December 15, 2005

Rich nations wrangle, poor complain at trade talks

By Doug Palmer and William Schomberg

HONG KONG (Reuters) - Developing nations cranked up pressure on the rich to open their long-protected markets as world trade talks floundered on Thursday, while the United States and Europe blamed each other for the deadlock.

The World Bank added its voice to the indignation expressed by least-developed countries over their treatment at the World Trade Organisation (WTO) meeting in Hong Kong, saying there had been much talk about development but too little action.

A South Korean farmer rests while performing the three-steps and one-bow as hundreds of South Koreans march toward the main venue of the World Trade Organisation meeting in Hong Kong December 15, 2005. (REUTERS/Lee Jae-Won)

"In the three days the meetings have taken so far, the rich countries have transferred more than $2 billion to their farmers in various forms of support," World Bank Vice President Danny Leipziger said in a statement.

"In the same period, the 300 million poorest people in Africa have earned less than $1 billion between them."

Poor nations slammed Washington and Tokyo at the talks for baulking at a deal that would allow their goods in free of duties and quotas, saying that after years of prescribing liberalisation for others it was time they "swallowed their own medicine".

One official said U.S. Trade Representative Rob Portman "went ballistic" over the statement, which was issued by Zambian Trade Minister Dipak Patel on behalf of the poorest WTO countries.

The United States also came under fire over the $4 billion a year in subsidies enjoyed by its cotton farmers, and won little respite when it announced its willingness to offer duty-free access for cotton from impoverished West African states.

"This is a step in the right direction but it is clear more needs to be done. The real problem for African cotton producers is dumping on the world market, resulting from domestic and export subsidies," European Union trade chief Peter Mandelson said in a statement.

Washington, for its part, sought to turn the spotlight back onto the EU's refusal to lower import tariffs for farm goods from developing countries.

DEVELOPMENT DEAL

As trade ministers haggled, over 1,000 anti-globalisation protesters marched towards the convention centre meeting site, singing, dancing and prostrating themselves along the way. "We deserve to be heard," they chanted as riot police watched nearby.

Police used pepper spray and batons to drive back South Korean protesters on the first two days of the meeting but they expect more intense confrontations before it closes on Sunday.

The protests against free trade have puzzled many in Hong Kong, a city former U.S. President Bill Clinton called "exhibit A in the case for global interdependence and its benefits".

"Most people in Hong Kong don't understand what they (the protesters) are doing," said K.K. Cheung, a retired construction engineer. "This is not in their culture. They like free trade."

So far there has been no repeat of the rampant violence that marred a 2003 WTO meeting in Cancun, Mexico, where talks on a deal to reform world trade and lift millions out of poverty almost collapsed.

The Hong Kong meeting was initially intended to approve a draft trade treaty freeing up business in farm and industrial goods and services, known in the jargon as the Doha round.

That plan was abandoned because of differences between rich and poor -- particularly the EU's refusal to lower farm import tariffs without offers of greater access to developing nations' markets for goods and services -- though the 149 WTO member states still hope to reach a deal by the end of 2006.

Saddled with its farm trade impasse, the WTO had hoped to come away from Hong Kong with at least a duty-free and quota-free deal for the 49 poorest nations and their 700 million people.

But the United States has been reluctant to allow poor exporters free access to sensitive areas such as textiles, sugar and cotton, and Japan does not want to open up its rice market.

The EU, meanwhile, came under pressure for refusing to endorse a 2010 date for ending farm export subsidies.

The 25-nation EU says Washington must first indicate how it plans to reform its food aid system, arguing that -- because the aid is in kind rather than cash -- it amounts to as great a subsidy for U.S. farmers as European export subsidies.

The United States parried pressure from African nations to end its cotton subsidies, saying it could not take such a step unless the EU opens its farm markets further.

(Additional reporting by Ee Lyn Tan, John Ruwitch, Sophie Walker and Richard Waddington)

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