A 'Hong Kong' Analysis

Geneva Last week's sixth World Trade Organization ministerial conference which brought about "5 percent progress" in the languishing Doha Development Agenda trade negotiations, according to Director General Pascal Lamy has preserved the "process" more than adding to the substance of the four-year-old negotiations, trade ministers said (WTD, 12/20/05).

Though claimed as a success by almost every member albeit to varying degrees the Hong Kong ministerial declaration can be interpreted in different ways, several trade ministers said. "What is in the decision is clearly modest but it's not insignificant," said the Brazilian Foreign Minister Celso Amorim who coordinated negotiations on the part of the powerful Group-of-20 developing-country coalition. "We didn't lose anything, and that's something to celebrate," he said in Hong Kong.

"After months of disarray, the most important outcome from the six-day ministerial meeting was that the Doha negotiations have been brought back on track and the process is preserved with clear time-lines," commented one Southeast Asian trade minister.

Before Hong Kong, some WTO members wondered out loud whether it would be useful to have a six-day meeting just to consider a development package for least-developed countries and leaving aside the core issues of agriculture, nonagricultural market access and services. But a dramatic turnaround came on the very first day when US Trade Representative Rob Portman, G-20 coordinator Celso Amorim and a few others upped the ante by pressing for an end-date for the elimination of farm export subsidies. Brazil's Amorim argued that agreement on an end-date much to the disgruntlement of the European Union would be the least ministers could achieve, saying that tinkering with some "technical issues" in the negotiations was not enough.

Food Aid Retort

EU trade commissioner Peter Mandelson countered the push for an end-date for farm subsidies elimination by attempting to turn the talks in another direction by calling for radical reform of the "food aid" provided largely by the United States.

The EU commissioner also pressed hard on getting an early agreement on the "cotton initiative" of most importance to the four small West African countries of Chad, Mali, Burkina Faso and Benin. The United States was painted early on as the "villain" in that debate.

The United States backed off its objections and agreed to "cotton" language in the final declaration.

In addition, the EU along with the United States took Brazil, India, Argentina and South Africa to task for failing to move on market access for industrials. USTR Portman repeatedly maintained during the week that the United States would work closely with the EU on both NAMA and services, but insisted that the EU show flexibility both on farm market access and the date for the elimination of export subsidies.

As the key players were embroiled in a "war of words" in the various "green room" meetings, the four cotton producing West African countries joined with a developing-country coalition led by Zambian Trade Minister Deepak Patel in insisting that the United States not succumb to domestic pressures by putting a string of caveats on the core issues of the development package.

In his final press conference, USTR Portman admitted to the "lukewarm" reception that the Hong Kong outcome will likely have in Congress and by most agricultural commodity groups and textile organizations particularly relating to US acceptance of the "duty-free/quota-free" initiative for least developed countries.

All this contributed to heightened finger-pointing among the two-dozen "green room" participants up until Thursday morning when it became clear that conference chairman John Tsang Hong Kong's secretary of commerce and WTO Director General Pascal Lamy would have to put up another draft suggesting issues that could nudge the talks towards a conclusion. That revision issued on Saturday afternoon gave the EU two options accept the 2010 date for elimination of agricultural export subsidies or agree to a five year phase-out period from the beginning of implementation of Doha trade results.

The compromise draft also included some difficult language on "cotton" and "duty-free and quota-free" access which would have been difficult for the United States to accept, diplomats said.

On agricultural market access, NAMA and services, the first draft went as far it could to bring about specificity. It suggested, for example, how tariff-rate quotas would be decided for sensitive products. Language on coefficients in a NAMA tariff-cutting formula, the principle of less-than-full-reciprocity and plurilateral approaches in services also were included.

The draft, for the first time, included language on balancing negotiations between agriculture and NAMA, which suggested that the "level of ambition in market access for Agriculture and NAMA is commensurately high." It stated "This ambition is to be achieved in a balanced and proportionate manner consistent with the principle of Special and Differential Treatment."

Saturday Night, Sunday Morning

The Saturday evening/Sunday morning "green room" session following circulation of the first revised draft was a stormy affair, after the EU's Mandelson indicated that Brussels would go along with eliminating subsidies by 2013 in a "progressive manner." The offer, however, failed to please Brazil's Amorim and the WTO Director General among others. They insisted that Brussels agree to "substantial front-loading in 2010.

Brazilian minister Amorim dissatisfied with the EU response walked out of the "green room" briefly, but returned at the pleading of USTR Portman.

Nigeria, Senegal and China among others supported the EU's 2013 date.

According to sources, EU commissioner Mandelson accused the others of an organized "conspiracy" to force Brussels to agree to their demands without reciprocal treatment. He hit back at the WTO chief who had suggested that members would not be expected to pay for the elimination of export subsidies.

Against this wrangling, a second revision was issued that contained substantial changes to satisfy the concerns of all the key players.

By trying to accommodate all concerns, the final draft creates even more confusion, commented one trade ministers. Though the process is preserved, it is uncertain that members will meet the end-of-April deadlines to reach full modalities in both agriculture and NAMA, he said.

The minister also suggested that the consensus among the six key players the United States, the EU, Brazil, India, Australia and Japan will be difficult to maintain over the coming months due to the collapse of trust among some ministers. The only way the situation can be salvaged is through a political push at the highest level in the new year, he suggested.

Around the Globe

Peter Mandelson, the European Union's trade commissioner, said yesterday the EU was even less likely to make further concessions on agriculture in the Doha round, given the few concessions on offer from its trading partners at last week's ministerial meeting in Hong Kong, the Financial Times newspaper reported (see related report this issue). Mr. Mandelson said in an interview he had been "struck" by the unity and resolve among the EU's 25 member states during the World Trade Organization meeting, given previous European disagreements over agricultural reform.

"My position on agriculture is not some temporary, tactical posture," he said. "The member states were strongly united in Hong Kong because there is a clear feeling that other members are not engaging seriously on the full Doha agenda? ... There is no question of my using the WTO talks to push through further or early CAP (Common Agricultural Policy) reform." He said the timing of the budget review in 2009 should make it clear to the EU's trading partners that it could not be linked to the Doha talks, which have to be concluded by early 2007.

At present, the EU wants to label as much as 8 percent of agricultural goods as sensitive products, but Mr. Mandelson said there could be "some flexibility" on this. He also questioned whether WTO members would be able to stick to a new April deadline for making progress in the talks.

Separately, Chinese Minister of Commerce Bo Xilai said yesterday the WTO ministerial achieved some positive results, but he urged rich nations to make greater concessions, the China Daily newspaper reported. Bo said the adoption of the Swiss Formula to calculate tariff cuts when opening market access for non-agricultural products might not necessarily be detrimental to China.

However, Bo said the achievements of Hong Kong conference were not totally satisfactory, saying concessions made by rich nations were insufficient. "Developed nations need to make more concessions to narrow the economic gap between the developed and developing world. The rich nations are not doing enough and we expect them to come up with more concrete ideas in future negotiations," he said.

Ugandan Trade Minister Daudi Migereko said the trade deal concluded in Hong Kong on Sunday was a good start that will pave way for Africa's entry into the global market, according to an Associated Press report from Hong Kong. "These negotiations have been a success. The consensus we have reached is a good start, which will pave way for Africa's entry into the global market. It is the first time Western countries agreed to eliminate subsidies and conceded to their distorting effects on the market," Migereko was quoted by local press as saying yesterday.