Trade Talks Resume in Negotiations Aimed at Lowering Tariffs

Governments revived global trade negotiations on July 31 by agreeing to a plan expected to lead eventually to lower tariffs on chemicals.

Meeting in Geneva, the 147 countries that are members of the World Trade Organization tackled an issue that had stalled trade discussions for the past 10 months--farm subsidies. Talks broke down in September 2003 when delegates from developing countries walked out of a WTO meeting in Cancun, Mexico, after the U.S. and European Union resisted their calls for eliminating subsidies that support agricultural exports. Many developing countries want to boost their exports of food and fiber to industrialized nations. They would not assent to lowering their tariffs on manufactured goods, including chemicals, until industrialized countries agreed to eliminate farm subsidies.

Under the agreement struck in Geneva, governments compromised, pledging to cut tariffs on manufactured goods and to phase out agricultural export subsidies. "This is very encouraging," even though the agreement is late in coming and not very specific, says Sushan Demirjian, manager of international trade issues at the American Chemistry Council.

The deal emerging from the Geneva meeting establishes a general goal of reducing tariffs on manufactured goods, with the highest tariffs targeted for the deepest cuts. The agreement does not actually lower these duties--it merely clears the way for future international negotiations to decrease tariffs on nonagricultural goods, including chemicals, Demirjian says. "This is where the number crunching and the horse trading starts," she says.