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Accord on Farm Exports Moves Trade Talks Forward, but Not Far

Posted on: Monday, 19 December 2005, 18:00 CST

By Alwyn Scott, The Seattle Times

Dec. 19--HONG KONG -- Negotiators narrowly avoided a collapse of global trade talks here Sunday, shaking hands on a limited agreement that fell short of what U.S. farmers and businesses had sought.

The Sunday breakthrough -- following a final night of haggling inside the conference center and violent street protests outside -- failed to produce a grand bargain.

But trade ministers for the 150 nations of the World Trade Organization did reach agreement to end developed nations' farm-export subsidies by 2013. They also set near-term deadlines for putting more meat on the skeleton deal reached here and avoided the embarrassing setbacks caused when prior gatherings in Seattle and Cancun, Mexico, broke apart in disarray.

"It's positive in the sense that the WTO members are moving forward," said Mark Powers, vice president of the Northwest Horticultural Council in Yakima, who was in Hong Kong to advocate for the region's growers. "That's better than the alternative. But honestly it's kind of a minimal progress. We've spent a week here, and you can't say that it's monumental progress."

Developing countries banded together to win concessions from developed countries to end cotton subsidies in 2006, and the world's 32 poorest countries obtained a commitment to eliminate quotas and tariffs on nearly all of their exports.

"We were able to display a big unity," said Celso Amorim, Brazil's foreign minister.

The final text lacked many goals set by the U.S., which had wanted more far-reaching accords to cut domestic farm subsidies and tariffs on imports around the world. The United States had sought a deal that would drop the European Union's huge farm subsidies closer to U.S. levels, as part of a global deal to further open markets to U.S. farm and manufactured goods.

That would have helped Washington state industries -- from apple growers and wine makers in Yakima to Windows programmers in Redmond -- sell more products abroad.

The U.S. also wanted to speed up entry of U.S. insurance, banking, telecommunications and other service industries into foreign markets.

But those goals remain ahead, and new deadlines will keep pressure on, officials said.

For farm goods, the trade ministers promised to set levels for subsidy and tariffs cuts by April 30. The same date applies to levels of tariff cuts on manufactured goods, which account for three-fourths of global trade.

The meeting also agreed to phase out all forms of farm-export subsidies by 2013, three years later than the U.S. wanted, after the EU made a proposal that broke the stalemate.

Nations face a tight Feb. 28 deadline to propose talks to open key sectors, like telecoms, banking, insurance and energy.

"All of U.S. industry would have preferred a more ambitious text," said Malcolm Lee, senior counsel for international-trade-policy issues at Microsoft, who was in Hong Kong. "But if this agreement provides a path to move forward and conclude the negotiations by the end of next year, then that would be a positive outcome."

Still, the ministers reached agreement on many areas.

They set a 2006 date for ending export subsidies for cotton, a win for West African cotton-producing nations. U.S. Trade Representative Rob Portman predicted that provision may prove tough to get through Congress.

Wealthy nations agreed to give duty-free and quota-free access into their markets by 2008 for at least 97 percent of products exported by the so-called least-developed countries.

Deals were forged on other issues important to developing countries, such as food and development aid. Those issues consumed much of the week and distracted from the WTO's main business of opening markets and cutting subsidies.

"We were arguing over the color of the frosting and we don't even have a cake," said Bill Bryant, chairman of Bryant Christie, a Seattle trade consultancy.

U.S. and EU manufacturers expressed disappointment, though they supported the deal. "Hong Kong was dominated by issues that aren't central to 75 percent of world trade," said John Engler, president of the National Association of Manufacturers.

By avoiding tough decisions on tariff cuts, the meeting created a much tighter deadline to get a final deal approved by the end of 2006. "We put increasing pressure on ourselves," Engler said.

But wheat farmers cheered progress on rules to rein in Canada, Australia and other countries where government boards buy and export their nations' grain in a way that U.S. farmers say distorts prices.

"That's huge for the wheat industry," said Chris Shaffer, a Walla Walla farmer who is here as an adviser to U.S. Wheat Associates, the organization of state wheat commissions.

The WTO is racing to reach a final agreement in 2006 so that Congress can approve the pact before so-called "fast-track authority," which mandates a simple yes-or-no vote on such trade deals without modifications, expires in mid-2007. Without that, progress could falter.

At the same time, the U.S. is working outside the WTO framework by ramping up efforts to negotiate separate agreements with individual countries or regions, such as the Central America Free Trade Agreement that Congress passed in July.

A free-trade agreement with Thailand, in the works for 18 months, could benefit Washington exporters. "It's something we've been working very closely with Starbucks on," said Barbara Weisel, assistant U.S. trade representative. "They'd like to lower tariffs to bring in [to Thailand] the kinds of beans they need."

A free-trade pact also would strengthen piracy protection for software and other goods in Thailand, where trade in knockoff products is rampant. But some say such agreements undermine the WTO process.

Sunday's WTO text was hammered out against a backdrop of opposition near the convention center. Saturday night, protesters wielding bamboo poles whacked police in riot gear, who fought back with clubs, pepper spray, water cannons and tear gas in what was reportedly the worst street violence in Hong Kong in decades.

More than 70 were hurt in the melee, which started after a protest march veered from the planned route. Many protesters were well-organized Korean farmers, who say WTO trade rules threaten their livelihoods.

On Sunday, advocacy groups lashed out at the agreement, saying developing countries had sold out cheaply by agreeing to slash tariffs without gaining enough of the concessions they'd sought.

"The text is a failure for development and a victory for corporate globalization," said Walden Bello, director of Focus on the Global South.

But others saw it differently.

"We welcome it," said Kamal Nath, India's trade minister. "It is focused and it strikes at various problems of developing countries."

Information from The Associated Press was included in this report.

SUCCESSES, FAILURES

Agreements:

--Developed countries will end farm-export subsidies by 2013.

--Developed countries will eliminate all export subsidies on cotton in 2006.

--Wealthy countries will allow duty-free and quota-free access for 97 percent of exports from countries with per-capita annual incomes below $750.

No deals:

--Developed countries didn't get cuts in industrial tariffs.

--Developing countries didn't get formulas for reducing other farm subsidies and agricultural tariffs.

Source: The Seattle Times, The Associated Press

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Source: The Seattle Times

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