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Last Updated: Wednesday, 4 May 2005, 13:39 GMT 14:39 UK
Q&A: World trade in crisis
World Trade Organisation draft agreement from Geneva
A good WTO agreement could boost world trade by $500bn
The World Trade Organisation is mired in crisis, with talks under way in Paris as time runs out to produce a global agreement. What are the sticking points, and how likely is it that a deal will emerge?

What are the big issues?

The meeting in Paris between dozens of ministers from around the world is part of a round of talks designed to reduce the barriers restricting trade between the WTO's member nations.

The hope is that this so-called Doha round will culminate in a better global trade environment from 2006.

Everyone wants a better global trading environment but individual nations and groups of nations are not always keen to give up the benefits they get from import tariffs and from farm subsidies.

In general, the idea is to reduce tariffs and subsidies but some are clinging on to them for dear life.

The time is over for bickering about which component of the negotiations moves first or fastest
Peter Mandelson, EU trade commissioner

France, for example, has a big agricultural lobby and lots of farmers who benefit from subsidies.

Some nations have also accused the European Union of protectionism and of using deliberate delaying tactics during the talks.

What are the obstacles?

On Tuesday night, a group of five - the US, Australia, the EU, Brazil and India - who managed to get the talks back on track in July 2004 after they had foundered (in September 2003), failed to agree over chicken, beef and rice.

Or at least they failed to agree on how important tariffs, normally expressed in terms of euros per tonne, could be expressed as a percentage for ease of use.

The "ad valorem equivalent" is a technical matter and ministers are now asking themselves how bigger political issues, such as tariff cuts can be agreed, if smaller technical matters can't.

Oxfam protest against WTO talks
Oxfam - shown in a former WTO protest - said the EU was stalling

The EU made a proposal for calculating AVE but Australia and Brazil - which is keen to secure a big tariff cut for its exports of poultry, beef and rice - rejected it.

Aside from technical matters, the main problem is that though some nations and trading blocks are willing to give up some of their privileges, most will only sacrifice privileges that benefit others more.

What's different this time?

This time, the developing nations - through their participation in the G20 group of developing and industrialised nations - are wielding more power.

They want high state subsidies and import tariffs slashed so they can sell more of their produce abroad. But the rich nations won't make this concession unless developing markets open up their markets more to their own industrial products and services.

When's the deadline?

People involved in the talks say that unless a framework agreement has been reached by July, there won't be enough time to flesh it out by December when talks resume in Hong Kong.

And, if there is no flesh on the bones of the agreement by then, it won't be ready in 2006 when negotiations are due to be completed.

Who's saying what?

EU Trade Commissioner Peter Mandelson wrote in an article in the Financial Times on Wednesday: "The time is over for bickering about which component of the negotiations moves first or fastest.

"We need, by July, a rough approximation of what a Doha undertaking might look like, so that we can put flesh on the bones."

But charity Oxfam saw the EU as part of the problem. It said "delaying tactics" by the EU could scupper the Doha round."

"It is five minutes to midnight," said Jeremy Hobbs of Oxfam International. "They won't be able to proceed on market access until they have solved this."

The World Bank believes the conclusion of the current round of talks could boost global incomes by $500bn a year, especially between developing nations.

What's likely to happen next?

Developing nations need the trade issues to be sorted out fastest and may make more concessions to encourage richer nations to cut tariffs and subsidies.

Meanwhile, the EU will probably go on using delaying tactics for a while.

It will look as if time is running out for the Doha round...

But the presence of a new US trade representative, Robert Portman, in the group of five - could give it the impetus to once again fulfil its past role as rescuer of the talks.

Some analysts say that because the US has a large farm export lobby as well as high import tariffs it is well placed to mediate in the dispute.

Let's hope they are right and the July deadline for a framework agreement can be met.


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