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The issues over which the WTO talks stumbled

Talks at the World Trade Organisation (WTO) to salvage the seven-year-old Doha round foundered on Tuesday on differences between rich and poor countries and developing importers and exporters.

business Updated: Jul 29, 2008 22:40 IST

Talks at the World Trade Organisation (WTO) to salvage the seven-year-old Doha round foundered on Tuesday on differences between rich and poor countries and developing importers and exporters.

Here are the issues that proved insuperable.

Hidden obstacle

* The deal broke down over a relatively obscure but complicated proposal to protect farmers in developing countries from a surge in imports.

* No one expected the "special safeguard mechanism" (SSM) to be the rock on which the talks foundered.

THE BIG ISSUES

* Going into the talks the main issues seemed to be the level of U.S. trade-distorting farm subsidies and the scope of exceptions for developing countries on industrial tariff cuts.

* This month's talks focused on agriculture and industry subsidy and tariff cuts, leaving most other areas until later.

* The United States made an early offer to cut its farm subsidies to $15 billion, and accepted a further cut to $14.5 billion in a compromise proposal last week.

* The new figure is less than one third of the current ceiling, but twice current outlays, so developing countries said it was not enough.

* Rich countries such as the United States and European Union members remained at odds with emerging nations such as China and India over proposals to shield developing countries' infant industries from the full force of industrial tariff cuts.

* One difference was the U.S. push to encourage developing countries to take part in voluntary agreements to slash or eliminate tariffs in individual industrial sectors such as cars or textiles in return for smaller overall tariff cuts.

* The United States said sectoral deals would create real market opening. India and China said the proposed tariff "credit" undermined the voluntary nature of the deals.

THE SAFEGUARD

* In the end it was the safeguard that blocked the talks. The way the safeguard proposal was framed failed to reconcile the vital interests of three important groups:

-- the United States, which sought assurances that market opening in other areas would compensate them for other concessions such as farm subsidy cuts

-- developing country exporters, which need growing farm exports to other developing countries

-- big developing countries, which need to protect subsistence farmers from a flood of imports that renders them uncompetitive.

* The safeguard proposal would allow importers to raise tariffs temporarily to counter a sudden surge in imports or collapse in prices.

* Developing importers such as India and Indonesia said this was necessary to stop their subsistence farmers being overwhelmed by market opening agreed in the talks.

* The first volume trigger for the rise in tariffs was a 10-percent rise in imports. This led developing country importers such as Uruguay and Costa Rica to say the safeguard would stifle normal trade growth, not just deal with emergencies, and could even shut off existing trade.

* Another proposal would allow importers in some circumstances to raise tariffs temporarily above current levels agreed in the 1994 Uruguay round if imports grew more than 40 percent -- a deterioration in conditions for the exporters.

OTHER BIG ISSUES

* Even if WTO members had agreed on the safeguard, there were still big differences on a host of other sensitive issues.

* The United States is under pressure to make big cuts in its cotton subsidies, but has not yet made a proposal.

* Developing country exporters are also unhappy with proposals shielding developing imports from the full impact of farm tariff cuts on certain products for reasons of food and livelihood security or rural development.

* The European Union wants to tighten rules protecting the use of place names on wines and spirits, like Champagne. They also want to extend this protection to other products linked to regional names, like Parma ham. A big group of developing countries supports the EU, and also wants to protect the use of indigenous plants and folk wisdom in products such as drugs.