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A hard test at Hong Kong

The countdown to the Hong Kong ministerial meet scheduled for December 13 to finalise a broad trade agreement under the aegis of the World Trade Organisation (WTO) has well and truly begun. What is worrying is that despite extensive discussions over the last four years, there are still no signs of substantial progress in narrowing down the differences. The three key issues that are likely to dominate the Hong Kong meet — agricultural trade access, non-agricultural market access (NAMA), and services, also referred to as the Doha development round issues — have enormous significance for India and other developing countries. Of these, a breakthrough in agriculture is deemed an essential first step for wrapping up agreements on the other two. The thrust of recent discussions has been on arriving at an acceptable framework for an accord on agriculture that could be adopted at Hong Kong. But that continues to be elusive, prompting all round scepticism over the outcome of the ministerial meet. Last week, after a round of meetings in London and Geneva, the G-20 countries, including India and Brazil, reiterated their well known stand that the developed countries should yield more by way of improving market access and reducing trade distorting subsidies in agriculture.

The recent proposals of the United States and the European Union, though refreshingly bold by their standards, fail in some crucial respects and in any case do not match the expectations of all member-countries, especially the developing ones. The U.S. has proposed slashing the highest tariffs on agricultural goods by 90 per cent and the most distorting farm subsidies by 60 per cent. However trade negotiators from India and other developing countries fear that the U.S. will indulge in "box -shifting", tucking away many types of subsidies to the non-challengeable green and blue boxes, effectively keeping them out of the negotiations. The EU proposals on reducing agricultural tariffs have been disappointing as is also, in a much broader sense, its linking agricultural negotiations to NAMA. Both the EU and the U.S. have to reckon with political constraints as well. The EU Trade Commissioner has been accused by France and a few other members of exceeding his brief. In the U.S., the approval given by the Congress to the President for a fast track clearance of trade accords will lapse by 2007. All these only underline the necessity of achieving a breakthrough at Hong Kong. On present indications, no one believes that it is going to be easy. Echoing Commerce Minister Kamal Nath's poser, WTO Secretary-General Pascal Lamy wanted to know whether it was time to "recalibrate" the expectations from Hong Kong. There are some advantages in being more realistic but they could also slow down the momentum the negotiations have acquired recently. The coming weeks are going to put the skills of the trade negotiators to a hard test.

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