‘WTO draft not a breakdown’

December 30, 2005 The Times of India

Lucknow: After six days of talks in Hong Kong, the draft ministerial text which appears to be ready for adoption calls for developed countries to open their markets to 97 percent of goods from the world’s poorest economies by 2008 by abolishing import duties and quotas. However, concerns voiced by Japan on rice and the United States on its textiles industry means that certain products can be selectively excluded from the package of concession.

This was stated by Veena Jha, India Programme Co-ordinator for United Nations Conference on Trade and Development, who was in the state capital to discuss the repercussions of recently concluded WTO Hong Kong pre-ministerial meet at a programme organised by Network of Entrepreneurship & Economic Development (NEED). She termed the outcome as ‘no breakthrough, but no breakdown either.’

Jha stated that if the draft is approved, the EU will also be required to phase out its export subsidies by 2013 and the US will have to move faster on reducing payments to cotton farmers and to end all export aid in 2006. However, the deal on cotton is contingent on reaching an agreement for elimination of all export subsidies by 2006. These proposals are expected to boost the chances of a final accord next year. According to this text, the EU will eliminate export subsidies with ‘a substantive part’ of the cuts made in the first half of an implementation period that is now scheduled to start in 2008. Brazil, and India backed by the US, had wanted the EU export payments for dairy, sugar and other commodity producers to scrap the aid, worth $3.6 billion last year by 2010. The 2013 deadline, provides comfort to the EU as that is when its recently approved six-year budget will come to an end.

The ministerial text specifies that developing countries will continue to have the flexibility to provide certain types of export subsidies for a grace period of 5 years after 2013. Instead of specifying the 5 year period, it may have been more appropriate to link the grace period to achieving competitiveness in agricultural exports, say by designating 5 percent share in global trade for the product concerned as the threshold for competitiveness.

On green box subsidies, the text seems to have pushed the real objective of reviewing and clarifying disciplines on green box to the underground. It may now be more difficult to development criteria for ensuring that these subsidies, given primarily by developed countries, result in no or minimal trade distortions, she added.