TWN Info Service on WTO and Trade Issues (July06/06)

6 July 2006


Press conferences were held by EU Commissioners Peter Mandelson (Trade) and Marianne Fischer-Boel (Agriculture) after the close of the WTO Geneva talks last weekend.  Another press conference was held by the Swiss Economy Minister, Joseph Deiss, representing the G10 countries.

If WTO Members ''do not turn things round in the next two weeks'', they face the possibility of defeat, Mandelson warned.  He also attacked the US offer on domestic support, giving figures to show that it would not cut into the actual level of spending.

At a separate briefing, Deiss said one of the reasons the meeting failed to make progress was because the G6 did not assume their leadership role.

Below is a report of the two press conferences.  It was published in the SUNS.

With best wishes
Martin Khor  



By Kanaga Raja (SUNS), Geneva, 2 July 2006

If WTO Members ''do not turn things round in the next two weeks'', they face the possibility of defeat, EU Trade Commissioner Peter Mandelson warned Saturday (1 July), saying that Members should be ready to raise the level of the talks to involve political leaders.

Mandelson who was speaking at a media briefing following the end of the WTO's Ministerial-level meeting, also attacked the US offer on domestic support, giving figures to show that it would not cut into the actual level of spending.

At a separate briefing, Joseph Deiss, Swiss Economy Minister, speaking for the G10, said one of the reasons the meeting failed to make progress was because the G6 did not assume their leadership role.

''We are five minutes to midnight if we want to complete this round by the end of the year,'' Mandelson said.  ''If we do not turn things round in the next two weeks, we will not make a breakthrough in the summer and then we will be facing defeat.''

Given the unchangable timelines, he said, ''we have to put the key pieces of the jigsaw in place by the end of July and then we have to fill in and negotiate all the country schedules...that has to be done in months, by the end of the year, for any deal to be placed in Congress 180 days before the TPA expires,'' he said. He added that there was no convergence as yet among the major negotiators which is necessary to produce a result. That was why a change in method was needed.

Pascal Lamy is being asked to play a more active role in facilitating convergence on the key issues, he said, adding that through urgent consultation and good offices, Lamy should act as the catalyst but not the author of an early agreement among the big players on the big issues.

''If necessary, we should be ready to raise the level of the talks to involve the political leaders around the world who hold the key to success or failure in the round. This should help us to get into a position to come back as negotiators before the end of July in genuine deal-making mode,'' Mandelson said. ''The costs of failure, both economic and political must now ring alarm bells in the ears of governments around the world. That is how urgent it is."

EU Agriculture Commissioner Mariann Fischer-Boel said that July is crucial. On the discussion on sensitive products, she found it boring to hear comments that the EU proposal on the treatment of sensitive products would result in no real access. 

She cited figures in that with the EU proposal on sensitive products, in the beef sector, this will mean an increase in imports of 800,000 tons into the EU, equal to the whole exports of beef from Argentina. Saying that the EU proposal is not worth anything is simply not true, she argued. She said the EU has been signaling within the mandate it received from the Council of Ministers that it will be able to give some 'goodies', but this requires that others show willingness to move. There will be no incremental move from the EU.

In response to a question on positions being wide apart on NAMA, Mandelson said the EU proposal was fair, reasonable, proportionate and economically doable by the emerging economies. With additional political will, they can make a serious offer commensurate with what the EU is putting on the table in agriculture, he said.

On agriculture, Mandelson said that while the G20 and the EU do not have identical positions, ''we are now much closer together than we were and convergence is within reach. It's essential that for an agreement to be struck, for the main players to come together on both market access and domestic support.

''What the G20 is asking for in domestic support, we can come very close to. They need to be listened to carefully by other key negotiators. There is scope for compromise on domestic support even though at the moment the gap looks very hard to bridge between what the G20 are asking for and what the US is presently offering,'' Mandelson said, expressing hope that the flexibility that the EU has indicated this weekend will be reciprocated by all the key negotiators.

Fischer-Boel said that there is still a gap to be bridged on what is on the table from the US at this stage, as they have not been moving throughout the last two days. What the US is asking for at this stage is about $22 billion, which does not at all discipline their domestic support, she said, adding: ''It's clear that we want the US to go down, so that we can really have disciplines on the very trade-distorting counter-cyclical payments. We hope there is willingness to bridge this gap. The US needs to come [down] to about $15 billion to match the demands.''

