Friday, December 16 2005 10:06 Hrs (IST) - World Time -

Hong Kong: With closed-door negotiations gaining momentum on the contentious issues of agriculture, industrial goods and development package, negotiators from 149 WTO member countries are inching closer to a watered-down deal with draft Ministerial text in next few hours.

With hectic negotiations taking the place of initial tough posturing, some forward movement on the development package for the Least Developed Countries is expected to be reflected in the draft Ministerial text after the issue was discussed at length in the 'green room', where negotiations seemed to hasten as time was running out for the six-day ministerial ending on Sunday.

LDC package issue has figured in the green room meeting since yesterday where group coordinator and Zambian Commerce Minister Dipak K A Patel made a fervent appeal to the developed and developing countries members that they must show some flexibility on the package to ensure that Hong Kong does not disappoint, sources said.

US, which has made it categorical that the package should cover, select products and be there for select countries basically wanting Bangladesh and Cambodia out of it owing to their competitiveness in textiles.

The issues confronting the negotiators are also on how can the package be made legally tenable with the WTO Framework though efforts are on to find a window to this problem.

Negotiators are also expected to make some forward movement on end date for elimination of export subsidies in the text though some issues were still to be ironed out due to EU unwilling to show flexibility till there was movement in services and industrial goods.

While pushing for subsidies, India and its G-20 and G-33 partners want developed countries to show some flexibility on the Special Products and Special Safeguard Mechanism. Though some proposals were on table as the closed-door negotiations progressed clarity was yet to emerge on it.

While US has agreed on the 2010 as the end date, the food aid provided by it is deadlocking the movement on the issue with EU unwilling to give an end date for phasing out its export credits.

However, on the issue of tariff cuts on agriculture goods the general agreement only on dividing the tariff lines into four bands and their thresholds. These, whoever may take a more specific form in the new text.

Hectic negotiations are underway to see that the text is able to make some progress on industrial goods and is able to give out some numbers so that discussion on the coefficients can be initiated.

India and other developing countries want to ensure that some flexibility is given to protect their small and medium enterprises while EU is pushing for aggressive market access.

The coefficient suggested by EU in the Swiss formula for tariff reductions which reduced the higher tariffs more than the lower tariffs is 10 for both developed and developing countries which is not acceptable to India and other developing countries as it would result in very steep cuts and did not take into the count the underlying principle of 'less than full reciprocity'.