Hong Kong Trade Talks a Qualified Success

The delegates at the Hong Kong talks on world trade managed to get a deal on the elimination of farm subsidies by 2013 a few days ago. That means eight more years of unfair agricultural trade, at the end of which, farmers in rich countries will still not be weaned from their subsidies. However, it does put negotiations back on track for some kind of broader deal in 2006. As the EU trade commissioner Peter Mandelson said, it was enough to avoid failure but not a success in its own right.

First of all, it is important to note that these talks have been going on since 2001 (and really, the subsidies have been a sore point long before that), and they have been stalled since 2003. So, to the extent that this moves the ball forward, it is a good deal. Failure of the talks might undermine the World Trade Organization and the global approach to trade tariff reduction. Nations may choose to conclude bilateral or regional deals, which improve things a bit, but which will leave many countries (especially the smaller and weaker ones) behind.

There are non-governmental organizations and opinion leaders who say that no deal is better than a bad deal for the world’s poor. To the extent that no provisions are made to cushion the blow in changing global trade rules, they are right. However, one must remember that within two generations, the world has gone from war-devastation with rigid trade rules to a largely open system with a large rise in global wealth. A middle class has emerged in nations where by custom millions used to starve as a matter of course.

So, what does this deal mean? Export subsidies are to go by 2013. That’s the good news. The bad news is that these make up less than 2% of global agricultural subsidies. The deal is one on principle rather than on substance. Also, the 49 poorest nations in the world will get tariff-free access to rich nations; these poor countries account for less than 1% of world trade. These are the places that need the most help (from the market, from other governments, and from their own elites). This deal doesn’t get very far down that road.

The agreement is enough to keep the talks going. In three months, they delegates will turn up in Geneva to hammer out more reductions, and they have until 2007, when the US “fast-track” authority from congress runs out. After that, the White House must either get a renewal, or the treaty could be amended on the floor of the Senate, trashing everything. Since American participation is vital, what gets done in the next 12 months is all there will be on the table. However, the losers have to have their needs addressed: farmers in the rich world, unskilled workers in industrializing nations like Brazil and South Korea who will lose out, and the poor nations who aren’t in the “lucky” 49. Thus far, the WTO and its backers have done a miserable job in addressing those issues – that’s what all the protesters in Hong Kong were about.


© Copyright 2005 by The Kensington Review, J. Myhre, Editor. No part of this publication may be reproduced without written consent.
Produced using Fedora Linux.

Home