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Deal on global trade holds out hope for poor nationsPosted: 05 Aug 2004
by Larry Elliott
Rich and poor countries last night pledged to secure a new global trade accord by the end of next year after a week of intensive negotiations banished immediate fears of a new era of protectionism by agreeing to cut deep into the west's lavish farm subsidies.
Negotiators described as "historic" an 11th-hour deal in Geneva early yesterday which ended almost a year of wrangling between the developed and developing world over the shape of a new trade liberalisation agreement designed to offer access to lucrative western markets for poor nations.
Pascal Lamy, the European Union's trade commissioner, said he was now hopeful that the talks could be completed by the time trade ministers next meet in Hong Kong in December 2005, following last-minute concessions by both Washington and Brussels to appease the developing world.
Trade war
With a US presidential election looming and a wholesale change to the European Commission imminent, the World Trade Organisation had warned that a fresh impasse would set back the prospects of a deal for years and might create the conditions for a global trade war.
Patricia Hewitt, the UK's trade and industry secretary, said: "This is a crucial step on the road to delivering a trade round that will benefit all of us, especially developing countries. An ambitious round is an important prize for the global economy and we must continue to make progress before next year's ministerial meeting in Hong Kong."
Under the agreement signed in Geneva, the 147 members of the World Trade Organisation agreed to a framework for liberalising trade in agriculture, manufacturing and services, as well as updating customs procedures that have re mained unchanged for more than half a century.
Western bias
Economists have estimated that a final deal could add more than $500bn a year to the size of the global economy, but some trade negotiators and most development groups warned last night the draft was biased in favour of the West and there was much to do to secure a deal that would benefit poor countries.
In an attempt to prevent a re-run of the fiasco in Cancun 10 months ago when the gulf between rich and poor countries proved unbridgeable, the compromise package agreed at the weekend was kept deliberately vague.
"Today multilateralism has made a minor triumph," said the WTO director general, Supachai Panitchpakdi. "The major triumph will be the day we achieve the Doha Development Agenda" - the name of the round launched in November 2001.
Negotiators agreed to eliminate export subsidies and other forms of government support for farm exports, but provided no timetable for reform. Under pressure from Brazil and India, the EU and the US also offered a "down payment" that would see an immediate 20 per cent cut in the maximum permitted payments by rich nations.
The highest agricultural import tariffs will face the biggest cuts, although no figures have yet been agreed upon. Nations will have the right to keep higher tariffs on some of the products they consider most important.
Farm subsidies
Brazil said it marked the beginning of the end for western farm subsidies, which add around �16 a week to the average food bill in the UK and hinder export of agricultural goods from poor countries. But Andrew Pendleton of Christian Aid said: "If everything that is written down in that text was agreed, it would be beginning to look better for a lot of the poorest countries.
"The reason I am being so guarded is the commitment on export subsidies is pretty clear and explicit, but there is no timetable - that is the absolutely critical factor."
Celine Charveriat, of Oxfam, said there was little in the deal to guarantee reforms that would help the poorest countries, and the deal overall was disappointing.
But the mood in Geneva was one of relief after a series of marathon negotiating sessions had repaired damage caused by the failure in Cancun.
Larry Elliott, is economics Editor for The Guardian.
This article was first published in The Guardian, (Monday, 2nd August 2004). All rights reserved. Reproduced with kind permission.
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