WTO ROUND: ECONOMICS MINISTER BRINKHORST OPTIMISTIC

UNCLAS SECTION 01 OF 02 THE HAGUE 000555

SIPDIS

STATE PASS USTR/NOVELLI

COMMERCE FOR 4212/USFCS/MAC/EUR/OWE/DDEFALCO
COMMERCE ALSO FOR /USFCS/OIO/OWE/ESLETTEN/PBUCHER

E.0. 12958 N/A
TAGS: ETRD IN NL WTRO EUN
SUBJECT: WTO ROUND: ECONOMICS MINISTER BRINKHORST OPTIMISTIC
ON POSSIBILITIES FOR PROGRESS



1. Summary: Dutch Economics Minister Brinkhorst has
returned from a trip to India, China, and Japan optimistic
over the prospects of reinvigorating Doha Round talks and
setting forth the elements of a negotiating agenda that he
believes will set the stage for positive results. This
agenda calls for a focus on agriculture and better results
in services but moderating expectations regarding
agricultural export subsidies and non-agricultural market
access, and backing off Singapore issues. End Summary.

Importance of Agriculture
--------------

2. In a 3/3 speech at the Institute for Social Studies
(ISS) in The Hague, Brinkhorst identified agriculture as the
Round's most important issue. He had earlier told the press
that " [t]he message of the Indian Government was very
clear: A world trade accord is feasible if the EU and the
United States reduce support for their agricultural
products, especially export subsidies allowing these
products to be dumped on foreign markets." At ISS, he
thought the WTO should focus its efforts on a package that
includes reducing but not completely phasing out
agricultural export subsidies, addressing export credits and
"unsustainable" food aid programs, priority treatment for
cotton in the context of the agricultural negotiations, and
"reasonably ambitious" goals in agricultural market access.
Brinkhorst declared it was important for the agricultural
negotiations to differentiate among developing countries
(for example, he said that Brazil and Mauritius are both
sugar exporters but Brazil has more to gain from
liberalization of existing tariff-rate quota systems than
does Mauritius which benefits from the implied preferences).
He also highlighted the importance of developing countries
opening their markets to the agricultural products of other
developing countries.

Other Important Issues
--------------

3. Although agriculture was the key area for Brinkhorst, he
said other important elements of a package would be more
ambitious goals in services and a non-agricultural market
access (NAMA) approach that is somewhere between the "Swiss"
and Uruguay Round formulas.

Drop Most Singapore Issues
--------------

4. Investment and competition policy remain important issues
for the WTO to address but it is premature to think of
moving forward in the Doha Round, according to Brinkhorst.
He called for giving sufficient attention to these issues to
allow for possible future WTO work but declared "they will
not be an obstacle" in this Round. Although Brinkhorst
highlighted the continuing importance of the WTO addressing
environmental and sustainability issues, he said that in the
Doha negotiations they would "not be a stumbling block."

Importance of Moving Forward
--------------

5. Although WTO members are now better prepared to carry
out substantive negotiations than they were in Cancun,
Brinkhorst also thought they are cautious of moving forward
too quickly because the consequences of another failure
would be too great. He identified the Geneva process
undertaken over the next few months as "crucial."
Brinkhorst warned that failure to advance the WTO round
would further stimulate the negotiation of free trade
agreements (FTA's) "which threaten to divide the world into
regional blocs" that have little commonality and may end up
being based on geopolitical rather than economic
considerations. Brinkhorst did not single out any WTO
members as particularly promoting FTA's noting that the
United States, European Union, and Japan have all moved to
conclude trade agreements with third countries.

Cancun and the WTO System
--------------

6. Brinkhorst affirmed that Cancun was a failure but
thought it could be explained as a reflection of the
continuing evolution of the multilateral trading system.
The Tokyo Round dynamic in which the United States, Europe,
and Japan dominated the talks and developing country issues
were a "sideshow" was clearly over but the system was still
adapting to the larger role of developing countries.
Brinkhorst noted the difficult evolution of the dynamics can
be illustrated by the WTO having "missed every deadline
beginning with the Battle in Seattle." He opined that the
successful launch of the Doha Round was the aberration in
the ongoing evolutionary process - a launch Brinkhorst
thought would not have happened were it not for the
terrorist attacks of 9/11/01.

Comment
--------------

7. Although Brinkhorst exuded optimism over the prospects
for Doha Round progress, several attendees at the ISS
lecture noted (in side conversations) that Brinkhorst did
not address the prospects for the EU showing more
flexibility in agriculture, the area Brinkhorst identified
as key to the overall negotiation.

Sobel