After six days of intensive marathon negotiations, the members of the World Trade Organization last Sunday adopted by consensus the Hong Kong Declaration. The agreement averted what could have been a disastrous failure of trade talks reminiscent of the earlier WTO meetings in 1999 in Seattle and Cancun in 2003. Last-minute compromises led by Brazil and India saved the day. The results were modest, and formidable challenges lie ahead, as the agreement is full of ambiguities. Difficult issues were deferred.
The current trade talks were launched in Doha, Qatar, four years ago, with the goal of lowering global trade barriers. Noteworthy reforms in Hong Kong include a 2013 deadline for ending farm export subsidies agreed upon by the 25-member European Union, which has also agreed to substantial reductions in export subsidies by 2010. An aid and trade package for the least developed countries, which have been left behind in this era of globalization, will provide technical aid and duty-free and quota-free access to 97 percent of their imports in the European Union, U.S. and Japan by 2008. A vague agreement to open markets to services such as banking, communications and insurance also was reached.
However, little progress was made on market access and tariff reduction in industrial goods. Under heavy pressure from Congress, the U.S. declined to remove the $4.2 billion it provides in subsidies to its 25,000 cotton farmers. Four nations in West Africa – Benin, Burkina-Faso, Chad and Mali, which are among the world’s poorest and rely on cotton for 40 percent of their exports – are highly critical. They claim that these subsidies depress prices worldwide and cost them $400 million annually in revenue. The U.S. has, however, promised to hold talks with West African countries to set a timeline for deeper cuts in these subsidies, as well as having promised an aid package to the four nations and Senegal. No agreement was reached on cutting tariffs and quotas on politically sensitive products such as rice, beef or apples, nor was there an accord on trade-distorting domestic farm subsidies.
Several thousand anti-WTO protesters gathered in Hong Kong as they have gathered at every WTO conference since Seattle in 1999. Violent demonstrations occurred Saturday when crowds attempted to enter the convention center where the talks were being held. Clashes resulted in more than 150 protesters and police being injured as the police used teargas, truncheons and water cannons. The most violent demonstrations involved 1,000 South Korean farmers protesting importation of rise into their country. More than 1,000 people were arrested, with a dozen charged.
Next is a four-month deadline to conclude trade liberalization talks on agricultural and industrial goods. Prime Minister Tony Blair is planning a summit of the G-8 rich industrialized countries and five leading developing countries early next year to keep the momentum going for a successful conclusion to the Doha round.
The WTO is a group of 20 advanced developing countries, another group of 90 developing countries, and the remaining industrialized countries. They have such divergent interests on international trade that it is a miracle to find common ground among the rich and the poor.
And the fear is that unless multilateral negotiations succeed in trade liberalization, major players such as the U.S. will focus their attention instead on regional trade agreements such as NAFTA or bilateral agreements such as the one the U.S. has entered into with many countries.
There is special urgency to conclude the Doha round by the end of 2006, as the legislative authority from the U.S. Congress to the president to conduct international trade talks on a fast track – that is, trade bills presented to Congress on a take-it-or-leave-it basis – expires in July 2007.
Critics have been uncharitable. As Steve Tibbett of Action Aid said, “The WTO has served up a diet of peanuts, waffle and fudge. Poor countries are still waiting for the famine to end and the feast to begin.” The developing countries need to see a credible WTO whose efforts succeed in not just promises but results that improve their economic well-being.
Ved Nanda is director of the International Legal Studies Program at the University of Denver.
