Analysis: A year of limited progress

WASHINGTON, Dec. 30 (UPI) -- With high ambitions of securing a multilateral trade agreement that would help aid least-developed countries, trade ministers spent the better part of 2005 attempting to re-energize stalled talks in the so-called Doha round.

After four years of limited progress, including two failed World Trade Organization ministerials in Cancun and Seattle, trade negotiators set their sights on Hong Kong hoping to break through the logjam of agricultural talks by the December ministerial with the sole aim of keeping Doha alive and concluding negotiations by the end of 2006.

"If we miss the boat this time, if we don't build on what we've done so far when we get to the meeting in Hong Kong and then try to conclude the actual negotiations in this round by the middle of 2006, it could be five to seven years before we get back to it," Mark Vaile, Australian trade minister, warned earlier this year.

But with a threat by Paris to veto any trade agreement that went beyond the European Commission's mandate, the European Union was left with little room to negotiate, blocking any real progress that could be made on actual tariff reductions in the current round of negotiations.

While EU Trade Commissioner Peter Mandelson spent the year caught in a rift between making progress on Doha and meeting the demands of certain EU member states to protect their farm interests, the United States touted its "bold" proposal, which included a 60 percent reduction of its own domestic subsidy program, arguing the key to a successful Doha round would be greater market access for developing and least-developed countries.

Even with an ambitious U.S. proposal in hand that promised to significantly reduce domestic support and cut trade-distorting subsidies, Mandelson continued to remain obstinate, refusing to make any further offers on reducing Europe's agricultural tariffs unless other developed and developing countries made movements on non-agricultural market access and industrial goods.

"The failure of the EU to put a real market access proposal forward puts Doha at risk," said Rob Portman, U.S. Trade Representative. "What is more disconcerting to us, probably, was the lack of a concern about the time crunch that we face. There was not only a lack of proposal but a seeming lack of urgency despite the fact that we are facing this deadline in Hong Kong."

Hoping to shift attention away from the EU's reticence to make further movements on its agriculture proposal, Mandelson called on key trade partners like the United States, Australia, Brazil and India to broaden negotiations into other areas including non-agricultural market access, services and manufacturing.

"If we are going to give developing countries the boost their comparative advantages merit, our working people in our local neighborhoods need to see compensating jobs being created," said Mandelson. "That's why we have to press for, and settle for no less than, real market access in industrial, manufactured goods where, in the quality, higher value sectors, we have an advantage."

But with little movement on either side, global trade talks were declared doomed, faced with the familiar impasse of years past. Both head of the World Trade Organization, Pascal Lamy, and head of the World Bank, Paul Wolfowitz, called on trade partners to grant concession on agriculture or risk derailing a critical trade liberalization deal even further.

"Unless serious concessions are made by all sides ... the Doha round of trade talks will fail and the people who will suffer the most are the world's poor," said Wolfowitz.

With only weeks left till the Hong Kong ministerial and no breakthrough in sight, ministers agreed to lower expectations for the December meeting, despite Lamy's strong urging to complete two-thirds of the negotiations by the ministerial.

While the United States continued to remain hopeful that some progress could be made, it revised its rhetoric arguing Hong Kong was never meant to be the end of Doha, but simply a milestone.

"It's an opportunity to take stock of where we are, but also again we'd hoped it would have been an opportunity to make some tough decisions on at the least the framework for discussions going forward," said Portman.

With diminished expectations, the EU attempted to shift attention to securing a development package for least-developed countries that would offer duty-free, quota-free market access.

"If we cannot deliver on this, the world will wonder what we're doing in Hong Kong," said Mandelson. "It's important to our credibility. It's important for the integrity of this round."

While trade ministers averted complete failure in Hong Kong after reaching some consensus on key agricultural issues, including a development package for the WTO's 50 least-developed countries, an end date for the elimination of export subsidies and increased trade facilitation, it was widely noted that while enough progress had been made to save Doha, it was greatly limited.

"Today we can be sure we are heading into the right direction," said Lamy. "We managed to put the round back on track, after a long hibernation. But we are not there yet."

With a promise by ministers to reconvene by April 30 to establish exact formulas for tariff reductions on agriculture and non-agricultural market access and a looming deadline of the expiration of the U.S. Trade Promotion Authority, trade ministers will be put to task in the next four months, which will be critical to determining whether or not the Doha round can or will be completed by its end date of 2006.