The Telegraph
Since 1st March, 1999
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Brasilia balm on Cancun cracks

Washington, Dec. 13: The European Union (EU) and the Group of 20 (G-20) developing countries — including India — which clashed in Cancun in September, contributing to the collapse of the world trade talks, have considerably minimised their differences ahead of a World Trade Organisation (WTO) general council meeting on Monday to relaunch the talks.

The two sides issued a surprise joint statement yesterday at the end of two days of discussions in Brasilia, calling for an end to the stalemate created in Cancun. India was represented at the talks by commerce minister Arun Jaitley.

The EU was represented in Brasilia by its trade commissioner, Pascal Lamy, and the WTO by its director-general, Supachai Panitchpakdi. Both men had extensive bilateral talks with Jaitley before the Brasilia meeting came out with a “positive” communique.

It said “the dialogue proved to be fruitful and positive with both sides explaining their own positions in a business-like manner and acknowledging the importance of this dialogue to achieve progress in the negotiations”.

The communique underscored a “general agreement that we need to intensify negotiations early next year” and significantly committed the two sides to finalising the Doha round of trade talks by a WTO deadline in 2004.

Jaitley told The Telegraph by phone from Sao Paulo that the two-day meeting had sent out a message that the G-20, which left its mark on the Cancun talks, was “alive and well”. The group’s common approach to issues of world trade continues to hold ahead of Monday’s meeting, he added.

Jaitley said the presence of the EU trade commissioner and the WTO’s director-general in Brasilia had added legitimacy to the group.

In a change of attitude that may help restart the process stalled in Cancun, Lamy told Jaitley at their bilateral meeting that Europe was willing to eliminate export subsidies, but only for products crucial to the economies of developing states.

The EU was also amenable to cutting domestic subsidies — but not eliminating — for its products, which are at the heart of the dispute between G-20 and rich countries. These were later conveyed to the entire G-20.

Lamy confirmed this flexibility on the part of Europe when he told reporters in Brasilia that “the impression I had is that we (the EU and the G-20) not only want to pursue negotiations but also to show some flexibility. If we start where we were (after Cancun) we will not succeed”.

Panitchpakdi said “this meeting was, indeed, a very useful one. I have been encouraged by open and frank discussions. I hope we will see more of those discussions in Geneva and other places once we move back to our negotiation process”.

Although it was not explicitly said, the impression was that Europe was now willing to manoeuvre around three of the four “Singapore issues”, which contributed to the stalemate in Cancun. These are investment, competition policy, transparency in government procurement and trade facilitation. The last issue continues to pose difficulties, it is learnt.

Egypt’s ambassador to the WTO, Magdi Farahot, summed up the mood after the Brasilia meeting when he said: “In Cancun, the ambience was acrimonious, here the tone was more harmonious. Lamy showed more flexibility and we, too, are ready to be more flexible on market access.”

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