&#91VIEWPOINT&#93Complex trade talks are in store

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[VIEWPOINT]Complex trade talks are in store

The World Trade Organi-zation’s ministerial meeting in Cancun closed with only a temporizing agreement. A failure to agree on the so-called Singa-pore issues, including cross-border investment, competition policies, government procurement and trade facilitation, was the direct cause of the breakdown, but sharp confrontations in the agricultural negotiations were also a significant factor.
The meeting’s statement also said more negotiations were needed in several sectors.
These negotiations will be remembered as a milestone in world trade negotiations. In the Uruguay Round of the 1990s, the United States and the European Union led the negotiations after arranging a proposed agreement through secret negotiations, and other countries just followed them.
In the new negotiation, the United States and EU announced a proposed agreement and, based on that proposal, drew up draft elements. The two major powers were supposed to play a leading role in reaching an agreement once again. But their lead met strong resistance from the developing-country group and it failed. This suggests that discussions on the world trade order from now on will be led by three groups ― the United States, the EU and the developing countries.
In these negotiations, each country changed its tactics fluidly to promote its own interests, forming endless alliances and groups, reminding us of the political strategies of ancient China. The Cairns Group, traditionally a coalition of agricultural exporting countries, actually collapsed. From the remains of that group, Brazil, India, Egypt, China and 17 other developing countries formed a new group called the G-21 and began to fend off the United States and the EU.
The G-21 made the U.S.- and EU-centered agreement difficult by not only refusing to discuss the Singapore issues, but also strongly demanding drastic cuts in domestic agricultural subsidies of the United States and the European Union. The non-trading countries, including Korea, formed a new group called the G-9 to voice the positions of agricultural-product importing countries and allied with Bulgaria, Taiwan and Israel instead of siding with the United States. Then there was the SP-25 led by Indonesia, the SP-35 after 10 former members of the Cairns Group joined the SP-25 and the ACP-78, a group of poor countries in Africa and the Caribbean. All these contending groups will make further negotiations difficult.
The collapse of the ministerial talks has two significant implications for our agriculture.
First, we have to negotiate on rice imports next year without any agreed international ground rules on how to cut tariffs and subsidies. As a result, rice negotiations will depend solely on bilateral negotiations with our major trading partners without any ground rules. Because neither we nor our trading partners can judge how much to demand or how much to yield, we will require more meticulous preparations and more determination.
Second, although the ministerial talks failed to reach an agreement, the group demanded that the WTO General Council and Secretariat cooperate to convene a meeting of the General Council at the senior officials level no later than Dec. 15. The group also demanded that the council take actions necessary to conclude the full negotiations within the designated negotiating period. So agricultural trade will be discussed in the agriculture committee under the WTO General Council, and we will have to work hard both to prepare for those negotiations and to prepare domestically to implement changes that may be difficult but in our best interests.
We should also note that because the draft submitted to the meeting not only cut tariffs sharply but also set limits on domestic subsidies in agriculture item-by-item, we will have some serious pain to contend with; the draft sets strict restrictions on domestic steps such as income compensation keyed to production in response to import damage.
On the other hand, we should also note that the draft also includes some very useful clauses to us, such as tariff reductions by developed countries, special differential treatment for least developed countries and changes to the rules governing permitted but discouraged subsidies. And then, depending on specific numbers put into places of the draft so far left blank, we could either gain or lose dramatically.
We will need the wisdom and tactics of Zhuge Liang, the ancient Chinese strategist, to use the complicated negotiating scheme successfully.

* The writer is the director of the Korea Rural Economic Institute. Translation by the JoongAng Daily staff.


by Lee Jung-hwan

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