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World trade talks inch toward compromise deal

Posted on: Sunday, 18 December 2005, 03:05 CST

By Sophie Walker and John Ruwitch

HONG KONG (Reuters) - Weary trade ministers inched toward a compromise deal curbing rich nations' farm subsidies on Sunday as anti-globalization protesters marched again in Hong Kong, a day after violent clashes with riot police.

As the World Trade Organization (WTO) meeting staggered into its last day, the United States went some way toward meeting the concerns of African cotton producers and a package for the world's poorest countries appeared to be falling into place.

But it was unclear whether Europe's offer on ending its export subsidies would be enough to satisfy big agricultural producing countries like Brazil, which have demanded a cut-off date of 2010.

"Everything is pretty much okay, but there is still a question mark over subsidies," one senior trade diplomat said.

Diplomats say that without agreement on sticking points in Hong Kong, a long-elusive pact to free up global business in farm and industrial goods and services could be killed off, throwing the very standing of the world trade body into doubt.

On Saturday, Hong Kong police fought running street battles and fired volleys of tear gas to repel hundreds of mainly South Korean protesters trying to force their way into the harbor-side convention center where the trade ministers were meeting.

Undeterred, more than 1,000 demonstrators began another march against free trade on Sunday afternoon.

The government said 114 people were injured in Saturday's fighting, including 39 police officers. Nine hundred people were arrested, many of them South Korean farmers who say the WTO is driving them out of business.

However, the fighting was less intense than the "Battle of Seattle" in 1999 when protesters succeeded in delaying the start of a WTO ministerial conference that had initially been intended to launch a new round of trade negotiations.

The current trade round was started in Doha in late 2001 in a bid to calm a jittery world economy after the September 11 attacks on New York and Washington.

It was sold to developing countries as a way to lift them out of poverty, but many of them complain that rich nations are clinging to decades-old protection of their agricultural markets.

"SLEEP IS OVERRATED"

Those rich nation-poor nation tensions have plagued the Hong Kong talks all week, and came to a head in fractious negotiations that went through the night and ended on Sunday morning.

Indian Trade Minister Kamal Nath emerged from those talks saying that there had been enough consensus for a deal.

But, minutes later, the EU said there was no agreement.

"We made the moves that were expected of us but the goalposts moved at the last moment ... others have put a barrier in the way," said European Commission spokesman Peter Power.

Diplomats said the EU had offered a cut-off date of 2013 for farm export subsidies despite pressure from developing countries and the United States for the earlier date of 2010.

"There was agreement from the vast majority of members for 2013 -- but then Brazil said 'no'," said one.

Export subsidies have become an emblematic issue for developing countries at the ministerial conference. Brazil says ending them would send a clear signal of rich nations' willingness to reach an overall pact that benefits the poor.

EU subsidies are currently worth about 2.7 billion euros a year, a small part of the 25-nation bloc's annual spending of more than 40 billion euros ($47.9 billion) on agriculture.

The EU said on Sunday it could begin a limited phase-out before 2013, but it would not be substantial. It was not immediately clear whether that would placate developing nations.

U.S. Trade Representative Rob Portman remained hopeful.

"I've learned that sleep is overrated. We're getting less and less every night and none last night," he told reporters. "But it was worth it. We made some progress. So I'm still encouraged. There's more time left."

The United States said it had proposed cutting its domestic support for cotton production more ambitiously and more rapidly than for other commodities.

A senior U.S. trade official said that, in response, cotton-producing countries in West and Central Africa -- which say U.S. subsidies are savaging their economies -- were likely to drop requests for specific cuts.

Diplomats said a plan to give the poorest nations tariff-free and quota-free access to the markets of the world's biggest economies was now likely to be slightly less sweeping, making it easier for the United States to accept.

($1=.8355 Euro)

(Additional reporting by William Schomberg, Richard Waddington and Chris Buckley)

Source: REUTERS

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