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• JULY 18, 2008

Tariff Disputes Make Breakthrough Unlikely in Doha Trade Talks

• By JOHN W. MILLER in Brussels and GREG HITT in Washington

Officials meet in Geneva next week to secure a deal in the Doha round of global trade talks, but disputes over tariffs for cars, chemicals and other goods, as well as drug-patent and food-name-copyright rules make a breakthrough unlikely.

The U.S. and European Union are closer than ever to agreeing on new limits for agricultural subsidies and tariffs, prompting the World Trade Organization to invite about 35 officials representing about 95% of world trade to its first formal talks in two years on the stalled Doha agreement.

The talks start Monday at the WTO's Geneva headquarters and could last all week. WTO chief Pascal Lamy is working against the clock. The U.S. election cycle will soon make all such gatherings pointless until late 2009, when a new U.S. trade representative will be ready to negotiate, analysts say, and the next U.S. president could be less committed to a Doha deal than President George W. Bush. Any deal signed by Mr. Bush or his successor would later have to pass a skeptical Congress, probably controlled by Democrats.

Darkening economic clouds and fears of protectionism are also putting pressure on leaders to do something. A trade deal "would be the only good news in the international economy these days," EU Trade Commissioner Peter Mandelson told a press conference in Brussels Thursday. According to the WTO, a Doha agreement could stimulate an additional $50 billion to $100 billion of trade annually.

The U.S. and its allies started the current round of trade talks in Doha, Qatar, in 2001. The goal was to offer farmers in poor countries access to rich markets, in exchange for developing nations opening up their markets to Western industrial goods and services. Negotiations quickly stalled, however, as the U.S. and EU resisted sweeping cuts in farm subsidies and food tariffs. In July 2006, officials broke off talks in Geneva, again disagreeing over agricultural tariffs and subsidies.

In the past month, the EU and U.S. have come closer to a compromise. The EU has pledged to cut farm tariffs by 54%, while the U.S. says it will keep farm subsidies between $13 billion and $16 billion a year, down from more than $20 billion. The U.S. Congress and skeptical EU governments such as France could still scuttle any farm deal. But for now, the spotlight has moved to developing nations' barriers to trade in goods and services, with discussions focusing on how deeply tariffs will be cut and which products would be shielded from foreign competition.

"Everyone is going to have to contribute," U.S. Trade Representative Susan Schwab said in an interview Thursday. She added she was cautiously optimistic for Monday's talks. "There is a deal to be had," she said, while noting that "a handful of countries can in fact bring down the round."

Even if there is a breakthrough, trade officials from all sides say there is a long way to go. Any outline deal reached next week would need many months of additional negotiations on details. Moreover, U.S. and EU demands for developing nations to open their markets to foreign law firms, banks and other services will only be seriously discussed for the first time next week.

Meanwhile, midsize developing economies such as Brazil, India and South Africa say they aren't willing to dismantle trade barriers that protect their manufacturing industries from Western and Chinese competition. Brazil, for example, has a 35% tariff on car imports. It has offered to bring that down to 22%, but EU negotiators, fighting on behalf of companies like Volkswagen AG, want bigger reductions.

Developing countries, meanwhile, want a rule that would force drug companies to prove, on patent applications, that they aren't stealing designs from traditional plants and medicines. Rich countries oppose that.

Write to John W. Miller at john.miller@dowjones.com and Greg Hitt at greg.hitt@wsj.com

Printed in The Wall Street Journal, page A5

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• 

• JULY 26, 2008

U.S.-Brazil Tariff Deal May Aid Doha Talks

• 
  

By JOHN W. MILLER

GENEVA -- European Union and U.S. trade negotiators achieved a minor breakthrough at the World Trade Organization summit, persuading Brazil to accept a compromise proposal on agricultural and industrial goods.

The Latin American country Friday accepted some tariff cuts on goods like cars and chemicals in exchange for a $14.5 billion cap on U.S. farm subsidies, down from $15 billion three days earlier. Those are key points of contention in the seven-year-old Doha Round of world-trade talks.

A final resolution remains far from certain. China, India, South Africa, Argentina and many others remain opposed to the compromise proposal, drawn up by WTO chief Pascal Lamy Friday in a last-ditch attempt to save the talks. And there are still dozens of unresolved issues on the table.

The negotiations began Monday and quickly turned into a marathon session of ill-tempered bargaining. "The biggest concern we have is that a handful of large emerging markets threaten this round for the rest of us," said U.S. Trade Representative Susan Schwab.

In particular, Indian's industry-and-commerce minister, Kamal Nath, has proved inflexible on the key EU and U.S. demand that he accept cuts in tariffs on industrial goods like cars and chemicals.

