Doha trade talks fail to achieve progress on textile tariff reductions

WTO members to try again in September

Doha trade talks fail to achieve progress on textile tariff reductions

17 August 2005 - The Doha round of trade talks at the WTO, aimed at reducing trade barriers, have failed to make any progress. Stumbling blocks to talks have centred on agricultural subsidies paid to farmers by governments in the developed countries. Poorer countries oppose this and are refusing to remove tariffs on industrial goods and services including textiles.

The 148-member WTO has now broken-up for the summer after having, up until now, failed to make any headway on liberalisation of world trade. The talks were launched in the Qatari capital of Doha, four years ago.

The Doha round is looking into advancing the world free-trade agenda on the basis of opening up markets by lowering protective measures such as quotas and tariffs.
Textiles and tariffs

Textiles form a decisive part of the Doha round of negotiations. For many developing countries, this represents an important part of the manufacturing sector and, in many cases, fledgling textile production is still at a vulnerable stage.

Any progress on textiles in the talks has been slow mainly due to the impact of world textile quota removals at the start of the year.

A recent meeting in Paris between the US Trade Representative, Rob Portman and his European counterpart, Peter Mandelson showed agreement by the two sides to work harder for a concrete outcome of talks.

US textile associations are urging Portman not to give too much away in a rush for an agreement.

They say US tariffs on textiles and apparel entering the giant North American economy are "the lowest in the world" - roughly 14 percent.

An agreement would be welcomed, however, so long as tariffs in other countries are brought down to the US level before seeking further cuts.

US Senator Elizabeth Dole representing North Carolina has urged US Trade Representative Rob Portman to especially take into consideration the needs of textile companies during these talks.

"It is my hope that you (Portman) will be able to lower export barriers for US-produced textiles, and only permit for US tariffs to be reduced on a reciprocal basis", said Dole.

Any protection hoped by Dole would still be reliant on a deal and such a deal is based on mathematical formulae for cutting tariffs being acceptable by all 148 WTO member states.
Formulae

Poorer countries with vulnerable industrial sectors may yet benefit from an EU-backed formula. A statement from the EU said it would not push for tariff cuts for weak countries as part of the Doha round.

"This", it says, "will allow least developed countries to open sensitive sectors at a pace determined by their development needs".

The formula could therefore grant Least Developed Countries (LDC) the right to temporarily retain limited access to particularly vulnerable sectors.

Six different proposals for tariff-cutting formula have been put forward but without concensus. A stumbling block is China who is keener on liberalisation than Latin American countries with fragile industrial sectors.

The problem is that developing countries cannot agree amongst themselves as to who should be allowed to protect what.

Brazil and others recently refused a EU proposal that would have produced a numerical assessment on the openness of each country's services markets are (as with the farm talks).

"It has become evident to me that we have reached an impasse...on the most fundamental element: the formula", reported the Chair of industrial discussions, Stefan Johanneson.
The way forward

Although there is much debate and little concession at this point, all major players regard a successful outcome in Hong Kong as both highly desirable and highly likely as there is, according to Peter Mandelson, political will on all sides.

The EU urges that developed countries should not expect tariffs in developing countries to come down. Richer countries, also, should be prepared to do more.

With rising sentiments of protectionism in Washington, future US trade agreements could be however scuppered. With the end of President Bush's "fast track" system in 2007 that allows for the President to put forward bills on free trade to Congress on an all or nothing basis, successful completion of the Doha round has added importance.