The Telegraph
Since 1st March, 1999
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Trade warriors wave white flag
- Farm clincher in face-saver deal

Hong Kong, Dec. 18: After a week of bitter wrangling, trade ministers of the 149-nation WTO finally reached an agreement today on the final draft ministerial declaration which will pave the way for concluding a global trade treaty by the end of next year.

WTO director-general Pascal Lamy said the negotiations “are now back on track and the declaration is an improvement, even if a modest one, over the earlier draft’’.

For India and the other developing countries, the draft ministerial declaration is not so much about getting access to the markets of developed countries but being able to protect their poor farmers from cheap agricultural goods.

The developing countries can choose the products they wish to protect and also take recourse to special safeguards, like anti-dumping measures, if they are swamped with cheap products. It also allows them to invest in rural development schemes and offer subsidies to small farmers.

India has also managed to extend its transport subsidy for farm goods till 2015.

The draft declaration affords developing countries the flexibility of not reducing tariffs in small and medium industries providing employment to millions. The protection can be provided even to units in their infancy.

The final declaration has addressed some concerns over the flexibility clause, which Kamal Nath took up last night. However, the Swiss formula for calculating tariffs for the manufacturing sector remains and some hard bargaining is expected in the ensuing rounds to work out the exact percentages by which tariffs will be cut.

The unity of the developing countries has paid off and they have, by and large, managed to thwart the attempts of the Western nations to sacrifice the development agenda at the altar of market access. The EU and the US found themselves cornered on farm subsidies but managed to get away without making big concessions.

In services, an attempt has been made to reduce the economic requirements in terms of bank guarantees and initial investments. However, granting more visas for professionals remains a sensitive matter for the West and there has been no movement on the issue.

The draft declaration provides for “duty free and quota free’’ access to some non-agricultural goods exported by the least developed countries. However, these nations do not see it going far enough to make an impact on their economies as the number of products is limited and the West has kept a regulatory clause.

The session will be remembered for the brinkmanship of EU trade commissioner Peter Mandelson, who finally conceded to 2013 as the date for eliminating farm export subsidies. The India-Brazil led G-20 had been insisting on a 2010 deadline. He even accused developing nations and the US of “conspiring’’ against him. On reducing trade-distorting farm subsidies, the US and EU have not conceded much. The least developed countries are upset that the US did not offer to cut the $3.5-billion annual subsidy to its cotton farmers.

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