Why did the G4 negotiations fail ?

Prospects for concluding a Doha Round trade deal in the foreseeable future took yet another blow last week when talks among the EU, the US, Brazil, and India broke down amidst persistent divisions on cutting industrial tariffs and farm subsidies. The G4 talks that started on the 19th June, 2007 at Potsdam, Germany, with great expectations surrounding the events of the Doha round, ended on the 21st with all four members pointing at each other for the collapse of the negotiations.

The G4 talks have been regarded as extremely important for a lot of issues. It aimed at bridging important differences and develop broader multilateral trade relations between the core 4 members. However, the 5-day discussion ended in bitter notes between the South and the North.

The EU and the US blamed Brazil and India for walking out after tabling nothing new in terms of non-agricultural market access (NAMA), in the face of new concessions on farm sector reform. The developing countries countered that Washington's offer on farm subsidy cuts and Brussels' on agricultural market access both amounted to a pittance that did not justify any changes in position.

Moreover, Brazilian and Indian officials insist that the flexibility to which their EU and US counterparts professed after the summit was never apparent inside the negotiating rooms.

In fact a number of changed paradigms and positions can be cited as the reason for the failure of the G4 talks. To summarise, certain specific reasons can be identified for the collapse of the talks.
Firstly, the configuration in relations between the four (the US, EU, Brazil and India) changed. The US and EU got together, had a rapprochement between themselves in agriculture, and united to press the two developing countries very hard on NAMA.
Second, the developing countries were going to get very little or no benefit from the negotiations that the US and EU had among themselves in agriculture. An important agenda of the Doha programme was supposed to complete the unfinished agenda, and remove (or at least substantially reduce) the trade-distorting effects of the developed countries' subsidies. The deals offered by the ‘giants’ in terms of the OTDS (overall trade distorting support) were totally disagreed upon by the developing country counterparts in the discussions.
Third, the developed countries were pressing India and Brazil to open wide  their markets to industrial products by cutting their tariffs very steeply, at rates far higher than what the EU and US were themselves willing to do.

Finally, a conclusion can also be drawn that the US and EU on one hand and Brazil and India on the other were operating under two different and contrasting paradigms, which eventually led to the collapse of the G4 talks. The US top officials kept insisting on "new trade flows" as the main aim and measure of the success of the Doha negotiations. By this they meant that the developing countries have to commit to cuts in their bound duties that go below their present applied rates.
What the US and EU want is expanded market access in markets of developing countries for their firms in agriculture, industry and services, to which the developing countries insisted that it was not the aim of the ‘development round’.

Resource: TWN info service on WTO and trade
Released: 22 June, 07