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While some may have given up hope of ever successfully concluding the Doha Round of world trade liberalisation talks, EU Trade Commissioner Karel de Gucht is clearlyanot among their ranks. In Washington for a fleeting visit, on 21 June, De Gucht unveiled his new strategy for bringing the decade-long talks to a successful conclusion. It involves making a down payment' or mini-package, which would include market opening for least developed countries, and which should be agreed in December. This would be followed up by a final deal, to be concluded after the US presidential elections of 2012, where the toughest nuts would be cracked: market access in advanced economies like the EU and US and emerging ones like China and India.

De Gucht elaborated his strategy over lunch at the US Chamber of Commerce, after having earlier met with US Trade Representative (USTR) Ron Kirk. "I was actually advisedanot to raise" this subject, he said, as "it would go down like a lead balloon". He had chosen nevertheless to do so because "I am a stubborn man". There wasano credible alternative to the Doha Round for multilateral trade liberalisation and abandoning it would cause "years of drift" and "erosion of the whole rules-based system underpinning open markets," he argued. He said that the mini packageaneeded to be rechristened down payment' because the previously-used term, early harvest', was no longer appropriate given how long the negotiations had dragged on. "Normally, after ten years, all the fruits are rotten," he said.

The down payment should include "getting a standstill on tariffs from everybody". Under the existing World Trade Organisation obligations, countries could actually raise tariffs significantly and still be in compliance, he noted, because there was a large gap between the bound tariff rates and the applied tariff rates. This difference could amount to 500-700 billion, which is why he felt it was so vital to get everyone to commit to not raising tariffs. Other issues on the table for the down payment' mini package could include environmental goods and trade facilitation, he said. The topics that would, most likely, have to be postponed until post-2012 included export subsidies on agricultural goods and market access for manufactured goods and services.

While De Gucht's idea seemed to go down well among the assembled business community representatives, it is not clear if the US administration is on the same page. De Gucht said that the US and EU shared the same analysis of the problem - how to phase emerging economies like China into the advanced world - but that their remedies to this problem were "not exactly the same". Judging from its recent comments, the USTR's confidence in Doha appears to be seriously flagging. The Obama administration is devoting most of its efforts to persuading Congress to ratify three pending bilateral free trade agreements between the US and South Korea, Panama and Colombia. That said, the US has not thrown in the towel yet. Should Obama win a second term in 2012, it could be more amenable to seeing it through to a successful conclusion.


De Gucht also met with his fellow Co-Chair of the Transatlantic Economic Council (TEC), Mike Froman, who is Obama's top advisor on international economic affairs. Theanext TEC will take place in Washington DC in November or December 2011. De Gucht said the TEC was "coming up to speed" in meeting its goal of preventing regulatory barriers to EU-US trade developing. Electric cars would be a big issue on theanext TEC agenda, he said. Asked if he thought the time was ripe to start talks on an EU-US zero tariffs on goods' agreement, he seemed unconvinced, saying "I wonder if the effects would be that dramatic" given how low these tariffs already were.

In his talks with USTR Kirk, the two also discussed further expanding trade and investment with Middle Eastern and North African countries. De Gucht said this was "not an easy job" because the relationship with each country was "completely different" and "there isano one size fits all' solution".
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Title Annotation:World Trade Organisation
Publication:European Report
Geographic Code:4E
Date:Jun 23, 2011

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