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).