Memo on the London meeting that brings key WTO negotiators together to prepare for April deadline

Hong Kong commitments

At the December 2005 Hong Kong WTO Ministerial Meeting negotiators agreed to try to achieve broad agreement on tariff and subsidy reductions for agriculture and tariff reductions for industrial goods by the end of April 2006. This would allow negotiators to use the remainder of 2006 to agree on other important issues such as trade in services and the amending of the WTO rulebook in order to ensure that that the Doha Round can be successfully concluded at the end of 2006 or early in 2007.

Progress since Hong Kong

Negotiations have continued in 2006. Following a mini-ministerial meeting in Davos, Switzerland in January, these have chiefly taken the form of a series of bilateral and plurilateral meetings between key negotiators.

Although these meetings have been constructive, the EU’s offer of October 2005 remains the only full offer on the negotiating table and no equivalent moves have so far been proposed in trade in industrial goods or services to balance the cuts proposed by the EU in agriculture. For the EU, these balancing moves are essential if the Round is to be successfully concluded.

EU Trade Commissioner Peter Mandelson put it this way in Berlin in January 2006: "The blockage in the Round is not in Brussels… That is why I am compelled to say again to our WTO negotiating partners: Europe cannot envisage a Doha Round that would be concluded on the basis of real cuts by Europe and paper cuts by others. We must work for a result that means something for traders on the ground. I cannot sell a deal in which Europe gives but gets nothing in return. That is not a negotiation; that is a capitulation. Europe is ready to give more than others. But it is not willing to get nothing in return."

On agriculture: cutting tariffs and reducing subsidies

Agriculture is the sector of DDA negotiations that has so far advanced the furthest. Agriculture negotiations encompass three "pillars"; tariff reductions, export subsidies and domestic support for farmers.

In Hong Kong WTO members agreed to eliminate all export subsidies by 2013. Members need to negotiate and agree precise details on this elimination by the end of April 2006. This includes reform to State Trading Enterprises in Australia, Canada and New Zealand and reform of the US’s Food Aid and Export Credit systems.

On domestic support negotiators have agreed a broad framework for cuts in trade distorting subsidies with the EU reducing support the most followed by the US, Japan and others. The EU has made an offer to bind its 2003 CAP reforms in the WTO, reducing trade-distorting payments to farmers by 70%.

On tariff reductions broad agreement has been reached on a system of tariff bands in which the highest tariffs will be cut by the most. The precise levels have not yet been agreed. The EU has offered to cut its highest tariffs by 60% and cut its average farm tariff almost in half to just 12%, the same as the current US average farm tariff. WTO negotiators will also have to agree the number of permitted "sensitive products" which will be subject to reduced tariff cuts, but for which market access will still increase significantly.

The EU is also pushing for greater international recognition and protection for "Geographical Indications" - the high-quality regional and traditional food products like Roquefort cheese and Parma Ham that represent Europe’s comparative advantage in agriculture.

Negotiators in London will work on narrowing differences on all of these issues with the aim of creating a high ambition, pro-development end for the Doha Round.

On industrial goods: balance for moves on farm trade

Although industrial goods make up more than three quarters of global trade for both developed and developing countries, negotiations in non-agricultural market access (NAMA) have until recently lagged far behind agriculture negotiations. The EU has made its agricultural offer conditional on moves from other developed and advanced developing countries to offer new market access in industrial goods and services.

The EU’s requests are specific and limited. The new market access for manufactures that we are asking for would apply to other rich countries - where the EU would like to achieve average tariffs in the low single digits - and advanced developing countries that can afford it (and would themselves benefit from it). The poorest countries are not requested to make any cuts. The cuts requested from advanced developing countries It would be significantly less than the concessions the EU is itself offering in manufactured goods (or, for that matter, agriculture) and would include the right to exclude a number of tariff lines. Nevertheless, in return for these limited but key cuts the EU is willing to eliminate its few remaining tariff peaks and provide new access for many of their key exports of developing countries - notably textiles and shoes but also agricultural products. The EU’s average industrial tariff is already less than 3%.

The EU is insisting that countries cut the tariffs they actually apply at the border which are in many cases much lower than the maximum tariff rates they notify in the WTO.

Trade in manufactures is central to the Doha Round’s wider development goals. Freeing up this trade is certainly good for European makers of cars, chemicals and machine parts. But it is also good for Bangladeshi textile makers, Indian leather workers and the hundreds of millions of workers in the developing world who make a living in manufacturing.

Manufactures make up the huge bulk of developing country trade - more than three quarters. Manufactures also account for three quarters of the tariffs that developing countries pay - largely to other developing countries. If the Doha Round is to push down that tariff bill and open up vital "south-south" trade between developing countries then Doha needs ambition in free trade in industrial goods.

Negotiators in London will continue to work towards agreeing a formula for balanced cuts in industrial tariffs.

On services: making sure negotiations do not get left behind

Negotiations on trade in services are also lagging seriously behind. As the world’s leading exporter of services the EU has a key interest in new services trade. However, increased trade in services is a crucial part of the Doha Round’s development goals. Improved transport, IT and telecommunications, stronger and more reliable banking and insurance sectors; these are the backbone of a growing economy and crucial for development. EU service providers and EU investment can play an important part in building these sectors throughout the developing world on the basis of decisions taken by developing countries.

On February 4 in Geneva developed and developing country WTO partners launched collective market access requests in several services sectors. These joint requests mark the beginning of the "plurilateral" negotiations in services as agreed by WTO members at last December’s WTO Ministerial meeting in Hong Kong leading to substantial revised offers are tabled by the agreed date of the end of July.

On rules and trade facilitation: a stock take for ambitious results

The Doha Round is also revising the WTO’s rulebook for customs procedures and trade defence instruments such as anti-dumping and anti-subsidy measures. As well as seeking to tighten the rules relating to the use of anti-dumping the EU is seeking to improving international rules on "trade facilitation" - the rules that govern customs services.

This has possibly the biggest potential for developing countries in the Doha Round, but it is the least talked about. Reducing customs and transit barriers, removing the unproductive, deadweight costs that shippers have to pay, and getting goods faster from factory gate to the consumer makes all the difference to trade performance. An agreement on trade facilitation would improve customs efficiency, increase collection of customs revenues - by 20% in typical cases - and decrease massively the costs to developing country businesses from delays in cross border trade.

Negotiators in London will perform a stock take on the state of play in these negotiations.