WTO strikes trade deal

Rich and poor nations struck a crucial deal yesterday to relaunch global trade talks and slash billions of dollars in farm subsidies, open industrial markets and boost global growth.

The accord, which restores the World Trade Organisation's (WTO) credibility by putting its troubled Doha Round back on track, was hailed as "historic" by exhausted negotiators.

But commentators and analysts said the deal was only a small first step and that many of the toughest decisions on lowering barriers to international commerce were still to be taken.

After five days of wrangling, the WTO's 147 member states gavelled a framework laying down the guidelines for the round, which has been in trouble since the collapse of talks almost a year ago in Cancun, Mexico, when no deal on subsidies was found.

"This is a historic moment for this organisation," WTO chief Supachai Panitchpakdi told a news conference after the adoption of the pact at a late-night session at the WTO's headquarters.

The hard-won deal on a series of contentious trade issues, from farm reform to the launch of negotiations on a new customs code, puts the Doha Round firmly back on track, officials said.

Failure in Geneva could have delayed further trade liberalisation for years.

Rich nations welcomed the deal, which would commit them - once the round is completed - to rein in the huge subsidies they lavish on farmers and give developed nations better access to their farm markets.

"The Doha Round is back on track. The results are good for the EU and good for developing countries," EU Trade Commissioner Pascal Lamy told reporters. He added that the round might be completed by the end of next year.

The Doha Round was launched in late 2001 and was supposed to have been completed by the end of this year, but trade officials long ago abandoned that deadline.

US Trade Representative Robert Zoellick said the accord was "crucial step for global trade". "There's a lot of work yet to be done. But today's framework is a milestone," he said.

After an all-night negotiating marathon, key WTO members, including the United States, the EU and Brazil and Japan, on Saturday had agreed to the elimination of export subsidies at a date yet to be set - long a key developing country demand - to limit other subsidies, and to lower tariff barriers.

Agreement in the sensitive field of agriculture opened the way to outline accords in industrial goods trade, services and measures to boost the stake of poorer developing countries in world trade - seen as pivotal issues for the round.

The World Bank says the round could help lift more than half a billion people out of poverty and trigger growth by injecting billions of dollars into the world economy.

African countries, who won some concessions from the United States on cotton, long seen as a prime example of the pain rich nation subsidies can inflict on poor producers, said they could live with the accord.

But the pact was fiercely attacked by some activist groups, with the Focus on the Global South calling it a "catastrophe for the poor."

Fact box

Key elements of WTO trade pact
Agriculture
The pact says that export subsidies, widely viewed as the most trade-distorting form of farm aid, will be eliminated, although the timetable is left for future negotiations. Export credit programmes and state trading enterprises will also be subject to disciplines to eradicate any element of subsidy.

On production subsidies, known as domestic support in WTO parlance, and mainly used by rich nations, the text calls for the most trade-distorting forms to be cut substantially, with product-specific capping of spending.

"Each member will make a substantial reduction in the overall level of its trade-distorting support from bound levels," says the text. Significant cuts will be made in the first year of a final deal under the Doha Round.

The United States secured some easing of the rules for its so-called "counter-cyclical" payments to farmers, but with limits to assuage European Union and developing country fears that Washington might otherwise keep farm spending at current levels.

The text also calls for a review of the so-called "Green Box" - state aid to farming that is considered not to distort trade too much because it is mainly devoted to programmes such as rural development. The review will ensure that the rules are not being bent.

On market access, essentially import barriers, the text stops short of proposing a formula for a reduction but says there should be a "tiered" approach, with the deepest cuts for the highest tariffs.

After fierce pressure from developing countries, the text drops language which would have given rich farm importers, such as Switzerland, Japan and the EU a virtual free hand in identifying which products they could continue to protect with high barriers. It accepts rich nations have "sensitive" products but leaves the issue of how they will be identified for a later date.

For developing countries, particularly those where farming is mainly subsistence, there will be no obligation to grant much increased market access.

Cotton
West African states dropped a demand that cotton be treated as a separate issue, but the text does give the crop special importance within the farm chapter. It says that it will be given "appropriate prioritisation" and a special WTO panel will be set up to check progress in cutting rich nation subsidies.

Industrial Goods
The basic aim of the agreement is to find ways to reduce import barriers to goods as varied as cement, shoes, chemicals and calculators. This will be done by a formula under which the highest tariffs get cut the most.

The text included a paragraph to allay some poorer country concerns they might have to cut tariffs too quickly.

The new language says that while the blueprint "contains the initial elements for future work", it adds that "additional negotiations are required to reach agreement on the specifics of some of these elements".

In general, the least-developed countries will not have to cut their industrial tariffs but will have to make them more transparent. Developing countries will also benefit from longer transition periods when making tariff reductions.

Trade Facilitation
This is jargon for making customs procedures easier and less expensive for business. It was one of the four so-called Singapore Issues, which were seen as making too great demands on poor nations and which finally caused the collapse in Cancun.

The other three issues were jettisoned, but customs procedures were retained.

The text includes much language intended to ensure that poor and developing countries adopt any new customs procedures when they are ready. Richer exporting nations got what they wanted in having negotiations on this area start at all.