From: Reuters
Published May 26, 2008 09:20 AM

WTO issues services paper, France slams proposals

By Jonathan Lynn

GENEVA (Reuters) - A World Trade Organisation (WTO) mediator issued proposals on Monday to open up services such as telecoms and banking, as France decried last week's negotiating texts on farming and industrial goods as a step backwards.

But EU trade chief Peter Mandelson said he had "overwhelming support" to press on with the Doha round talks to open up world trade, which are now in their seventh year.

The new services text, replacing a previous one issued in February, set no dates for revised offers or final commitments in the services negotiations.

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And the document, by Mexico's WTO ambassador, Fernando de Mateo y Venturini, who chairs the services talks, showed big differences between developed and developing countries on how to proceed.

"Members shared the view that substantial efforts were needed to reach a successful conclusion of the negotiations," Mateo said in his report, summarizing progress in the services talks in the Doha round over the past few months.

Services account for 70 percent or more of most developed economies and 50 percent or more of many developing ones. But they account for only 19 percent of world trade.

CRUCIAL TEST

The WTO's Doha round faces a crucial test in the next few weeks, after which the U.S. presidential election may cause years of further delays in the negotiations.

Ministers from WTO countries are expected to meet in June or July to seek a breakthrough in the talks, which they want to wrap up by the end of the year.

Mediators last week published proposals in agriculture and industrial goods, which together with Mateo's paper, aim to serve as a blueprint for that deal.

Anne-Marie Idrac, France's junior trade minister, said the proposals were "less ambitious and balanced than ever."

Diplomats who attended a meeting between European Trade Commissioner Peter Mandelson and the bloc's foreign ministers said France and other countries such as Ireland argued strongly that there was no basis for negotiating a WTO deal.

But Mandelson said he had backing from the bloc to press on and try to secure improvements for the EU.

"The view expressed that the conditions do not exist for the round to be concluded successfully was a very small minority view," he told reporters.

"The overwhelming majority of member states are in favor of remaining engaged and taking forward the negotiation."

An eventual deal would involve the EU opening its protected farm markets by cutting agricultural tariffs, and the United States cutting its trade-distorting farm subsidies, while developing countries cut tariffs to open up their industries.

But service sector organizations say there are potentially huge gains to be made from freeing up services.

Developed countries want to sell banking and other professional services in developing countries, either from home or by opening up majority-owned subsidiaries.

And developing countries are keen to exploit their lower labor costs by seeing their citizens win more freedom to travel temporarily to fulfill contracts from construction to health.

Mateo's latest report -- to be reviewed by WTO members on June 2 -- does not list specific proposals for opening different sectors, but instead lays out the framework for an agreement.

However, there is still disagreement on some fundamentals.

Developed countries want the opening in services to be at least as ambitious as those in agriculture and industrial goods. They want developing countries to lock in current levels of market opening and agree to further liberalization.

Developing countries do not accept that, and say that any further opening in services must be in areas of interest to them including liberalization of the movement of temporary workers.

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