Bilateral deals new goal as Doha Round grinds to halt

By Stewart Fleming

Date: 26/01/06

The EU is shifting its attention to negotiating bilateral trade deals with third countries as the Doha Round of world trade talks runs into trouble.

The Doha Development Round is on the brink of collapse after failure to achieve a breakthrough in Hong Kong in December. The European Trade Commissioner Peter Mandelson was this week hardening the EU's negotiating stance ahead of meetings of trade ministers at the World Economic Forum in Davos which began yesterday (25 January). Those talks are supposed to establish procedures, including scheduling new meetings, in a bid to move the negotiations forward by the end of April.

According to some well-placed trade officials in Brussels, Mandelson has been indicating that if the current stalemate in the Doha talks is not resolved the EU will intensify its efforts to reach bilateral agreements with some countries. The EU is already discussing how to deepen its economic relations with India. Mandelson is to meet his Indian counterpart in London on 1 February and David O'Sullivan, the EU's recently appointed director-general for trade, will be going to Delhi to meet S.N. Menon, India's commerce secretary.

This approach is mirrored elsewhere. In November the US announced that it was intensifying discussions with India on bilateral trade relations with the formation of the US-India trade policy forum.

Mandelson's spokes-man said: "While the EU remains committed to working towards an ambitious outcome to the Doha talks, this objective remains remote in the absence of any serious offers by our negot-iating partners to cut industrial tariffs and open up services."

He added: "If the round fails to deliver new market access opportunities and thereby fulfil the Doha mandate, then clearly we will have to look at alternative bilateral arrangements. This is not our preferred option, but it may be what we have to resort to."

"All of a sudden bilateralism is back on the EU agenda," said a senior Brussels-based diplomat from one of the EU's important trade partners. In his view, however, this was part of an effort to "turn up the pressure" on the other negotiators in the global trade talks at a time when the EU was being pilloried as the main obstacle to a successful round because of its refusal to improve its offer on access for agricultural goods to EU markets.

He said that if the global talks broke down the EU would intensify its efforts to secure more one-on-one deals just as other major trading nations were doing. This would, however, be to the detriment of the multilateral trade system and the authority and credibility of the World Trade Organisation, he added.

EU trade officials said that the Union had moved far enough on agricultural trade and now needed to see movement from countries like Brazil on opening their markets to EU industrial exports and services. In a speech in Berlin on 23 January, Mandelson singled out Brazil's intransigence as a particular obstacle to progress for the Doha Round.

He also significantly hardened up EU rhetoric towards the US following an unproductive visit to Washington by O'Sullivan.

Mandelson said that the EU was not prepared to accept "post-dated cheques" from the US, a reference to the fact that US Congress will have to pass new farm legislation to implement the promises of liberalisation which US Trade Representative Rob Portman put forward.

Author suggests that the EU was shifting its attention to negotiating bilateral trade deals with third countries as the Doha Round of world trade talks had run into trouble.