GENEVA: Mexico has proposed a way to break the deadlock in the long-running Doha round trade talks by allowing countries to make simultaneous trade-offs across the main areas.
The proposal would meet demands from rich countries for a more far-reaching deal, but require them in return to make bigger concessions than emerging economies.
Trade ministers agreed last week to push for an outline deal in the decade-old talks by July, and instruct their negotiators at World Trade Organization headquarters in Geneva to make the necessary compromises to reach an agreement.
Mexico’s proposal attempts to tackle the fundamental divide in the talks - the call by rich countries for a more far-reaching deal than is now on the table versus the demand by poorer countries that a deal primarily promotes development.
Here are the main points of the proposal:
q Industrial goods
The Mexican proposal tackles one of the issues that sank the last push for a deal in 2008 - the call by rich countries to go beyond any general reduction in tariffs and have groups of countries agree to cut further or eliminate entirely duties in some industrial sectors, such as chemicals or electronics.
Mexico said only the more advanced, or emerging, developing countries would take part in a maximum of two sectors and would be able to propose exceptions to cuts within those sectors for specific products. Rich countries would have to participate in every sector deal they sponsor, and with bigger cuts.
q Environmental goods
The Doha talks aim to free up trade in environmental products from biofuels to windmills to help counter climate change. Developed countries would have to make bigger cuts on a wider range of goods than developing countries.
The biggest chunk of the economy, but one widely seen to be lagging in the negotiations behind agriculture and manufacturing.
All the main trading countries would commit to keep markets for services such as banking or law open at their current state, on the basis of their current regulatory regime.
Countries would be allowed to make exceptions, with more exceptions permitted for developing countries.
The key to an overall deal because of its importance for developing countries.
Here the proposal would prevent developed countries from being able to increase their current actual tariffs on farm produce as well as negotiating a cut in the ceiling.
That is because negotiations set maximum permitted tariffs for a product and allow countries to raise or lower duties at will as long as they do not breach those ceilings.
Under the Doha proposals countries will negotiate cuts in those ceilings, according to a formula.
Mexico said that where the formula cut leaves the new ceiling for a developed country above its current actual tariff, it must lower the ceiling further to the current rate.
Developed countries would also not be able to seek any further exceptions to these tariff cuts for sensitive products, and would make further cuts in domestic subsidies.
The United States and European Union want emerging economies to open up their markets more than so far proposed, while developing countries want advanced economies to make a bigger contribution to the deal than they do.
Since it is already agreed in principle that the world’s poorest countries would not have to make concessions, the difference is between rich and fast-emerging economies like Brazil, China, India, South Africa and Thailand.
Some economists say a Doha deal could inject hundreds of billions of dollars into the world economy. It would also boost business sentiment and bolster defenses against protectionism.
While the nine-year-long negotiations have prompted yawns and skepticism in the past, businesses are paying increasing attention.