The Week in Europe
  By David Jessop
   
  Rarely can so little have happened at a meeting attended by so many.
   
  After two years of preparation, the World Trade Organisation’s  (WTO) sixth ministerial conference took place in Hong Kong in late December. There, hundreds of Trade Ministers and officials from around the world met to try to achieve a consensus on how to take forward the global trade liberalisation agenda.
   
  After six days and sleepless night of almost continuous negotiation, the process, according to the WTO’s Director General, Pascal Lamy, moved forward by five per cent so that it is now sixty per cent complete. Despite this, there remains the Herculean task of having to complete the most difficult forty per cent of the negotiations by the WTO member’s own deadline of 2006.
   
  The most that can be said about the compromise agreed in Hong Kong by the WTO’s 149 member nations was that it averted a crisis. The cost was the postponement to this year of virtually every difficult aspect of negotiations that began in Seattle in 1999 and which are still meant to be the development oriented.   
  Little concrete progress was made on the detail of the WTO’s agriculture agenda. But under strong pressure from the US, Australia, Brazil and most other developing countries, the European Union agreed a 2013 deadline for eliminating all trade-distorting agricultural export subsidies. Europe also said it would make "substantial" reductions in its farm subsidies by the end of 2010 but made clear it would reject any WTO a timetable for cuts that required further reform of its agricultural regime. 
   
  Negotiators could not agree on specific numbers or formulae for cutting either tariffs or subsidies. However, WTO members did agree that agricultural tariffs would be structured into four bands so as to determine the percentage by which tariffs will be cut. It was also accepted that developed and developing countries will be subject to differing levels of tariff cuts but the thresholds at which these will be set remain contentious. 
   
  At the Hong Kong Ministerial, WTO Negotiators could not agree on the flexibility to be given to ‘sensitive products’ or ‘special products’. That is to say respectively, to those goods that developed countries and developing countries will be allowed to exclude from tariff liberalisation. 
   
  On sensitive products WTO members took a step backwards. The text now suggests that members have yet to agree on how to treat sensitive products. This means that the original position that would have caused quotas to be introduced for excluded products in direct proportion to the leniency of the tariff cut has for the time being been abandoned.
   
  At present, the EU wants to label as much as eight per cent of its agricultural tariff lines as sensitive. Others suggest that the percentage of developed world tariff lines that might be excluded in this way could range between one and fifteen percent. 
   
  On special products, developing countries will be able to self-designate an appropriate number of tariff lines guided by food security, livelihood security and rural development. In Hong Kong some developing country members suggested that they should be allowed to designate at least twenty per cent of their agricultural tariff lines as special products. Again there was no basis for agreement.
   
  There was however, agreement that developing countries should be allowed special safeguard mechanisms tailored to particular circumstances. But there was no consensus on the quantity involved that would trigger such measures or on the products to be covered.
   
  In Hong Kong it was agreed that all developed countries would give duty and quota free access to the world’s poorest nations, the least developed by 2008. However there was a caveat. They will only be required to do so for 97 per cent of all tariff lines, meaning potentially that up to 330 tariff lines might be excluded, making such market access potentially meaningless. 
   
  At the meeting ministers set a deadline of April 2006 for finalising agreement on all such issues with the objective of completing the whole round by the end of 2006. All WTO members are expected to provide by July 31st, 2006 a comprehensive draft schedule of binding liberalisation commitments: a process originally envisaged as being undertaken over twelve months
   
  What does all this mean for the Caribbean?
   
  Firstly it is far from clear whether after Hong Kong there is the political will or trust between leading WTO members to take forward the process in the time scale envisaged. 
   
  Secondly it is hard to see how far or how fast the process can proceed in the absence of any convergence on solutions. Not only do many outstanding matters of principle remain to be resolved but also in key areas such as agriculture the highly contentious fine detail has hardly been discussed.
   
  Thirdly Europe, the US, Japan and many other WTO members remain internally politically divided about how far and how fast the global trade liberalisation agenda should proceed.  
   
  For example US negotiators mindful of the concerns of the US Congress and a strong agricultural lobby have left themselves plenty of room to exclude sensitive products. In Europe France has made clear the EC must make no further concessions on agriculture. China is virtually silent while for their part Brazil and India, the other two emerging global trade powers, recognise that they still have everything to play for. And for scores of small states such as those in the Caribbean the issue of special and differential treatment has yet to be addressed. 
   
  Fourthly Caribbean ministers and negotiators will have to consider where best to focus their attention in the next three months. The timetable agreed to in Hong Kong cuts across the negotiating timetable agreed between Europe and the Caribbean for a region specific Economic Partnership Agreement (EPA). These were expected to enter a detailed negotiating phase in February 2006. 
   
  And fifthly it looks likely that 2006 will be the year that those in involved in agriculture, manufacturing and services in the region will have to consider the likely concrete effect on their competitiveness in their own or others markets of whatever tariff cuts are offered. 
   
  In this respect the ministerial declaration contains a warning of the little realised competition yet to come. In a footnote fourteen potentially ominous words appear:  ‘The method for calculating the AVE ‘(the method that will be used for calculating tariff reductions) ‘for sugar lines is still to be established’.
   
  For the Caribbean the Hong Kong Ministerial was an expensive step along the road to an eventual world trade round. While the probability of its conclusion by the end of 2006 may seems very slim, tariff reductions and global trade liberalisation remain a reality. 
  . 
  David Jessop is the Director of the Caribbean Council and can be contacted at [log in to unmask]
  Previous columns can be found at www.caribbean-council.org
  January 7th, 2006
   


		
---------------------------------
To help you stay safe and secure online, we've developed the all new Yahoo! Security Centre.