- The Washington Times - Sunday, August 1, 2004

GENEVA — World Trade Organization members today approved a plan to end export subsidies on farm products and cut import duties around the globe, a key step toward a comprehensive accord contemplated since 2001, trade officials said.

The deal was approved by a consensus of the 147-nation body shortly after midnight, opening the way for full negotiations to start in September.

“Developed countries have recognized that agricultural trade with a heavy subsidy component is not free trade,” Indian Trade Minister Kamal Nath said.

But he said the United States, nations of the European Union and other developed countries also will benefit by removing heavy agricultural subsidies from their budgets.

“Today’s decision is a crucial step for global trade,” U.S. Trade Representative Robert B. Zoellick said. “We have agreed to make historic reforms in global agricultural trade.”

The document agrees to eliminate subsidies and other forms of government support for agricultural exports, while making big cuts to other subsidies. It includes a “down payment” that would see an immediate 20 percent cut in the maximum permitted payments by rich nations such as the United States.

“It is incredibly important for Canada and for the world,” Canadian Trade Minister Jim Peterson said. “We have a historic opportunity to get rid of agricultural subsidies and open up the world, particularly the developing world.”

Brazilian Foreign Minister Celso Amorim said the framework was “a good deal for everybody.”

“It’s a good deal for trade liberalization. It is also a good deal for social justice … with the elimination of subsidies,” Mr. Amorim said.

Approval came after a breakthrough yesterday when some 20 key countries approved a document setting out the framework for a legally binding treaty, WTO spokesman Keith Rockwell said.

The document commits nations to lowering import duties and reducing government support in the three major areas of international trade — industrial goods, agriculture and service industries such as telecommunications and banking.

The deal will set back in motion the long-stalled “round” of trade-liberalization treaty talks launched in 2001 by WTO members in Doha, Qatar, but delayed by the collapse of the body’s ministerial meeting last year in Cancun, Mexico.

WTO Director-General Supachai Panitchpakdi, who has mediated the negotiations since that collapse, was ecstatic.

“It is really a historic moment for this organization,” he said.

The highest agricultural-import tariffs will face the biggest cuts, although no figures have yet been agreed. Nations will have the right to keep higher tariffs on some of the products they consider most important.

The biggest sticking point apparently was how to handle those farm products on which a group of 10 countries, including Japan and Switzerland, want to maintain higher import tariffs to protect domestic producers.

“What we regret is that some of the G-10 concerns haven’t fully been taken into account,” said Swiss President and Economics Minister Joseph Deiss, who heads the Group of 10. “The liberalization process will put additional economic pressure on our farmers.”

But, he added, “This will be a key step for the opening of the world economy and this will be of benefit for all countries.”

Tariffs on industrial products also will be cut according to a formula, but the exact details have yet to be established. Developing countries will have longer to make changes.

The deal also approves the opening of new negotiations to ease trade — “further expediting the movement, release and clearance of goods” by streamlining customs procedures.

Developing countries in particular have congratulated themselves for forcing issues onto the agenda that they say were ignored by rich nations — such as the effect of U.S. cotton subsidies on producers in Africa.

The so-called Group of 20 developing nations, led by Brazil, has had a major influence on discussions over the past year, and Brazil was one of the big players in drafting this new agreement.

“Post-Cancun, the G-20 was seen as a destructive force. Now it’s seen as an essential part of a deal, so draw your own conclusions,” Mr. Amorim said.

Economic theory says reducing barriers to trade and allowing the market to dictate who produces a commodity and what they charge for it will boost the global economy. A recent University of Michigan study found that cutting global trade barriers by one-third would boost the world economy by $613 billion — the equivalent of adding a country the size of Canada to the world.

Nations are reluctant to agree to big cuts in some areas because free trade also creates losers, and entire industries can be devastated in some countries if they are opened to foreign competition. So trade rounds tend to be slow and laborious affairs.

The deal agreed to today sets out a series of principles for liberalization, but stops short of details. Those must be negotiated in further talks, expected to start in September.

WTO members accept that it will be impossible to achieve the aim of negotiators in Doha to finish the round by the end of this year. However, this agreement gives focus and direction to the discussions, and makes it much more likely that a full treaty can be worked out next year.

That could lead to a final deal being signed in Hong Kong late next year, with the agreement coming into force in 2006.

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