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Mon, Dec 19, 2005 - Page 12 News List

WTO reaches subsidies breakthrough

SMALL VICTORY Although not as ambitious as originally hoped for, the final draft agreement includes a proposal that all cotton-export subsidies will be scrapped next year

AP , HONG KONG

Protesters pack a Hong Kong street as they break through the police line outside the Hong Kong Convention and Exhibition Center on Saturday. Hundreds of protesters fought riot police in the most violent demonstrations since trade ministers from around the world began a WTO meeting last Thursday.

PHOTO: AP

Negotiators reached a breakthrough on the most contentious issue of the six-day WTO trade talks, ag-reeing that wealthy countries would eliminate farm-export subsidies by 2013, paving the way for a modest agreement to cut trade barriers across various sectors, according to a copy of the final draft agreement made available to journalists.

The breakthrough, coming after all-night negotiations, appeared to save the WTO meeting from an embarrassing collapse -- provided the final draft is approved by all 149 member nations and territories meeting later yesterday.

But the draft represents a far less ambitious agreement than WTO negotiators had originally hoped to achieve in Hong Kong: A detailed set of formulas for cutting farm and industrial tariffs and subsidies.

The revised text sets April 30 next year as a new deadline to work out those details, a key step toward forging a global free-trade treaty by the end of next year.

The 2013 date for the end of farm subsidies was a key demand of the EU, which held out against intense pressure from Brazil and other developing nations to phase out a significant proportion of its controversial farm-export subsidies by 2010.

Developing nations say such government farm payments to promote exports undercuts the competitive advantage of poor farmers.

The draft noted "the compelling urgency of seizing the moment and driving the process to a conclusion as rapidly as possible. We must maintain momentum. You don't close divergences by taking time off to have a cup of tea," it said.

"To meet this challenge and achieve this goal, we must act decisively and with real urgency," the text said.

The final draft also calls on wealthy nations to allow duty-free and quota-free privileges to at least 97 percent of products exported by the so-called least-developed countries by 2008.

In a victory for West African cotton-producing nations, the text retained an earlier proposal that rich countries eliminate all export subsidies on cotton next year.

That represents a concession by the US, a major cotton exporter, and US Trade Representative Rob Portman had said the proposal would be a hard sell to US lawmakers.

Cotton growers in Burkina Faso, Benin, Chad and Mali say the US farm aid drives down prices, making it impossible for small family farms to compete in international markets.

These last two measures were considered critical to the overall success of the current round of WTO talks that were launched four years ago in Doha, Qatar, particularly to address the concerns of developing nations.

Portman said that while he had some concerns about the WTO's final draft agreement, he hoped that the delegates could come up with an acceptable version in time.

"Some members have concerns as we do but in the end there is an overriding need to come together and work out our differences so I'm hopeful we can do that," Portman said as he was walking from his hotel to the convention center.

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