Is Hong Kong just a stage on the road to nowhere?

Published on Thursday 1 December 2005 00:07

BOB Hope and Bing Crosby made a successful series of On The Road ... films. But they were funny. It's not so funny for humour-bypassed trade negotiators traipsing the world - Seattle, Geneva, Cancun, London, - in search of a free-trading world economy.

That is why, as World Trade Organisation negotiators take the road to Hong Kong later this month, there won't be many laughs.

In fact, given the glacial rate of progress over four years, as representatives of 148 countries try to reach agreement on import subsidies, export subsidies and farm subsidies, there might not be much of anything to declare except more big hotel bills.

After the most recent talks bogged down in London and Geneva last month, representatives of the big players - the US, the European Union, the loose association of countries in the G20 - did the decent thing. They blamed each other.

But they also insisted they were all committed to reaching agreement by the end of next year, with Hong Kong a vital stage.

Ho hum, aye, right, haud me back and here's to that other essential for WTO negotiators - an iron backside. The predecessor of this so-called Doha round of world trade talks, which began in 2001, was the General Agreement on Trade and Tariffs.

That was actually the general disagreement and talks lasted, if memory with its merciful blanks still serves, more than seven years. If this lot reach agreement before the end of 2007 at the earliest, I will be among the many to be surprised, no matter how they spin it.

Mike Johanns, the US secretary for agriculture, said recently : "I am optimistic we can make significant progress in Hong Kong even if it is not as much as ministers would have liked. We can lay a pathway to a successful round completed in 2006."

What we could have here is the old double-bluff - lower expectations for the lieges, then surprise them by getting somewhere. Followers of European Union common agricultural policy negotiations, which invariably end in a flurry of press conferences in the early hours, will be familiar with it.

One man, however, warned against playing down the significance of the Hong Kong discussions. Peter Mandelson, now EU trade commissioner and described by Irish negotiators at the WTO talks as "the most dangerous man in Europe" after his offer of extensive farm subsidy cuts to try to get a deal, said: "We need an outcome for Hong Kong that significantly advances the negotiations. There is a risk of losing more and more time until it is too late to recover."

In a world where poachers and gamekeepers are inter-changeable, Pascal Lamy is now WTO director-general. A few years ago he was doing the job Mandelson does now, defending with skill and tenacity EU farming subsidies and its import/export restrictions with the rest of the world.

Now he is trying, with some caution, to produce a draft text that ministers can agree in Hong Kong, and was reported as saying: "If we try this jump and miss it, we might lose what has already been achieved. This is not at all desirable."

To the layman, not a lot has been achieved, except a peripheral agreement by the EU to cut its subsidy to sugar beet growers over the next few years. Even that is the most conditional of gains for the world's sugar cane growers because the world price is expected to slump.

What the sugar agreement does indicate is the importance of agriculture in this Doha round. World trade talks started soon after the Second World War, but farming did not appear until the late 1980s.

Now farmers, at least, see agriculture at the heart of discussions and, again as anyone who has followed the contortions of the CAP over its half-century history knows, that means tortuous, near impenetrable, arguments about when is a subsidy not a subsidy and how many decimal points of a percentage will make a difference.

The main argument was originally between the US and the European Union, with its overt system of farm subsidies, said Andy Robertson, chief executive of NFU Scotland. That put the EU on the back foot as America demanded free trade and much more access to the European market.

That has changed as US attempts to camouflage payments to its farmers have been exposed and now it is on the back foot, said Robertson.

Not that you would suspect that given the consistently bullish approach of US officials, even now that Mandelson has offered to reduce EU tariffs by an average of about 39 per cent, although some products designated as "sensitive" would be subjected to smaller cuts.

That compares with the G20 group's proposal for an average 54 per cent reduction and the US's proposed 75 per cent cut. But the EU has the moral high ground, said Robertson, and the US must make an offer to show willing.

For starters, it should rethink its $2 billion counter-cyclical contingency payment fund - a typically obscure way of saying that the US government will compensate farmers if world prices for their products fall.

That must go, said Robertson. There is no point the EU putting its house in order if the other groups don't. Well, quite.

However, a more accurate indication of American thinking came at a recent conference in Scotland when British farmers were told to "forget it" if they hoped that their higher production costs, associated with high environmental and animal welfare standards, would be recognised in the WTO talks.

Jim Grueff, who led the US WTO negotiating team until earlier this year, said that such issues were unlikely to figure in any agreement.

He added: "This round of negotiations is proving such a struggle that issues like that aren't even likely to be looked at."

In general, Grueff said, the EU was taking a defensive position in trying to protect the common agricultural policy while the US "is taking a much more offensive approach".

You bet it is. Come 13 December don't bother watching this space.