February 21, 2008 / 8:02 PM / in 10 years

Trade negotiators start to make Doha round trade-offs

GENEVA (Reuters) - Negotiators are starting to make trade-offs between agriculture and industrial goods in the long-running Doha round as they grope towards a deal to open up world trade this year, diplomats said on Thursday.

At this stage countries are making demands not concessions but there is now an explicit linkage between the two chapters, a crucial step in reaching an overall deal, they said.

The development is all the more remarkable given the lack of progress this week at the World Trade Organisation (WTO) in talks on the individual areas. A meeting of ministers proposed for March or April to reach an outline agreement is where such trade-offs could normally be expected.

In a review over the past two days of a revised negotiating text for industrial goods, so many delegates drew comparisons with the new draft for agriculture, that several negotiators commented that the “horizontal” process of trade-offs had begun.

“I’ve heard the comment made,” said Canada’s WTO ambassador Don Stephenson, who chairs the industry talks and drafted the revised text.

“It’s a very interesting and perhaps accurate comment,” he told reporters, forecasting the linkages would increase in the coming days and weeks.

Any eventual deal will involve rich countries opening up their food markets by cutting agricultural tariffs and subsidies in return for developing countries cutting industrial tariffs and liberalizing services to open up their markets.

Increasingly, however, countries both rich and poor are complaining that what they are being asked to do in one area is out of line with what their partners are doing in the other.

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Developing countries argue that the Doha round, launched in November 2001, specifically aims to foster development, and requires developing countries to do less than rich ones.

But they say the proposals on the table require developing countries to make bigger cuts in their industrial tariffs than developed ones would.

They also complain that rich food-importing countries are resisting meaningful reforms of agriculture, with several keeping tariffs on some products well above 100 percent.

Rich countries on the other hand say any cuts in tariffs for developing countries smaller than proposed would make a deal meaningless -- they have to see substantially increased access to developing country markets to justify their own painful cuts.

For instance Switzerland, whose protected farmers are shielded by some of the world’s highest subsidies, said it wanted to see a result in industry -- known in trade jargon as NAMA -- to balance the high price it would pay in agriculture.

“The more you push me on agriculture, the more I’ll push you on NAMA,” the Swiss delegate told Thursday’s meeting on industry according to a participant.

The differences are not just North-South.

Angry exchanges between Brazil and Costa Rica over the past two days reflected Brazil’s role in the NAMA-11 group of developed countries keen to protect fledgling industries and Costa Rica’s position as an export-orientated economy like Singapore or Mexico eyeing an opening of South-South trade.

At parallel consultations on the agriculture draft, negotiators this week have not managed to reduce any of the 170-odd alternatives it contains to single proposals.

That lack of progress, and the differences over industry, suggests it will not be possible to get workable texts ready for ministers to meet in March of April. Argentina ruled out such a meeting on Thursday because it disagrees with the industry text.

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