Sarkozy's attacks on WTO talks could threaten deal

10th July 2008, Comments 0 comments

The French president’s attacks on world trade negotiations could foil success of reaching a new global trade deal in July.

10 July 2008

GENEVA - French President Nicolas Sarkozy's attacks on the World Trade Organisation negotiations could wreck the chances of reaching a new global trade deal at a meeting of leading countries in July, experts say.

By declaring that he might block a WTO deal that threatened the European agricultural programme, Sarkozy has put "another nail in the coffin of the Doha round", said Jean-Pierre Lehmann, who is director of the Evian Group of officials, business executives and experts on international trade.

"The French are a problem, but they're not the only problem - when the American Congress voted last month for a hike in farm subsidies, it was completely incompatible with the negotiations," he added.

The so-called Doha Round, which started at the end of 2001 in the Qatar capital, is to enter into a make-or-break series of meetings from 21 July when ministers from 30 key economies will meet in Geneva in a last-ditch attempt to hammer out a deal.

The round aims to boost international commerce by removing trade barriers and subsidies, but a deal has so far proved elusive as countries are reluctant to open up their markets or reduce financial support to farmers.

Even though the EU is negotiating the deal on behalf of its 27 member states, France - which currently holds the presidency of the bloc - could yet garner support from other EU states and block the pro-WTO EU Trade Commissioner Peter Mandelson, noted Lehmann.

Mandelson, who has the mandate to negotiate for the EU, and Sarkozy are currently locked in a public spat over the trade talks, after the French president said he would block any WTO deal that sacrificed European farm production on the "altar of global liberalism."

A day after Sarkozy's declaration, Mandelson told the BBC that he was "being undermined and Europe's negotiating position in the world trade talks is being weakened".

Sarkozy promptly retorted saying that Mandelson would enjoy the publicity created by their disagreement.

Critics say that Sarkozy's move was driven by personal interest, as France is Europe's biggest agricultural power and the largest recipient of EU farm subsidies which a WTO deal aims to cut.

Figures cited by Sarkozy were also put into question by experts and the European Commission.

Sarkozy had said that the WTO deal would result in a drop of European agricultural production by 20 percent.

The European Commission meanwhile estimates a decrease of just 1.1 percent.
"I would like to have the source of the figures cited by Sarkozy," said economist Patrick Messerlin, whose global economic group at French elite political college Sciences Po had tabled a maximum drop of 15 percent for some protected sectors such as cereals.

But other products, such as pork, fruits, vegetables and wine, stood to gain from an overall worldwide tariff cut, said Messerlin.

"There are twice as many farmers in France who would lose out if we did not liberalise," he added.

The proposals tabled at the WTO would cut European farm subsidies by up to 70 percent as well as lower agricultural import tariffs by an average of 54 percent.

For Sarkozy, these agricultural concessions to be made by the EU would not yield any concessions in return from other sectors of services and industrial products.

"It's not completely wrong. But over the past 50 years, rich countries have protected their agricultural sector from imports from the developing world and should therefore not expect automatic compensation when they cut subsidies," said Lehmann.

Messerlin pointed out that the deal would require emerging countries to accept tariff cuts in the industrial product sector, which was the "essence of the deal" for developed countries and their industrial exporters.

"This part of the deal offers a safeguard to exporters. Without it, Brazil could hike its tariffs by 20 or 30 percent tomorrow," he said.

Sarkozy's attempt at evoking the world food crisis to back up his move to protect farm subsidies was also shot down by experts.

It was precisely these subsidies paid by rich countries to their farmers that have disrupted production from the developed nations, said Romain Benicchio from aid agency Oxfam.

"The trade in subsidised products has played a role in the food crisis in developing countries," he said.

For Benicchio, the proposed WTO trade deal is not going far enough to address the global trade imbalance.

He said: "What is on the table accommodates demands of the rich countries rather than the needs of developing countries."

[AFP / Expatica]

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