But Brazil's acceptance of Mr. Lamy's proposal could unlock the tension in the talks, say analysts. Brazil and India had previously forged an iron pact of resistance to Western demands on industrial tariffs. "The talks had foundered for days and were on the verge of collapsing, so this is important," says Paul Blustein, a trade analyst at the Brookings Institution.

Brazil's foreign minister, Celso Amorim, sounded a note of optimism on leaving the meeting of delegates from some 30 countries. "There is now a 65% chance of doing a deal, where before there was a 50% chance," he said.

On Saturday, negotiators will start discussions on rules for banking, insurance and other service sectors. They will then go back to discussing agriculture on Sunday. Those talks are expected to last until Wednesday.

"What's on the table is not perfect, it's not beautiful, but it's put together what will be a genuine boost for the world economy, and particularly good for developing countries," the EU's trade commissioner, Peter Mandelson, told reporters.

Write to John W. Miller at john.miller@dowjones.com

Printed in The Wall Street Journal, page A4

• 

• JULY 23, 2008

U.S. Offers Farm-Subsidies Cap To Spur Global Trade Talks

Proposal Suggests $15 Billion Limit; Failure to Impress

• 
  

By JOHN W. MILLER

GENEVA -- The U.S. offered on Tuesday to cap trade-distorting farm subsidies at $15 billion, in hopes of jump-starting talks at the World Trade Organization in Geneva aimed at securing a new global trade deal.

The proposal followed a similar move by the European Union a day earlier, but failed to impress a Brazil-led coalition of emerging economies that has become the kingmaker in the talks, now expected to last into next week.

Talks ended late Tuesday night on an acrimonious note, causing WTO chief Pascal Lamy to postpone Wednesday's general meeting to Thursday. Countries' representatives instead will meet in small groups Wednesday in a bid to build consensus.

On Monday, the EU's trade commissioner, Peter Mandelson, improved the bloc's offer to cut farm subsidies by 60%, up from the 54% it had put on the table earlier. The U.S. had previously said it would be willing to cap subsidies at $16.4 billion. Brazil Foreign Minister Celso Amorim, talking to reporters, called the EU's proposal "purely statistic gimmickry," though he offered no further explanation. The U.S., he said, "threw the ball, but not far enough. It's still in their end zone."

In exchange for the concessions on farm aid, the U.S. and the EU want emerging economies to agree to steep tariff cuts on chemicals, cars and other industrial goods. The U.S. and European business communities consider access to these markets essential in a slowing global economy.

Negotiations on the so-called Doha round of trade talks began in 2001, with the ambition of opening rich markets for poor farmers, and have stalled repeatedly. This week's formal gathering -- called as a last effort to seal the talks before the U.S. presidential election campaign hits high gear -- is the first in two years.

Domestic pressures -- from France and like-minded countries in the EU, the Democratic Congress in the U.S. and farm lobbies in both -- mean the trans-Atlantic powers can't retreat much further on farm aid, making a final Doha deal unlikely, trade officials and analysts said.

The EU and U.S. "still haven't found a mechanism for getting the developing countries to pay their fair share of the deal," said Richard Weiner, a trade lawyer for Chicago-based Sidley Austin LLP.

Still, they are trying. "The U.S. is committed to the Doha round and understands the responsibility that goes along with the leadership role we have," U.S. Trade Representative Susan Schwab said at a news conference.

Célio B. Porto, an adviser to Brazil's Ministry of Agriculture, Livestock and Food supply, said after listening to Mrs. Schwab outline the new U.S. offer: "We still want to see specific cuts in specific areas." In particular, Brazil wants cuts in aid for soybean, cotton and corn farmers, he said. All have strong lobbies in the U.S.

Several trade diplomats pointed out that high food prices already are reducing U.S. price-support payments, which distort trade patterns and which the WTO is trying to phase out. The U.S. paid farmers $7 billion under the scheme last year, "which makes an offer to cap subsidies at $15 billion meaningless," said Bolivia's chief negotiator Pablo Solon Romero.

Mrs. Schwab dismissed the criticisms. A $15 billion cap "would have reduced total farm subsidies in seven out of the past 10 years," she said.

The offer will become meaningful when prices go down, as they surely will, she said.

Another criticism of the U.S. offer was that it would require modifying the U.S. Farm Bill subsidy package, which Congress recently passed despite President Bush's veto. That appears unlikely.

The Bush administration feels it can persuade Congress to rewrite the Farm Bill "if we can demonstrate meaningful market access for our own farmers," said U.S. undersecretary of agriculture Mark Keenum, who is accompanying Mrs. Schwab at the WTO talks.

Even if they agree on agriculture and industrial goods, the 30-some countries in Geneva still have to tackle dozens of other issues this week, including services markets, patent law and the copyright of food place names.

Write to John W. Miller at john.miller@dowjones.com

Printed in The Wall Street Journal, page A8