[an error occurred while processing this directive]
BBC News
watch One-Minute World News
Last Updated: Monday, 19 December 2005, 15:22 GMT
Winners and losers in Hong Kong
By David Loyn
BBC News

Negotiators from G20 developing countries
Developing countries are divided over what was achieved
One of the stated ambitions at the 2001 Doha meeting of the World Trade Organization (WTO) was that the developing world would get a trade round for free.

This meant it would not have to make concessions in order to secure benefits.

But four years on in Hong Kong, according to Oxfam's head of research Duncan Green, "the developed world has won a round for free".

"There is very little in here for developing countries," he says.

Behind the rhetoric of this so-called WTO 'development round' lies the hard-headed reality that trade terms really matter to the relative strength of a country's economy.

National interest

Strong positions are not easily given away to help development.

In the first 10 years of tariff reform and trade liberalisation, we literally deindustrialised Zambia
Zambian Commerce Minister Dipak Patel

That's why the poorest countries have found it hard to make headway in these talks: they have little to offer in return for their demand that the richest countries 'level the playing field' in food prices by cutting subsidies.

Their claim that the cuts would remedy inequalities of the past does not carry any weight at the negotiating table.

The key concrete concession they won in Hong Kong, which dominated the conference, was an agreement that rich countries should end export subsidies to farmers by 2013.

Harvesting cotton in Burkina Faso
US cotton subsidies dwarf the output of many African countries

But most of these subsidies were being phased out anyway.

According to analysis by the aid agency Cafod, the share of export subsidies fell from 50% of EU agricultural spending in 1980 to 5% in 2004, and were set to drop still further.

The US had already promised to abolish export subsidies before coming to Hong Kong.

Cotton is treated differently from other agricultural products, and the US has now agreed to cut export subsidies here too - although this was no more than has already been demanded of it by a WTO ruling.

A separate requirement to reduce US domestic support for cotton farmers in the final Hong Kong text is not mandatory.

US cotton farmers receive funding worth more than the entire GDP of any of the four west African countries who are campaigning on this - Benin, Burkina Faso, Chad and Mali.

Tit-for-tat

In return for modest gains in agriculture, the poorest countries have made modest concessions in the other two pillars of the WTO process, services and non-agricultural manufactured goods.

But there was significant disappointment among interests in the richest countries that these did not go further towards a more comprehensive free trade treaty.

Most countries united against Japan, the European Union and the US on farm subsidies, in an alliance of four-fifths of the population of the world.

This unity did not extend to services and non-farm manufactured goods.

Larger developing countries like Brazil and India want more liberalisation in these sectors and liked the progress made.

Pascal Lamy, WTO director-general
Pascal Lamy succeeded in securing a consensus

Poorer countries still want to be protect their economies while they grow, and are concerned that they may have given away too much.

None broke ranks to walk out, but Venezuela and Cuba reserved their right to oppose the document, which should give them more leverage in re-opening discussions on these issues.

Still, the success of Pascal Lamy - the WTO director-general - was in producing any consensus at all after the collapse of the process at the Cancun WTO meeting two years ago, and the very low expectations of progress in the months leading up to Hong Kong.

Empty gesture?

The biggest disappointment of the poorest, so-called "least developed countries", was the development package tacked onto the rest of the deal.

The key new element gives them the right to sell their goods into developed countries without paying tariffs or being limited by quotas.

But it is too full of exemptions to make a real difference. America is expected to continue to put obstacles in the way of textile imports, while Japan has proposed to exempt rice, fish, sugar and maize.

The offer should, however, allow the poorest countries to sell goods with added value at the tariff-free rate, enabling them to develop food-processing industries. At the moment they have to pay high tariffs to sell processed food.

Zambians carrying grain sacks
Zambia is dependent on the international trading system

Some of the least-developed countries were happy that the process was now back on track.

Uganda's Trade Minister, Gaudi Megeleko, said that there was now "something to build on" before another full ministerial meeting early next year to put flesh on the bones of the agreement.

Developing countries know that they have nowhere else to turn.

"In the first 10 years of tariff reform and trade liberalisation, we literally deindustrialised Zambia," Zambian Commerce Minister Dipak Patel - who led in negotiations for the least-developed countries - said before the WTO meeting.

"But now we are into it we have no other options. We can't go it alone. We don't have sufficient capital, so we have to rely on the multilateral trading system.

"It is ironic that it has turned out this way but that is our only salvation."


PRODUCTS AND SERVICES

Americas Africa Europe Middle East South Asia Asia Pacific