The Hindu Business Line : WTO ministerial: Tough bargaining lies ahead

THE developing countries, representing 22 per cent of world agricultural production and 70 per cent of rural workers, should apply the lessons learned from the agricultural negotiations in Geneva.

After the failed Cancun summit, there is the realisation of the combined strength of developing countries and their powerful voice as articulated effectively by G-20.

There has been a welcome change in the complexion of the World Trade Organisation that reflects a concern for social justice and true trade liberalisation. It is also realised by all that if the Doha negotiations succeed, it could see 500 million people come out of poverty and the annual addition of $200 billion to the economies of developing countries.

One of the predominant and contentious issues to be discussed in the next ministerial conference at Hong Kong in December 2005 is agriculture. No meaningful agreement on global trade is possible as long as developed countries employ unreasonable farm subsidies and tariffs to protect their domestic agricultural producers. These go against the interests of poor farmers in developing countries competing in the world market.

The successful outcome of the Doha round would hinge upon the willingness of rich countries to pull down agricultural subsidies and tariffs that have for long distorted the pricing, export and production of food across the world.

The cotton producers from Africa are the most vocal. Agriculture subsidies accorded by the few cotton-producing developed countries harmed the economies of developing countries considerably.

Luckily, in the July 2004 talks, a breakthrough was achieved when the US and Europe agreed to large concessions. The agreement to cut their maximum subsidies by 20 per cent in the first year after the agreement was reached, and that countries with highest subsidies would bring them down considerably was a step in the right direction.

However, the nuts and bolts of this deal should be thrashed out at Hong Kong, and a time-frame fixed for the cuts to be effected.

This partial success should not make developing countries complacent, as the forces of protectionism would rear their heads again in response to criticism locally in those countries. A US Democrat Senator had denounced the agreement as a "sell-out of our farmers at the negotiating table".

The US has now come up with a proposal for removing the farm subsidies in two stages of five years beginning in 2008 and ending in 2023. It has also linked the subsidy cuts with sharp reduction of tariffs, making it difficult for the developing countries to maintain tariff walls.

It must be remembered that agriculture is at present part of the single undertaking; there can be no separate accord on agriculture alone without an agreement on all the other points of the DDA.

The participating countries have committed themselves to comprehensive negotiations on market access, export subsidies and domestic support.

The agreement also acknowledges that further discussions should take note of the need for special treatment required for developing countries, keeping in mind food security and environmental protection.

There will be an attempt to contrive an agreement by negotiations on three areas: Domestic support, export competition and market access. As the Foreign Minister of Brazil, put it: "The challenges posed by other items, such as non-agricultural products, trade facilitation, and special trade treatment for developing countries and implementation-related issues should not be underestimated."

The real danger to the developing countries could be in the details, and the G-20 should be extra vigilant in examining these. The road to the successful culmination of the negotiation process is long and rocky, and the final agreement may not be in sight for a long time.

The comforting thought is that talks have not broken down and some headway has been made. The talks in December will reveal whether or not a binding agreement will emerge or merely an agreement to continue the talks with no deadlines.

The developing countries should, on no account, fail to make their best attempts to usher in the multilateral trade system that the WTO is trying to put in place, as the bilateral and regional trade arrangements with richer countries will only be to their disadvantage.

They should work in a concerted manner to make the Doha round succeed and move towards the Millennium Development Goals.

(The author is a Chennai-based freelance writer.)

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