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Farm Subsidy Deal Eases WTO Fears

DW staff (nda)August 1, 2004

Members of the World Trade Organization finally found a compromise on the sticky subject of agriculture at the global trade talks in Geneva and agreed a deal late on Saturday.

Farm subsidies will be cut in exchange for trade opportunitiesImage: AP

Representatives of World Trade Organization (WTO) nations finally came to a compromise deal on global trade and rescued talks which collapsed last September in Cancun, Mexico, overcoming differences between rich and poor countries by agreeing an accord which cuts farm aid and tariffs on manufactured goods.

The deal, which is a positive step toward a 147-nation pact that lowers border barriers and enables exporters to sell their goods in more markets, came after days of hard bargaining and negotiations. The official deadline for the deal passed at midnight on Friday but members hunkered down through the early hours of Saturday morning and the rest of the day to reach agreement.

Industrialized nations find subsidy compromise

Eventually, industrialized nations, including the United States, EU members and Japan, offered a compromise where they scaled back protection for their farmers in exchange for boosting trading opportunities for products ranging from computers to cars.

It was a major breakthrough on the main sticking point of agriculture, which had stalled the talks. About 70 percent of the world's poor live in rural areas and earn their income from farming. The €153 billion ($184 billion) in subsidies and other forms of aid the US, EU and Japan give each year to support their farmers have been the biggest obstacles to reaching a broad WTO agreement to dismantle trade barriers.

Emergency negotiations were necessary after the WTO released a new compromise text on Friday in an attempt to overcome resistance to the mainly agricultural stumbling blocks but within hours of delegates receiving the new draft of the agreement, it became clear there were still major problems with the text.

Problems in new draft meant extended work

Several countries raised objections to the section covering agriculture specifically references to subsidies and tariffs, and as the deadline drew near, a small group of members worked diligently to iron out the problems. But as the deadline for an agreement passed, no deal had been made and the core group of countries continued to work into the small hours.

The hard works seems to have paid off but there is still to be a final agreement on the exact nature of the pact. Even so, what looked to be a losing battle has now been turned into a single victory in an ongoing war.

If ratified, the successful agreement will add some €420 billion ($520 billion) to the world economy by 2015, with most of it going to poorer countries, according to projections from the World Bank.

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