted cautiously.
The new negotiating drafts cover trade in agricultural and industrial goods – the two major sticking points in the troubled seven-year WTO negotiation process.
Minor advances on agriculture
WTO mediators say they offer fresh compromises and additional clarity on certain key issues of contention, including on how countries can protect certain “sensitive” agricultural products from large tariff cuts.
Developed countries would be able to maintain higher protection levels for up to 6% of their farm goods – slightly less than the 8% hoped for by the EU but more than the 2% the US was insisting on – while committing themselves to an overall quota for imported products.
As regards farm tariffs and subsidies, the texts vary little from earlier versions, proposing an average cut of 54% in customs duties on agricultural imports in developed countries and 36% in developing nations. The EU would be required to reduce its farm subsidies by 75-85%, while the US and Japan would have to cut them by 66-73% – much more than the 53% cut originally proposed by the US.
Continued divergence on industrial goods
The new draft on industrial trade foresees a slightly lower cap of 7-9% for developed economies on manufactured goods. It also offers increased flexibility to emerging economies, such as China, Brazil and India, in the hope of bridging a deal between the North, keen to open up new market opportunities in these fast-growing economies and the South, keen to protect its infant industries.
According to the text, about 30 developing countries would be able to choose from three options:
- Capping their customs duties at 19-21%, while being able to exclude up to 14% of their most “sensitive” industrial goods;
- a cap at 21-23%, while shielding up to 10% of their sensitive tariff lines, or;
- a maximum of 19-21%, while being able to exclude 5% of all products provided this does not represent more than 5% of the overall value of total industrial imports.
The text also offers special treatment for new WTO members, allowing them to phase in tariff cuts over long periods of time (up to 18 years for countries like China, which joined in 2001), something which European and American businesses say is unacceptable.