WTO Meeting in Hong Kong and Globalization

It was indeed a breathtaking moment for billions of people to watch scores of delegates from 149 countries descend upon Hong Kong in December 13-18, 2005 to spearhead a free trade agreement that would have far reaching impacts on their life and the life of their offspring. It is not that globalization has been a tempting thought for nations like least developed countries (LDCs), for there was always the suspicion that it was a policy which would eventually push poorer societies into a straitjacket. Nevertheless, the Hong Kong meeting, amid allegations of lack of democracy and transparency in decision making process, achieved some sort of success, at least by the Cancun standard. Well, it depends who you ask!

Unlike Cancun, the poor countries were not as unified as before, which, many say, resulted in a weak and unbalanced trade agreement. “The developing countries gave in on the key market access issues of services and non-agricultural market access. In return they did not receive any significant gain in cotton…”, says Martin Khor a critic of the agreement. “As for the 2013 end-date for elimination of agricultural export subsidies, the most publicized claim of benefit from Hong Kong, it was no victory. This greatest-distorting subsidy of all should have been eliminated many years ago, and no price should have been asked for it” he argued.

For Europeans the meeting was a resounding success. “Today Europe has gone further in its existing commitment to eliminate its export subsidies by setting a clear end date in 2013. I said we came to Hong Kong to do business and this shows we meant it,” said Peter Mandelson, the EU Trade Commissioner. “We have demanded, and received, equivalent commitments from others for similar subsidy reform…Europe made it happen and we are pleased to have done so,” Mandelson reiterated.

"I remain disappointed” says Senator Saxby Chambliss, expressing US sentiments, “...EU Trade Minister Mandelson remained a main obstacle to a major breakthrough in the negotiations and while the trading bloc agreed to phase out export subsidies by 2013, it simply does not go far enough.” The National Cotton Council Chairman, Woods Eastland expressed his dissatisfaction to the agreement by saying “…the text is not consistent with the concept of a single undertaking for agriculture and establishes an unwise precedent for WTO trade negotiations…it clearly singles out cotton.”

In contrast, the African delegates expressed concerns over the deal criticizing the decision as having achieved nothing. “The declaration offers the elimination of export subsidies in 2006. But export subsidies constitute only a small portion of the nearly $4 billion subsidies the US gives to its cotton producers every year” says one critic of the declaration, referring to US domestic subsidies in the form of Step 1 and AWP and European domestic support of 55 billion euros for their farmers (European export subsidy is only 3 billion euros). The African Ministers had demanded that 80% of domestic subsidies for cotton be eliminated by the end of 2006, and the rest within a few years. It is unclear at this time how negotiators will address this issue in next few months before the negotiation concludes by April 30, 2006. The U.S. cotton industry has vehemently resisted changes to its domestic subsidy programs.

Another contentious issue in the meeting was duty- and quota-free access of LDCs to western markets. While, it sounded like a generous concession was made by the rich countries, allowing an access for 97% of the LDCs products. This will also allow the developed countries to continue to protect “sensitive products” that are of export advantage to LDCs, such as textiles, clothing etc.. Practically the LDCs can have access for products they don't produce or don't produce competitively, but access can be restricted for products they are competitive. Bangladesh, a country of 140 million, and Cambodia have been treated in a dismissive manner, with the result that their textile products may not find a place in the US households, as the US indicated that it cannot include textiles and clothing from these countries. It is thus that Bangladesh, Cambodia and those poor cotton-producing nations of Africa lose out. ¨

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