A Promise Not Kept
World Trade Organization Gathers for Last-Ditch Attempt To Give Farmers in Poor Nations Better Access to Markets

By Paul Blustein
Washington Post Staff Writer
Friday, June 30, 2006

GENEVA, June 29 -- Rich countries promised 4 1/2 years ago to make the global trade system fairer for poor countries, changing rules to help them reap the rewards of international commerce. Now the negotiations launched then are reaching a do-or-die stage, but prospects are bleak for a deal that would bestow much benefit on the poor.

At the headquarters of the World Trade Organization on the shores of Lake Geneva, trade ministers from around the world convened Thursday in hope for a weekend breakthrough. The ministers seek to lower trade barriers worldwide. But unlike previous negotiations with similar aims, this set of talks has an ambitious twist: The main goal is to change rules that have put poor countries at a disadvantage in the global marketplace.

Even before the meetings could begin in earnest, initial comments from some ministers underscored the difficulties. Peter Mandelson, the European Union trade commissioner, said Thursday that the E.U. may offer sharp cuts in tariffs on farm goods in an effort to satisfy developing countries. But Mandelson can't count on bringing along even the countries he ostensibly represents.

His remarks drew sharp rebuttals from European member countries with powerful farm lobbies. They suggested their governments would use their clout to block deep cuts. Christine Lagarde, the French trade minister, saw "no room to maneuver in that direction."

Farm trade, though by no means the only issue, is the chief focus of the Doha round of trade talks, named for the Qatari capital, where they were launched in 2001. That is because agricultural goods, the mainstay of many poor countries' economies, face steep tariffs and other obstacles in the markets of many rich countries. Another major grievance of developing nations is the billions of dollars in subsidies that farmers in rich countries receive from their governments. The payments encourage excess production of crops, which leads to gluts on world markets, depressing prices.

Time and again, the WTO's 149 members have missed self-imposed deadlines to agree on how to cut farm tariffs and subsidies, and tariffs on manufactured goods. A gathering in Cancun, Mexico, in 2003 collapsed, and subsequent deadlines in December 2005 and April 2006 were not met. This weekend, negotiators are struggling with a draft accord with more than 760 passages marked in brackets indicating differences in negotiating positions, an exceptionally high number.

Many people "got angry at the end of the '90s about the system and its inability to help poor people," said Jamie Drummond, executive director of the advocacy group DATA -- for Debt, AIDS, Trade, Africa -- founded by the Irish rock star Bono. "The point was to make capitalism look good again. If that's your goal, you'd better do a lot better than they're doing."

This weekend's meeting is crucial because WTO members face a deadline they may not be able to ignore: the looming expiration of a U.S. law that gives President Bush special authority to negotiate trade deals. Although the law doesn't expire until July 2007, failure to complete a deal in the next few months would mean that it could not get approval from Congress under the law's special procedures, under which amendments are prohibited.

Those few months are barely enough time to agree on the fine points of a document sure to run thousands of pages. An extension of the law could change the timetable, but with protectionist sentiment rising in the United States, congressional approval would be chancy.

Accordingly, WTO Director General Pascal Lamy warned that this meeting is probably the last opportunity for a deal. Waiting a few more weeks, he said would mean that negotiators would not have time to forge agreements on other important aspects of the talks, such as trade in services.

"Postponing decisions on the cuts to subsidies and tariffs until later in the year is a recipe for failure," Lamy said this week, outlining a possible compromise in which the United States would cut its subsidies more deeply while scaling back some of its demands on other countries.

Leading the U.S. delegation is Susan C. Schwab, the newly appointed U.S. trade representative. She portrays the United States as the leader in the talks, claiming that its willingness to make concessions has not been matched by other big powers, notably the European Union and Brazil. The United States has offered what the Bush administration describes as a 60 percent cut in farm subsidies, with the proviso that rich nations, including the E.U., cut tariffs on farm products by an average of about two-thirds.

In a show of resolve, Schwab joined congressional leaders at a news conference this week to show that there is little, if any, room for compromise in the U.S. position.

"What have we seen in response to [the U.S.] proposal?" said Sen. Saxby Chambliss (R-Ga.), chairman of the Senate Agriculture Committee. "A very weak, very unmeaningful and uncomprehensive proposal, frankly, coming out of the European Union." The E.U. proposal would cut average farm tariffs considerably less than would Washington's, and it would keep many "sensitive" products such as beef, dairy and poultry sheltered from foreign competition.

Other WTO members accuse Washington of playing numbers games, arguing that although the U.S. proposal to cut subsidies would lower the theoretical legal ceiling, it would allow an increase in the actual level of spending. The anti-poverty group Oxfam said the United States could increase farm subsidies to $22.7 billion, from $19.7 billion in 2005, under the U.S. proposal.

The Europeans reject assertions that they are coddling their farmers at the expense of the world's poor. They note that a number of recent studies have indicated that the benefits of freer farm trade may not be all that great for many impoverished countries.

"You only have to look at who is pressing hardest for farm tariff cuts to work out who will benefit most," Mandelson said in a June 23 speech. "It is not the poor countries of Africa, the Caribbean and the Pacific; it is the large agriculture exporters of the United States, Australia, and Brazil."

Still, Mandelson said that Europe would accept sharper cuts in farm tariffs if big developing countries offer a concession eagerly sought by European companies: a substantial reduction in duties on manufactured goods. The biggest developing nations, including Brazil, India and China, have banded together in a group called the G-20.

"There is a three-way bargain here," Mandelson said. "The G-20 wants steeper cuts in U.S. farm subsidies before it is willing to table the required cuts in industrial goods. Washington can unlock this by stepping forward with a better offer. If this happens the E.U. will, at the same time, meet them both with a strengthened offer."

The view of the least-developed countries was plaintively stated by Love Mtesa, Zambia's ambassador to the WTO. "We are saying, both these giants need to move a step further," he said.

There's wide agreement that a collapse of the Doha negotiations could inflict serious damage on the WTO. It would almost certainly accelerate the trend toward two-country and regional trade deals such as the North American Free Trade Agreement and the U.S.-Central America Free Trade Agreement, and it could undermine the credibility of the WTO's tribunals in settling trade disputes. The upshot, some fear, would be that small, weak countries would be even more subject to bullying than they already are.

"If the round fails, it will be a disaster for developing countries," Mtesa said.