US embassy cable - 04THEHAGUE555

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