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Poorer nations celebrate trade talks
failure
By Anil Netto
PENANG,
Malaysia - The collapse of the Fifth Ministerial
Conference of the World Trade Organization in Cancun,
Mexico, last week may signal a dramatic change in the
way the world's trade rules are being formulated. It
could also spell the beginning of the end of the WTO as
a negotiating forum for world trade unless new impetus
gets underway to change the situation.
The
failure of the talks is regarded by the developing
nations in Africa and Asia as a signal of their arrival
as a new force to be reckoned with in the global
economic stakes. The collapse of the talks follows a
similar breakdown in 1999 in Seattle, Washington and of
a later meeting of the United Nations Conference on
Trade and Development (UNCTAD) in Bangkok.
But
there is a growing danger that the WTO will recede into
the background, regarded by the developed nations as an
irrelevant talking-shop for protesters, even as they
negotiate the real business of international trade under
divide-and-rule tactics to cut even more lopsided
bilateral deals than in the past. There is already
serious and growing concern about the tendency of
developed nations to negotiate bilateral trade treaties
with poorer countries of their choosing, at the time of
their choosing, to their advantage.
The Cancun
meetings collapsed when the world's poorer countries
closed ranks and refused to discuss new issues until
some basic issues such as agricultural reforms had been
tackled. They refused to accept a proposal that would
have meant only small cuts in developed nations'
agricultural subsidies and that too only if developing
nations agreed to open up on the new issues to allow
foreign firms easier access into developing markets.
For now, the developing nations are celebrating
their ability to stop the powerful European Union-United
States-Japan juggernaut in its tracks. Countries such as
Brazil, China and India flexed their muscle to draw
impressive support from other developing nations, which
represent more than half the world's population. Backed
by vociferous campaigners and protestors outside,
delegates argued that stalling the talks was a far
better option for developing nations than reaching a
lopsided agreement stacked in favor of developed
nations.
The talks collapsed when a "Green Room"
of 33 countries failed to agree on contentious
"Singapore issues" that the rich countries wanted
discussed, dealing with investment, competition, trade
facilitation and transparency in government procurement.
That prompted the chair of the ministerial to declare an
end to the conference. The proposals created far deeper
disquiet than the disputes over agriculture.
The
impasse came despite concessions from EU Trade
Commissioner Pascal Lamy, who agreed that the
negotiations should treat the four issues separately in
Cancun. The developing-countries bloc flatly rejected
these issues, arguing that there was no clear
understanding that the Doha Declaration required
negotiations on these new issues.
This
solidarity among developing nations was in sharp
contrast to the past when similar groupings cracked
under pressure from developed nations, which customarily
have dominated the direction of previous negotiations
under a veil of secrecy.
Certainly, the
developing nations' success in blocking Cancun is a
severe blow not only for the WTO but also for other
regional multilateral trade agreements. Some analysts
worry that the very future of rules-based multilateral
trading as exemplified by the WTO is now at stake.
Proponents of the old order complain that the influx of
poorer nations into the WTO's privileged ranks has
transformed the once-focused trade body into a
148-member mishmash of conflicting players who are more
interested in "pontificating and not negotiating".
Those against the existing setup regard Cancun
as a huge victory for the united power of developing
countries to stand up to arm-twisting by the US and the
EU. This process, they argue, is vital in creating a
more democratic setting for world trade negotiations
that would go a long way in promoting real economic
justice globally. These critics say the developed
nations should stop trying to pin the blame for the
Cancun failure on developing nations and instead examine
how they have been trying to protect their own economic
interests.
Certainly, these economic
dislocations are serious. According to the World Bank's
2004 report on Global Economic Prospects, published in
early September in advance of the Cancun meeting,
protectionism hits all of the world's developing nations
hard. Protection facing developing nation-exporters in
agriculture is four to seven times higher than against
manufactures in the north, and two to three times higher
in developing countries. Tariff peaks are particularly
high in rich countries against the products of poor
countries. Hefty specific duties are particularly common
in rich countries.
In fact, US subsidies to
cotton growers - a staple of African agricultural
production - totaled US$3.7 billion in 2002, three times
total US foreign aid to Africa. Those cotton subsidies
depress world cotton prices by an estimated 10 to 20
percent, reducing the income of thousands of poor
farmers across the globe. In West Africa alone,
according to the World Bank, where cotton is a critical
cash crop for many small-scale and near-subsistence
farmers, these US cotton subsidies cost them about $250
million a year.
The problem in Cancun was that
the draft text did not call for serious reforms in
domestic support for agriculture within the EU, the
United States and Japan, while developing nations were
told to decrease their tariffs sharply. Developing
countries led by China, Brazil, India, South Africa and
Argentina, under the newly formed Group of 22 (G22),
were not impressed. Little was given to developing
countries in the way of concessions on strategic
products and safeguard mechanisms, they argued.
Crucially, the draft had insisted on at least
two new issues at the start of negotiations: government
procurement and trade facilitation. It also attempted to
impose a deadline for reaching agreement on the mode of
negotiations on the equally contentious competition and
investment issues. Negotiations hit an impasse, with
some 90 developing countries opposing the launch of
negotiations on the Singapore issues.
The
developing countries complained that they simply did not
have the capacity to handle these new issues on top of
the existing WTO negotiations. They also said that
agreements on these new issues would have further
restricted their domestic economic policy options and
jeopardized domestic industries.
Despite the
impasse in Cancun, many ministers have indicated that
they are still committed to carrying on with the Doha
Round in some form, raising hopes for what they regards
as a more democratic, transparent and participatory WTO
to emerge from the ashes.
(Copyright 2003 Asia
Times Online Co, Ltd. All rights reserved. Please
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