Seattle to break logjam over WTO talks

Date: 25/11/1999

Fierce arguments between WTO members in the run-up to next week's crunch meeting in Seattle have prompted pessimism about the chances of agreeing an agenda for the next round of global trade talks. But a deal which everyone can sell back home is likely to emerge at the 11th hour. Simon Taylor reports

AS TRADE negotiators and their political masters pack their bags ahead of the Seattle meeting next week which will launch a new round of global liberalisation talks, there is widespread gloom over the continuing disagreements between the World Trade Organisation's 134 members over the agenda for the negotiations.

One European Commission official summed up the reasons for this pessimism this week, warning bluntly: “We are very far from remotely approaching consensus.”

Yet the message from seasoned trade observers is clear - we have heard it all before and there is no immediate cause for concern.

Old hands steeped in the ways of the WTO's predecessor, the General Agreement on Tariffs and Trade (GATT), point out that the mood of crisis was far stronger back in 1986 in the South American port of Punta del Este when trade negotiators met to thrash out an agenda for the Uruguay Round, which was not concluded until 1994.

Although WTO members may not have been able to agree a joint declaration ahead of next week's meeting, the situation is better than last time around when there were three competing versions of the text on the table and some countries were threatening to hold up the start of talks.

But although the picture might seem brighter by comparison, significant differences remain between the key players on almost all the important issues to be discussed at the four-day meeting which begins next Tuesday (30 November).

The EU and the US are still a long way apart over the scope of the round. In 1986, the US was ready to hit the ground running and had tabled a bold offer on farm reforms. This time, Washington is sticking to its demands for a minimal agenda, with the Clinton administration still reluctant to move on the Union's key demands: negotiations on competition and investment rules.

Intriguingly, it is the EU which is leading the campaign for a comprehensive round despite - or, more accurately, because of - its defensive stance on agriculture.

Commission economists estimate the benefits of agreeing a full round in line with the Union's vision of a broad agenda at no less than €380 billion. They say a deal on competition and investment rules alone would increase wealth by €150 billion.

The preparations for Seattle have, not surprisingly, been fraught despite the achievements made at the end of the Uruguay Round, which laid down part of the agenda in advance of this year's meeting. It was agreed then that agriculture would be covered in the next round of talks. This means that countries with highly-protectionist farm policies such as the EU, Japan and Korea have already agreed in principle to sign up to further cuts in farm support. Despite this, agriculture has been a major sticking point in the 'pre-negotiating' phase.

Trade officials at the WTO's headquarters in Geneva say the Union is in a very difficult position, trying to win support for a comprehensive agenda taking in competition and investment while unable to offer meaningful concessions on agriculture - the one area which most countries are interested in.

“It is as if the EU is sitting at a poker table trying to bluff with a pair of twos when everyone in the room knows that is all they have got,” said one official.

Talks on agricultural policy have run into the sand amid demands from other major trading blocs - such as the Cairns Group of farm-produce exporting countries which includes Australia, New Zealand, Brazil and Argentina - that the EU must agree that agricultural goods should eventually be treated in the same way as industrial products.

While this request may seem innocuous at first glance, it poses enormous problems for the EU because it would mean agreeing to scrap essential farm support tools such as export refunds which have been banned in the industrial sector for decades.

The Union has already had to give ground in its attempts to get its trading partners to recognise the “multi-functional” role of farming. Other WTO members were rightly wary that this phrase, which refers to farming's role in providing employment and preserving the rural landscape, amounted to a crafty attempt by the EU to defend its generous payments to farmers before negotiations had even begun. Instead, the Union has settled for language stressing the “non-trade” aspects of farming, which include issues such as food safety.

But one EU request has provoked howls of derision in Geneva. When Union negotiators insisted that WTO members should make some commitments on animal welfare standards, officials from other countries with significant agricultural exports are reported to have chuckled at the unintended irony of the EU's position. “This is from the people who brought us foie gras, bullfighting and veal crates,” said one wryly.

But despite such early skirmishes, Seattle should be able to strike a deal on agriculture which will satisfy most of the players so that the real business of negotiating can begin.

The Union's insistence on tackling competition and investment issues also means that a forum for addressing these subjects will have to be part of the deal which emerges from the Seattle ministerial meeting.

Reports from Geneva suggest that WTO members are split into two camps: the EU and others who think that negotiations should start on both areas as part of the round, and the US and its supporters who argue that the time is not right for a deal.

The EU claims growing support for its position, citing the interest expressed by countries in central and east Europe, some Latin American states and some Asian nations in a broad round.

One possible way of squaring this circle would be to set up a special forum to examine the scope for agreement on these issues before bringing them to the formal negotiating table. But, for the time being at least, the EU is saying no to this approach.

“Forum” could be the new buzzword of this round. Despite strong opposition from developing countries to any link between labour standards and trade in the forthcoming talks, officials in Geneva are optimistic that the EU's plan to create a permanent joint forum between the WTO and the International Labour Organisation to discuss workers' rights could be accepted by the poorer countries in the southern hemisphere in return for concessions in other areas.

Observers of the international trade scene point to another key difference between the preparations for the last round and the forthcoming one.

In the past, deals were basically stitched up by the EU and the US as the world's most powerful trading blocs. This time, developing countries are exerting more of an influence over the agenda.

Trade officials say this is part of the reason why they are encountering such problems in brokering an accord ahead of Seattle, because developing countries' priorities - access for farm exports and textiles - are often at odds with those of the 'big' boys.

Officials also point to the presence of new director-general Mike Moore at the head of the WTO as a contributing factor. “Not being a European, Moore is sympathetic to developing countries' concerns, which does not necessarily make him friends in Brussels or Washington or Japan,” said one Geneva-based diplomat.

Despite the wide differences between WTO members, trade experts are convinced that Seattle will produce some kind of deal which all the parties can sell back home, pointing out that the time has come for a large injection of high-level politics to break the current logjam in Geneva.

Optimism has also been boosted by the news that Washington has reached an agreement on China's bid to join the WTO, meaning that US trade officials can now focus their attention on making Seattle a success.

But everyone is well aware that next week's meeting wil only be the start of a long negotiating process.

Both the EU and the US have made it clear that they want to strike a deal within three years. But with presidential elections in the US next November, and campaigning already under way, the real haggling will almost certainly not start until 2001. As a result, whatever the politicians may say, the next round stands little chance of being concluded within five years.