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| Sunday, 25 December 2005 |
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Declarations not to everybody's liking : WTO back on track after hibernation - Pascal lamy Hong Kong Ministerial meeting of the WTO ended on December 18 after extensive discussions and negotiations of trade ministers of 149 member countries. The Ministerial Declaration was described in many dimensions. "We have managed to put the round back on track after a period of hibernation", Director General of the WTO Pascal Lamy addressing a press conference in the evening of the final day, said. According to WTO officials the agreed document of 44 pages is a significant progress. Hong Kong's Commerce, industry and technology secretary John Tsang, who chaired the conference outlined the achievements in the declaration. According to Tsang an end date for all export subsidies in agriculture has been secured. However it is not in a form to everybody's liking. Agriculture is one of the most controversial topics in negotiations. Even in the GATT, trade in agriculture commodities were hardly covered. The reason is that the agriculture is considered as the main source of food production and exposing it to market forces may cause problems of food security. Non food agricultural products too were not covered by GATT rules. Uruguay rounds went long way to bring all agricultural products within the WTO multilateral trading system. Official announcement of the Hong Kong meeting stated that a number of issues on agriculture have been settled or have been partly settled. The most straightforward one is the agreement to end export subsidies in agriculture by 2013. It has also proposed to reduce domestic support to agriculture and there will be three bands for reduction in the overall cut in trade-distorting domestic support with high linear cuts in higher bands (developed countries). All developing countries are in the bottom band. However the declaration said that the agreed date is conditional and loopholes have to be plugged to avoid hidden export subsidies in credit, food aid and the sales of exporting state enterprises. Agreement on cotton is another important achievement at the Hong Kong round. All forms of export subsidies for cotton will be eliminated by developed countries by 2006. This was a key demand from West African countries. On market access, developed countries will give duty and quota free access for cotton exports from LDCs from the start of the period for implementing the new agriculture agreement. Ministers have also agreed to cut domestic subsidies on cotton and act quickly . Non Agricultural Market Access (NAMA)is another important topic discussed and concluded at the Hong Kong meeting. The declaration adopted that to reduce or as to appropriate, eliminate tariffs including the reduction or elimination of tariff peaks, high tariffs and tariff escalation in particular on exports interest to developing countries. It also instructed the negotiating groups to finalise its structure and immediately taking into account the needs and interests of developing countries. Until recently, multilateral trade negotiations were more on NAMA because, trade on agricultural products which was kept outside the purview of the GATT. Free trade on non agricultural products produced significant progress in seven rounds of GATT negotiations. These include liberalising tariff and non-tariff barriers. Trade in service is one of the most important topic discussed at the Hong Kong round. This topic is new in multilateral trade negotiations, because previous GATT negotiations were restricted to trade in goods. Therefore until 1995 GATT trade disciplines were not applicable on trade in service. The negotiations on service started in early 2000. WTO negotiations on the subject is going on under the General Agreement on Trade in Service (GATS). Trade in service is difficult and controversial, because it is not regarding reducing or elimination of tax and tariffs. It is related to the laws of the country. GATS has identified four mode of international trade in services.They are; cross border supplies that do not require physical movements (business process outsourcing), consumption abroad (tourism), commercial presence (banking services) and temporary entry of natural persons. The strategy of GATS in promoting free trade is to eliminate or reduce all national policy measures that tend to discriminate among service supplies. The criticism on GATS is this policy would end independence of all countries, because under GATS rules, any national or provincial policy decision or legislation of a member country can be defined and challenged as a barrier to trade in service. Cuba and Venezuela formally expressed their reservations on the texts on NAMA and services and the meeting noted them. India and most of the developing countries as well as the European Union sought improvement in the draft declaration. As The Hindu reported, Indian Commerce Minister Kamal Nath has told that it had some positive elements but there were serious flaws. He wanted to change the draft to meet development concerns such as inclusion of less than full reciprocity and special differential treatment as a provision in market access on industrial goods of poor nations. India also demanded tariff reduction formula reflected in the draft. The G 20 group has defined the draft as a micro step forward. According to the EU the draft declaration lacked balance and was not up to its expectation. According to LDC coordinator and the Zambian Trade Minister Dipak Patel, LDCs want a meaningful agreement. As international media reported Hon Kong Summit faced the hardest protest from anti globalisation protestors. Previous WTO ministerial summits specially Seattle and Cancun Summits faced similar opposition. In Hong Kong radical South Korean farmer groups led the riots. They broke the barricades and clashed with riot police. One of the major issue in trade negotiations is cutting agricultural subsidies by US, Japan and the EU. The value of subsidies given by USA and Japan alone for their farmers is US$ one billion a day. In negotiations the countries which have an annual per-capita income of less than 425 Sterling pounds want duty free access for all products and countries. But US and Japan said they want to limit the list of products and countries. The rationale behind the multilateral trade negotiations of WTO is Adam Smith's theory saying that "When the market is very small, no person can have any encouragement to dedicate himself entirely to one employment, for want of power to exchange all that surplus part of the produce of his own labour, which is over and above his own consumption, for such part of the produce of other men's labour as he has occasion for".- Adam Smith- Wealth of Nations. Today free trade is considered as the engine of growth. Expanding market
access can help accelerate economic growth and it also will expanding
opportunities to the poor. However World Bank predictions suggested that a
country with a per capita income of $100 would boost it by only 60 cents
over the next ten years as a result of trade liberalisation. This says that
trade negotiations in the next decade will not progress as appropriate. |
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