WTO trade ministers concluded their 6th Ministerial Conference in Hong Kong late on 18 December 2005.
The agreement was concluded after six days of negotiations ending with a night long session ending on Sunday morning. In keeping with the low expectations for the meeting that were announced in mid-November, negotiators indeed failed to bridge gaps on key matters, in particular the extent to which import tariffs would be cut on agricultural and industrial products. It seems that at best the negotiators did not lose any ground, but aside from harvesting some pickings on the margin, they essentially remain at a point short of operational modalities, an achievement that has been elusive since first expected in mid 2003.
The main provisions of the deal include the following –
• Agriculture: export subsidies will progressively be phased out by 2013. However, there has been no agreement on import tariffs.
• Cotton Initiative: Developed countries will phase out export subsidies for cotton in 2006, but there is no agreement on a date for reducing domestic subsidies.
• Aid to trade: The poorest countries will get quota-free and duty-free access to global markets for 97% of their goods.
The achievement lauded as the ‘breakthrough’ in the negotiations was the setting of an end date to agricultural export subsidies in 2013. This was by no means a general breakthrough, but was a decisive victory for the European Union. Negotiating memory is short. It us thus useful to recall that the Doha Declaration of 2001 (which launched the current talks) indicated clearly that there would be reductions, with a view to phasing out all forms of export subsidies. The task appears rather simple, yet has been a thorn in the heel of the trading system for 4 years without resolution. A cursory examination of domestic policy in the European Union would have left negotiators with no illusions as to when the Union would accept the final demise of export subsidies. A leading South African researcher, Daniel Malzbender, indicated in a paper in 2003 that the European budget (including Common Agricultural Policy payments) had been fixed in the EU for the fiscal period to 2013. The EU has been successful in delaying being tied down on this issue before, and has now offered this, ostensibly as a Hong Kong concession, when in fact it simply falls in line with their long term budgetary planning. It would thus be incorrect to claim any negotiation ‘victory’ here. Assessments by some negotiators that this item provides an ‘impetus’ to the agriculture negotiations may be somewhat generous, but this may well be a primer to a fusing mechanism.
The West African Cotton Initiative certainly established itself as the rallying point for the development dimension of the negotiations. The USTR even referred to cotton as a ’cause celeb’ of the Hong Kong talks. The 4 West African states dubbed the Cotton 4 (C4), did extremely well to resist persistent pressure from the US negotiators to accept a lukewarm result on cotton, in urging them to accept its resolution within the general agriculture milieu, together with a conditional aid package. The July 2004 Framework text established the now well used notion of cotton having to be treated ambitiously, expeditiously and specifically within the agriculture negotiations. The C4 (with wide support) have continued to maintain that this wording requires that cotton be advanced ahead of the general agriculture package. To some degree this is now encapsulated in the Hong Kong text with a date for an early harvest in cotton export subsidy elimination of 2006 (in advance of the general date of 2013) and an more rapid, but undated, cut in domestic cotton subsidies. Again there is some irony in the perceived victory in that the US, who are by far the greatest provider of cotton export subsidies, have to remove these in any event in terms of their being ruled illegal in the WTO Upland Cotton dispute that they lost against Brazil earlier this year. In terms of that ruling the US was already supposed to have discontinued these subsidies by July 2005. Again, this is a ‘concession’ that would have materialized independently of the Hong Kong effort.
The aid for trade ‘concession’ to the least developed countries is perhaps the most striking item. The spirit of the Doha mandate intended to provide duty free and quota free access to all LDCs. The 32 LDC’s in the WTO together represent 0.6% of world trade. Despite this insignificant ripple on the trading system, an array of Members still feel threatened by these countries and claimed that some products from LDC’s should still face trade barriers on 3% of tariff lines. Notably this was raised by the US with reference to textiles and sugar, 2 leading export products for this LDC group of countries. While a 3% exclusion sounds trivial, in reality it actually equates to in the order of 300 individual products. The 300 products will be applied to ‘sensitive’ agricultural, textile and industrial products in the US. Japan and Canada have also indicated their need for exemptions. Canada, a member of the reformist Cairns Group, wants to protect dairy and poultry, and Japan is going to protect rice and fish from the threat posed by LDC imports.
On the systemic side the Hong Kong meeting was a great stride in fostering a transparent and inclusive negotiating style. The ‘bottom up’ approach used I Hong Kong provided a better networking into the deals in the small group sessions called ‘green rooms’ which have been severely criticized as lacking transparency at previous meetings. The WTO Secretariat provided timely reporting on the progress of the meetings and made the revised official texts publicly available almost immediately. All the official sessions and several press briefings were broadcast live on the internet, enabling capital based officials, trade practitioners and civil society access to the gist of the proceedings. This action bodes well for the WTO’s public image, which was much discussed in their institutional review under the ‘Sutherland Report’ earlier this year. One might even speculate that transparency can be overdone – it was even announced that the Director General had overslept and missed part of his treadmill session.
Was this a Ministerial Conference that justified the vast expense of taking 5 000 plus official delegates to Hong Kong?
The Financial Times of 19 December made a classic observation in paraphrasing Winston Churchill. With reference to the Hong Kong meeting they stated that:
‘Rarely in the history of international negotiations have so many laboured so long to produce so little.’
Others also had their own views on the extent of the ‘labour’ expended.
NAMA facilitator Hamayun Khan of Pakistan reported curtly after hosting his initial session that:
‘No Member spoke and the meeting ended.’
The Director General had a go at bolstering the pace of action early on and told the ministers of the Commonwealth States, meeting on the fringe of the negotiations, that:
‘This week needs to be about negotiations, not just Christmas shopping.’
The Chair of the meeting, Hong Kong’s John Tsang held the pace and still managed to feel upbeat to the very end. Quoting the 1960’s pop icons, The Beatles, he remarked in his closing address that:
‘It’s been a hard day’s night. And I’ve been working like a dog.’
One might be forgiven for wondering if there were really negotiations going on in his ‘green room’ negotiation session, or whether it was actually a karaoke session behind the ‘Green Door’, from another old rocker, Shaki’n Stevens:
‘Don’t know what they’re doin’ But they laugh a lot behind the green door. Wish they’d let me in so I could find out what’s behind the green door.’
The prize observation must however go to the BBC. A gang of South Korean farmers protesting against agricultural reform (note that Korea is an industrial powerhouse with a GDP of nearly twice that of South Africa) jumped into Hong Kong’s Victoria Harbour and tried to swim across to the WTO meetings about 2km away. Some actually made it. At this point the BBC commented that:
‘Several dozen police boats have converged on the scene, and now police appear to be making them swim back!’
No doubt these intrepid swimmers did their share of labouring.
Whatever the view one takes on the real efforts taken in Hong Kong, there can be no doubt that a severe injection of labour will be needed early in the new year if the Round is to be completed, with or without an intervention by heads of state, in 2006. The Hong Kong Ministerial Declaration makes this clear by candidly stating in its paragraph 10 that:
‘However, we recognize that much remains to be done in order to establish modalities and to conclude the negotiations. Therefore, we agree to intensify work on all outstanding issues to fulfil the Doha objectives, in particular, we are resolved to establish modalities no later than 30 April 2006 and to submit comprehensive draft Schedules based on these modalities no later than 31 July 2006.’