Doha hopes sizzle away again

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Global trade negotiations in Geneva, Switzerland have broken down and been declared a failure for now after seven years of on-again-off-again meetings. The U.S. had hoped that the talks would yield more open market access for American exports while others involved in the talks wanted decreased farm subsidies and to strengthen the international trading system.

"While we made good progress during the past week," said Ambassador Susan Schwab in a statement on Tuesday, "it is clear that despite our best efforts we will not be able to reach a breakthrough at this time."(Listen to audio from the event. It runs approximately 40 minutes.)

There was a lot of hype as always heading into the latest round of intense negotiations. And there was even a little optimism last Friday when Brazil stepped out of ranks with other developing countries and supported a deal proposed by WTO General Director Pascal Lamy.

Prior to the meeting the U.S. said it was willing to reduce U.S. overall trade distorting support (OTDS) to $15 billion and ended up coming down slightly lower to $14.5 billion before negotiations stalled out again.

What ended up being one of the major sticking points on the issue of the rules for Special Safeguard Mechanisms (SSM). "The proposed deal on SSM would have allowed developing countries a virtually unchecked ability to close their markets to any further growth in trade in agricultural products almost at will. This became the deal breaker for the United States, said Ken Hobbie, U.S. Grains Council president and CEO.

Lamy told a press conference afterwards that out of a "to-do list" of 20 topics, 18 had seen positions converge but the gaps could not narrow on the 19th — the special safeguard mechanism for developing countries, which would allow developing countries to raise tariffs temporarily in order to deal with import surges and price falls.

The difference boiled down to some wanting a high "trigger" (a large import surge needed to trigger the tariff increase) in order to avoid the safeguard being triggered by normal trade growth, while others wanted a lower trigger so that the safeguard could be easier to use and more useful, he said.

"After more than 36 hours trying to find bridges between these two positions, today it became clear that the differences were irreconcilable. The remaining issues, including cotton, were not even negotiated," Lamy said.

Not over yet?

The talks' failure does not mean the end of the Doha Round. Lamy told an informal meeting of the Trade Negotiations Committee that he remains convinced that what is on the table represents twice or three times more than has been achieved in any previous multilateral trade negotiation. Much was achieved in these meetings, he said.

Lamy reported to the General Council on Thursday, July 31 that the Trade Negotiations Committee heard the day before "multiple strong calls for preserving the package that had been so painfully negotiated in order to conclude this Round successfully." He said there is no doubt that "looking at what is on the table now, members believe that the Doha Round is still worth fighting for." (Click here for his audio comments.)

Challenges ahead

The likelihood of bringing Doha back to life after this week's failure is slim, if not impossible. A U.S. election year stymies progress on free trade. In addition, Congress' unwillingness to abide by international trade rules when writing this year's farm bill signified it wasn't excited about accepting anything that may potentially harm even one sector of U.S. agriculture.

Also this week a senior Brazilian official stated the country is considering making a formal complaint against U.S. ethanol tariffs. The Associated Press reported that Roberto Azevedo, Brazil's WTO ambassador, said there was a "strong possibility" the country would file a complaint in September against the 54 cents per gallon tariff on imported ethanol.

The issue of ethanol tariffs emerged in the latest round of WTO talks. In the final days, Brazil came behind a proposal by Lamy. In exchange the Latin America country sought new opportunities for its ethanol exporters from the U.S. and European Union explaining that petroleum products, such as gasoline, face no taxes. One U.S. lobbyist said the collapse of the talks "stems principally from an intransigence in the U.S. position regarding ethanol tariffs."

The 54-cent ethanol import tariff was extended as part of the 2008 Farm Bill. Ethanol supporters say the tariff counters the 51-cent blenders' credit and encourages domestic production. Brazil said the tariff protects U.S. farmers from competing against cheaper sugarcane ethanol.

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