Director-General of the World Trade Organization, Pascal Lamy, warns the Doha Development Round will fail if trade ministers do not resolve differences over agricultural subsidies, farm and industrial tariffs by the end of the month. Lamy was speaking on the eve of a ministerial meeting in Geneva aimed at salvaging the trade liberalization talks.
Trade ministers from more than 40 countries are gathering in Geneva to try to revitalize the deadlocked trade liberalization talks that opened in Doha, Qatar, nearly five years ago. World Trade Organization (WTO) Chief, Pascal Lamy, is in no doubt as to what they should do.
"It is determined by real cuts in subsidies and by new trade flows in agriculture and industrial products," he said.
Lamy says proposals currently on the table are too low. He says the European Union needs to increase its offer on domestic subsidy cuts as does the United States. And he says developing countries also need to improve their offers on reducing industrial import tariffs. He says trade ministers have three days in which to make some crucial decisions.
"The decision for this is the end of June," he added. "It is the moment of truth. I do not think we can postpone any longer the decision. If we were to do that, we would put the entire project at risk…And I strongly believe that postponing decisions on the cuts on subsidies and tariffs and size to later in the year is a recipe for failure, and I would not recommend it."
Agricultural trade and farm subsidies are the two main stumbling blocks to a global free trade deal. The European Union accuses the United States of not making deep enough cuts in its domestic farm subsidies. The United States says it has made a strong offer, which the EU has not matched. And both sides accuse developing countries of not going far enough in cutting import duties on industrial products.
Lamy says everyone would benefit from a successful round, rich and poor countries alike. However, he says it should be kept in mind that this is a development round and rich countries should be prepared to make more concessions.
"If you increase disciplines on subsidies, all developing countries will benefit," he explained. "If you increase market access plus the flexibilities which are there for developing countries, and we know that there are many of them, everyone will benefit. If you increase market access in industrial tariffs, plus the flexibilities which are there, everyone will benefit."
Lamy says countries have to cut a deal this week. Otherwise they will not meet a July 31 deadline to submit a list of their commitments to cut specific tariffs and subsidies.