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Mandelson Move a Blow to Doha, Free Trade Lobby

Source: Reuters
03/10/2008

Brussels, Oct 3 - EU trade chief Peter Mandelson's move to take a British cabinet job deprives free trade advocates of their strongest voice in Brussels and could encourage those who argue that Europe's economies need more protection.

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It could also be a final nail in the coffin for efforts to resurrect the Doha trade round, which Mandelson refused to give up on, even after ministerial talks on it collapsed in July.

Below are some of the possible consequences of Mandelson's move back into the British government, which he confirmed to reporters in London on Friday.

WHAT DOES IT MEAN FOR EU TRADE POLICY?

That will depend partly on who is Mandelson's replacement -- not necessarily another Briton. Whoever gets the job is unlikely to have the profile of the 54-year-old Mandelson, one of the few genuine stars in the current European Commission and who appeared to relish locking horns with critics.

Supporters say that during his four-year spell in Brussels, Mandelson managed to rid the EU of many protectionist reflexes aimed at safeguarding its farming and other sectors, and placed it broadly on a par with the U.S. trade stance.

"It's been a battle to the death with him, he had us on ropes a few times," Padraig Walshe, President of Irish Farmers Association, told Reuters.

French President Nicolas Sarkozy accused Mandelson of being a naive free marketeer, and his departure will be cheered by critics who may now push on with their demands that Europe do more to protect companies and jobs in the face of unfair competition from economies with low social standards.

"There is an immediate challenge in that the financial crisis does not lead to a protectionist backlash -- there is a need for people like Mandelson to fight against that," said David Woods of consultancy World Trade Agenda Consultants.

The burden of defending trade liberalisation in Brussels may fall more on European Commission President Jose Manuel Barroso, who has in the past stood up for Mandelson but who also enjoys close ties with Sarkozy.

WHERE DOES THIS LEAVE THE DOHA ROUND?

In even more trouble, some would say. "The fact that he is returning to London clearly shows that he believes there is no longer any hope of saving the Doha round of trade negotiations," said Katinka Barysch of the Centre for European Reform (CER).

Trade experts are sceptical about the chances of a deal on the World Trade Organisation's (WTO) Doha round after July's collapse, but as late as last month Mandelson pledged the EU was ready to revive it if others were.

"He obviously felt that there was a bigger legacy awaiting him back in London than in Brussels. He obviously knew there would be no WTO deal, so this will be seen as the final nail for Doha," said one Irish diplomat.

WHAT ARE THE OUTSTANDING ISSUES?

Mandelson's successor has several weighty issues to grapple with. In the near-term, tensions between the West and Moscow over Russia's incursion in Georgia have raised questions over the Kremlin's bid to join the World Trade Organisation (WTO) -- an aspiration which Mandelson backed despite the Georgian war.

In the longer term, there is also the question of Europe's trade relations with China. Analysts say Mandelson resisted a push by some to clamp down more heavily on Chinese goods. His office confirmed this week that anti-dumping duties on Chinese and Vietnamese shoe imports would remain in place for now for legal reasons, but EU officials said Mandelson had resisted that decision.



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