TWN Info Service on WTO and Trade Issues (Jan07/02)

17 January 2007

Below please find an article in the SUNS on the press briefing given by the USTR Susan Schwab at the WTO building in Geneva on 12 Jan. 2007

With best wishes
Martin Khor


Optimistic USTR admits nowhere near 'breakthrough'
Published in SUNS #6169 dated 16 January 2007

By Goh Chien Yen (Geneva), 15 Jan 2007

The United States Trade Representative, Susan Schwab, who has been exuding optimism on the Doha talks, admitted Friday evening that WTO members are nowhere near a breakthrough in the negotiations.

Mrs. Schwab was speaking to journalists at a crowded media briefing at the WTO, after her meeting with Director-General Pascal Lamy.

"We've got a long way to go for a breakthrough," Schwab said, but insisted that she is more optimistic and encouraged than she had been for months because of the progress that had been made. Still, she added that "it's too early to tell if we will succeed."

Schwab told journalists that over the last few months she had been meeting with her ministerial counterparts from Brazil, Europe and Japan to "get behind some of the bumper sticker numbers that hung us up in July."

An attempt was made by the WTO members and the Director-General to conclude the trade talks last summer, when the key players ( India, Brazil, EU, US, Japan and Australia) were to agree to Lamy's "triangle" of core issues: the extent to which they were willing to cut their farm and industrial tariffs and total trade-distorting farm subsidies.

Schwab explained that the negotiating path that the WTO members were on "ran into rocks [in July 2006] because we were viewing too narrowly the bumper sticker numbers." And the " many, many moving parts associated with the agricultural part of the negotiations, NAMA, non- agricultural market access [and ] services" were not looked into.

She is now more optimistic because "we have been digging down behind some of the bumper sticker numbers into the components of that."

That means looking at more than just two or three numbers and "it turns out, it's probably more than 10 or 12 numbers," she added.

In this respect, "there is no single number that is going to generate a breakthrough and there is no single country that can generate a breakthrough," she said when asked about what the US would do on domestic support, since this is one of the key bumper sticker numbers.

According to Schwab, a key component behind the bumper sticker numbers is how 'special products' would be treated by developing countries in the agricultural arena, which "is critically important in terms of getting to a breakthrough and getting an agreement in the Doha Round in agriculture."

However, she claimed that "there is significantly less definition in the framework related to special products than there is, for example, in how domestic support would be constructed." In her view, "a great deal of technical work that needs to be done," in defining special products.

Elaborating on her preferred approach of getting behind the bumper sticker numbers, Schwab claimed that the negotiating framework on the table was lopsided with "lots of details in certain parts of the equation and virtually no details in other parts of the equation."

As such, according to Schwab, it was not possible to see how the different variables interrelate with each other in order to start doing trade-offs.

"And when you start going through specifics and you're looking at key sectors where you have ambition and key sectors where you have sensitivity, and then you start playing with the pieces of the puzzle - in agriculture, in manufacturing and ultimately in services - the idea is to see whether you can start coming together with some of the broader numbers rather than starting with the bumper sticker numbers," she added.

"We're talking about the complexities associated with some of the bumper sticker numbers and it turns out that is probably a prerequisite to getting to those numbers."

"We have not been through that exercise, and we're not done with that exercise. But we are making, finally making progress on, you can call it technical, on a technical level and increasing understandings that are prerequisite to ultimately getting to real tradeoffs."

Susan Schwab took over as USTR from Robert Portman, who had succeeded Robert Zoellick after the July Framework of 2004 and until the Hong Kong Ministerial meeting and Declaration in 2005. The July 2004 framework and the Hong Kong Ministerial Declaration have laid the current framework for the negotiations.

Asked by journalists whether time is running out especially with the impending expiration of the US Trade Promotion Authority (TPA), Schwab claimed that it would be a case of "content over chronology and ultimately it will be substance that dictates when there's a breakthrough, not the calendar that dictates when there's a breakthrough."

She added that "the United States is going to need an extension of Trade Promotion Authority to implement any Doha Round agreement However, to the extent that we're making progress in the Doha Round, I think you are likely to see Congress and US constituencies much more enthusiastic about moving ahead with an extension of Trade Promotion Authority. So that's a fairly straightforward relationship."

"What we'd like to do though, obviously, is reach a breakthrough and achieve a successful outcome to the Doha Round sooner rather than later. But substance is the critical element. If you have the substance in the breakthrough then Trade Promotion Authority becomes a much more straightforward exercise."

Schwab told journalists at her Friday media briefing that she will be going to Davos (World Economic Forum) meeting next week to meet with her ministerial counterparts and see whether there is sufficient political will and momentum that can be "parlayed into a breakthrough."

Civil society activists and trade observers and experts in the US are somewhat mystified by Schwab's optimism and her prognosis for the TPA.

According to postings on NGO list servers, Schwab has not so far held consultations with the chairs of Agriculture Committees of the Congress and the Senate after the mid-term elections.

While Sen. Baucus of Montana, the chair of the Senate Finance Committee (which has jurisdiction in this area in the Senate) has said, soon after taking over in January, that fast track would be extended, the Senate Majority leader, Senator Reid has made clear that he has no intention of bringing such a bill or motion for consideration and adoption in the Senate.

The relevant House committees, and the new leadership in the House of Representatives have also said that this is not their priority.

Some US trade observers have suggested that Schwab is trying to get concessions from India and Brazil and lock them into it, and use it to go to Congress for Trade Promotion Authority.