WTO members launch push for industry deal

Posted June 11, 2008 in [Trade]

By Jonathan Lynn
GENEVA, June 9 (Reuters) - A dozen rich and poor countries launched
talks on Monday to reach agreement on trade in industrial goods,
diplomats said. The talks, hosted by the United States, include the
European Union and Japan with advanced developing countries like India,
China and Brazil, and are due to run for one or two weeks.

The talks mark a potentially decisive attempt to reach the outlines of a
global trading deal before the European summer break, widely seen as
necessary if an overall agreement is to be completed this year before a
change of U.S. administration.

Trade ministers meeting in Paris last week agreed to give the talks new
momentum by telling senior officials to "engage intensively" on
industrial goods, after Washington and Brussels warned the world trade
talks could collapse.
Talks on cutting industrial tariffs as part of the World Trade
Organisation's (WTO) Doha round have proved to be surprisingly
difficult, with rich and poor countries divided over the extent to which
each should open up their markets.

AGRICULTURE VS INDUSTRY
The United States and European Union complain that developing countries
are focusing too much on agriculture, and are not willing to make the
opening in industrial goods which is where the big gains for the world
economy can be found.
But developing countries, pointing to the food crisis, say rich nations
are not doing enough to cut the huge subsidies and high tariffs on farm
products that distort agricultural trade.

The Doha round, launched in late 2001 to boost the world economy,
especially developing countries, by freeing up trade, has made progress
on the more politically sensitive and complex issue of agriculture, even
though big differences remain. Now with industry holding up prospects of
agreement, officials are trying an approach that worked with some
complicated farming problems -- getting a few of the leading countries
around a table to examine what a deal could look like.

Whether that approach can lead to signs of convergence in industrial
goods over the next two weeks, enabling ministers to come and take the
big political decisions on a deal in late June or early July, remains to
be seen.

It took more than seven months to reach an understanding on the
contentious agriculture issue of how countries can shield sensitive
products from the full force of tariff cuts.
And diplomats say it is still not clear whether ministers have given
their officials the mandate to make concessions.
Unwillingness to negotiate and compromise led the WTO mediator on
industrial goods to suspend the talks last week.

Meanwhile WTO members continued to trade barbs.
U.S. WTO ambassador Peter Allgeier, noting the Doha talks were at a
critical juncture, said President George W. Bush was willing to make
bold proposals and take political risks -- provided others do the same.

"But breakthroughs are urgently needed where the greatest impetus to
growth and the greatest development gains will come," he told a WTO
review of U.S. trade policy in a reference to big developing countries
such as China that are benefiting from the opening of trade under the
WTO.

But China's WTO ambassador Sun Zhenyu told the review that a
breakthrough in the talks depended on the farm negotiations.

He said the new $290 billion farm bill approved by Congress had sent
negative signals by raising subsidies when WTO members were trying to
negotiate a reduction in farm support.

"China urges the U.S., as the greatest beneficiary for decades of the
multilateral trading system, to play a leading role and make a new and
meaningful offer to substantially reduce its domestic support in
agriculture to break the ice," he said. (Editing by Stephen Weeks)