Key deadline looms on Doha trade talks

As a key deadline for the Doha Round of world trade talks looms, a breakthrough agreement among the key players remains elusive.

The World Trade Organisation's 150 members have given themselves until the end of this month to reach a deal on the "modalities" of a new trade pact. The aim is to move from words to numbers, from what to liberalise to how much and how quickly.

For this to happen, WTO director-general Pascal Lamy says, the European Union needs to improve its offer on opening its markets to agricultural products, the US needs to do more to cut internal farm subsidies and the Group of 20 developing counties, led by Brazil and India, need to do more on reducing industrial tariffs.

Neither officials' talks in Geneva nor meetings of the Group of Six (Australia, Brazil, Europe, India, Japan and the United States) in London last month and of the key three (the US, Europe and Brazil) this month in Rio de Janiero have yielded any visible signs of progress.

But people familiar with the process say such meetings are essential to increasing the major players' understanding of how far the others can go in sensitive areas, which is fundamental to getting a deal which they can sell domestically.

"We are not despondent about it but obviously with each week that passes the window of opportunity narrows," New Zealand Trade Minister Phil Goff said.

"The world does not come to an end on May 1 if the modalities aren't in place, but equally we don't like giving away deadlines when we have to make faster progress this year than in the past two or three years," he said.

"Given the fact that an outcome will be beneficial to everybody and nobody will want to accept blame and responsibility for preventing that result, we hope that as the year proceeds there will be less brinkmanship and more readiness to put something on the table, in return for getting something back."

Trade Ministers agreed in Hong Kong last December on a date of 2013 for the elimination of export subsidies for agricultural products, and for "substantial" progress towards that goal by the mid-point of 2010.

It was an important gain for New Zealand, but the concern now is that the Europeans will seek to back-load the timing of cuts to export subsidies on dairy products towards the end of that period.

On improving access to European agricultural markets, the key issue for New Zealand is the expansion of quotas, and that the expansion be based on the size of the market, not the size of existing quotas.

Tim Groser, who was New Zealand's ambassador to the WTO and chair of its agriculture committee before being elected to Parliament at the last election, counsels against seeing the April 30 deadline as a black-and-white, all-or-nothing issue.

"What I hope is that some very important pieces of the jigsaw will be put in place, but the idea we would get it all done in April is not the correct way to look at it," he said.

"'There is a fundamental trade-off that is very obvious, very important. It is for the US to come to the party with a better offer on its internal subsidies, and then for some more movement from the Europeans and east Asians on agricultural market access. To make that politically feasible for the US and the EU, the developing countries are going to have to move on non-agricultural market access. "

Developing countries' dread of opening their markets for industrial goods was reminiscent of New Zealand manufacturers' fears in the 1970s ahead of the Closer Economic Relations Agreement, Groser said.

"They haven't got their act together just as we didn't when we went into CER. For us it was Australia; for them it is probably China.

"But as it was in New Zealand, the underlying reality is that if they don't expose their industries to competition they will remain weak."

Groser sees in the to-ing and fro-ing of trade ministers like US Trade Representative Rob Portman a "huge political effort" to try to find a deal. "Without that degree of political commitment I would be very pessimistic."

Goff leaves for Washington this week. Among the officials he will meet are Portman and his predecessor Robert Zoellick, now a deputy secretary of state.

The ultimate deadline hanging over the Doha Round is the expiry in the middle of next year of the US Administration's trade negotiating mandate form Congress.

The trade promotion authority means the Senate can only vote for or against the outcome of the round. After it expires they could take it apart line by line, an intolerable situation for the rest of the world. Because of the logistics of getting a treaty through the Senate, it needs to be done and dusted by the end of the year.

And because of the time it takes to translate the essential political deal on the modalities into detailed numbers for thousands of tariff lines, country by country, the effective window of opportunity is a matter of months.

The Doha Round

* The latest round of trade talks was initiated in November 2001 by the World Trade Organisation in Doha, capital of the Gulf state of Qatar.
* The specific aim of the round is to reduce poverty by making international trade more fair.
* Reducing the use of tariffs and subsidies for agriculture will benefit New Zealand exporters.
* A stand-off between the US, Europe and agricultural nations (including New Zealand) has prompted fears the Doha round will fail.