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Shape of trade deal may emerge soon: WTO head

A long-awaited breakthrough in WTO talks could emerge soon because major players all know what has to be done.

india Updated: Feb 18, 2006 11:11 IST
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A long-awaited breakthrough in world trade talks could emerge soon because major players all know what has to be done, the head of the World Trade Organization said on Friday.

"This makes me believe we could soon start to see the shape of a final deal," WTO director-general Pascal Lamy told a Washington audience of trade experts.

"The Europeans know that they will have to move on agricultural market access. The US knows it will have to move on agricultural domestic support and emerging countries like Brazil, India, South Africa and a few others know that they will have to move on industrial tariffs and services," Lamy said.

"And the good thing is that all of them have now said they will move in concert," he added.

Global trade talks made scant progress at a World Trade Organization meeting in Hong Kong in December. But countries set a new late April deadline for agreeing on a blueprint for farm trade reforms and reducing industrial tariffs. Trade ministers from the United States, EU, Brazil, India, Japan, and Australia also are meeting in London in March.

Countries face a hard deadline to finish the talks this year because US negotiating authority expires in mid-2007 and chances for Congress to renew it are "extremely thin, if not naught," Lamy said after two days of meetings in Washington.

He also stressed that strong US leadership was needed to bring the round to a successful conclusion.

Although countries welcomed Washington's offer last year to cut its trade-distorting domestic farm subsidies by 60 per cent over five years, many remain suspicious the United States will avoid making real cuts by simply shifting some of its farm spending to different categories.

"It's also clear therefore if the negotiations are to progress, the United States will have to move on domestic support," Lamy said.

It also is in the strong interest of all WTO members to tighten rules governing anti-dumping duties, Lamy said, touching on another sensitive issue for Washington.

Lamy, a former EU trade commissioner, said there was a wide consensus that the EU's offer to cut agricultural tariffs by an average of 39 per cent was insufficient.

"The European Union and the G10 ... are on the frontline on this issue and they will have to move," he said.

The EU has proposed exempting up to 8 per cent of agricultural tariff lines from the deepest tariff cuts, which the United States, Brazil and others say would allow Brussels to shield all of its most attractive farm markets.

Lamy said he took "with a grain of salt" World Bank estimates that exempting more than 2 per cent of tariff lines from the deepest cuts would render the agreement meaningless.

Also, any pact would probably require the number of sensitive products to shrink over time, he said. "The WTO only creates boxes that shrink," Lamy said.