Trade agreement touted as ‘good deal for everybody’

Plan would end export subsidies, cut import duties

? In a breakthrough Saturday, trade ministers tentatively agreed on a plan to end export subsidies for farm products and cut import duties, a key step toward a comprehensive global accord that advocates say will boost the world economy.

The deal, under discussion since 2001, was expected to be approved by all 147 members of the World Trade Organization later Saturday, opening the way for full negotiations to start in September.

“Developed countries have recognized that agricultural trade with a heavy subsidy component is not free trade,” Indian Trade Minister Kamal Nath said. But he said that the United States, European Union and other developed countries also would benefit by removing heavy agricultural subsidies from their budgets.

“It is a good deal for everybody,” Brazilian Foreign Minister Celso Amorim said. “It’s a good deal for trade liberalization. It is also a good deal for social justice … with the elimination of subsidies.”

Economic theory says that reducing barriers to trade and allowing the market to dictate who makes what and at what price, will boost the global economy. A recent study by the University of Michigan found that cutting global trade barriers by a third would boost the world economy by $613 billion — the equivalent of adding a country the size of Canada.

But nations are reluctant to agree to big cuts in some areas because free trade creates losers as well as winners, and entire industries can be devastated in some countries if they are opened to foreign competition. So trade rounds are slow and laborious affairs.

On Saturday, some 20 key countries approved a document setting out the framework for a legally binding treaty. It will commit nations to lowering import duties and reducing government support in the three major areas of international trade: industrial goods, agriculture and service industries such as telecommunications and banking.

The delegations met late Saturday night to approve the document.