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RHETORIC OVERSHADOWS REALITY
IN one month ministers from the 148 countries
that make up the World Trade Organisation (WTO)
will gather in Hong Kong with a heavy weight of
expectation on their heads. The Doha round of
trade talks, launched in the Qatari capital in
2001, is entering what is highly likely to be
its final stages. The US's ability to negotiate
a trade deal without having it picked apart by
Congress expires in mid-2007, and with Capitol
Hill currently in an unforgiving and often
protectionist mood, it seems unlikely to be
renewed. That means December's biennial
ministerial meeting is the last time that all
members are scheduled to gather.
Ministers and officials insist that a broad,
ambitious deal to cut goods, services and farm
tariffs under Doha is at the top of their
agendas. But the rhetoric about the importance
of getting a deal done has not been matched by
the reality of the negotiations. The dominant
countries in the negotiations, particularly the
European Union (EU) and US, are only now getting
down to the kind of detail they originally
envisaged having agreed by the end of July for
the WTO's traditional summer break.
The two have edged closer to each other in
recent weeks, beginning to explore the possible
parameters of a deal that will have to be at the
heart of a successful trade round - cuts in EU
farm tariffs in return for reform of US
agricultural subsidies. But both also face tough
domestic constituencies who are strongly opposed
to giving away the farm.
The most likely outcome at the Hong Kong
ministerial is at best a weak deal. Even when
the EU and US have managed to hammer out a
common position, the rest of the membership may
have very different ideas. At the previous
ministerial meeting in Cancun in 2003, the
developing countries showed they were perfectly
prepared to let a meeting collapse rather than
sign up to an unsatisfactory deal on
agricultural liberalisation, the issue that
matters most to them. And in turn the developing
countries, particularly India and Brazil, which
have assumed a representative role in the
negotiations, have been dragging their feet on
the quid pro quo for cuts in the rich world's
agricultural subsidies and tariffs --
liberalisation of their services and goods
markets.
Indeed, one thing the round will have great
difficulty in living up to is its official
label: the "Doha development agenda". Although
the primary focus of the round so far has been
on agriculture, the subject of great concern to
developing countries, it seems likely that any
gain will be concentrated among a small and not
particularly badly off subset of them.
With the exception of cotton, which is grown by
a group of west African countries, the poorest
nations in the WTO generally do not compete
directly with the crops and products subsidised
by the rich ones.
Accordingly, the least developed countries have
concentrated their efforts on trying to get the
rich countries to open their markets further
through special preference schemes outside the
WTO negotiations while limiting the extent to
which they themselves will have to liberalise.
Some trade experts point out that this
traditional "mercantilist" approach -- promoting
exports and keeping out imports -- is highly
unlikely to deliver many development gains.
"A development round would focus on those areas
where freer trade would contribute most to
poverty reduction, and that means focusing on
the needs of individuals in the poorest
countries," says Grant Aldonas, a former senior
US commerce department official, now at the
German Marshall Fund of the United States think
tank. For example, he says, the rich countries
could reduce agricultural subsidies and
eliminate particularly high tariffs on items
like clothing and footwear where developing
countries do have competitive producers, in
return for the poor countries no longer taxing
imports of drugs and other healthcare goods and
services. "This would require the developing
world to give as well as get and so everyone
would feel they owned the WTO rather than opting
out," he says.
Most trade economists dislike these agreements,
which they say distort rather than liberalise
trade.
But if the traditional function of a
multilateral trade round -- for each country to
be able to gain from one part of the
negotiations, such as agriculture, what they
lose on another, such as services -- is no
longer able to deliver, trade ministers may well
wonder why they put so much time and effort into
multilateral talks.
And if the Hong Kong talks collapse as
ignominiously as the previous meeting at Cancun,
disillusionment with the multilateral route is
only likely to grow.
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