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WTO Avoids Failure In Hong Kong

by Mary Swire, for LawAndTax-News.com, Hong Kong

20 December 2005


The WTO's Doha Round summit in Hong Kong stumbled to some sort of conclusion on Sunday, avoiding the outright failure that had been feared, and reaffirming the main goals of the Round, which is still set to be completed by the end of 2006.

The US and the EU agreed to end agricultural export subsidies by 2013, with the EU promising to make substantial cuts by 2010. For the US this doesn't mean much, since it hardly uses agricultural export subsidies; and for the EU, which had already planned to eliminate most export subsidies, it will apply to about US$3bn of payments annually. The US agreed to end cotton export subsidies by the end of 2006, something seen as important for African countries, but refused immediate action on direct cotton farm subsidies which amount to more than $4bn annually.

The main achievement of the meeting was a programme to grant the WTO's 32 least-developed countries duty- and quota-free access to the most-developed countries' markets, which was adopted with exemptions for 3% of the rich countries' products. 3% doesn't sound much, but it applies to tariff lines, not volumes or value, and includes many key items such as some types of textile. Developing countries wanted fewer exemptions.

Although the meeting avoided the ignominious collapse of the last major WTO summit in Cancun in 2003, due to support from the important group of developing countries led by Brazil and India, the major goals of the Doha Round still appear very ambitious.

"In a week of disappointments," said European Union Trade Commissioner Peter Mandelson, "the agreement on export subsidies . . . is no small prize. It's not enough to make this meeting a true success. But it is enough to save it from failure."

The Hong Kong meeting agreed to complete draft conclusions for the Round by the end of April, 2006, allowing completion of the Round by the end of the year, which gives a few crucial months for President Bush to gain approval of the package from Congress before his fast-track trade promotion authority expires in July, 2007. It is not thought likely that Congress will renew it.

“We have managed to put the Round back on track,” said Pascal Lamy, WTO director-general, adding that he was more confident than a month ago about prospects for the Round.


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