G-33 bloc to hold fort against US, EU superpowers in WTO talks in Hong Kong

Keeping the cohesiveness of the G-33 economic bloc of developing countries in the run up to the World Trade Organization (WTO) talks in Hong Kong this December is proving to be an equally tough challenge for its members, as they chip on the woodwork put up by superpowers European Union (EU) and the US which aren’t bending a bit to end trade-distorting subsidies in agriculture.

"The Hong Kong meet is critical to the life of developing countries and there is greater pressure to get the developed countries to agree to concessions that would address poor nations concerns about survival and development," said Jeremy Hobbs, executive director of Oxfam International, a confederation of 12 international organizations working together with over 3,000 partners in more than 100 countries to find lasting solutions to poverty.

Hobbs admitted that developing nations are rather pessimistic on the prospects of hammering out an agreement on agriculture (AOA) by December.

"Clearly, there seems to be no urgency on the part of the US and EU to strike an acceptable deal. What we are seeing now instead is that there are efforts to split the ranks of G-33 and destroy the cohesiveness achieved in Cancun last year," said Hobbs.

He said that the G-33, led by Indonesia and the Philippines is struggling to maintain its solidarity because of the free trade agreements (FTAs) and bilateral trade agreements being dangled by the economic superpowers.

Hobbs noted that another failed negotiation in the WTO would lead developed countries to aggressively pursue bilateral agreements and maintain high domestic support for their own producers, continue to deny developing countries tariff-free market access and keep on dumping products into developing countries.

There will also be no end-date for export subsidies extended by the governments of developed countries to its industries and agriculture.

"We are worried. Hong Kong could be a train crash, a collision of the North and South countries. That’s because developing countries have different interests. African countries for instance, seem to be more interested in getting aid rather than trade concessions," said Hobbs.

He noted that rich nations are also driving a wedge among G-33 members by classifying India, China and Brazil as "advanced developing nations."

Oxfam, which works with G-33 members, already developed benchmarks of what poor countries should strive to achieve in the Hong Kong talks.

These include giving developing country-members the option to impose higher level of market access protection for products accorded special product or SP status by imposing tariffs higher than current bound rate schedules and quantitative restrictions.

"Also, an agreement on tariff reduction formula should not result in developing countries further reducing already low tariff walls," said Hobbs.

Moreover, the SSM or special safeguard mechanisms should neutralize trade distortions by allowing importing countries of subsidized goods to impose additional duties to approximate levels of subsidies applied by exporting countries. As such, the presence of a subsidy, as confirmed by immediate country notifications to the WTO and other relevant sources of informations, should be used as one of the triggers for imposing SSM remedies.

Also, the EU and US and other developed nations like Japan should commit to a timeline to reduce by at least 50 percent their existing subsidies to their farmers.

At the same time, developed countries can list a maximum of five agricultural commodities that can be considered as sensitive products, and thus, will continue to be protected. More than that would be non-negotiable.

While these proposed measures are considered a breakthrough for G-33 that is trying to stay afloat, Hobbs said the bigger challenge is for the fragile coalition not to give in to the lobby of rich countries when they themselves are not inclined to budge an inch from their firm stand.

"Neither the EU nor the US would have to get rid of a single cent of the subsidies that they currently provide to their farmers. In fact, they could raise the amount of money spent on subsidies by redefining programs," said Hobbs.

Oxfam research show that the EU would be allowed to increase agricultural support by $35 billion, and the US, by $7.9 billion at the end of the implementation period.

Worse, under the US Farm Bill approved by President George Bush in 2002, there is an 80 percent estimated increase in subsidies to American farmers that could total $82 billion over the next decade.

The US also proposed that for developing countries, only commodities produced by subsistence farmers should be accorded SP status. This totally disregards the G-33’s efforts in Cancun last year to be allowed to identify SPs for as long as they meet the general criteria relating to food security, livelihood and development.

"The ball is on developed countries to respond to proposals of poor countries, the inertia is coming from them. The further they delay the agenda, the better it would be for them. But it would be the developing countries that should find convergence in their difficulties and ensure that talks do not break down totally," said Hobbs.