December 13, 2005, Hong Kong, Press Release

The 6th WTO Ministerial Conference is about to be formally inaugurated in a few hours from now. Key WTO Members have so far not made much headway in terms of convergence on the most contentious issue of farm trade liberalisation. No party seems to be in a mood to relent. The EU Trade Commissioner Peter Mandelson is facing most of the criticism. But he expressed his inability to further improve upon October 2005 EU’s offer on agriculture. Mandelson said he would lose the support of national governments if he made a new farm-trade offer.

The EU’s offer to cut average farm tariffs 46 percent has been criticised by the US, Brazil, India and Australia, which said the offer didn’t go far enough. In fact, the chances of further reductions in EU farm subsidies diminished well before the beginning of the Ministerial when France accused Mandelson of exceeding his mandate after it appeared that he was prepared to offer more cut on farm subsidies before 2013 in preliminary WTO talks in Geneva.

India too, on the other hand, is taking up a strong stand on the issues related to development. The Indian Commerce Minister Kamal Nath in his pre-inaugural briefings to the NGOs and media emphasised that it is not the completion but the content of the Doha round is important. “The present round must address the prevailing inequities in the world trading system and not further perpetuate them”, he said.

On the issue of market access, he pointed out that for poor countries the greater market access means elimination of tariff peaks and escalation, correction in anti-dumping laws, checking the misuse of non-tariff barriers, addressing the issue of CBD and TRIPs and TRIPs and public health. If these issues are addressed to the satisfaction of developing countries and LDCs then only the Doha round can be brought back on track.

Nath was highly critical of the latest EU’s proposal on NAMA, according to which India will have to reduce its tariff on non-agricultural products by 77 percent against 24 percent cut for the EU. “This is certainly an Special & Differential Treatment, but the other way round”, he remarked.

The G-20 in its Ministerial Declaration released on the eve of the inaugural reiterated the development aspect of the Development Agenda. The declaration calls for removal of distortions in the international agricultural trade market. “The largest structural distortion in international trade occurs in agriculture through the combination of high tariffs, domestic support and export subsidies that protect inefficient farmers in developed countries. Removing these anti-development measures is a core objective of the Doha Round as it will help in reclaiming the development dimension of the Doha Development Agenda and the meaningful integration of developing countries into the global economy. It is for this reason that agriculture is the central issue of the Doha Round.”, The Declaration emphasised.

The big question is who will blink first. The EU has demanded that leading developing countries like Brazil and India open up their economies to Europe’s industrial goods and services – something they have so far resisted until the EU moves further on agriculture. “Unless the EU is able to improve substantially its offer on agricultural goods there will not be a successful trade round,” Brazil’s foreign minister, Celso Amorim, put forward explicitly in a news conference. There has been no change in EU’s stance on phasing-out of export; promising to cut the highest tariff rates by 60 percent and to eliminate all subsidies for farm exports as long as other countries made similar moves on other components of export competition pillar of agriculture.

Given the prevailing logjam, the WTO Members seems not very optimistic of any significant outcome at the Hong Kong ministerial and they are getting prepared to meet sometime early next year. This is evident from the statements given by representatives of some of the key WTO members. The EU Trade Commissioner said a breakthrough was “impossible” because the gulf between the 150 member states was too wide. “There’s simply too little on the table to negotiate in Hong Kong,” he said. The US Trade Representative, Robert Portman, has already conceded that the Hong Kong meeting will not result in a major breakthrough on agricultural trade and expecting a deal sometime next year.

The WTO Director-General, Pascal Lamy, from his end, is trying to convince delegates to make this week’s meeting a starting point, to see what can be achieved now and save the harder stuff for later. With major progress unlikely this week, the least WTO members can do to put in place building blocks for an agreement early next year. This would include setting parameters for cuts in agriculture and industrial protection and a package of special help for the poorest countries to enable them to build up the capacity to trade.