Suspended trade talks a blow to developing countries

THE COLLAPSE on Monday of the World Trade Organisation’s Doha Development Round Negotiations in Geneva has left international trade negotiations in limbo.

The Doha Development Agenda (DDA), in which analysts say provides an unprecedented opportunity to cement a rules-based and equitable international trading system that would benefit developing countries, was launched in the Qatari capital in November 2001. Since then, the Doha Round has been failing to meet its goals mainly due to the intransigence of developed nations to give up economically-dependant farm subsidies.{{more}}

Ministers from the G6 group – Australia, Brazil, India, Japan, the European Union and the United States – failed to make a breakthrough in their last-ditch efforts to revive talks throughout 14 hours of negotiating on Sunday. The officials struggled to reach a consensus on expanding trade in agricultural and industrial goods, as the United States resisted making further concessions on farm subsidies.

On Tuesday, Trade Policy Advisor to the OECS Dr. Claudius Preville commented on the impasse during a trade workshop organised by the Private Sector Organisation of St. Vincent and the Grenadines (PSOSVG), and the Caribbean Regional Negotiating Machinery (CRNM).

According to Dr. Preville. all reports coming out of the deliberations pointed to the US not being prepared to liberalised agriculture to the extent that would please the greater membership of the WTO in particular MERCOSUR, a regional trade block in South America, and India, one of the world’s largest agriculture producers.

“The very factor that caused the Free Trade Area of the Americas (FTAA) talks to have slipped into a coma seems to be coming back as a basis to the crisis we now face,” Dr Preville acknowledged.

According to the CRNM’s Trade Advisor to the OECS, while the US is resisting further concessions on farm subsidies, the European Commission remains committed to liberalising agriculture, but wants large developing countries like Brazil to adopt a Swiss formula (where tariff cuts are directly or inversely proportional to the initial tariff rate) for cutting tariffs on manufactured imports.

The Swiss formula, he said, would still affect revenue from imports for developing countries like St. Vincent and the Grenadines.

Dr. Preville mentioned that CARICOM is looking at having closer talks with MERCOSUR, the South American trading bloc, Canada and the EU to open new multilateral agreements where subsides once existed.

“The region finds itself in a difficult position as the Caribbean Basin Initiative (CBI) we have joined with the US expires in 2007.

“When the CBI runs out at the end of 2007, what will be the nature of our relationship with the United States. In the case of St. Vincent and the Grenadines, you import in the vicinity of 60-65 per cent of all your goods from the US this is your most important trade partner, therefore there has to be predictable disciplines that border the commerce between yourself and the United States, the same general statistic applies to the rest of the OECS,” Dr. Preville highlighted.

According to the Trade Policy Advisor, a secure and long-lasting agreement with the US is necessary, but an FTAA-type agreement would imply significant losses in tariff revenue to OECS countries.

“I am less convinced that the international community is committed to genuine free trade, in fact what is emerging out of Geneva is big-time protectionism and what some old economist would call mercantilism, we are in an era where all the preferential trading arrangements have been dismantled and what was to replace these arrangements finds itself in some difficulty,” Dr. Preville pointed out.