EU close to proposal that would save the Doha Round?

Will the European Union step in at the last minute and rescue the Doha Development Round? That was the buzz in Washington as the WTO approached its July 31 deadline for wrapping up a Doha agreement.

Saxby Chambliss, R-Ga., the chairman of the Senate Committee on Agriculture Nutrition and Forestry, appears to have started the speculation by issuing a statement about a possible breakthrough on July 21.

“Yesterday, I was informed by administration officials that the European Union is prepared to make a market access proposal to cut tariffs significantly above the G-20 offer with limited protection for sensitive products. This is welcome news and the type of serious proposal we've been waiting for.

“This could mean the Europeans are finally willing to be full participants in the negotiations and will help trade ministers make significant progress this weekend.”

A tariff-cutting proposal above the G-20 developing countries' offer would mean a reduction of at least 55 percent. The latter would not match the U.S. demand for 66 percent but is a long way from the previous EU offer of 39 percent.

The statement also implies the European Union would back away from exempting 8 percent to 10 percent of its tariff lines as sensitive products, special products and special safeguards for agriculture, the three S's U.S. negotiators have criticized.

As Chambliss issued his statement, U.S. negotiators were headed back to Geneva for one more attempt to try to conclude the negotiations. The G-6 — the United States, European Union, Australia, Brazil, India and Japan — were scheduled to meet July 23 and 24 and again on July 28 and 29.

During the G-8 Summit in St. Petersburg, July 17-18, President Bush said the United States was prepared to make more cuts in farm subsidies. But U.S. Trade Representative Susan Schwab told reporters “the U.S. will be more flexible on domestic support when we see more flexibility on market access from our trading partners.”

EU officials have accused the United States of proposing “phantom” cuts in its farm subsidies, changes that would actually allow the U.S. government to increase its so-called amber box spending ceiling from $19.1 billion to $22 billion. U.S. negotiators have said those claims are “ridiculous.”

They contend the 60 percent cut in their proposal would reduce actual U.S. amber box spending from $15 billion to $16 billion a year to $7.6 billion, resulting in a 10 percent cut in marketing loan rates and a 4 percent to 6 percent drop in target prices.

World trade agreements have a history of being brought back from the dead, often after U.S. officials have given up the farm on issues such as the $19.1 billion amber box ceiling in the Uruguay Round, which took from 1986 to 1994 to complete.

The other day a friend asked me why the European Union, Brazil and other countries always assume that the United States is in the wrong whenever we get into these trade negotiations? Maybe this time will be different.

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