RI hails WTO deal as victory for developing nations

RI hails WTO deal as victory for developing nations

Zakki P. Hakim, Jakarta

The government welcomed the latest World Trade Organization
(WTO) deal saying it would benefit developing countries like
Indonesia, particularly as developed nations would start reducing
their farm subsidies in the near future.

Director General of International Cooperation at the Ministry
of Industry and Trade Pos M. Hutabarat expressed optimism on
Monday that developed nations would start reducing their farm
subsidies in 2007 based on the premise that farm supports would
only account for five percent of their total agricultural
production by 2012.

Pos, who heads the Indonesian delegation at the WTO General
Council five-day meet in Geneva, described the new framework as a
major breakthrough for developing countries.

Some 147 member states of the WTO on Sunday agreed to a
negotiating framework to slash supports and tariffs in the farm
sector, lower import duties on manufactured goods, liberalize the
services sector, and harmonize customs procedures.

The agreement should revive the Doha Round trade talks aimed
at boosting global trade, which stalled last year after the
collapse of the Cancun WTO ministerial talks in Mexico. The farm
subsidy issue had been the main stumbling block in the global
trade talks.

Details of the new framework will be worked out at the next
WTO ministerial meet in Hong Kong in December next year.

"As the agreement will really become effective in 2007 (after
a one-year grace period), all of the heavy (farm) subsidies will
then immediately experience a 20 percent cut," he told The
Jakarta Post and Bisnis Indonesia.

The United States and European Union reportedly provide
between US$80 billion and $90 billion in domestic and export
supports to their farmers annually. This is depressing world
prices and preventing products from developing and least-
developed countries for competing, thus preventing farmers from
improving their lives.

Pos also said that another major achievement for Indonesia, as
the leader of the so-called Group of 33 developing countries, was
that the WTO had finally agreed to include the issue of special
products and special safeguard mechanisms (SP-SSM) in the
upcoming trade talks.

The concept of SP-SSM will allow developing countries like
Indonesia to maintain high tariffs on key food crops strategic to
the nation's food security.

Meanwhile, Institute for Global Justice (IGJ) executive
director Bonnie Setiawan doubted the commitment of the developed
nations to ending government support for their farmers.

In addition, the forced tariff cuts for industrial products
would come as a blow to local industries as they would be unable
to protect themselves against the flow of cheaper imported goods,
Bonnie said.

"We are pessimistic that the developed countries would really
cut, let alone end, their heavy subsidies," he said.

"We'll open our markets to them, while there is no guarantee
that there will be an end to the unfair subsidies," he said.

But Pos argued that Indonesia had been reducing tariffs anyway
on a wide range of industrial products in line with the Asean
Free Trade Agreement (AFTA).