HOPES of a new deal on agricultural trade among the WTO member states have apparently faded after the latest round of negotiations — the most crucial in many respects — ended in Geneva in a deadlock at the end of July.

Now the member countries are left with only three months. And if no breakthrough is achieved in September (or later) when the talks resume after a one-month summer break, the ten-year old trade organization, which the West’s corporate world pins much hopes upon to advance its agenda, may experience another Cancun-style failure at its Hong Kong ministerial conference in December.

And such a repeat failure of biennial ministerial conferences will be ominous as it may put in jeopardy the fate of the Doha Development Agenda.

The end-July was billed as the target date for interim agreements in key negotiating areas of the stalled Doha round talks. But a meeting of the Trade Negotiations Committee (TNC), the key committee, held on July 28 followed by a meeting of the General Council, the highest decision-making forum, the next day confirmed the failure of the year-long negotiations and meetings. The failure gave no surprise to anybody because the chairmen of three key negotiating groups had already indicated what was in store after the meetings they wound up prior to July 27.

Even the eleventh-hour appearance in Geneva of several ministers had little effect on the outcome. The EU trade commissioner Peter Mandelson remained on standby for last-minute rush to Geneva if needed but the US trade representative Rob Portman remained busy in CAFTA talks. Different formats of talks were also tried to break the ice. One such format was to let a group of 14 key countries including the EU, US, Brazil and India make an attempt to reach some kind of consensus which could then become a basis for final negotiations. It also failed.

As had happened in the wake of the collapse of the September 2003 ministerial conference in Cancun, some member states again suggested changes in the manner in which WTO negotiations are conducted. The EU, in particular, put emphasis on a “paradigm shift,” and was of the view that instead of negotiating in piecemeal, meaning negotiating one incremental step at a time, there was need to “lift a series of difficult logs at the same time.”

Outgoing WTO Director-General, Supachai Panitchpakdi, who wished to end his tenure with some tangible achievement to his credit, was very outspoken in his last statement to the TNC, which he chaired. He strongly criticized the “reluctance on the part of key players to engage in real negotiations on the proposals put on the table.” This, he said, “must change and it must change immediately.”

Similarly, he was critical of “the brinkmanship” that often marked WTO negotiations, under which western governments tended to announce concessions only at the last minute, even during ministerial conferences. He called for an end to the practice of “last-minute bargaining”. He will be succeeded by former EU trade commissioner Pascal Lamy.

Tim Groser, the New Zealand ambassador to WTO, is also on his way out. He has been chairing the sensitive agriculture talks and thinks that only “a set of clear political decisions” can end the deadlock and restart the negotiations that could pave the way for a successful ministerial meeting in December.

At the end of the August recess at the WTO, Groser will be replaced by his compatriot Crawford Falconer, as new New Zealand Ambassador to the WTO. The first agriculture week is currently scheduled to begin on September 26.

The bone of contention for the continuing deadlock remains the agricultural subsidies which the rich countries pay to their farmers amounting to about one billion dollars a day. This not only distorts the agricultural trade to the detriment of the developing countries and depresses the prices of farm commodities but is gradually destroying agriculture in several African states particularly where cotton is produced. Unless these distortions are removed, Doha round cannot make a headway.

While the US and the EU have often conceded that the root-cause of the deadlock is the subsidies, they remain unwilling to take any practical measures to eliminate them and adopt the path of fair trade. They have not only been bickering between themselves over concessions on agricultural subsidies, they have also been playing a game of brinkmanship, hoping that developing nations will eventually give in.

While this key issue is prevented from being thoroughly discussed at the related WTO forum, too much time is spent by the negotiators on issues like how to convert ‘specific’ agricultural tariffs based on quantities imported into ‘ad valorem’ equivalents (AVEs), i.e., tariffs based on the price of the product.

Such debates and attitudes have held up overall progress in the negotiations for months. It was obviously intended to prolong negotiations and exhaust the delegates of the Third Word. In fact, the structure of a tiered formula for market access is the key issue for which a solution is needed, since delays on the formula inevitably cause all other issues to remain on hold as well.

Besides, there have been efforts to prevent any movement on cotton which is too vital for west Africa, keeping in view the current fall in its global prices.

In recent months, there have been several high-level meetings of groups and blocs within the WTO to develop convergence of views on key issues prior to the end-July crucial meetings. These took place in Indonesia, Kenya and China and now another one, of G-20, is due to take place in Islamabad in September to take stock of the work done so far and formulate a common stance for the future.

The meeting held in the Chinese city of Dalian on July 12-13 was of mini-ministerial level and was participated by many delegations from both developed and developing countries. Pakistan played a significant role in the meeting. The trade ministers were able to agree on using a compromise text on market access provided by the G-20 group, but failed to reach a consensus on how to go about cutting import duties on industrial products. Both rich and poor countries disfavoured India’s idea of using a modified Swiss mathematical formula for reducing import tariffs, taking the average of each country’s WTO bound tariff rates as the co-efficient.

The proposal from the developed countries about using a “simple Swiss formula” had already been rejected by the Third World. But the Pakistan proposal for using two coefficients — one for the developing countries based on their average tariffs and the other for the developed countries based on their average tariffs — received wide support.

The last week of July has at least made one thing quite clear that the Doha round will ultimately fail if it goes on like this. While everyone agrees that the pace must pick up when the talks resume in September, there remain reservations as to where the responsibility lies.

Most of delegates consider the EU and the US being the main culprits. Unless both of them come up in the post-September meetings after having secured a clear commitment — from EU member states and US Congress — to go ahead to reduce farm tariffs and cutting domestic farm support, Doha round should be considered doomed.

Meanwhile, the United Nations’ top poverty adviser says African countries should refuse to hold negotiations on a new round of trade talks if rich nations do not cut farm subsidies and tariffs which they had agreed to do so in July, 2004.

Jeffrey Sachs, a Harvard economist and economic adviser to UN Secretary-General Kofi Annan, recently said that under the existing tariffs cocoa-producing countries such as Ghana were unable to export chocolate to Europe and had to remain exporters of cocoa, used in making chocolate. European tariffs on raw material are lower than tariffs on finished products.

And it was a similar case with cotton, an industry in which, for example, the United States spends $3 billion in annual subsidies to 26,000 cotton farmers. These farmers receive about $140,000 per head of subsidies per year. “They are growing subsidies, they are not growing cotton,” Sachs told journalists.

Meanwhile, Brazil and the United States have put a temporary hold on a dispute involving US cotton subsidies, ruled illegal by the WTO. Brazil had threatened to break patents of the medicines produced and marketed by the American drug multinationals. The two countries reached an agreement under which they will ask the WTO arbitrator to suspend its review of Brazil’s retaliation request of around $2.9 billion for an indefinite period.

The recent USDA announcements regarding a legislative proposal to repeal Step 2 and changes in GSM export credit guarantees led to the agreement and Brazil expects the US Congress to follow up with concrete actions to resolve the US cotton subsidy dispute.