WTO heads for showdown hoping history is no guide
 

GENEVA, Friday (Reuters)

World Trade Organisation (WTO) states head for potentially decisive talks in Hong Kong next week on a global trade pact, hoping history will be no guide to the outcome.

Two of the last three WTO ministerial conferences ended in bitter disarray and a further setback could be fatal for the chances of negotiating a new treaty to open up markets, boost economies and help lift millions of people out of poverty.

Conscious of the high stakes, the WTO lowered its sights for the Dec. 13-18 meeting of 149 states - including newcomer Saudi Arabia - and dropped its initial goal of wrapping up a draft liberalisation accord.

But it needs to come away with something from Hong Kong, where its every move will be dogged by thousands of anti-trade activists and non-governmental organisations (NGOs), because a final deadline for the so-called Doha Round is not far away.

"The costs of failure at the WTO meeting would be significant. If we do not get a solid result from the Doha Round, the whole viability of the (WTO) will be called into question," wrote Jim Sutton, New Zealand Trade Minister, in the Wall St Journal.

"Thankfully, it seems to me to be universally understood that we cannot afford to fail," he added.

Intense negotiations at the WTO's Geneva headquarters, and a flurry of meetings between ministers from trade powers such as the United States, the European Union, Brazil and India, failed to make the needed breakthrough in the run-up to Hong Kong.

Divisions are too wide, particularly over agriculture, which is where developing countries have most to gain and rich states most to lose if farm subsidies are slashed and tariffs lowered.

Pressure has been on the European Union, the world's top subsidiser, to give more ground, but its chief negotiator, Trade Commissioner Peter Mandelson, is under strict instructions from France and other farm powers to do no such thing.

But wealthy nations are equally adamant that developing countries, especially the more advanced such as Brazil and India, must open up their markets for industrial goods and services where the developed nations are strongest.

"Now that the ministerial is upon us ... the shadow boxing must come to an end," said John Tsang, Hong Kong Secretary for Commerce, Industry and Technology, who chairs the conference.

Hong Kong will deploy some 9,000 police officers and cordon off areas around the conference centre so that the 300 ministers - many members have both trade and agriculture ministers there - and 6,000 delegates can deliberate in peace.

They aim to avoid the street violence that marked the 1999 WTO conference in Seattle and in Cancun, Mexico, in 2003, where mistrust between rich and poor states all but killed the round.

This time, diplomats and trade officials say the mood inside the conference hall - at least - looks calmer. Despite their differences, both developing and developed states seemed determined to get the job done, they say.

"The atmosphere is better, there is a willingness to ensure that Hong Kong does not fail," said WTO director-general Pascal Lamy, who co-authored the draft text that will provide the basis for the ministerial negotiations.

Ministers must at least agree target dates for concluding the draft deal that will elude them in Hong Kong. They are also committed to securing an accord on better treatment for the poorest states, including duty free access.

The deadline for a new trade treaty is the end of 2006, after that special U.S. presidential powers to negotiate on trade elapse and are unlikely to be renewed. But the blueprint must be ready months before - which means late spring.

Estimates for the economic benefits from a successful Doha round, launched in the Qatari capital in late 2001, vary, with the World Bank saying hundreds of billions of dollars.

Anti-free traders counter that the poorest countries have in fact lost out from the freer trade and stand to lose even more.

For many diplomats and trade observers, the importance lies in stemming a tide of protectionism, already visible in Europe and the United States, and making sure trade rules are set globally - the only way to make them fair for all.

"The WTO is the ideal place for regulating world trade. The alternative is the jungle," warns Lamy. (Additional reporting by Susan Fenton in Hong Kong)