News

Lukewarm Deal Keeps Trade Goals Afloat

By Kurt Achin
Hong Kong
19 December 2005

Global negotiators have bought some more bargaining time for a comprehensive free trade deal, following a modest agreement at World Trade Organization talks in Hong Kong. Many critics say the latest agreement falls far short of fulfilling trade goals aimed at helping developing countries. There is a wide consensus that the work of the next few months will be both arduous, and crucially important.

Six days, hundreds of handshakes, and countless cups of coffee after World Trade Organization talks formally opened here in Hong Kong - a deal is on the table.

In closing the ministerial meeting of 149 WTO member economies Sunday night, Director-General Pascal Lamy praised a "modest" accord that avoids failure, but leaves the real job of formalizing details for the future.

"What we need is a lot of work," said Mr. Lamy. "But I now believe it is possible, which I did not a month ago."

Delegates arrived here in Hong Kong trying to rescue the Doha Development Agenda, a set of wide-ranging free trade goals set forth in Qatar four years ago. Indian Trade Minister Kamal Nath says Sunday's deal gives developing countries something to look forward to, and keeps crucial momentum alive.

"It may not be adequate. There may be room for more," he said. "But at least, we are moving."

Here is a brief checklist of what the Hong Kong draft deal does include:

Wealthy nations agree to end agricultural export subsidies by 2013. The Hong Kong deal embraces a proposal to have wealthy nations slash all of their farm subsidies, but does not say when or by how much.

Wealthy nations also will end agricultural export subsidies on cotton by next year. And they will open most of their markets to duty-free and quota-free imports from the world's poorest countries by 2008.

The Hong Kong deal also provides for a close examination of U.S. food aid policies, which European officials say distort trade by pricing farmers in the developing world out of business.

It is what the deal does not include that leads many aid organizations to criticize it as being too little, too late. Gawain Kripke, of the humanitarian group Oxfam, says the talks did not live up to their billing as a development round.

"Basically there was very little decided here and what little was accomplished wasn't really in the favor of developing countries," he said.

Aileen Kwa, with the anti-WTO group Focus on the Global South, says the most glaring omission in the deal is the failure of rich nations to commit to a time frame for ending domestic agricultural subsidies.

"So we're going to have cheap subsidized products being dumped in developing country markets all over again," said Ms. Kwa.

Aid groups also fault the United States for failing to say when it will end domestic cotton subsidies. Economists say U.S. payments to farmers keeps their cotton artificially cheap, pushing poor African farmers out of the market. U.S. officials respond they want African countries to improve the reliability of their production before U.S. subsidies are ended.

Some negotiators and trade experts say the agreement also does not go far enough in pushing developing nations to open their markets to imported manufactured goods and to services. Although the WTO members are committed to a formula of cutting tariffs and trade barriers, it does not say by how much or when.

Advocates of unfettered free trade, such Barun Mitra, also are disappointed with the declaration. Mr. Mitra, the director of the Liberty Institute, a New Delhi free-trade research organization, says the talks did a disservice to developing countries by preserving a mentality of aid and protectionism.

"Because they're being given an excuse that you don't have to bother about your institutions, you don't have to bother about your property rights, your rule of law, your security of investment - but you just liberalize trade and things will happen," he said. "It will not happen!"

Mr. Mitra says developing countries should learn from the WTO host city, Hong Kong - a small territory with few resources that became an advanced economy through free trade.

The key players in last week's WTO meeting agree the next few months are of crucial importance to completing a deal on the Doha goals. More meetings will take place in Geneva in early 2006. U.S. Trade Representative Robert Portman says it will be a "real problem" if a deal is not reached by April.

European Union Trade Commissioner Peter Mandelson also warns more progress is urgently needed to prevent the talks from sputtering out. He warns that the Doha trade agenda has only about "a year's energy" left in it.

Source: Voice of America