Keeping Hong Kong On Line

Geneva Trade ministers of the United States, the European Union, Brazil, India, Japan and Australia meeting here on Saturday in an informal session hosted by the United States agreed broadly on what can be delivered in next week's Hong Kong trade conference for least-developed countries (WTD, 12/2/05).

The Hong Kong ministerial declaration may include a commitment in the Doha Development Agenda trade negotiations to "special products" and a "special safeguard mechanism" for developing countries in their farm sectors. However, the number of "special products" as well as the disciplines for a special import safeguard mechanism will have to be negotiated in the post-Hong Kong phase, the ministers said.

US Trade Representative Rob Portman who chaired the two day meeting told reporters that ministers made significant progress on the "duty-free/quota-free" access issue for developing countries. He noted, however, that there were some specific concerns. For the first time, the USTR indicated that the United States is willing to accept "duty-free/quota-free" access.

Japanese agriculture minister Soichi Nakagawa said Tokyo is prepared to commit a substantial package for developing countries; Brazil and India also said they were ready to enhance access for LDCs.

The six, however, failed to make progress in other key market access areas for agriculture, industrials trade and services, with the European Union refusing to budge from its entrenched position on agriculture. European Union trade commissioner Peter Mandelson refused even to agree to an end-date for elimination of export subsidies without having all parallel elements export credits and food aid decided as well. He also refused to negotiate on the EU's current market access offer despite a direct challenge from Brazil and India to do so.

'Building Blocks'

Consequently, members settled on some "building blocks" in agriculture by next March such as work on parallelism for determining the end date for export subsidies and equivalent targets in export credits and food aid.

The Friday and Saturday meeting touched on all issues of the Doha agenda as well as procedural aspects for the Hong Kong meeting. "There will be substantial progress in the Hong Kong meeting on developmental issues," said US Trade Representative Rob Portman. He warned reporters not to downplay progress made in the talks especially in the past few months. Hong Kong, he said, will be an important "stock-taking" exercise; some negotiations on specifics will likely occur in the "hall ways", suggested Brazilian foreign minister Celso Amorin. He said the informal ministerial demonstrated continued momentum to advance the Doha trade negotiations into next year.
"We tried to find a middle ground short of full modalities," said EU trade commissioner Mandelson, warning that "no wrong moves are made in Hong Kong that jeopardizes the foundation" for the talks.

Indian trade minister Kamal Nath said there was "conceptual clarity" among the six ministers but more work is required in all areas.

Australian trade minister Mark Vaile also said progress is needed in all areas. He said ambitions in nonagricultural market access in terms of agreeing on a formula and coefficients in NAMA market access and services has to be set.

Though the six trade ministers tried hard for "trade offs" in all three areas of Doha market access negotiations, there was little progress because the EU did not want to move from its current market access offer, according to USTR Portman. Ahead of the meeting, the USTR wrote to EU trade commissioner Mandelson urging some improvement in the EU's late October agriculture market access offer. He suggested that Brussels' demands for big market openings in NAMA could not stand on the paucity of its agriculture concessions, according to sources.

During the meeting, the United States tried to convince Brussels that it should consider increased farm access through tariff-rate quotas for sensitive farm products by basing expansion on actual consumption in its member states and not on imports alone.

The EU trade commissioner and farm commissioner Mariann Fisher Boel dismissed the US suggestions. They conceded only that Brussels would consider increasing cuts in its highest tariff band from 60 percent to 70 percent.

G 20

India's Mr. Nath defended the Group of 20 developing country coalition proposal on agricultural market access requiring industrialized countries to cut tariffs by an average of 54 percent and developing countries by 36 percent. He criticized the EU proposal for amounting to a cut of only 39 percent in real terms. He urged the EU to boost that amount to 54 percent.

On NAMA, the United States asked Brazil and India to agree to a "Swiss" formula with two coefficients one for industrialized countries and one for developing countries.

But the Indian minister refused to talk about either structure or formula without first agreeing on "paragraph eight" flexibility and less-than-full reciprocity. He said the Argentina/Brazil/India proposal remains a viable alternative.

Brazil's Amorim repeated that further movement in NAMA will depend on the level of progress in agriculture.

The six trade ministers agreed to push the services text in Hong Kong despite stiff opposition enunciated by the African Union states just prior to the meeting. Nevertheless, there was broad disagreement among ministers on inclusion of numerical targets, as suggested by the EU. Brazil, India and the United States all said they could not agree to numerical targets in the services mandate.