The developed world is sending a loud and clear message -- developing countries must be ready to reciprocate at the Hong Kong WTO ministerial meeting, writes Niveen Wahish It's that time, when speculations are rife over whether or not the trade ministers from the World Trade Organisation's (WTO) 148 member countries will reach any consensus at the next ministerial conference scheduled to be held in Hong Kong on 13 December. Negotiators are hard at work in Geneva trying to find some common ground between the various parties with the EU, which worked hard to get the round started, working even harder to ensure it reaches a satisfactory end. If recent history is anything to go by it will be an uphill struggle. The Doha Development Agenda, originally scheduled to end in 2005, may well drag on until the end of 2006. Two years ago, at the WTO ministerial meeting in Cancun, talks broke down when G20 states decided that developed countries were offering insufficient concessions in the area of agriculture. The G20 wanted access to developed countries' markets and an end to trade distorting subsidies. Developed countries were unwilling to make the necessary adjustments. This time the EU is embracing the G20 and working with it. Earlier this year the EU began negotiations with G20 members India and Brazil "so that we are able to take forward in the best way possible the multilateral negotiations," EU trade commissioner Peter Mandelson recently told a group of journalists from the G20 countries in Brussels. Other G-20 members include Egypt, China, Malaysia, the Phillipines and Argentina. But as Jens Schaps, head of Agriculture, Fisheries, SPS measures and External Trade at the European Commission (EC) told the same group of journalists, although the paper drafted by the G20 is a good base for further negotiations the road to Hong Kong remains bumpy. The EU, according to Schaps, is already attempting to reform its agricultural policies. Agricultural support consumes 45 per cent of the EU budget, which in 2005 stood at 106 billion euros. The EU is now attempting to decouple production from payments made to farmers. Previously, the more a farmer produced the more he would receive in subsidies. The EU may have started to deal with its own subsidies, but this is only half of the equation. What developing countries -- particularly big agricultural exporters such as Brazil and India -- want as well is better access for their own agricultural goods. Though there are indications the EU is coming round to the G20, the position of the US remains difficult. America has yet to work on reforming its domestic support policies, though there are some signs that it might be willing to move in that direction. A recent US proposal on domestic support may signal a breakthrough: as Pascal Lamy, WTO director-general, said in a 13 October statement, the "US has [finally] crossed the line of reform of its agriculture policy," putting domestic support up for negotiation. The EU desire to smooth over the issue of agriculture stems from a general recognition that "the key to open the door to this round is agriculture", as Paolo Garzotti, deputy head of the EC's WTO, OECD, TRTA and GATT coordination unit, put it. He lamented that talks are not proceeding as quickly as they might, conceding that "timing is a problem". The US fast track ends next year which means that, as in the Uruguay round, there could be a great deal of last-minute haggling before any agreement is reached. While the Hong Kong ministerial meeting is only a staging point on the road to a final agreement it will, says Schaps, provide important indications of how to proceed. Just as the EU believes it is making an effort and wants to get the US on board, it expects developing countries to make their own concessions in areas including non-agricultural market access (NAMA) and services. "We cannot finish this round by coming to an agreement on agriculture. Important as it is, we have to find a satisfactory outcome in services and non-agricultural market access," says Mandelson. He warned that there is potential for trade and growth which developing countries could lose "if we do not have further progress in the liberalisation of other sectors, not progress on one thing, but all". Non-agricultural market access is among the most significant of those other sectors. Improved market access, says Mandelson, will provide greater opportunity for South-South trade among developing countries. Sandra Gallina, of the EC's WTO, OECD, TRTA and GATT coordination unit, expects an agreement over NAMA modalities to be reached in Hong Kong. She pointed out that the EU is ready to liberalise in several key areas for developing countries, including textiles, clothing and footwear. But guaranteeing success, she insists, will depend on an equitable distribution of concessions, with developing countries also opening their markets and lowering tariffs. In the field of services progress has been particularly slow, says Julien Guerrier, deputy head of the trade in services unit, despite the fact that service industries represent the fastest growing segment of international trade. "Services liberalisation in developing countries could provide as much as $6 trillion in additional income between 2005 and 2015," says Guerrier. Under the General Agreement on Trade in Services countries can choose which sectors they want to open, to what extent and at what pace. Nobody, says Guerrier, expects developing countries to take on the same commitments as developed countries. While tourism, financial and business services are relatively open in developing countries, distribution, health and education remain closed. Guerrier hopes that by the ministerial meeting in Hong Kong negotiations on service liberalisation will have caught up with talks on agriculture and NAMA. For this to happen though, he stresses that developing countries must be allowed room to exercise flexibility. The interests of developing countries, particularly the least developed, should be at the heart of negotiations at all levels: "The proper opportunity to adjust gradually to the changes being introduced, a combination of trade opportunities, access to other markets, the delivery of development assistance to raise the capacity of those countries to produce trade, the improvement of trade facilitation and lowering the cost of trade is [needed] to help poorer developing countries," Mandelson said.
