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Malaysia finds an ally for
Cancun
By Anil Netto
PENANG,
Malaysia - South African President Thabo Mbeki wrapped
up a three-day visit to Malaysia on Wednesday with talks
centering on adopting a common position ahead of crucial
global trade talks in Cancun, Mexico, on September
10-14. The two nations, along with others in the South,
are seeking to persuade developed nations to make world
markets fairer for developing nations.
In 2001,
the World Trade Organization (WTO) launched the Doha
"Development" round of trade negotiations, which were
supposed to focus on the issues confronting developing
countries. The fifth ministerial meeting of this round
in Cancun will be the latest battleground in what is
turning out to be a long-running war pitting developing
nations against the industrialized West.
Malaysian Prime Minister Mahathir Mohamad took
over from Mbeki this year as the chairman of the
115-member Non-Aligned Movement and has been a
persistent critic of current globalization trends. South
Africa, an economic powerhouse in Africa, wants Malaysia
to play a pivotal role in forging a common stand among
developing nations at Cancun.
Progress in the
Doha Round has been curbed by a lack of political will
among developed countries as well as by developing
countries' difficulties in managing the huge and complex
agenda.
Analysts point out that the Cancun
Ministerial Conference could be a litmus test for the
multilateral trading system. If the WTO and its powerful
backers in the West fail, observers warn that the United
States and Europe might walk away and the entire WTO
could be shunted into irrelevance. In its place, they
worry that the US and the European Union would then
carve up the world into a series of free-trade
agreements and allow the multilateral system to unravel.
Developing nations point out that what is needed
in Cancun are initiatives to promote fairer trade rules
in agriculture. Agriculture drives most African
economies, and countries such as South Africa are
concerned that the huge subsidies offered to farmers in
the developed world are making it impossible for African
farmers to compete. They also hinder competition in
developed markets and promote dumping of subsidized food
products on developing nations.
Developing
nations will seek exemptions from tariff reduction
commitments that could affect their food security crops.
They are also likely to reject the extension of the
so-called "Peace Clause", under which agriculture is
exempted from WTO disciplines on subsidies. The Peace
Clause expires at the end of this year and analysts say
this gives developing nations added negotiating strength
in ending such exemptions.
Of far greater
importance in the Cancun negotiations for Asian nations
such as Malaysia, India and China are the new so-called
Singapore Issues, seen as a bigger threat than the issue
of agricultural subsidies. Critics feel the already
heavy WTO agenda should not be further overloaded with
these new issues: transparency in government
procurement, competition policy, foreign investment and
trade facilitation.
India, in a letter to the
general council chair on August 27 on behalf of 12 other
objecting nations, stated that including these issues in
an annex to the draft ministerial text gave the
"distorted" impression that the annexes had been
discussed by members. Along with the other objecting
nations including China, Indonesia, Malaysia, and the
Philippines, India instead submitted a list of issues
for clarification to be attached as an additional annex
to the draft ministerial text.
Since early June,
101 developing countries have publicly stated their
opposition to commencing negotiations on these issues.
Of these, 68 are members of the WTO - more than half the
developing-country membership.
While many would
welcome transparency in government procurement, there is
mounting fear that developing governments would
increasingly cede control of national economies to
outside forces. For one, they would not be able to
shield local firms - and by extension - the domestic
economy - from competition from foreign companies;
neither would they be able to provide preferential
treatment to local firms.
Critics contend that
such a multilateral agreement in any case is unlikely to
lead to increased foreign investment. Some argue that
almost all countries have in truth discriminated between
foreign and local investors in order to encourage
technology and skills transfer - something that goes
against the WTO's "core principle" of national
treatment.
The Malaysian Institute of Economic
Research (MIER) fears that "a multi-lateralized
competition policy will place all countries, regardless
of their differences, in a straitjacket with one size
fitting all". Wealthier developing countries such as
Malaysia also feel they have to tread cautiously as they
are themselves going into offshore investment. Malaysia,
for instance, is the third-largest investor in South
Africa.
Developing nations are also upset with
the way the draft ministerial text has been written.
Officials and activists often complain that the WTO
conducts negotiations without clear rules and that the
chairs of various negotiating groups are increasingly
dominating the negotiating process. Many developing
nations, by contrast, feel marginalized.
Invariably, the chairs of the relevant bodies
come up with their draft text after confidential
informal consultations with a number of unknown members
- a distinct lack of accountability. There are often no
minutes taken during such informal consultations, thus
excluding absent member country delegations from the
process.
Developing nations hope that the Cancun
Ministerial Conference meetings will promote
participation by all WTO members as well as transparency
and democracy in the WTO decision-making process. They
argue that the finished products, the Ministerial
Declarations, should reflect the views put forward by
all countries and not just the powerful nations.
The agenda for the South Africa-Malaysia talks
focused on the needs of developing nations, including
the push for cheaper copies of patented life-saving
drugs to be made available in these countries. On
Saturday, the WTO gave the green light for imports of
generic drugs from other developing countries with the
capacity to manufacture them. This was seen as a major
boost in the fight against AIDS and other killer
diseases in the developing world. But analysts warn of
the bureaucratic hurdles that have to be negotiated
before full use can be made of the agreement.
Trade between South Africa and Malaysia has been
expanding since 1994 with the balance tipped in
Malaysia's favor - an imbalance that South Africa would
like addressed. South Africa has also been eager to
learn more about Malaysia's pro-indigenous
affirmative-action policies. It is also keen to share
its experience in terrorism through the Regional Center
for Counter-Terrorism based in Kuala Lumpur.
Meanwhile, the stakes at Cancun could not be
higher. If the text of the Singapore Issues remains as
it is, critics say the result would be the creation of a
non-elected corporate elite with no accountability to
anyone but shareholders. Disputes would increasingly be
settled in secret by trade "experts" instead of by an
elected or representational judiciary or by member
governments.
The MIER, for its part, says an
"all or nothing" approach at Cancun will only spell
disaster: "Significant progress in some areas leaving
some unresolved issues at new crossroads appears to be
the best-case scenario that we can hope for under the
present circumstances."
(Copyright 2003 Asia
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