Back to Work in the WTO, With Empty Hands


By Gustavo Capdevila

Inter Press Service
December 30, 2005

Without breaking stride to mull over the disappointment of Hong Kong, the developing countries will be back at work in early January striving to recover the ground lost at the 6th World Trade Organisation (WTO) ministerial conference held mid-December in that Asian city.

"The WTO Hong Kong ministerial meeting was a lost opportunity to make trade fairer for poor people," maintained Oxfam International executive director Jeremy Hobbs.

Martin Khor, director of another international non-governmental organisation, the Malaysia-based Third World Network, concluded that the conference "resulted in an imbalanced outcome to the disadvantage of developing countries."

In the wake of the Hong Kong meet, the WTO will resume its efforts in the coming weeks in the Doha Round of multilateral trade negotiations, a process aimed at promoting greater liberalisation of world trade that has been plagued with delays and disasters since its launch four years ago in the Qatari capital.

The WTO schedule of activities for the first weeks of 2006 has yet to be defined, but it almost certain that the struggle for greater trade benefits will immediately resume with the election of the officials heading up the organisation's subsidiary bodies.

The rotating, regional-based presidency of the General Council, the key body in the control of the multilateral trade system and the negotiations themselves, will pass from Amina Mohamed of Kenya to a representative of the industrialised countries. This change in leadership traditionally takes place in February.

But beforehand, in January, the heads of the delegations from the 149 WTO member states will hold informal consultations to designate the chairs of such subsidiary bodies as the Councils for Trade in Goods, Trade-Related Aspects and Trade in Services, as well as the Committees on Agriculture, Market Access and Rules of Origin, among others. At the same time, new chairs will be elected for the special committees responsible for negotiations, which play a key role in periods like the current one, when the WTO is striving to expand the opening of markets.

Hobbs mentioned, as an example, the role played before the Hong Kong conference by the chair of services negotiations, Mexican representative Fernando de Mateo, who "produced a draft text in October 2005 that suited the EU's proposals, despite developing countries' opposition."

As a result, new plurilateral, sectoral and modal negotiating methods were established in Hong Kong, intended to complement the traditional mechanism of requesting and offering market opening in particular sectors.

The Global Services Coalition, a private sector group, has described these new plurilateral mechanisms as a "useful springboard" for services trade liberalisation.

At least two countries, Cuba and Venezuela, openly stated their reservations about the final text on trade and services presented at the Dec. 13-18 conference in Hong Kong.

The new negotiating methods adopted "will erode the flexibilities available to developing countries to liberalise only in sectors they choose to and to the extent they want to," Khor commented in a telephone interview with IPS. Meanwhile, the president of the U.S.-based Coalition of Service Industries, Robert Vastine, acknowledged that the agreement on plurilateral negotiations fulfilled the objectives established by the United States at the outset of the Hong Kong meet.

U.S. services exports total 340 billion dollars annually, with a current trade surplus of 50 billion dollars. "The potential for growth of U.S. exports and investment in these sectors is enormous," noted Vastine.

The services sector will likely be the next battleground in the world trade war, which essentially boils down to a confrontation between the rich and poor countries. The agreement adopted in Hong Kong stipulates that WTO countries must submit their requests for market opening by the end of February.

But before then, more precise guidelines could be issued for the continuation of the Doha Round, since the Swiss authorities are attempting to organise a consultation among trade ministers from a limited number of countries who will be in Switzerland for the Jan. 25-29 World Economic Forum in the ski resort of Davos.

In any event, a precise deadline - Apr. 30 - was set in Hong Kong for reaching an agreement on the modalities of trade negotiations on agriculture and industrial goods.

These "modalities" refer to the general objectives, including both numerical targets and detailed rules, for the final stage of negotiations, such as specific reductions in trade-distorting tariffs.

The Hong Kong conference resulted in little progress for the developing countries with regard to agriculture and industrial tariffs.

As Khor stressed: "The developing countries gave in on the key market access issues of services and non-agricultural market access (NAMA). In return, they did not receive any significant gain in the development package," which is aimed at attending to the needs of the least developed countries.

"Even the toned-down text on non-agricultural market access and services is inimical to development," commented Hobbs.

The ministers agreed to cut industrial tariffs using a Swiss formula - aimed at narrowing the gap between high and low tariffs - with coefficients, an approach favoured by developing nations like Argentina, Brazil and India.

But it is agriculture that will undoubtedly remain the primary bone of contention in the Doha Round, since almost all of the failures and setbacks experienced since January 2002 have stemmed from the dispute between developing countries that are current or potential exporters of agricultural goods and the industrialised nations that protect their markets with heavy subsidies for their own farmers.

The declaration adopted in Hong Kong was particularly disappointing for the developing countries with regard to agriculture, Oxfam International concluded. While a pledge was made to eliminate export subsidies and equivalent payments by 2013, "this is three years later than originally hoped and EU export subsidies account for only 3.5 percent of its overall agricultural support," the organisation stressed.

The protests of African cotton producers against the subsidies shelled out by the industrialised nations, particularly the United States, fell on largely deaf ears in Hong Kong, but will be heard again over the coming weeks in Geneva.

The final declaration offers the elimination of export subsidies in 2006, but export subsidies constitute only a small portion of the aid that the United States provides to its cotton producers, which totals four billion dollars a year.

The next stage in negotiations will continue to be influenced by the same private pressure groups that actively lobbied in Hong Kong. In the meantime, the deadline for the conclusion of the Doha Round remains firmly fixed as June 2007, the expiry date of the U.S. Congress authorisation for the government to sign trade agreements without the need for detailed legislative review and approval.

But in the opinion of Hobbs, "the Doha Round, launched with such fanfare four years ago, is in danger of grinding to a standstill. Rich countries have both a moral duty and a long-term self interest in seeing a world free from extreme poverty and hunger."

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