Collapse of WTO talks could delay Swiss reforms

Without high subsidies, alpine farming and its traditions would cease to exist Keystone

Switzerland's chief trade negotiator Luzius Wasescha warns that the collapse of the Doha Round of world trade talks could slow the pace of domestic farm reforms.

Agriculture was once again the stumbling block that led to the breakdown of the Geneva talks between the six leading members of the World Trade Organization (WTO) aimed at saving the Doha Round.

The deadlock prompted the WTO’s director-general, Pascal Lamy, to suspend the talks on dismantling market barriers indefinitely, effectively scrapping the end-of-year deadline for completing the round.

Analysts said the last-ditch negotiations between the European Union, the United States, Japan, Brazil, Australia and India failed due to the intransigence of Washington and Brussels to give ground on agriculture.

Lamy had called on the US to impose tougher limits on aid to farmers, and the EU was told it had to cut protective tariffs on commodity imports.

Wasescha, Switzerland’s chief trade negotiator, told swissinfo that the end of the WTO talks could embolden the domestic farm lobby to oppose a government plan to slash subsidies at home.

According to the Organisation for Economic Cooperation and Development, Swiss farmers receive among the highest subsidies in the world.

The government wants to reduce subsidies by SFr600 million ($482 million) from SFr14.1 billion to SFr13.5 billion over the three-year period beginning in 2008. The plan is expected to be debated in parliament in one of the forthcoming sessions.

“There could now be attempts to delay the necessary reforms and therefore Swiss farmers could [find themselves] in a more difficult situation in a couple of years,” Wasescha said.

Resumption?

The trade negotiator added that if and when the Doha Round resumes in a few months or a few years, the EU will have agreed to farm reforms and it will be essential that Switzerland does not miss the boat.

“In the dynamic world of trade you never have a status quo,” Wasescha said. “The world is changing and we as exporters have to adapt to changing markets and therefore we need a continuous reform process in agriculture which is sustainable for farmers.”

The Swiss Farmers’ Association reacted positively to the collapse of the Doha Round. A spokeswoman said the reduction of import tariffs would have hit the sector hard. But Sandra Helfenstein said the association feared that the proposed free trade agreement on agriculture with the EU could be an “even worse solution” for Swiss farmers.

Switzerland’s business sector called the breakdown of talks in Geneva a missed opportunity. “What Swiss farmers gain from high tariffs, Swiss industry loses from poor sales potential,” said Axel Dreher, economist with the Institute for Business Cycle Research (KOF).

Wasescha believed the Doha Round would be delayed at least until the November mid-term elections in the US to see “if these polls give president Bush greater flexibility [to negotiate]. Otherwise we’ll have to wait until there is a new US administration”.

swissinfo with agencies

In brief

The Doha Round of global trade talks began in 2001. The 149 members of the WTO have been negotiating on the liberalisation of trade of goods and services.

Switzerland presides over the G10, a group of nine countries that are leading net importers of agricultural products. The members include South Korea, Japan, Norway, Iceland, Israel and Taiwan.

Switzerland has rejected WTO calls to lower farm subsidies and import tariffs on agricultural products, while pushing for liberalisation of services and lower tariffs for industry.