Wednesday, December 21, 2005

WTO Hongkong - "Absymal" Failure?

Last week ended the WTO talks at Hong Kong - a part of the "Development Round" of talks. The write-up tries to cover in short what was achieved and what was lost - I will give a brief and people can dig into new stories for more detail. (I wont necessarily cover all the points & not to 100% accuracy as Trade is way too complicated).

Before that guess an answer to these questions (taken from BBC Quiz) and mail back to me:
1. How much of the price of a jar of instant coffee purchased in a supermarket goes to the coffee grower? Options A. 50% B. 20% C. 10% D.1%
2. How much do rich countries spend on subsidising their farmers everyday? Options A. $100m B. $500m C. $1 billion D. $3 billion

Overall the goals of the "Doha" or "Development" round of talks was to focus on developing countries/their demands. The round overall has been not being going good after failures and deadlock at Seattle, Cancun, Singapore ...

Most of the goals focused on reducing/eliminating the "agricultural" subsidies in the developed world - US, Japan & Europe mainly. A quote african delegation gave after the talks was illustrative of the amount of subsidies given in the developed world -
"The situation will remain that it would be better to be a cow in Japan, subsidised for $7 per day, than to be a human being living in Africa". These subsidies have a whole lot of tampering affects - lots which are too difficult to even imagine.

Hong Kong talks were meant to break deadlock on agricultural subsidies. Even before the talks started Europe was not ready to reduce these to a large extent - mainly France was opposing this. Though blame was given to Europe neither US or Japan wanted to cut subsidies sustantially. Infact US eliminated some subsides but through a back door created even more subsidies, saying technically they are not subsidies.

What Happened:

Almost everybody expected the talks to fail from starting. Europe came up with a new proposal to allow poorest countries (42 or so) to trade without any tarrifs. The proposal saw opposition from US and Japan as they wanted to protect Cotton & rice repectively for local market. It was passed with many exemptions to US/Japan. So its little help but not much. And guess who opposed this deal?. Some of the carrabiean and other poor countries - why? Figure out.

Europe agreed to end "export" subsides(which are only 3.5% of Europe total subsidies) by 2013. But most poor countries felt this was too less.

Some services & non-agricultural market were opened up in developing world. But not much. This was demand by the developed world. The poor countries opposed this but some fast developing countries like India/Brazil supported this.

Protests: There were strong protests outside WTO talks with around 10,000 people participating. Some groups which had protested previously were now inside the conference room as they were invited and their views also heard.

Going Forward:

WTO atleast hasnt become completely irrelevant - though lost most of it credibility. This is bad in my opinion. If WTO falters the poor & developing world loses a platform where they can negotiate hard with the developed world. Bilateral/Multi-lateral trade agreements like NAFTA/CAFTA/ASEAN etc will become more prominent. In these platforms poor countries have less power to bargain or ask for anything and rich countries get huge benefits.

This does not mean that poor/developing world should accept unfair agreements at WTO. But it means that they need to stand together and bargain harder and get agreements with developed world at this forum.

Deal at WTO -
In Depth Coverage -

There are many other articles all over the press - if you want anything specific and cant find ping me, I might be able to help.


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