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World trade deal survives stormy Hong Kong talks

Posted on: Sunday, 18 December 2005, 12:59 CST

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)

Source: REUTERS

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