Pascal Lamy, the new Director-General of the World Trade Organization, clearly laid out the agenda for the December 2005, Hong Kong Ministerial Conference. He emphasised that Hong Kong should be "two thirds of the way" to completing the round of negotiations by the end of 2006. However, are negotiators approaching the right issues in the right way? Or has the process become too complex?

Lamy identified the main strategic areas as agriculture, non-agricultural market access, services and rules. He emphasised that "substantial results" on development issues must be achieved in all areas and that the development dimension must be central to the negotiations. This will be difficult as the "easy" parts of trade negotiations have already been completed. Industrial tariffs among developed countries are generally low and quantitative restrictions on textile trade have been eliminated. Developing countries generally receive preferences in developed markets for their manufactures. And least developed countries can have duty-free treatment under schemes like the European Union's Everything But Arms initiative. Trade negotiations are now dealing with more difficult, sensitive issues in all the strategic areas mentioned above.

In agriculture, competitive exporters are keen to open up closed markets and reduce trade distortions. However, farmers and governments in many developed and some larger developing countries are resisting attempts to lower their prices and income support levels. Eliminating trade distortions that result from developed countries' long-standing agricultural support programmes is central to the negotiations. Progress in this is the key to success in other areas.

Countries that depend on preferences tend to follow old-style production patterns and, therefore, face greater difficulties in adjusting to new developments.

Special and differential treatment (SDT) is becoming increasingly complex. Developing countries are divided among themselves. Some, such as Chile, are pushing hard to achieve non-discriminatory market opening in agriculture, manufactures and services and to reduce or eliminate all trade-distorting subsidies in farm trade. Others, such as Mauritius, are trying to retain preferential access to major export markets.

Originally, SDT was intended to cover developing countries as a group, with additional special treatment to least developed countries. Successful developing economies, such as South Korea and Mexico, have moved out of dependence on SDT into a world where access, not preferences, counts as was envisaged when SDT was introduced. Countries that continue to depend on preferences tend to follow old-style production patterns and therefore face greater difficulties in adjusting to new developments. However, it is important for all countries to apply lessons in adjusting to the pace and scope of trade liberalisation. Countries that could lose from liberalisation will need domestic programmes to assist them in overcoming adjustment costs. Poor countries lacking the necessary resources will need external assistance, as proposed by Prowse in this issue. For economies that are heavily dependent on one or two products, adjustment programmes involving time and financial assistance must be found.

The rapid growth of China and India as markets and as exporters adds a new dimension to world trade negotiations. These countries, with other emerging markets such as Brazil and South Africa, are now major players in the negotiations.

The rapid growth of China and India as markets and as exporters adds a new dimension to world trade negotiations. These countries, with other emerging markets such as Brazil and South Africa, are now major players in the negotiations.

The breakdown of developing countries' negotiating positions into small, special interest groups may not help in reaching multilateral agreements that would help all developing countries. Smaller negotiating groups take attention away from the main focus of opening developed country markets for agricultural exports and eliminating the damaging effects of subsidised agricultural exports.

In all trade negotiations, the big political picture often gets lost when focussing on the details. Too many special interests can ruin the best intended process. WTO members, developed and developing countries, need to lift their eyes from the details to see the bigger picture of how trade can benefit all and work on how a transition to greater openness can be achieved. A clear vision must focus on these major priorities:

• removing distortions in agricultural trade,
• reducing further market access barriers in developed and developing countries, especially larger emerging markets, and
• the developmental concerns of the poorest countries.

Only then can agreements that benefit all sides can be made. This is the challenge for Hong Kong.




Contributed by Peter Tulloch. Reprinted with permission from id21.org. id21 communicates international development research to policymakers and practitioners worldwide. Research featured on id21 focuses on policy solutions relating to health, education, urban development, rural development, natural resources and global issues policy in developing countries.

To read another Global Envision article about the World Trade Organization meeting in Hong Kong see, New FAO Report on Agricultural Trade and Poverty.



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