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Geneva session viewed as crucial for advancing long-stalled negotiations

WASHINGTON, DC - 06/30/06 - US officials in Geneva for crucial World Trade Organization (WTO) negotiations say they are still waiting for other countries to offer agricultural and industrial tariff cuts that would lead to increased trade.

They talked with reporters in Washington following their meeting yesterday with representatives from the European Union, Australia, Brazil, India, and Japan.

"We haven't seen the kind of access we need yet," said one US negotiator, who spoke on the condition of anonymity.

The WTO negotiations, formally called the Doha Development Agenda, have stalled almost since their launch in 2001 over politically difficult agricultural issues.

The US side submitted in October 2005 what it views as an ambitious proposal for drastically cutting agricultural tariffs an average 66% and sharply reducing US and EU domestic-subsidy spending on their farmers.

A proposal from the G20 group of developing countries for an average 54% tariff cut was viewed by US officials as inadequate; they said a 39% cut offered by the EU, combined with proposed exceptions, would amount to no new market access.

"We can't avoid the basic point that we've all committed to an ambitious round," one official said.

Similarly, another US official dismissed as inadequate a proposal floated by WTO Director-General Pascal Lamy that would require rapidly growing developing countries, such as Brazil and India, to cut industrial tariffs much less than the US proposes.

At issue is what is called a Swiss formula, a progressive formula for cutting high tariffs more than low tariffs. 

In the formula, the higher the value of a number called the Swiss coefficient, the smaller the resulting tariff cut. 

For the more rapidly growing developing countries, Lamy suggested a coefficient of 20, requiring much smaller cuts than the coefficient of 15 proposed by Washington.

"We have ... in no uncertain terms told him that ... that doesn't do it for us," the official said, "and we don't think it really is the number that helps developing countries stimulate trade between themselves."

The US has proposed a coefficient of 10 for developed countries, taking average US industrial tariffs down to 2.1% with peak tariffs of 8.5% on only three products. 

By contrast, a coefficient of 15 for developing countries would still allow average tariffs seven times higher for India, five times for Venezuela and four times for Brazil and Egypt without even calculating exceptions for individual products.

Under Lamy's proposal, the official said, Brazil and India would not have to cut at all half of their highest tariffs and their other tariffs would drop on average only 10%.

"That would be five years of negotiating for 10% cuts on half of the developing country lines, which is not really much of a round," the official said.

More than 30 trade ministers are attending a series of WTO meetings in Geneva through July 2. 

The WTO goal is to complete the complex negotiations on agriculture, industrial goods, services and several other issues by the end of 2006.

As the Geneva sessions began, the EU and major developing countries were still demanding that the US offer to cut its domestic support for farmers even further while they continued to resist cutting their tariffs any more.

"If the European Union comes here not prepared to move at all, we will not conclude the negotiations," one US official told reporters in Geneva. "We still have several days here, and we can test that out."

The US agriculture offer from October for a 60% cut in the most trade-distorting domestic support for farmers, called the amber box category, would lower the ceiling on US-allowed annual spending from $19.1 billion to $7.6 billion.

Actual US 2005 amber box spending amounted to more than $12 billion, less than half the level of similar EU spending.

"We've got a very strong proposal on the table that delivers on market access, on export competition," the US official said.  "We're definitely not looking at lowering our ambition as we go forward here."

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