Pessimism surrounds WTO Hong Kong meeting

Best hope is for compromise to help poor countries, analysts say

Pessimism surrounds WTO Hong Kong meeting

The World Trade Organization meets in Hong Kong this week with little hope of forging a compromise between the European Union and the United States on farm subsidies that would in turn pave the way for an overall global trade accord.

Expectations for the Hong Kong meeting have been downgraded as preparatory talks failed to make progress on the key sticking point - global free trade in agriculture in return for free trade in industrial goods and services.

The main protagonists - the EU, U.S., India, Brazil and Japan - have all come up with proposals in the run-up to the ministerial talks that open Tuesday but they have been unable to break the deadlock.

Falling back to well prepared positions, they are now stressing instead that the talks should at least reach some sort of agreement to help the less developed, poorest countries get the benefit of freer trade.

"Two scenarios emerge as the most likely outcomes for the Hong Kong ministerial: a breakdown in negotiations or lowered expectations that allow for progress toward a less ambitious trade round," said Philippe de Pontet, an analyst at the Eurasia Group in Washington.

It is hoped a compromise deal would prevent a repeat of the debacle at the previous WTO ministerial meeting in the Mexican resort of Cancun in 2003, which ended in acrimony.

A political compromise in Hong Kong would also keep alive the so-called Doha Round of free trade negotiations, launched in Qatar in 2001, and maintain hopes the round could be concluded next year as planned with a global free trade agreement.

The build-up to the Hong Kong talks has been marked by bitter exchanges and finger-pointing, and growing calls for the European Union to offer bigger cuts in the huge subsidies it gives to its farmers.

The EU commission has offered a range of tariff cuts between 35 and 60 percent, with the average EU agriculture duty cut by about half, from 22.8 to 12.2 percent. The EU says the offer is final.

The United States meanwhile is pressing for reductions of 55 to 90 percent.

EU Trade Commissioner Peter Mandelson has also demanded that in exchange for concessions on farm trade, emerging market countries in particular must allow greater access for EU industrial products and services.

'Tactical brinkmanship'

Developing nations have been pressing both the EU and the United States to reduce tariffs and subsidies, arguing that until they do, farmers in poor countries will be unable to compete fairly on world markets.

"The problem is the negotiations are not actually happening," EU Trade Commissioner Peter Mandelson warned last week, blasting what he described as "tactical brinkmanship" and "crude bargaining" behind the WTO scenes.

"We don't want to pull out of the talks and certainly don't intend to ... but if this round fails, I think the possibility of restarting a further trade round is way, way into the future."

On Friday, U.S. Trade Representative Rob Portman, who has steadily pecked away at the EU position, said the WTO meeting would provide no dramatic breakthrough but it should build a platform for progress. The Doha Round is a "once in a generation opportunity" to lift hundreds of millions out of poverty, with a global aid deal doing "more for developing countries than all of the (aid) checks that our governments can write."

Portman said that he agreed with Mandelson in arguing that trade in industrial goods and services should be on the table alongside agriculture.

But he reiterated that without progress on agriculture, the developing world would never embrace change on other fronts.

The Hong Kong meeting was supposed to produce a framework for a treaty, with the goal of finishing the Doha round by the end of 2006.

WTO members are under pressure to wrap things up by 2006 because the United States' "fast-track" trade approval process expires on July 1, 2007, which permits Congress only to approve or reject, without amendments, trade deals. Without it, Congress would be free to reject specific points in any agreement, making it much more difficult to pass.

Updated : 2021-04-15 05:17 GMT+08:00