EU, US expect trade progress on Davos sidelines


The World Economic Forum, which starts in Davos today (22 January), could help towards achieving a much-awaited breakthrough in WTO negotiations on freeing up global trade, top EU and US trade officials have announced.

The European Union and the United States still hope to conclude a long-delayed global trade pact before the end of 2008, EU Commissioner Peter Mandelson and US Trade Representative Susan Schwab announced at a joint press conference on 21 January. 

The declaration came one day ahead of a six-day meeting in the Swiss resort of Davos, where political and business leaders from around the world convene each year to discuss upcoming global challenges. The hot topics this year are expected to include the state of the world’s financial markets following the US subprime mortgage crisis, sovereign wealth funds, climate change, energy security and water shortage. 

But the 2008 Davos meeting also marks the one-year anniversary of the re-launch of the Doha Round of negotiations (EURACTIV 29/01/07). The talks had been suspended in July 2006 due to 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 the subsequent refusal of developing countries to open up their markets to industrial goods and services. 

Despite grand declarations, one year on, nothing much has changed. Nevertheless, Mandelson and Schwab insisted that they remain “very strongly committed” to closing the Round in 2008. “Both sides understand that this means moving rapidly towards an agreement on modalities by the very early spring,” said Mandelson, adding that an informal trade ministers’ lunch on 26 January could help pave the way. “Davos will help put a clear roadmap in place,” he said. 

But continued tensions relating to bilateral trade barriers could hamper progress. While the EU and the US have suggested eliminating tariffs on environmentally friendly goods and services as part of the WTO talks (EURACTIV 4/12/07), Schwab hit out at Europe in her comments to the press, saying the bloc was all too often using environmental issues as an excuse for protectionism, whether related to GMOs or regarding greenhouse gas emissions. 

“We have been dismayed at a variety of suggestions where we see climate or the environment being used as an excuse to close markets,” she said, referring in particular to suggestions that the EU should introduce “border-tax adjustments” on imports from countries with less stringent climate change mitigation policies. 

“Using bad science to make trade policy decisions is certainly a practice that would come back to haunt all of us in other countries,” she warned. Although Mandelson defended the EU’s GMO policy, he agreed with Schwab that trade restrictions are not the way forward for fighting climate change: “They are not cost-efficient, there is risk of retaliation, and they result in increasing costs for European industry at large.” 

At the same time, the EU trade chief highlighted European concerns about US environmental policies, notably in relation to “unfair” government subsidies for its biofuel industry (EURACTIV 17/10/07). “We are likely to receive a complaint from the European industry on this and we will certainly investigate and take any action and pursue it if we find the complaint is substantiated,” he cautioned, in a sign that many issues will need to be resolved before a veritable free market for green technologies is established (EURACTIV 13/02/07). 

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