Scramble for aid package for WTO poorest nations

Leading trade powers were on Monday scrambling to assemble a package of trade and aid measures for the World Trade Organisation’s poorest members, in an effort to pre-empt any repeat of the mass walkout that shut down the last ministerial meeting in Cancun two years ago.

The US, the European Union and Japan all regard early agreement on a combination of cash and unrestricted access for poor countries’ exports as essential to clear the way for negotiations at this week’s WTO meeting on how to break the deadlock in the Doha trade round.

A senior diplomat from a developed nation said that, though many differences remained between the WTO’s biggest members, discontent and frustration among the poorest countries posed the biggest threat to the six-day talks, which open Tuesday.

Peter Mandelson, EU trade commissioner, said the package should be the first item on the agenda. “We need this downpayment for developing countries here in Hong Kong because this is a development round and because it would pave the way for the serious development gains…which will come from the core market access negotiations.”

Rob Portman, US trade representative, said agreeing a package was important and joined the EU in welcoming Japan’s announcement last week of a $10bn programme to promote poor countries’ exports. He signalled that Washington planned to increase its aid and expand duty-free imports from the poorest WTO members.

Mr Mandelson offered the US an olive branch by dropping demands that it remove all its barriers to poor countries’ exports. He acknowledged that domestic constraints made it hard for Washington and Tokyo fully to liberalise some politically sensitive imports, such as textiles and leather goods.

Despite the commissioner’s conciliatory tone, Mr Portman renewed pressure on the EU to do more to free farm trade. “Until we can solve the agricultural dilemma, it will be very, very difficult to make progress in the other areas,” he said.

He described as “cynical” Brussels’ claims that freer global farm trade would hurt poor countries, saying the EU was seeking to shelter its own producers from competition.

Celso Amorim, Brazil’s foreign minister and leader of the Group of 20 developing-country agriculture producers, also criticised the EU. He said the trade round would not succeed unless Brussels improved substantially its offer to lower agricultural tariffs.

Details of the proposed trade and aid package have yet to be decided and may provoke heated argument. One potential flashpoint is Washington’s resistance to demands by African countries, backed by the EU, for immediate cuts in its trade-distorting subsidies to US cotton farmers.

Even if that problem can be resolved, this week’s talks face other issues that underline the growing acceptance that progress in the Doha round hinges on meeting long-standing concerns of developing countries, which account for four fifths of the WTO’s 149 members.

The concerns include fear that removal of trade barriers would reduce the value of preferential access to rich countries’ markets and complaints by Latin American banana producers that revised EU trade arrangements penalise their exports.

The disagreements are complicated by deep divisions between the poor countries themselves. For instance, Africans and Caribbean banana producers, which have long enjoyed privileged EU treatment, fiercely oppose granting easier market access to their more efficient Latin American competitors.

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