Delegates Eke Out a Trade Deal

Members of the World Trade Organization reached agreement Sunday on several divisive issues, keeping alive hopes that a new global trade accord could be forged by the end of next year.

In the final hours of a weeklong summit that saw violent protests outside, ministers from leading trading nations scraped together a deal that includes the elimination of subsidies for all agricultural exports by 2013 and allows the world’s 50 poorest countries to ship more goods into developed nations without tariffs and quotas.

The deal was approved by delegates of the WTO’s 149 member nations. But there was no breakthrough on the crucial issue of lowering farm tariffs, nor was there a full resolution on concerns of African cotton growers.

“It is not enough to make this meeting a true success,” said Peter Mandelson, the European Union’s trade commissioner, referring to the final declaration from the Hong Kong talks. “But it is enough to save it from failure.”

By averting collapse -- such as what happened in Cancun two years ago -- the WTO hopes the gains from the Hong Kong meeting will spur further progress in the coming months toward the eventual realization of a new free-trade pact, which analysts believe could boost worldwide economic growth and help reduce poverty.

A failure in Hong Kong would have badly damaged the credibility of the Geneva-based WTO at a time when it was contending with such challenges as a proliferation of bilateral agreements among nations, global economic imbalances and growing protectionist sentiments in industrialized countries.

The Hong Kong meeting was part of the so-called Doha round of talks, named for the Qatar city in which trade talks were launched in 2001. The aim is to remove trade barriers and inequities and help lift poor countries out of poverty.

Nearly 6,000 delegates from 149 nations attended the conference, which also drew more than 2,000 representatives from nongovernmental organizations and about 3,000 journalists.

Leading organizations such as Oxfam, Greenpeace and Public Citizen, sharply criticized Sunday’s agreement.

“It is scandalous that the rich countries have gained concessions in return for merely promising, for the third time over, to end export subsidies,” Greenpeace said in a statement.

Thousands of others came to Hong Kong to protest against globalization, including about 1,300 South Korean farmers who on Saturday battled police in the streets near the convention center, the delegates’ meeting site, resulting in more than 100 injuries and 900 arrests.

On Sunday, several thousand people held a peaceful rally in Victoria Park, while dozens of South Korean farmers, surrounded by riot police, staged a sit-down a few blocks from the convention site.

From the beginning, expectations for the trade talks in Hong Kong were low. The WTO had once hoped that in Hong Kong trade ministers would agree on a new system of formulas for cutting tariffs for farm and industrial goods. But in the weeks leading up to the conference, the EU, facing pressure from France, made a modest proposal of cuts that also exempted 8% of product categories. The U.S. and many other other nations wanted deeper tariff reductions and a 1% exemption.

Throughout the week, U.S. Trade Representative Rob Portman stated that market access in agriculture was the breakthrough needed to achieve the development goals of the Doha round. That didn’t happen.

“In order to see the round come together, we have to unlock the agricultural deadlock,” Portman said at a closing news conference.

Africa’s cotton farmers also didn’t come away with what they wanted. For more than two years, West African countries, which rely heavily on cotton exports to support their economies, have demanded that the U.S. scrap subsidies for its 25,000 cotton farmers, including about 1,500 in California. The Africans say the subsidies have pushed up supplies that have driven down global prices for cotton, which have severely hurt millions of farmers in Africa. The dispute over cotton was a major factor in the collapse at Cancun.

The final declaration from Hong Kong calls specifically for the elimination of nations’ export subsidies for cotton by the end of 2006. Export subsidies are government supports for goods shipped abroad. But African trade ministers said those subsidies were already on the way out, as they had been determined to be illegal by the WTO. (Congress, in fact, is expected soon to repeal the so-called Step 2 subsidy program for cotton exports.)

Export subsidies also make up only a small part of the overall $3.5 billion in subsidies that are projected to go to U.S. cotton farmers this year. The rest are in the form of price supports and other domestic farm subsidies.

Choguel Maiga, minister of trade and industry for Mali, one of the big four West African cotton growers, said in an interview that he was disappointed but hopeful that the African countries and the U.S. could resolve their differences bilaterally in the coming months.

“The atmosphere in Hong Kong is better than Cancun,” Maiga said, noting that the Americans were particularly engaging. “In Cancun they were arrogant. Now they are more diplomatic.”

The agreement to end all farm export subsidies by 2013 was a breakthrough in that the U.S. had long sought their removal. As a practical matter, though, their elimination isn’t expected to have a big direct effect since export subsidies aren’t a major source of global trade distortion, according to analysts.

The U.S., Brazil and other nations had sought an expiration deadline of 2010, but the EU said that was not possible. The agreement also left vague the timetable on which the subsidies would be phased out.

The agreement also would have wealthy nations do away with quotas and tariffs by 2008 on 97% of goods from the 50 poorest countries. Portman, the U.S. trade chief, said the U.S. had not made a decision on what items would be exempted. But he suggested that there would be significant considerations given to apparel and textiles.

Bangladesh and Cambodia are among poor countries whose exports of apparel to the U.S. are substantial and growing, but heavy political pressure is expected from Congress to protect the ailing U.S. textile sector.

In the U.S., trade agreements must be approved by Congress. The WTO is trying to complete the Doha round and draft a new trade accord on agricultural, industrial and services issues by the end of next year, before President Bush’s authority on trade promotion expires.