Global Policy Forum

By Suvendrini Kakuchi

Twenty-two countries that ended a mini-summit Sunday on trade liberalisation, including the touchy issues of agricultural subsidies and access to cheaper drugs, reached no breakthrough here -- and managed only an agreement to discuss the matter further.

But while World Trade Organisation (WTO) director general Supachai Panitchpakdi called it a good start, activists here said the lack of progress showed the deep differences between rich and developing countries on how to balance freer trade measures with equity and social concerns. ''If I would compare the meetings in Tokyo to Sydney (the last informal WTO summit in November), the degree of engagement has increased,'' said Supachai. ''There has been a straightforward discussion and members are trying to see the others side's position. Members will have to find ways of making use of the document,'' he said, referring to the WTO draft proposal discussed here that seeks cuts in farm tariffs but also reduces trade-distorting subsidies and phases out export subsidies.

The proposal was the discussion paper prepared by WTO farm negotiations chairman, Stuart Harbinson, for the informal summit here, which follows a similar meeting in November in Sydney. Like the Sydney meeting, the Tokyo one was a by-invitation-only summit, drawing flak from activists as ''exclusionary'' and ''undemocratic'' because a small group of countries discusses ''critical WTO matters affecting all member states'', they said in a statement circulating ahead of the Japan meeting. Among the governments represented here were the United States, European Union, Japan, India, Brazil, Kenya and Egypt. China, South Africa, Trinidad and Tobago were absent even though they were invited by Japan.

''We want an acceptable package. The market access issue is very clear - there is very little flexibility in the draft for developing countries,'' Indian Minister for Commerce and Industry Arun Jaitley said, although he said the WTO proposal had some good points. ''After Tokyo, we are two steps back instead of one step forward,'' argued Rian Fokker of Oxfam International, saying the WTO proposal did not give fair protection to farmers in developing countries, including by the prevention of the entry of subsidised exports into developing country markets. The ministers' reactions to the WTO proposals themselves are '' diplomatic acknowledgement of the deep differences in the WTO, or a cautious recognition of the fact that the draft might be the only basis for further movement,'' Walden Bello of the Bangkok-based think tank Focus on the Global South said. Any hopes by developing countries that the deadlock on public health issues would be broken here were dashed.

In November 2001, the WTO reached a landmark decision to allow revisions in trade rules to allow developing countries to override drug patents, and make and export cheap generic copies to meet public health needs including the HIV/AIDS pandemic. At the time they did not specify how these countries would be able to get licences to make generic copies of patented drugs, due to debates over what makes a public health ''crisis''. Governments failed to resolve this issue at Sydney and again here in Tokyo, which was another attempt to put together acceptable proposals to be forwarded to the complete WTO membership.

In Tokyo, the only new sign of movement on the issue was a proposal made by Brazil, which suggested that the World Health Organisation play the role of monitor in judging when poor countries could use this trade mechanism. Pharmaceutical firms and industrialised nations, including the United States, are wary of allowing poor countries to export drugs produced under the relaxed rules, fearing the medicines would find their way back into wealthy markets. ''Progress on public health issues has been neglected in Tokyo. We should be going forward not backwards,'' said Phoenix Leung, campaign officer at Oxfam Hong Kong.

Still, the WTO's Harbinson says that the organisation's proposals discussed here ''sparked a fresh debate and engagement to narrow the differences'' on key matters. Harbinson's paper proposes a minimum 25-45 percent and average 40-60 percent cuts on all farm tariffs over five years, an increase in import quotas to 10 percent of consumption, a 60 percent reduction in trade -distorting domestic subsidies and a phaseout of export subsidies in nine years.

Japan, host of the summit, described the WTO paper as a ''catalyst'' for the conference. In a press conference, Foreign Minister Yoriko Kawaguchi said: ''The divergence of views are expected, but the paper was a success at motivating discussions.'' U.S. Trade Representative Robert Zoellick called the draft ''a starting point'' that needed further clarification and discussion.

India's Jaitley added that the proposals discussed here had some ''positive features in the form of provisions for special and differential treatment for developing countries in agriculture'' but also ''the lack of flexibility that India had in access in agriculture''. After all, he said, India's 650 million farmers cannot compete against imported agricultural products highly subsidised by their industrialised-country producers.

But most of the other comments highlighted that much work still needs to be done before countries can take any steps to closing the huge gap that threatens the success of the WTO ministerial meeting in Cancun, Mexico in September. European Commissioner for Trade Pascal Lamy said that while the WTO paper ''provoked reactions'', the EU is waiting for the second draft of the text because the paper is unbalanced and tilted toward rich countries' market access. A major grouse for the EU and Japan, two countries rejecting a U.S. call for lowering tariffs on farm imports, is that the proposals in the WTO paper, while promoting tariff reduction, does not take into consideration issues such as environmental protection and food safety. Japan, which has fiercely protected its rice market, opposes a proposed minimum 45 percent cut in its 490 percent tariff on rice. But Harbinson said a 45 percent reduction in rice tariffs is a stronger reform measure than the U.S. call for a 25 percent cut.

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