'Hong Kong offers last chance to Doha'

Liberalising imports should be consistent with poverty reduction strategies and millennium development goals.

The United Nations has said developing countries should not be forced to make economic commitments that did not suit their development needs. The UN Development Programme's Human Development Report 2005, released today, said the WTO's ministerial meeting in Hong Kong in December offered the last chance to restore confidence in the Doha round.

"The WTO rules recognise in principle that developing countries should not be made to make commitments incompatible with their economic status and development needs. However, they have come under pressure to liberalise imports at a rate inconsistent with their development needs," it said.

It said liberalising imports could offer advantages if applied in a sequenced fashion consistent with national poverty reduction strategies and millennium development goals. It suggested that reciprocal demands for market access from the developing countries should be limited to industrial goods, and that the tariff reduction formula should offer them flexibility.

It also called for a list of special products exempted from commitments. It was also for allowing developing countries to use safeguard mechanism if surge in imports threatened food security.

It pointed to high tariff reduction commitments undertaken by Vietnam and Cambodia, which joined the WTO recently. Accession rules should ensure that liberalisation demands were not inconsistent with their development status, the report said.

The report said agriculture was at the centrestage of talks, and, therefore, effort should be made to prohibit all direct subsidies extended by developed countries by 2007. It also proposed that by 2010, rich countries should reduce their overall subsidies to 10 per cent of the production value.

Compensation to developing countries dependent on sugar and cotton exports has also been proposed, along with a phased reduction in import tariffs through the Swiss formula by 2010. The tariff reduction formula would result in the deepest cuts on the highest tariffs with a ceiling of 10 per cent. An end to blue-box subsidies that provide market-based support by developed countries has also been suggested.

To bridge the gap between rich and developing countries, the report proposed that tariff peaks and escalation should be done away with by 2010 by ensuring that maximum tariff was not twice the average tariff. It pointed out that Indian garments' exports to the European Union were affected due to an import duty of 10 per cent.