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Last Updated: Sunday, 18 December 2005, 10:46 GMT
Q&A: Trade deal
Trade ministers meeting in Hong Kong are on the verge of a deal to help progress talks on expanding free trade.

But what does it mean to people in rich and poor countries?

Coffee workers in Rwanda
African countries have limited access to world markets

What is going on?

The world is trying to reach a new deal to expand free trade, with a special emphasis on helping poor countries.

Talks have been going on since 2001, and have been stalled since 2003.

Proponents of a trade deal say it will help end poverty in developing countries, and rich countries could also benefit if they can sell more goods and services abroad.

Advocates of the deal say it will boost global growth and increase jobs, but critics say it will cost jobs in developing countries and hurt poor people.

What has been agreed in Hong Kong?

The trade deal in Hong Kong has made a few small symbolic steps to help move the process of trade negotiations forward, but has sidestepped a final deal on the big issues of opening up trade in agriculture, services, and industrial products.

Instead, it has agreed largely symbolic date for the ending of one type of agricultural subsidies, export subsidies, which make up less than 2% of total subsidies, by 2013.

And it has offered some help to poor countries, by agreeing a plan to grant tariff-free access to goods from the world's 49 poorest countries, which make up less than 1% of all trade.

Cotton farmers in West Africa will get some extra help as well.

Do we have a final trade deal yet?

Not yet.

The Hong Kong meeting was originally supposed to agree the final shape of a trade deal, but that ambition was downgraded.

Now negotiations will probably have to move to Geneva in three months' time where a deal will need to be struck on the key areas of opening markets in agriculture, industrial goods, and services.

Negotiations aim to finish by the end of 2006.

The main sticking point will be how fast the EU will be prepared to open its agricultural markets, and how much developing countries will open their markets for industrial goods in return.

Why is the timetable so tight?

The US government has only been granted "fast track" negotiating authority by Congress until July 2007.

"Fast track" or trade promotion authority, means that the Congress must vote the deal up or down as a whole; otherwise opponents could add wrecking amendments and force the US to renegotiate the whole deal.

Rob Portman, US Trade Representative
US negotiators are under pressure to secure a deal by 2007

In the current political climate in the US Congress, with trade deals already unpopular because of the huge trade deficit, it is unlikely to be extended.

And any trade deal without the participation of the world's largest economy would be meaningless.

Who would benefit from a trade deal?

If we get a final trade deal, the big winners are likely to be big agricultural exporters like Brazil, Argentina, Australia and Canada who will be able to sell more goods abroad.

The very poorest countries will also gain from the extra aid they have been promised and more access to rich country markets.

And consumers in rich countries, especially the EU, might have cheaper food prices.

Businesses and consumers in developing countries could also gain from more efficient services in banking, shipping and telecommunications, while China will gain from being able to export more manufactured goods.

Who might lose from the trade deal?

Other developing countries like Pakistan might lose out if the least developed countries get preferential treatment to rich country markets.

And poor farmers in those countries might be hit if the more efficient producers like Brazil are able to sell more into their markets.

Workers in industries in protected industries in countries like India could also be hit by increased imports.

And unskilled workers in rich countries might have relatively poorer chances of getting good jobs if there is shift towards service sector employment.

What if the trade deal collapses?

A failure to complete a trade round could have serious consequences for the World Trade Organisation, which was only created in 1995, and for the multilateral trading system.

Countries might increasingly move to negotiate individual trade deals between each other, which would put small countries at a disadvantage.

Business would be worried that the certainty that there a set of international trade rules would be undermined.

But some NGOs argue that no deal is better than a bad deal for the poor, and that it would be better to start from scratch to redesign the world trading system in a fairer way.

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