Lamy sees spring 2007 as crunch time for WTO deal

By Richard Waddington Posted 10 October 2006 @ 05:18 pm EET     Print     Reprint     E-Mail     Comments

GENEVA (Reuters) - World Trade Organisation chief Pascal Lamy said there was a window of opportunity to resume global free trade talks between U.S. Congressional elections in November and next March, after which it could be too late.

But for formal negotiations to resume, positions must shift significantly, particularly in agriculture over which the WTO's Doha round ground to a halt last July, he told journalists.

This in turn meant secret, behind-the-scenes discussions between the trade powers and alliances to test room for manoeuvre, because without prior signals of willingness to move, there was no point in getting around a table again, Lamy said.

"If the negotiations are to resume, it will only be after flexibility is appearing and this flexibility will not appear to you," he told journalists at a press dinner on Monday night.

After the setback in July, there was a clear risk that the Doha round, heralded as a chance to lift millions out of poverty through greater trade, would end in failure, Lamy said.

"The option of failure is now seriously on the table."

This could undermine faith in the multilateral trading system at a time when the global economy faced less robust growth and protectionist pressures were growing. The big losers would be the poorer, weaker developing countries, Lamy said.

The clock starts running after the November 7 mid-term U.S. Congressional elections and could stop sometime next March when the next U.S. farm bill starts to take shape, Lamy said.

The farm bill lays down agricultural spending for coming years and so influences the U.S. negotiating position.

"So it is sometime between post-mid-term (U.S.) elections and spring next year," he said. "The shape of it (the farm bill) needs to be reasonably clear by spring time," he added.

But Lamy said he saw no impact on trade policy should the Republicans lose control of the House of Representatives to the Democrats, as opinion polls suggest may happen.

"Trade policies, especially on agriculture, have traditionally been very bi-partisan," Lamy said.

A further factor pointing to early next year being a decisive moment was that Congressional discussion would be intensifying on whether to extend current U.S. presidential powers to reach trade deals, so-called 'fast-track' authority, without which the Doha round becomes impossible to negotiate.

By then the WTO must have a credible package of trade measures on the table, he said.

"Credible enough that the negotiation could finish some time in 2007," Lamy added. "That is the time window as I see it."

The round of trade talks, launched in 2001 in the Qatari capital, was put on ice by Lamy in early July after trade powers failed to break a long-standing impasse over farm trade.

Three months later, the fundamental trade-off remained the same - bigger cuts to U.S. farm subsidies in return for lower tariffs on farm goods' imports in the European Union and leading developing countries.