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Asia's Developing Economies Want More Concessions from Richer Nations


Some Asian nations are expressing disappointment at the lack of progress toward an agreement on free trade going into the World Trade Organization meeting in Hong Kong. Market access for agricultural products remains a major stumbling block. Experts say Asia's developing economies are unlikely to make more concessions on other trade issues unless wealthy nations step forward with concessions on agriculture.

Few in Asia are optimistic of reaching a breakthrough on major trade disputes at the World Trade Organization's ministerial meeting in Hong Kong.

Developing Asian economies remain far apart from developed nations on issues such as market access for agricultural and industrial products, and for services.

Asian developing economies want rich countries like the United States, Japan and those of the European Union to cut billions of dollars of government support to their farmers that make it difficult for Asian products to compete. But the European Union so far refuses to make more concessions.

Asian developing nations, however, are unwilling to cut their barriers to imported farm and manufactured goods, or to grant greater access to overseas service industries.

Shunli Yao, a specialist on agriculture trade talks at Peking University, says that for China, further cuts to agricultural supports would invite serious political and social problems. The country is struggling to improve conditions for hundreds of millions of impoverished farmers.

"You cannot expect China to make much more concessions in the WTO agricultural negotiations because China's [trade] defense is very limited," he said. "It's already very low and it cannot be lowered because it has to consider its potential impact on the rural economy, which is quite fragile and China's leaders have to think about impact on rural stability and poverty issues."

As Asian governments cut barriers to foreign competition, local industries argue they are increasingly marginalized in their own markets. In South Korea, angry rice farmers have clashed with police in recent weeks to protest against increasing foreign rice imports.

South Korea and Japan have traditionally protected of their farmers. But under the WTO, the two countries have been easing restrictions on many imports, much to the dismay of the politically powerful agricultural groups.

But agriculture is only the start of the problem for Asia when it comes to WTO negotiations. An equally big headache lies in the trade of products such as textiles, chemicals, minerals and manufactured goods.

Negotiations to reduce tariffs on these products, known as non-agricultural market access (NAMA), remain deadlocked. The framework under discussion seeks to cut the highest tariffs the most - for example, a country that charges 80 percent tariffs might have to cut by 50 percent, while a nation that charges 20 percent tariffs would have to cut just 30 percent.

But developing countries generally have the highest tariffs, which they argue are essential for the survival of industries that are not ready for foreign competition. And they insist that developed countries should cut the most.

Manab Majumdar heads the WTO division of the Federation of Indian Chambers of Commerce and Industry. Mr. Majumdar says Indian business supports free trade but he says it has to be fair.

"India and other developing countries would have to reduce import duties but at the same time the particular provisions of NAMA in the Doha mandate says there is a concept of less than full reciprocity. By that, I don't mean that India will not undertake tariff cut in the non-agriculture sector. It will," he said. "The only thing we have to be careful is that that should result in lesser tariff reduction obligations compared to developed countries."

In a bid to push the talks forward, India recently offered to lower its tariffs on industrial goods by more than the 50 percent it has already proposed. But India will do so only if developed countries match or exceed its offer. Some Asian countries say they are unlikely to make concessions on NAMA or the services sector if developed countries do not do their part in agriculture.

Despite the differences, most Asian governments have reaffirmed their commitment to resolving these issues in Hong Kong. But experts say negotiators are coming with low expectations.

Barry Desker, a WTO expert at Nanyang University in Singapore, says negotiators in Hong Kong will try, at least, to salvage the talks from total collapse. "What we could have is a papering over of disagreements and an attempt to carry on the discussion so that there would be further substantive negotiations in 2006," he said.

The Hong Kong ministerial meeting originally was supposed to set out a final framework to achieve the so-called Doha Development Agenda. The round of talks, which began four years ago, is aimed at eliminating unfair trade practices and giving poor countries greater access to global markets.

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