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Last Updated: Sunday, 18 December 2005, 19:12 GMT
What stymied the Hong Kong talks?
By Steve Schifferes
BBC economics reporter in Hong Kong

After six days of negotiations, efforts to expand the world trading system in a way that helps poor countries reached a modest conclusion.

Nelson Mandela and Bob Geldof campaign to Make Poverty History
Only months after the Make Poverty History campaign, talks are stalled

Trade negotiators in Hong Kong struggled to make even limited progress on the very limited goals they set for themselves.

It is all a far cry from six months ago, when world leaders at the G8 summit in Gleneagles made a ringing declaration that called for trade to be the cornerstone of their plans to make poverty history.

And it seems an even longer way from Doha, the capital of Qatar, where these talks were launched in November 2001, with the express aim of demonstrating that the West cared about the world's poor so they would turn against extremism.

The broad goal of the talks, as far as developing countries were concerned, was to tackle the unfair balance of trade in agriculture, where rich countries subsidise their farmers by $300bn each year, and maintain high tariff barriers that keep out poor countries' products.

But the world's big power blocs, the EU and the US, could not agree on how far and how fast to cut these subsidies and tariffs - and that impasse still remains at Hong Kong.

Linked problems

So instead the talks concentrated on trying to agree on two symbolic gestures to show good faith in agriculture to the developing countries.

Texas cotton farm
Subsidies for US cotton farmers are taking a toll on pickers in Africa

Negotiators also added a third concession for the 49 poorest developing countries - the least developed countries.

First, much effort was put into agreeing a date for the ending of one type of subsidies to farmers - export subsidies.

Everyone agrees they should go - but they make up less than 5% of total farm subsidies - and a deal was eventually reached to phase them out by 2013.

Secondly, there was the hope that the four poor African cotton producers - Benin, Mali, Chad, and Burkino Faso - could get special treatment to make it easier for them to sell their cotton abroad, where they face competition from subsidised US cotton farmers.

But that came up against the strong opposition of the US cotton industry, and the US says it can only agree a deal in cotton when there is an overall deal in agriculture.

Glare of publicity

Finally, the rich countries agreed a "development package" of measures to help least developed countries get duty-free, tariff-free access to their markets, including extra aid money.

But there are fears that some key products, like rice and textiles, could be exempt because producers in rich nations would be hurt by the plan.

Protester in Hong Kong
Those who lose out are more likely to demonstrate than winners

The fact than even these modest goals were so difficult to reach shows that there is a deeper problem in the world trading system, after a half-century in which free trade and globalisation expanded throughout the world after World War II.

In the early years of trade liberalisation, there was an early harvest of benefits - mainly to a few developed regions like Europe and Japan, which were recovering from the ravages of war and needed export markets, mainly in the US.

And the talks were conducted in private, not in the glare of publicity that we see today.

That makes a difference, because in any trade liberalisation the losers - like the Korean rice farmers today - are likely to be more vocal than the larger number of small winners - like Western consumers who buy cheaper clothing made in China.

Furthermore, the expansion of trade talks into new areas - beyond manufactured goods - has brought new sensitivities about trade policy impinging on every country's right to regulate its own economy and society.

Clashing views

Friction has been most clear over environmental regulations - like the bans on the import of GM food or tuna caught with dolphin-unfriendly nets - which could be seen as a breach of trade rules.

A man repairs a computer in Delhi
Countries such as the US may need to allow skilled labour in
But it has come up in many other forms.

For example, the US is alarmed that negotiations on liberalising services could force it to change its immigration policy to allow entry to a larger number of skilled workers from developing countries.

Thirdly, the increasing involvement of developing countries in the trade talks - a positive thing in itself - has enormously complicated the process of negotiations, even though they worked together in groups.

Many developing countries take a fundamentally different view of trade liberalisation, seeing its dangers more than its promises.

They do not see the need for the necessary trade-offs, such as giving rich countries access to their service and manufacturing sectors.

And there are many differences between them in where their trade interests lie.

Fear of consequences

But ultimately, the big problem is that free trade has become a harder sell at home for many countries, and most notably in the US, which as the world's biggest economy has always been the biggest advocate of free trade.

The public unease about further trade liberalisation has meant that the political will for painful sacrifices has not been forthcoming.

So although the anti-globalisation protesters outside the Hong Kong conference centre did not directly disrupting the proceedings, the fear of the negative consequences of globalisation is making its mark.

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