Geneva, 24 July 2006
I want to express the profound disappointment and sadness of the member states of the European Union, and of Mariann and myself, that the world trade talks are having to be suspended today.
This is neither desirable nor inevitable. It could so easily have been avoided. What stands between us and the modalities of an agreement are not vast numbers or enormous sums. In fact, our lengthy G6 meeting yesterday - which was to be the first of several continuing to the middle of August - was actually the best of its kind, until it became the worst. Having been mandated by heads of government at the G8 to come together to indicate further flexibility, I felt that each of us did, except the United States.
The United States was unwilling to accept, or indeed to acknowledge, the flexibility being shown by others in the room and, as a result, felt unable to show any flexibility on the issue of farm subsidies.
This was meant to be a consensus building meeting, a "what if" meeting, one in which we could indicate movement without tabling formal new offers so that, in the end, we could bring the ingredients together and finally act in concert. Nobody was being asked to act prematurely or unilaterally. The idea was, through intensive informal discussion, to build up a series of combined moves that would take us to the level of ambition at which everyone would feel comfortable to settle.
In deciding to withhold any indication of future flexibility, the US has judged that it would be better for the process of negotiation to be discontinued at this stage. This is not in keeping with the spirit of the St Petersburg summit. Actions have consequences and this action has led to the Round being suspended.
The EU deeply regrets this as we have signalled before the meeting and during it that we are able to make a significant improvement in our agricultural market access offer, bringing our average cuts close to the level requested by the G20 group of developing countries, provided others move in parallel. I am glad the G20 were good enough to acknowledge our level of ambition may not be what some have demanded but I defy anyone to say that it is meagre: 100% elimination of export subsidies. 75% reduction in trade distorting domestic support. Readiness to go to a 50% average tariff cut. We also indicated that we were ready to talk about the number and treatment of sensitive products. This is more, much more, than anyone would have expected from the EU.
There is no more time left. We have missed yesterday the last exit on the motorway of negotiations this summer and it would be unwise to conceal this from ourselves.
Fundamentally, with what is already on the table, we are close to a package that is greater in value than anything ever achieved in previous trade rounds. To say that there is no new market access on the table is simply wrong.
Failure this weekend means losing from the table the important, tangible gains we have assembled for the developing world, including for the poorest nations.
Not only new opportunities for trade in agricultural and industrial goods and services, but stronger trade rules that could drive economic growth and development for the most needy in the world. We stand to lose Duty Free/Quota Free access to others' markets for the least developed countries. A sizeable Aid for Trade package is now in abeyance, not withstanding that the EU will press ahead regardless. A major agreement on Trade Facilitation will not go ahead. And perhaps most important of all, we do not have the once and for all multilateral programme of fundamental reform of farm subsidies in the rich world that should be the centrepiece of this Round.
But the cost is even greater. We risk weakening the WTO and the multilateral trading system at a time when we urgently need to top up international confidence not further damage it, and do what we can to stabilise the world not create additional tension and uncertainty.
Let's be clear, as well as an economic cost, there is a huge political cost of failure.
For all these reasons, the EU is not giving up on this Round. We have stuck with it, paid into it, given a lot, indeed given more than others. We will continue to do so because it is right and fair to do so towards the developing world, as well as in our own economic interests. I hope that when the smoke has cleared, others will want to do the same. We stand ready to pick up where we have left off.
Read some Fact Sheets on this issue:
What was the EU offering in terms of new market access?
What are the costs of failure in the Doha Round?
What were the WTO Membership asking of the US?
Some background on the US offer
Some recent economic analysis
Chronology of the Doha Development Agenda
Speech: What is at stake (23 June 2006)