Asked about Lamy's role as catalyst, Mandelson said that what Lamy needs to do is organize the consultations, hold confessionals, pin down the bottom lines and the red lines, and navigate his way through those different positions and hope the key players will converge. The negotiators will remain the key actors. The WTO members retain the responsibility of negotiation. Lamy can act as a catalyst rather than an author.

He said that while the G6 are key players, they can only facilitate the wider consensus. ''If we are going to bring Ministers back in negotiating mode by the end of July, they are simply not going to be given tablets of stone passed down by a few of us and told to endorse them. They need time to analyse and, two weeks' of building consensus among the key players and two weeks' of digestion so that we can all come back together in negotiating mode by end of July, is the only available timetable.''

Mandelson said that sensitive products such as SPs and SSM were negotiated in 2004 and are part of the Framework agreement. They provide in the case of sensitive products for new market access for all products through tariff rate quotas which is currently being negotiated to find a satisfactory and agreed way forward. You cannot negotiate the issue of sensitive products and their treatment in isolation from the tariff cuts as a whole, which has not yet been agreed, he said.

Fischer-Boel said that it was boring to be confronted with World Bank reports that have a narrow approach. OECD reports are much broader in their approach which give a more diversified picture of the situation. You can't look at market access exclusively. You have to take into account whether tariffs are linked directly to applied rates, or is there a lot of 'water' to cut. You also have to take into account the damaging effects of domestic support and the phasing out of export refunds and the consequences that these have on market access, she added.

In response to a question on US domestic support, Mandelson said that the figure of $15 billion is the absolute minimum and not a starting point. To illustrate what was at stake, Mandelson said that the US has proposed a 60% cut in AMS - bringing  maximum AMS spending to $7.6 billion. A 2.5% cut in Blue Box would bring spending to $4.85 billion. Combined, this resulted in over $12 billion. A 50% cut in de minimis (overall and product-specific) leaves spending in that category to $9.7 billion. This adds up to over $22 billion for the US to spend on the basis of its offer in trade-distorting support. The $22 billion plus figure compares to the actual spending of $18 billion by the US, i.e. what they are proposing in theory as their ceiling on expenditure for the future is over $3 billion more than what they are spending at the moment. Most people would agree that  would not be a bold proposal by the US, Mandelson said.

Asked as to where the cuts in domestic support by the US would come from, Mandelson said that the US offer leaves a significant reserve for the US to use to promote its commodities in global markets - that's why it is so trade-distorting and why developing countries are opposed to it. That's why EU farmers are saying that if they are going to experience the pain of cutbacks in subsidies and greatly reduced farm supports, for them to be competitive with US farmers, the playing field has to be levelled between the US and the EU.

''We need to compete on a level playing field just as much as developing countries must not be put at a permanent disadvantage by agricultural trade-distorting subsidies. We are also concerned of the possibility of this being concentrated on a few products. If you concentrate your trade-distorting subsidies on just one or two products, as at the moment the US will be able to do due to absence of criteria and disciplines to be applied to their Blue Box, that would put those commodities and the farmers producing them at an even greater unfair advantage in world markets,'' Mandelson said. Through 'box shifting', without the disciplines needed in relation to the Blue Box, this very large fund could be used on what the EU considers the most trade distorting US program of all, which is their counter-cyclical payments.  When applied to just one or two commodities, the impacts that would be created can be clearly seen, Mandelson stressed.

At a separate press briefing, Joseph Deiss, Swiss Economy Minister, speaking for the G10, said that the meeting had not made major progress and one reason is that the G6 could not propose a common platform on the central issues. It's important that the US and the EU as well as the G20, in terms of market access, should come closer.  The EU has given signals of flexibility on market access, saying that they will try to reach positions close to those of the G20. The US did not give any signal at all in relation to domestic support, he said. The G20 who in his view had to move on NAMA, also did not give any indication in that direction. For the G10, he stressed the exclusion of any tariff capping in relation to market access, and the extreme importance to the G10 of the treatment of sensitive products.

When asked what the coefficients for developing countries should be in NAMA, Deiss said that a fair solution would be a couple of coefficients that are not too distant - five points, in his view. A coefficient of 10 for developed and 15 for developing countries would work. The coefficient of 15 is within the reach of developing countries and emerging economies. Deiss said that if the G20 countries give the G10 a reduction in bound rates, which are clearly above the applied, it may be that the bound rates will still remain above the actual applied rates and nothing will happen. ''This would not be an outcome that we can sell at home."