World trade deal survives stormy Hong Kong talks

By John Chalmers and Kim Coghill

HONG KONG (Reuters) – Ministers from 149 states saved
long-running global trade talks from collapse on Sunday with an
interim deal to end farm export subsidies by 2013 and open
rich-country markets a bit wider to the world’s poorest
nations.

Ministers expressed relief that they had averted a repeat
of failed conferences in Seattle in 1999 and in Cancun in 2003.

But they described the Hong Kong pact as disappointing and
said it would be tough to wrap up the four-year-old talks by
the end of 2006, after which U.S. President George W. Bush may
lose his Congressional authority to negotiate trade deals.

“In a week of disappointments, this is no small prize,”
said European Union Trade Commissioner Peter Mandelson. “It is
not enough to make this meeting a true success. But it is
enough to save it from failure.”

The agreement came after six round-the-clock days of
fractious talks between ministers and a string of
anti-globalization protests that erupted into vicious street
battles outside their harbor-side convention center.

World Trade Organization (WTO) Director-General Pascal Lamy
told weary ministers they had injected new impetus into the
Doha round, a so-far hapless drive to boost global economic
growth and lift millions out of poverty by bringing down
barriers to trade.

“What you all take back from Hong Kong is a new political
energy, a potent fuel to reach cruising speed during 2006,” he
said. “Seattle was about shrinking the WTO. Cancun was about
sinking the WTO. Hong Kong was about rethinking the WTO.”

The agreement, a series of compromises, fell well short of
more ambitious plans the WTO originally had for Hong Kong.

It proposed April 30, 2006, as a deadline for reaching a
draft for the Doha round, a milestone the organization had
originally hoped to reach in Hong Kong.

But Lamy said the “modest” package of market-opening steps
agreed on Sunday meant negotiators had at least taken the round
from 55 percent of the way to completion to 60 percent.

“BETRAYAL”

Big-hitters among developing nations, led by Brazil and
India, gave their nod to the draft but voiced their frustration
over the EU’s refusal to agree on 2010 as the cut-off date for
export subsidies.

“The EU owes one to the developing countries. We showed a
real will to negotiate and we didn’t feel it was the same from
the other side,” Argentina’s Alfredo Chiaradia said.

The agreement will bring the elimination of export
subsidies for cotton in 2006. Washington also proposed
quickening the pace at which it dismantles subsidies enjoyed by
U.S. cotton producers, which African nations say are ruining
their economies.

The accord fell short of U.S. and European hopes for
greater access to poor nations’ markets for manufactured goods.

But developing nations felt they were the ones
short-changed.

“There is a general feeling of frustration and
dissatisfaction, not to mention discontent,” said Mauritian
Trade Minister Madan Murlidhar Dulloo.

Non-governmental organizations also branded the Hong Kong
talks another victory for protectionist wealthy nations.

“This is a profoundly disappointing text and a betrayal of
development promises by rich countries whose interests have
prevailed yet again,” relief agency Oxfam said in a statement.

Indeed, one key element of Sunday’s deal — duty-free and
quota-free access for imports from the 49 poorest nations of
the world — was watered down because of U.S. and Japanese
reluctance to accept unbridled trade in goods such as textiles
and rice.

“It’s a shame the richest countries in the WTO outside
Europe could not go the extra mile for the world’s poorest
countries,” Mandelson said of the compromise, under which 3
percent — or 250-300 tariff lines — would be exempted from
the scheme.

U.S. Trade Representative Rob Portman voiced caution on the
week’s result, saying a Doha deal would only come in 2006 if
there was a breakthrough in cutting import tariffs on farm
goods.

That was an apparent reference to the 25-nation EU’s
refusal to open its long-protected agriculture markets any
further.

The sigh of relief inside the conference center was echoed
on the streets of Hong Kong on Sunday as thousands of
demonstrators marched peacefully to protest against the world
trade talks.

The mostly good-natured demonstration was in stark contrast
to Saturday’s pitched battles between protesters and riot
police, the worst street violence in the city in decades.

(Additional reporting by Richard Waddington, Doug Palmer,
William Schomberg, Sophie Walker, John Ruwitch and Tan Ee Lyn)