World Trade Organization Meeting Opens

The sixth round of the World Trade Organization’s ministerial meeting, which will redefine the framework of the global trade, convened in Hong Kong on December 13.

The meeting will be attended by about 5,800 delegates from 149 countries, and on the agenda will be discussions on opening markets through the Doha Development Agreement (DDA) that will last until December 18.

The DDA agreement deals with six sectors such as agriculture, non-agriculture, service, anti-dumping, development, trade and environment.

The prospects for agreement are bleak, however, as each country’ has different interests. Korea’s wishes are twofold: reducing the range of agricultural products affected by opening its market, and pursuing industrial product trade liberalization.

Agriculture is the key to the DDA agreement. Its goal is to lower each country’s tariffs, open agricultural markets, and abolish agricultural subsidies (export subsidies and domestic subsidies).

The agricultural agreement focuses on establishing detailed principles which will become standard in each country’s plan for opening its market.

A consensus has been reached when it comes to removing export subsidies, but the U.S., EU and developing countries are pitted against each other on how much tariffs should be reduced and whether to abolish domestic subsidies.

Korea is sensitive about how much tariffs will be reduced and for what products.

The U.S. wants to divide items into four categories according to the grades of existing tariffs, and it wants to cut 90 percent of tariffs on items with over 60 percent tariff rates.

This means that Korea will curtail tariffs significantly on 152 out of 1452 items if this plan is passed. For example, tariffs on hot pepper should be down from 270 percent to 27 percent. The same goes for garlic, tangerines, and onions.

The EU, an agricultural product importer, suggested a more modest lowering of tariffs by 25-60 percent. Korea prefers this.

Developing countries, with stronger influence than they had before, are taking a strong attitude toward the farm produce sector.

The group of 33 developing countries (G33) held a separate meeting on December 13 and said they will not recognize any agreement results from Hong Kong if the use of a special products category for developing countries which gives them minimal or smaller tariff reductions is not allowed. The G33 includes Korea, which falls under the category of developing country in the agriculture sector.

Developed and developing countries have differences on how to lower tariffs of industrial products. Developed countries insist on lowering tariffs on industrial products uniformly, while developing countries maintain that only developed countries should reduce tariffs significantly. Korea is taking sides with developed countries in terms of the industrial products sector.

Korea will be at a disadvantage if the agreement gets complicated-

After the Uruguay round, the multilateral agreement mechanism has become a tug of war between farm-produce exporters and importers.

The conflict between developed countries and developing countries became an additional consideration after the WTO ministerial meeting in Cancun, Mexico.

Recently, the issue of reducing domestic subsidies has caused friction between the U.S. and EU, and the differences are growing among developing countries as well.

Brazil and India’s entry into the G4, which plays a key role in the agreement, leaving out Japan and Australia, has led to its increased influence. That is another factor.

A Byzantine agreement mechanism is not good for Korea. A broken agreement due to each country’s different position, and the growing influence of Brazil as a farm-produce exporter are not good for Korea as well.

The DDA agreement’s limitations-

In addition to agriculture and industrial products, the support of the 50 least-developed countries (the development sector) is also an important variable.

The least developed countries in Africa denounced the U.S., saying that instead of supporting developing countries, the U.S. is providing about 25,000 cotton farms with $4 billion a year in grant money, and that is threatening the lives of hundreds of thousands of Africans who live on cotton.

However, the U.S. has shown movement toward creating a new subsidy. To this end, some are concerned that the DDA agreement could be delayed for a long time or be derailed.

International trade professor Kwag No-seong of Dongguk University pointed out that because of the limitations of the DDA agreement consisting of 149 countries, Korea should focus its efforts on bilateral trade agreements, such as free trade agreements, as well.

Eun-Woo Lee libra@donga.com