David Jessop

Last Monday in Washington, José Manuel Baroso, the president of the European Commission and the United States President, George Bush, tried to breathe political life into the suspended multilateral trade negotiations at the World Trade Organisation (WTO).

Their words, if taken at face value, seemed to signal a joint commitment to move forward. The two men informed journalists that they had agreed that the U.S. and the EU would give instructions to their negotiators to propose a solution as soon as possible. Implicit in their comments was an acceptance that if this new thinking did not bear fruit rapidly - most say before Easter - then nothing was likely to happen until there was a new incumbent in the White House.

mystery

How such rapid movement is to be achieved remains something of a mystery when almost every indication suggests that even if agreement were possible on the level at which Europe could reduce its agricultural tariffs and the U.S. its farm subsidies, there is as yet little incentive for India or Brazil to agree to the full-scale resumption of negotiations.

As matters now stand, the Doha Round is stalled. While a conclusion this year is theoretically possible, this requires all of the key WTO members to come forward with concrete proposals and concessions in the next three months.

new flexibilities

Speaking to a session of the WTO General Council in December 2006, the institution's Director-General, Pascal Lamy, noted that while the major players have indicated a willingness to introduce new flexibilities and have softened their bargaining positions, the challenge was to translate political will into substantive proposals. If this does not happen, he noted, failure could be just around the corner.

While there was, in the latter part of 2006, a greater interest in discussing the actual numbers to be applied to tariff and subsidy reductions, the prevailing sense among WTO members is that only well-prepared political negotiations can restart the process.

Although the latest pronouncements in Washington suggest that the EC and the U.S. Administration are moving in this direction, it is very hard to see how within the domestic constituency of either, there is much room for manoeuvre.

In Europe, 14 nations including France and Ireland have made clear that they are not prepared to accept any cut in farm tariffs that is much beyond the 39 per cent the EU formally offered last year. (The U.S. proposed 66 per cent while the Brazil leading the G20 group of developing nations, argued for 54 per cent).

lack of enthusiasm

Across the Atlantic in Washington, the expiry of the President's fast-track negotiating authority at the end of June and the lack of enthusiasm for any trade deal among members the Democrat-controlled U.S. Congress also seems to make any breakthrough undeliverable under a Republican president.

Elsewhere, the sense remains that everything is still to be played for as India, Brazil and others continue to bide their time before seeking concessions in areas that the U.S., Europe and other developed economies find politically difficult - the exclusion of many developing country commodities and products from tariff liberalisation.

What this suggests is that without serious concessions and strenuous diplomacy between now and March, when the U.S. sets its levels of agricultural subsidies in its domestic budget, there is unlikely to be any further progress until 2009 - the most likely time for the new incumbent in the White House to reveal his or her trade strategy.

last-ditch attempt

In this respect, it seems that the January 8 meeting between the EU and the U.S. was a last-ditch attempt to try to achieve an agreement before any announcement on the level of U.S. farm subsidies. With the possibility of a long delay in the present round in mind, Europe is believed to have proposed to the U.S. on January 8 further cuts in EU tariffs in return for the U.S. reducing its annual programme of farm subsidies from US$23 billion to US$15 billion.

Whether there is any room for a global deal will become clearer when most of the key protagonists and a wider grouping of WTO ministers including Jamaica's Foreign Minister Anthony Hylton meet in the margins of the World Economic Forum in Davos later this month. While the EC presents itself as optimistic, a more likely scenario for this meeting may be a quiet informal debate on the steps necessary to start to deliver an agreement in 2009.

Irrespective of this continuing commitment to multilateral trade liberalisation, it is now clear that European trade policy has changed and it is now placing its real long-term emphasis on bilateral and bi-regional arrangements that contribute to enhancing its global competitiveness.

new priority partners

Last October, the European Commission issued a communication (policy paper). This argued that future European competitiveness would to a significant extent depend on a trade policy that engaged new priority partners. China, the document suggested, would test Europe's capacity to turn globalisation into an opportunity for growth and jobs. For this reason Europe will, it stated, develop a comprehensive new trade policy strategy on China.

The paper also indicated that the EC will propose a new programme of bilateral free trade agreements in which economic criteria will be a primary consideration, rather than the present mixed emphasis that includes weight being given to development, governance and political relationships. The document also argued that in future, in such negotiations, Europe will wish to include issues "that are not ready for multilateral discussion" (investment, government procurement, intellectual property) and will wish to go far beyond the market opening approach of the WTO. This would, the EC says, especially apply to trade relations with China, Russia, ASEAN, Korea, Mercosur, Chile and Ukraine. As far as market access is concerned, Europe's intention, it seems will be to concentrate on non-tariff barriers in priority countries and markets.

For the Caribbean, these are further messages about how rapidly the world that it has previously relied on continues to change and an indication that mercantilist values and self-interest have become the prevailing principle among its traditional partners. Once again the suggestion is that a reordering of priorities in the region's international relationships and economic focus is very much overdue.

David Jessop is the director of the Caribbean Council and can be contacted at david.jessop@caribbean-council.org.