Warning that WTO aid deal could fail

HONG KONG – The US and the EU sparred yesterday over farm subsidies, food aid and measures to help the world’s poorest countries, souring world trade talks that were already in trouble.

Europe’s trade chief warned that a push to help the world’s poorest countries might fail, leaving a key meeting of the World Trade Organisation with little to show for a week of hard bargaining. Although Trade Commissioner Peter Mandelson mentioned no names, European diplomats said that both the United States and Japan were reluctant to accept the sweeping duty-free and quota-free access for their goods poor states were seeking.”I’m worried that the LDC (Least Developed Countries) package could now be in some trouble,” Mandelson told a news conference.”If we cannot deliver on this, I really think we should ask what we are doing in Hong Kong,” he said.The WTO’s nearly 150 member countries have already abandoned hopes of a draft free trade treaty in Hong Kong as initially planned and many trade diplomats see a package for the poorest as the most achievable goal of the meeting.EU intransigence over cutting farm duties has been one of the main stumbling blocks to progress in the WTO’s Doha round of free trade negotiations, and some see Brussels’ emphasis on a pact for the poor as a way to divert attention.A key part of the plan is duty-free and quota-free access to the world’s biggest economies for exports from its 49 poorest.But trade officials say the United States has baulked at allowing poor exporters free access to sensitive areas such as textiles, sugar and cotton, and Japan does not want to open up its rice market.”There are limits to how far we have to go politically,” a US trade official said.”Some areas are just too sensitive.”Washington and Tokyo are also worried about making the agreement a permanent concession, which could not be modified with changes in their domestic economies.Other measures in the development package include more “aid-for-trade” to help exports from poor countries.On Wednesday the United States said it would double its aid-for-trade grants to devleloping countries to US$2,7 billion per year by 2010, and Japan has already promised to provide US$10 billion to help poor countries develop their export capacity.But British relief agency Oxfam questioned the sincerity of the offers, saying much of the money was aid that had already been promised and so would be diverted from other programmes.”In each case, most of the money would come from existing aid budgets, forcing poor countries to decide between trade and spending on basic essentials like medicines and education,” it said in a statement.”Aid for trade is needed …but it must not be a substitute for fairer trade rules,” it added.The development package would also include speeding up the removal of US cotton subsidies which African farmers say stop them competing on world markets.Egyptian Trade Minister Rachid Mohamed Rachid said African countries wanted a declaration on cotton before the end of the week, but calls for an immediate end to export subsidies have run into opposition from Washington.Rachid, spokesman for the African Union, said poor countries were wary of rich nations “repackaging old ideas to claim something is on the table”.Madan Dulloo, trade minister of Mauritius who co-ordinates the Africa, Pacific and Caribbean group of states, said rich nations should ensure that poor governments do not have to wait years to get hold of aid due to complex conditions attached by the donors.-Nampa-ReutersAlthough Trade Commissioner Peter Mandelson mentioned no names, European diplomats said that both the United States and Japan were reluctant to accept the sweeping duty-free and quota-free access for their goods poor states were seeking.”I’m worried that the LDC (Least Developed Countries) package could now be in some trouble,” Mandelson told a news conference.”If we cannot deliver on this, I really think we should ask what we are doing in Hong Kong,” he said.The WTO’s nearly 150 member countries have already abandoned hopes of a draft free trade treaty in Hong Kong as initially planned and many trade diplomats see a package for the poorest as the most achievable goal of the meeting.EU intransigence over cutting farm duties has been one of the main stumbling blocks to progress in the WTO’s Doha round of free trade negotiations, and some see Brussels’ emphasis on a pact for the poor as a way to divert attention.A key part of the plan is duty-free and quota-free access to the world’s biggest economies for exports from its 49 poorest.But trade officials say the United States has baulked at allowing poor exporters free access to sensitive areas such as textiles, sugar and cotton, and Japan does not want to open up its rice market.”There are limits to how far we have to go politically,” a US trade official said.”Some areas are just too sensitive.”Washington and Tokyo are also worried about making the agreement a permanent concession, which could not be modified with changes in their domestic economies.Other measures in the development package include more “aid-for-trade” to help exports from poor countries.On Wednesday the United States said it would double its aid-for-trade grants to devleloping countries to US$2,7 billion per year by 2010, and Japan has already promised to provide US$10 billion to help poor countries develop their export capacity.But British relief agency Oxfam questioned the sincerity of the offers, saying much of the money was aid that had already been promised and so would be diverted from other programmes.”In each case, most of the money would come from existing aid budgets, forcing poor countries to decide between trade and spending on basic essentials like medicines and education,” it said in a statement.”Aid for trade is needed …but it must not be a substitute for fairer trade rules,” it added.The development package would also include speeding up the removal of US cotton subsidies which African farmers say stop them competing on world markets.Egyptian Trade Minister Rachid Mohamed Rachid said African countries wanted a declaration on cotton before the end of the week, but calls for an immediate end to export subsidies have run into opposition from Washington.Rachid, spokesman for the African Union, said poor countries were wary of rich nations “repackaging old ideas to claim something is on the table”.Madan Dulloo, trade minister of Mauritius who co-ordinates the Africa, Pacific and Caribbean group of states, said rich nations should ensure that poor governments do not have to wait years to get hold of aid due to complex conditions attached by the donors.-Nampa-Reuters