Egypt and other developing nations gave their stamp of approval to a WTO framework agreement based on the promise of better access for their agricultural exports, Niveen Wahish reports It took 10 months to get the Doha Development round of multilateral trade talks back on track. The round-the-clock negotiations at the World Trade Organisation's (WTO) general council meeting last weekend came to a conclusion on a positive note. The 147 members of the multilateral trade organisation agreed last week to eliminate export subsidies, limit other subsidies on agricultural products and lower tariff barriers. The passage of the framework agreement, also known as the July Text, which sets out a series of principles for liberalisation but sidesteps details, has salvaged the Doha round of trade talks which was launched by WTO ministers in the Qatari capital in 2001. The success of the general council meeting has raised hopes of a revived global economy. A study by the University of Michigan, quoted by the Associated Press, found that cutting global trade barriers by a third would boost the world economy by $613 billion -- the equivalent of adding a country the size of Canada. The Doha round negotiations had come to a standstill following the failure of the ministerial conference in Cancun, Mexico last year. At that time delegates had come to a dead end particularly on the issue of agriculture. Developed nations, headed by the EU, the US and Japan were blamed for protecting their markets while pushing for access into markets of poor countries. Some $300 billion in subsidies and support are paid by the wealthy nations to their farmers. The target date of the conclusion of the Doha round, originally set for the end of 2004, will never be met, and a new target date has been scheduled for 2005. But during the ministerial conference in Hong Kong everyone was given something to be happy about. As Gregor Kreuzhuber, an EU agriculture spokesman, was quoted as saying, "What we need is a balance of unhappiness." In fact, the turnout was viewed as encouraging. However, Ahmed Ghoneim, assistant professor of economics at Cairo University, said that it remains to be seen how the good intentions in the July Text will be translated into mechanisms of implementation and to what degree the process is transparent. Moreover he believes that negotiations could face fresh obstacles as delegates will get down to details when they meet again is September. On the core issue of agriculture, the framework agreement calls for elimination of export subsidies, widely viewed as the most trade-distorting form of farm aid, reduction of domestic support and restriction of export credits. On market access, the agreement does not place a formula for a reduction but recommends a "tiered" approach whereby the highest agricultural import tariffs will face the biggest cuts although figures have yet to be specified. Moreover, countries will have the right to keep higher tariffs on some of the products they consider "sensitive". But again details were postponed to a later stage. Such cuts in government support for agricultural production are primarily targeted at wealthy agricultural producers such as the US, and the EU. In return, their non- agricultural exports would have greater access to developing countries, although specifics were again left open to negotiation. But the Text also gives the poorest nations the chance to maintain some protection in key areas. Just like other developing countries, Egypt's primary concern was agriculture. The leading Egyptian negotiators on that issue are the new Minister of Trade and Industry, Rashid Mohamed Rashid, accompanied by veteran WTO negotiator Youssef Boutros Ghali, minister of Finance. But for Egypt, agriculture is a double-edged issue. According to Ghoneim, the country has a comparative advantage with a number of products which are facing unfair competition due to subsidies offered by the EU and the US. For example, Egypt stands to benefit from the elimination of export subsidies on products such as cotton which have been facing fierce competition from US cotton. US cotton farmers receive some $3 billion annually in government support. On the other hand, Egypt is a net food importer and the elimination of subsidies would cause Egypt's food import bill to inflate. If liberalisation takes place in the sense of reduction of subsidies, enhancing market access by reduction of tariffs in developed markets, combined with a special treatment that can be implemented for the benefit of net food importers, this will be good for Egypt. But Ghoneim is sceptical, saying that "we have been talking about net food importers since the Uruguay round and nothing has been done." However, Rashid is more optimistic. Speaking at a press conference on Tuesday he said that the removal of subsidies will enable Egypt to realise its full pontential in agricultural exports, which should make up for any increase in imports. Aside from the contentious issue of agriculture, further liberalisation for non-agricultural goods was also on the agenda, with the aim of reducing import barriers to goods. A formula whereby the highest tariffs will receive the most cuts will be adopted. But again, additional negotiations will be carried out to write down specifics. Developing countries will have longer to make the changes. This is an area where there was not much reason for concern for Egypt. As Ghoneim put it, "the government already recongnises the need for reduction of tariff barriers. That is already on the domestic reform agenda." Moreover, he explained, tariff cuts will not be felt by the layman as they will not be at the applied rate, which is already below our commitments to the WTO on many items. Another issue which also came up at last week's meeting was that of trade facilitation, which basically entails making customs procedures easier and less costly for businesses. This is one of the four Singapore issues which rich countries were trying to convince developing countries to sign up with in Cancun. The developing countries refused, however. The other three Singapore issues which were dropped include competition, investment and transparency, and government procurement. "The fact that only trade facilitation was placed on the agenda is a success for developing countries who were refuting the idea of a single undertaking," said Ghoneim. Trade facilitation was accepted as it was viewed as advantageous for everyone: governments, business, investors and consumers. Where Egypt is concerned, trade facilitation goes in line with government efforts to streamline customs procedures. "It will be beneficial for the business community, which suffers under high transaction costs. And this will be passed onto the consumer in the form of cheaper products," Ghoneim said. He fears, however, that any malpractice by ignorant customs officials may make Egypt liable for dispute settlement mechanisms.
