Financial Daily from THE HINDU group of publications
Tuesday, Aug 03, 2004
Industry & Economy - WTO
Breakthrough in WTO talks a boost for global economy
Brussels , Aug. 2
THE breakthrough in the world trade negotiations under the auspices of World Trade Organization (WTO), after intense and emotive sessions of bargaining between rich and poor or developed and developing countries, has been greeted with cautious optimism all round.
The WTO, comprising 147 member-states, has this time successfully negotiated a global trade deal after spectacular failures at Cancun, Mexico in September. The current Doha round will initiate fresh round of detailed trade talks on the basis of agreement reached early on Sunday.
This could provide a big boost for the world economy and could add more than $520,000 million to the world trade by 2015. According to current estimates by the World Bank, all this may also elevate living standards of some 500 million farmers in poorer countries.
The bottomline is that the richer countries have agreed to reduce agricultural subsidies to their farmers to enable agriculture produce from poorer countries to be marketed in the developed countries and in return, poorer countries have agreed to reduce import tariffs on imported goods from the developed countries. It is a delicate compromise based on consensus on both sides of the rich and poor fence to boost global trade.
The WTO delegates could not reach an agreement by self-imposed Friday midnight deadline and officials carried on negotiations till Sunday.
The concessions by Europe, America and Japan - representing key developed countries - are structured to enable agriculture produce from the developing countries find new markets in rich countries.
This lobby was led by China, India, Brazil and South Africa. And in return major developing countries would have a smooth access to sell industrial goods to the developing countries.
As Mr Franz Fisher, the European Union's Agricultural Commissioner (Minister), put it: "Agriculture is not the real stumbling block any more, the feeling is that it would be done if there are any lose ends."
Some European critics feel that the developed countries have given "too many concessions".
The present agreement has yet to be translated into detailed documents and the real effect of the proposed changes would not be felt at the grass root level on both sides of the fence for another decade or so.
Obviously, there are serious political ramifications, as the centre-right political lobbies in the developed countries will try to placate powerful and influential farmers voting blocs in the developed countries.
The dissident farmers in the developed countries could have a telling effect on the course of political thinking.
It remains to be seen how the centre-right media in the developed nations would respond to the proposed changes.
The poorer countries have argued that cutting rich countries' tariff on leading world commodities would be the first step in boosting their farm sectors.
The rich countries have agreed to partly slash nearly $ 1 billion a day, governments in developed countries spend tariffs and subsidising their farmers.
Such massive subsidies have so far driven down prices of agricultural crops that are the core part of the economies of developing countries, which is home to estimated 90 per cent of the global farming community. The developed countries have so far defended their policy of highly subsidised agriculture to maintain prosperity and living standards of their farmers.
The developed countries have further defended their agriculture subsidy policies by suggesting that rich countries have provided technical and financial aid to the developing countries.
The more advanced developing countries led by China, India, Brazil and South Africa have argued that they want "more trade and less aid" from richer countries and this is the first mile stone in that quest.
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