A face-saver’s hammered out to wrap up Hong Kong

After hectic long-winded negotiations that began at 10.30 pm last night and went on till 9 am this morning, a final revised draft for the WT...

After hectic long-winded negotiations that began at 10.30 pm last night and went on till 9 am this morning, a final revised draft for the WTO’s Hong Kong Ministerial declaration was agreed upon by the 150 member countries. A considerable improvement on the vague draft text put out yesterday by the WTO secretariat, the revised final draft takes on board some concerns of India and the developing world in all three sectors under negotiation, namely Agriculture, Industrial Goods and Services.

Analysts and NGOs, however, called the pact a ‘face-saving’ deal to prevent Hong Kong from being labeled as another failure like Cancun or Seattle. Most concerns tackled are just reiterations of the promises already extended in the July Framework of 2004. Yet, with the US and EU arriving here with an intention to backtrack on the July Framework, even the reiteration is being seen as a moderate gain for Indian negotiators.

Visibly fatigued, yet seeming pleased, India’s Commerce and Industry Minister Kamal Nath welcomed the revised draft as a reasonable step that ‘‘at least sets the Doha Round on the right road and fleshes out the contours for arriving at full modalities in the next few months.’’

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Brazil Foreign Minister Censo Amorim noted that the final text was a ‘‘fair compromise that makes modest progress.’’

Brazil and India had taken the lead this week in putting together a grand alliance of 110 developing and least developed countries, the unity among which helped exert unprecedented pressure on the EU and the US to scale down their ambitions from the meet and make several compromises in favour of developing countries. In a reversal from the past, when the EU and the US dictated terms, this week, the developing world negotiated future global trade terms from a position of strength.

Nath said that the battle between 2 per cent of the world’s farmers in the developed nations and the millions of farmers in developing countries has been addressed to some extent, with the EU and the US agreeing to end their agricultural export subsidies by 2013. The G-20 nations had been pressing for a 2010 end date, but pocketed the 2013 deadline offered by EU Trade Commissioner Peter Mandelson.

In adequate defence of India’s 650 million farmers, developing countries have been allowed to self-designate Special Products and protect themselves from price fluctuations through imports by increasing import duties appropriately. Also, domestic support extended to developing countries’ small farmers, would be kept out of the ambit of WTO talks. However, the other pillars of agricultural subsidies, including the most trade-distorting domestic support extended by the EU and the US have been completely glossed over.

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The Indian industry representatives present here, seemed relieved as the final text provides for granting flexibilities in tariff cuts to protect infant and small-scale industries. However, specific numbers on these flexibilities have been left open for the future, so it’d be premature to get elated.

On the other hand, the Argentina-Brazil-India formula for tariff reductions remains alive as the text calls for adopting the Swiss formula with more than one coefficient.

The text also calls for the developed nations to focus on reduction of tariff peaks and tariff escalations on products of export interest to developing countries. Nath said hat there was ‘satisfactory text’ on non-tariff barriers, which had been applied by the United States and the European Union about 773 times in a ‘creative’ manner over the last five years. Though Nath hailed the services text as one that makes ‘engagement by developing countries an easier process’, trade analysts considered it ‘insipid.’

One tangible gain for countries like India with interest in products of biological diversity and geographical indications such as Ayurvedic products and Basmati rice, is that discussions in the area will be intensified and completed by June 30, 2006. But as the curtains go down on Hong Kong, the Doha Development Round continues to remain a misnomer for the have-nots of the world.