Trade Commentary - September 2007

Negotiators returned to Geneva on September 3rd after a month long recess in August to digest the details of the modalities text released by Ambassador Falconer in July. Leading up to the beginning of formal discussions, leaders of APEC countries convened in Australia where the Doha round was an important area of conversation. Most member countries reiterated their support for a deal to be reached by the end of this year which provided a good shot in the arm for negotiations in Geneva. Consultations kicked off with a bang as countries dove straight into debate over the most contentious issue of market access. In order to protect most of its current sensitive products, Canada repeated that it wanted the number of allowed sensitive products to be based on all tariff lines instead of dutiable tariff lines and that it wanted no reductions in over quota tariffs. The EU has been strongly pushing its idea of designating specific tariff lines for particular product groups. Under this idea, the majority of tariff lines would not be sensitive, but offers countries the flexibility to chose which specific product they would deem as sensitive (eg: particular cut of pork or beef). This idea may appear to offer some real in-roads to market access, but severely restricts any possible access for the products deemed sensitive as consumption data to calculate the 5 % access level are generally not available for specific products such as a pork loin or a filet mignon. Although market issues dominated most of the discussions in September, it was domestic support that really garnered attention during the 3rd week of negotiations. The United States announced that it could negotiate within the range proposed in the modalities for a limit on overall trade distorting support between 13-16 billion dollars. Some argue that this was simply a political statement so as not to implicate the US should the Doha talks fail. However, the majority of the members embraced this commitment by the US and has received high praise from many influential countries, including the EU and Brazil. All in all the negotiations in September appeared to proceed reasonably well. Formal negotiations will take a break starting the week of Sep 24 and resume on the week of Oct 8. Negotiations are projected to last for 2 weeks and assuming continued progress is made, Falconer is expected to begin revisions of the draft modalities the week of Oct 22. Supposing that an agreement could be reached on the modalities, there is a possibility of heavy ministerial meetings in November. Although many positives can be taken from the meetings in September, it is important to also keep an eye on proceedings in domestic policy. For example, the US congress currently does not have fast track legislation in place which allows for bills related to trade deals to be passed through the house and senate with a simple yes or no vote and restricts any proposed changes to the bill. Countries may have good intentions in Geneva, but it does not mean that they have the political will back home to push a deal through.