Compromise text takes WTO process from bad to worse

Opinion of the vast majority of participants, both government delegations (from developing and least developed countries) and NGOs was however justifiably totally different.

The entire approach appears to have been the seeking of and deciding on least common denominators that would uphold and satisfy the interests of developed countries as opposed to those of developing nations. At the same time, there was no hesitation within the richer nations about marginalising LDC interests in the process. The whole purpose appears to have been to create a soft document intended to guide ministers in further negotiations with the goal of approving a final trade liberalisation deal and completing the current round of negotiations by the end of 2006.

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The agreement reached by the global body's 149 member governments in key areas included the following:

(a) in farm trade, governments accepted the elimination of all forms of export subsidies by the end of 2013. It is being hoped that substantial part of the cuts will be underway by around 2010. This was seen as a compromise between the EU, which pushed for a later date, and Australia, Brazil and the USA, which wanted a 2010 cut-off. In exchange the EU won a commitment that food aid, which Brussels says is misused by Washington to offload the US farm surplus, will be examined to ensure that they do not distort trade;

(b) in development, industrialised countries, and developing countries declared that they were in a position to give 'at least 97 percent of all goods from LDC states access to their markets from 2008';

(c) in the area of industrial goods there was least progress. In exchange for farm trade concessions, rich nations wanted developing countries to give them more market access for manufactured goods. The deal simply said that customs duties would be reduced to maximum levels but this was not set out with clarity;

(d) in cotton, it was agreed that cotton from the world's poorest nations will be allowed to enter markets in the industralised world duty and quota free from 2008. This however did not tackle the question of the four billion dollars paid in subsidies by the US to its cotton growers which made entry into that sector that much more difficult for African cotton growers;

(e) in the sector of services, negotiations decided that there would be further liberalising of trade in this area, including banking, insurance and tourism.

The developed countries have suggested that their concessions would be useful for the more than 2.4 billion poverty stricken population of the world. This does not however conform to analytical interpretation of the agreement.

It is generally agreed that the meeting after six days of grueling negotiations, adopted a text that delivered only paltry reductions in subsidies. It needs to be remembered that by 2013, the cuts in EU farm export subsidies will amount only to one billion euros. Action aid quite correctly points out that this pales into insignificance compared to the 55 billion euros that the EU gives in domestic subsidies every year.

In fact, rich countries, including the USA have conceded minimal access to their agricultural markets while opening up the sensitive industrial and services sectors of developing nations. Oxfam's Phil Bloomer was characteristically articulate when he commented that 'small progress in agriculture was more than cancelled out by extremely damaging agreements on services and industry.'

It is quite clear that after this agreement, rich countries would still be able to protect key products such as textiles -- which would definitely affect African cotton producing nations.

Consequently, market access measures announced by the US will be meaningless as long as domestic subsidies persist and keep prices artificially low.

Similarly, in the services sector, the poor countries will now be forced to open key areas, including education, healthcare and water to developed countries, without getting too much of a reciprocal gain.

It is true that developed countries have pledged aid for trade. However, WTO's ministerial text does not provide any guarantee that money will actually materialise.

Deeper analysis also reveals that Annex F to the revised text of the agreement will continue to allow the US to protect about 420 product tariff lines. Japan will also be permitted to retain tariff protection on 400 products. This format is bound to further exacerbate the existing inequalities between countries.

The WTO agreement was prepared following a compromise between the EU and G-20 led by India and Brazil. Their main bone of contention was 'agriculture subsidy.' Some sort of facilitation was achieved between the two sides. It did not however mean any fall-out for the poorer African LDCs.

Eventually, the Hong Kong Declaration has proposed the providing of duty free access for 97 percent of the LDC products sent to developed countries. This is considerably less than 100 percent or 99.9 percent that was being proposed by the LDCs including Bangladesh. The process in this regard has been further complicated by the fact that the provider country will decide which products would be excluded from the duty-free basket.

In the case of Bangladesh, three percent tariff lines of the United States, at an eight digit level, could include over 300 products -- enough to cover all of Bangladesh's textile exports if not the most significant portion of its entire exports. In effect, after this Hong Kong meeting, doors have been opened for the situation to move from bad to worse.

The agreement will hurt Bangladesh severely. This is particularly unfortunate because this country has been trying over the last fifteen years to live up to its commitments towards further liberalisation. A democratic country, Bangladesh in its own way has opposed Islamic militancy and terrorism and tried very hard to move forward through trade rather than aid. Its success in this front is now beginning to work against it. Instead of supporting Bangladesh and its RMG and textile sector (which employs millions of women), the US continues to refuse duty free and quota free access. It was therefore regrettable that the US Trade Representative had to remark that Bangladesh and Cambodia would not be given duty free and quota free access to the US market as 'it would be difficult to justify because of the global competitiveness the two nations have achieved in this sector.'

This unreasonable means of protection employed by the US seems to be completely against all the doctrines that it preaches. That government seems to have forgotten that the war on terror is best fought by creating employment and generating development. This widens the number of stakeholders interested in stability and peace. It is most unfortunate that the Afro-Caribbean Bill continues to thrive within the US lobby at the expense of progress among LDC states in Asia.

The Hong Kong meeting has demonstrated once again that the developed world has its own agenda and its interests to protect. They will continue to do so at the expense of the developing and least developed countries. It has also raised agonizing moral questions as to whether removing poverty is really in the developed world's global agenda. The demonstrators and NGO representatives who braved policemen on the streets of Hong Kong have had their views amply re-affirmed about the inequity that prevails and persists within the WTO. Competitiveness has been thrown out of the window. We have missed the opportunity to eradicate poverty through a joint effort.

Muhammad Zamir is a former Secretary, Ambassador and Member, Advisory Council on the WTO. He can be reached at mzamir@dhaka.net