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Silver lining in WTO talks

Philip Bowring

MONDAY, DECEMBER 19, 2005
HONG KONG In terms of achievement, last week's ministerial meeting of the World Trade Organization here earned a low, though not failing, grade. But for symbolism, it rated a high mark.
 
The developing world received little of what it was supposed to get when the so-called Doha "development round" of negotiations was begun four years ago. But Hong Kong proved for the first time that much of the developing world is now more committed to the principle of trade liberalization than the developed world is. Progress may have been minuscule, yet developing countries proved major players in the negotiations. By being seen as very much a part of the process rather than mere recipients of whatever is determined by the United States, the European Union and other old rich countries, they have in very broad terms acquired a commitment to the principles of the WTO - multilateralism and the benefits of lower trade barriers.
 
For that, much credit must go to Brazil and India for a firm but ultimately pragmatic stance on behalf of both the G-20 - which includes China, India, Brazil, South Africa, Mexico and others - and the bigger, very diverse G-90 group of developing nations. It matters symbolically that India and Brazil, whose national interests are quite different and which have traditionally have been relatively minor players in trade are now so engaged in the process.
 
China has also played an important role - by remaining almost invisible on its own soil. China's export potential may be feared by many developing countries as much as by the old industrialized ones, but it both kept a quiet solidarity with developing-country farm exporters and provided an example of the benefits of lower tariffs on industrial goods for developing countries.
 
East Asian nations as a whole played a limited role in Hong Kong - unfortunate, given that they above all have been beneficiaries of freer trade and a multilateral system. Their stance reflected illusions that regional and bilateral pacts can be a substitute for the WTO, as well as the farm protectionist follies of Japan, South Korea and Taiwan.
 
Indeed, the thuggery by protesting Korean farmers outside the conference mirrored that on the part of the European Union inside. The Union is simply unwilling to acknowledge that if it wants to be a global power, it must play by global rules, and not try to force the world to bend to the results of self-serving anticompetitive horse-trading in Brussels.
 
Eventually agreeing to an end date - 2013 - for ending farm export subsidies was a modest concession with a distant time line. The dots linking Europe's support for its inefficient farmers and its problems with slow growth and urban decay were clear enough to others. Annoyance with a self-righteous Europe desperate to maintain the unequal privileges of a bygone era was the meeting's background music.
 
The European Union's inability to negotiate anything that had not already been stitched up between Paris and Berlin enabled the United States to get off lightly. The Americans gave only a modest concession to the African cotton farmers who are being impoverished by U.S. subsidies and blocked duty-free garment access for some of the poorest countries like Bangladesh and Cambodia.
 
It remains to be seen whether negotiators can build on the progress so far and reach a conclusion to the Doha round. Normally one might expect ministers to see the forest despite the trees, and to use their political authority to reach agreements beyond the powers of negotiators in Geneva. In this case however, now that some of the headline issues are out of the way, the best chance may be that the ministers will quietly allow their Geneva (and Brussels) negotiators to use the fine print and arcane technical details to put some liberalizing flesh on the bare bones of Hong Kong.
 
It is now clear that the developing countries will be more flexible on non-agricultural market access and services, the issues of greatest interest to the developed world. India, Brazil and China all have interests in a deal. So too should Europe and the United States - but only if they can escape being ruled by sectional interests. If they looked at how far China, India and Brazil have all come over the past decade by confronting entrenched domestic interests, they might awaken to the modern world.
 
Hong Kong has probably done just enough to halt, for now, the trend toward regional and bilateral trade deals that promise much but deliver confusion and trade discrimination. The follow-through in 2006 will be doubly difficult given the size of the U.S. trade deficit and the abysmal demographics that rule Europe and Japan. But just possibly, they will see the cost of sacrificing the interests of their advanced industrial and service sectors to the tyranny of influential minorities.
 
 
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