Quotes of the Day

Wednesday, Dec. 14, 2005

Open quoteThere was a time when world trade deals were agreed among the G7 industrialized nations, and the rest of the planet would be expected to meekly sign up. No more. At the World Trade Organization's Hong Kong ministerial meeting this week, the old roles seem reversed, with the trade behemoths now prostrating themselves before the world's poorest nations in a bid to secure their support. The principle of consensus means that the tiniest of the wto's member nations can block any deal — or allow itself to be courted royally before agreeing to come on board.

European Union trade commissioner Peter Mandelson has spent much of his time at the summit touting Europe's development credentials in offering unrestrained access to its markets for the poorest exporters. At the same time, U.S. trade representative Rob Portman has underlined American goodwill to developing nations, promise new money, and boasted about how much food aid the US provides to starving countries.

It's almost like an election campaign, as the two vie for the affections of the wto's developing nations. But it may all be in vain. The wto's current set of talks — named the Doha round after the city where it was launched in 2001 — are in deep trouble. Deadlines have been missed, including one to secure a framework for the final agreement in the Doha round by the end of the Hong Kong meeting, on Sunday. And the major sticking point is agricultural subsidies.

The EU is roundly criticized for holding up the talks by hanging on to farm protection and not offering more tariff and subsidy cuts. Mandelson is also constrained by EU countries such as France, which vowed to veto any deal that further cuts tariffs and subsidies. Just to stiffen Mandelson's spine in that regard, French agriculture minister Dominique Bussereau thought it prudent to remind Europe's top negotiator what it was he was supposed to defend: "The CAP, the whole CAP and nothing but the CAP."

The EU knows its farm policies are a lightning rod for complaints about unfair trade. By stressing its other aid and development policies that help poor countries, it hopes to shift the debate onto areas where Europe has an interest, like tariffs on industrial goods and trade in services. Mandelson says that Hong Kong offers a unique chance to agree a special package of measures for poor countries to prove that the wto is not about enshrining rich country tariffs and subsidies. "If we cannot deliver on this, I really think we should ask what we are doing in Hong Kong," he said. "But it requires negotiating, not posturing."

The U.S. is holding out against the EU's plan to offer total duty- and quota-free access to imports from 50 of the world's poorest nations. This is partly because it is sensitive in areas such as textiles, sugar and cotton. Japan, too, is balking, as it does not want to open up its rice market. U.S. senator Chuck Grassley — the chairman of the powerful Senate Finance Committee that handles trade — said the EU plans were a distraction. "It's an attempt to take the spotlight off of its weak offer on agriculture market access," he said. "That's a red herring."

A separate row has erupted over U.S. food aid. Mandelson says Washington simply dumps its farm surpluses on poor countries, turning it into a form of export subsidy. He insisted that US aid-in-kind "distorts trade and depresses local production," adding that "statistics show that this aid is directly related to the price shifts for the commodities concerned on the US market."

The EU says US food aid in 2003 was $2.6 billion, which accounts for up to 20% of wheat exports and more than 50% of skimmed milk powder exports. Portman rebutted the criticism calling it "a sort of European obsession." Since the EU has switched to a policy of cash-only food assistance, Portman said, it has been giving less to poor countries that suffer chronic food shortages. "We have tens of millions of people going hungry every day, demanding more food," Portman said. "There's not enough food to go around. Let's be sure that we supply more and not less food to those who need it."

There were other fronts, too, in the battle for the hearts and minds of poor countries. Portman announced this week that the U.S. would double aid to help developing countries boost their capacity for trade, to $2.7 billion per year by 2010. It followed a similar aid-for-trade pledge from Japan of $10 billion, and an EU promise to raise spending to $2.4 billion a year.

But poorer countries, who account for two-thirds of the wto's membership, have been unimpressed so far. Some of them are hoping for more, and under the consensus principle, they can wait until they are courted again. wto director general Pascal Lamy accepted that this was the consequence of introducing democracy to the wto decision-making process. "If it were different, taking decisions on the negotiations would probably be easier," he said. "But it would not be as legitimate." Lamy — who once described the process as "medieval" — now argues that this is the best route to an effective deal. "It takes more time, it is more burdensome and cumbersome, but I am convinced it remains the best way to take decisions that impact directly the lives of billions of people," he said. Close quote

  • LEO CENDROWICZ / Hong Kong
  • WTO rules require that new trade deals be adopted by consensus
Photo: AP PHOTO / DANFUNG DENNIS