What hopes lie for the Doha Development Agenda after the G-4 talks breakdown?

The 21st of June 2007 witnessed yet another breakdown in Global talks on the Doha Development Agenda between the G-4. For even the most diehard enthusiasts of multilateralism there is serious lack of hope and optimism about the political willingness of the top trading nations of the world to make meaningful concessions and provide much needed incentive to make the round deliver.

The meeting, which was held in Potsdam, Germany, had been heralded as a last-minute bid to push the Doha Round by narrowing differences amongst the United States, the European communities, Brazil and India. The ministers called it a day when it became clear that there was no meeting foreseeable meeting of minds on the numbers tabled by participants.

Both Brazil and India blamed the US refusal to reduce its overall trade-distorting domestic agricultural support as the main factor for this latest breakdown following on from a similar one at the end of July last year. Some responsibility was also attached to the EU for high tariff protection for sensitive farm products. On the other hand, the European Community and the United States faulted Brazil and India for not providing more market access for industrial goods.

Full facts are not yet clear but on the basis of various briefings it seems that the United States had indicated that it could accept a US$17 billion spending limit for domestic support instead of the US$22.5 billion currently on offer. The European Community reportedly agreed to consider the principle that tariffs in the highest tier would be reduced by 70 percent, i.e. by 10 points more than its standing offer. However, duties on sensitive products falling in the highest tier would only be reduced by one-third of the formula cut instead of the 30-percent maximum deviation sought by Brazil and India . The EC approach would result in a 23 percent reduction for duties on sensitive products, while India and Brazil ’s proposal would produce a 49 percent cut.

According to Brazil and India the concessions on offer in agriculture did not compare with the American and European demands on industrial market access. The coefficients in the reduction formula were at the crux of the issue, being the determining factors for the post-Doha tariff levels for manufactured goods. Developed countries had proposed a coefficient of 10 for themselves and 15 for developing countries, which would have capped their respective tariffs at 10 percent and 15 percent. India and Brazil indicated that they might go as low as 25 for developing countries.

The breakdown of the G-4 talks, while a setback, is not the end of the Round. The negotiating history of the WTO / GATT shows that each round of negotiations took longer than the previous one due to higher complexity of issues that arises in each round. Moreover, some commentators state that the dynamics of the G4 are inherently unworkable and therefore a breakdown was inevitable as was the case with the breakdown of the G6 talks last year.

The rest of the Members of the WTO are now fully engaged in Geneva where the chairs of the Agricultural and NAMA committees are expected to circulate new negotiating drafts in mid-July. The revised texts are likely to narrow the gaps and positions and provide a starting point for defining the flexibilities available to developing countries and other issues on which official positions are still poles apart.

The Members are expected to engage in intense negotiations up to the end of July. Original plans to hold a ministerial meeting at the end of July seems to have been abandoned. However, without a deal by the end of this year, the round could head for a deep freeze till after the American elections in 2008.