Trade talks 'fail to tackle tough issues'

Trade negotiators failed to tackle the toughest issues in a draft agreement circulated at world trade talks today, showing that only modest progress was being made as the meeting entered its final hours.

The text, which is likely be revised further before the six-day World Trade Organisation conference in Hong Kong ends tomorrow, touches on a broad array of topics ranging from cutting agricultural subsidies to opening markets to services like insurance and banking. But it was riddled with loopholes and gaps that could prove hard to close with little time left.

One of the most contentious issues was setting a deadline for ending government payments to domestic producers to promote exports. The draft suggested that such export subsidies be eliminated by 2010 – a date that is likely to draw opposition from the European Union.

In a victory for West African cotton growers, the draft calls for rich nations to end export subsidies for cotton in 2006. This represents a US concession to demands by African and other developing countries that say government support for farmers in rich countries is driving many poor farmers out of work.

The text also showed progress on the issue of granting duty-free and quota-free access for goods from the world’s poorest countries, suggesting that all developed nations would agree to the proposal, although the small print still leaves rich countries with some possible opt outs.

But in other vital areas, major gaps remained. In particular, there was no date by which members would agree to a precise method for reducing agricultural trade barriers, a key demand of poorer nations.

A dispute over how much wealthy nations should cut their tariffs and farm subsidies has been a major obstacle during the meeting, with many delegates pinning the blame on the European Union's refusal to further open up its farming market to imports. The EU, however, says it has made ambitious offers to cut its trade barriers and wants developing nations to agree to lowering their tariffs on manufactured goods and services.

US Trade Representative Rob Portman said he did not expect any big breakthroughs but was hopeful for modest progress, including an agreement on an end date for export subsidies.

“The US had hoped for more in Hong Kong, but we came here with relatively low expectations because of the inability to resolve the agriculture issues,” he said. ”I’m still relatively hopeful.”

The Hong Kong meeting was originally meant to produce a detailed outline for a global free trade agreement by the end of 2006. But the six-day meeting appeared doomed even before it began due to the impasse over agricultural trade.

A failure in Hong Kong could seriously undermine the WTO’s credibility. Previous trade-liberalisation talks in Cancun, Mexico, in 2003 and Seattle in 1999 collapsed in disarray. And the current Doha round of talks, started in 2001 in Qatar’s capital, is already two years behind schedule.

Near the conference venue, dozens of South Korean protesters scuffled with riot police, throwing eggs at security forces and hitting them with bamboo poles. Police with riot shields and helmets fought back with clubs and pepper spray.

The demonstrators – mostly farmers – were part of a parade of thousands marching in the streets against the WTO, which many of them consider to favour corporation and wealthy nations. The Korean farmers are concerned that a WTO treaty opening up agricultural markets would wipe out the domestic rice market and their livelihoods.