The rich countries of the world have delivered another blow to the plight of people living in poverty at the recent World Trade Organisation ministerial in Hong Kong.
This round of trade negotiations was trumpeted as a “development round” with the needs and aspirations of people of developing countries supposed to be at the heart of the discussions. Critically, agriculture trade, central to most developing countries economies and the arena of some of the most perverse and scandalous practices by rich countries, was intended to be the focus of the negotiations.
But the results of the Hong Kong meeting confounded even the most pessimistic. Rich countries - notably the United States and European Union - consistently put their narrow commercial interests above those of the billions of people looking for reform of trade rules as a pathway out of poverty. The EU and US complicated negotiations and diverted them from a focus on agriculture and development with determined pushes to force developing countries to open their markets to service industries and industrial products. Indeed the small progress on some aspects of agriculture is more than cancelled out by extremely damaging proposals on services and manufactured goods.
Developing countries were hoping for a swift end to the massive subsidies and supports that the US and EU governments pay to their agricultural producers; subsidies that are devastating the livelihoods to poor farmers in developing countries. These subsidies by rich countries amount to around US$1 billion a day. This is more than the combined income of the 1.2 billion people who live on less than a dollar a day. While millions of poor farmers struggle to survive on less than the Australian equivalent of $540 a year, American farmers receive on average A$28,000 a year just in subsidies, and European farmers A$21,500, most of which goes to their largest producers.
They were also hoping to see an opening of rich country markets to their agricultural products. This more than any other measure would be of direct benefit to poorer countries. But apart from a watered down offer for “least developed countries”, there is nothing concrete in the Hong Kong agreement, and no guarantee that developing countries will gain significantly greater access to rich country markets.
In agriculture, the text includes a welcome commitment to ensure developing countries have the right to protect products of vital importance to poor farmers. There is also a pledge to eliminate export subsidies and equivalent payments by 2013. But this is three years later than originally hoped and EU export subsidies account for only 3.5 per cent of its overall agricultural support.
On cotton, the US is offering to eliminate all forms of export subsidies, which is welcome, but this is already required by a WTO ruling and these payments only represent 10 per cent of overall spending. The text does not address the core issue of domestic payments that have been proved to distort the cotton trade and facilitate dumping.
The offer of duty-free and quota-free access by rich countries to their markets for products from least-developed countries was watered down by the ability to exclude key imports vital to the livelihoods of millions of poor people. Hence countries such as Cambodia or Bangladesh will have free access for products that they do not export, while their vital export earners, ready-made garments, will be excluded.
There was one small glimmer of hope for the poor at Hong Kong. While rich countries fought hard to preserve their privileges, developing countries showed increasing assertiveness. The previous ministerial conference in Cancun, Mexico, two years ago was marked by the emergence of the G20 - a group of large developing countries, such as Brazil, India, South Africa and China. While the early demise of this group had been widely predicted, to the contrary, it has gone from strength to strength. In Hong Kong, the G20 joined with other developing countries, including the very poorest, to articulate their demands for a righting of the rigged rules and double standards which plague international trade.
The discussions at Hong Kong have left much unresolved. A follow-up conference will be held early in the New Year to try to progress negotiations towards a conclusion of the round by the end of 2006. Given that virtually every deadline in this Doha round has been missed so far, there are strong grounds for scepticism that this one will be met.
Primarily there is a need for a fundamental change of direction from both the American and European negotiators. This change needs to start in the tone adopted and both sides of the Atlantic must come to the table with credible offers to meet the needs of developing countries. An end to the shadow boxing between the two trading super-powers would certainly assist the negotiations.
Reform of agriculture trade must move to the centre of negotiations and not be linked to movements in other areas. Trade-distorting subsidies which cause so much harm to poor farmers around the world need to be ended and ended early. Trade, along with increased aid and debt relief, can help make poverty history. But first and foremost this needs a serious change of heart from the world’s richest nations and a resolve to put “development” back into the Development Round.
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