Failure at Cancun

THE WTO ministerial conference, which was critical for rapid recovery of the global economy, collapsed in Cancun on Sunday, following the failure of delegates to bridge deep differences over agricultural, investment and competition rules. Representatives of developing countries sought removal of distortions created in the global farm market by the rich nations by elimination of export subsidies, cuts in domestic subsidies and bigger tariff reductions by developed states. The North was accused of not sticking to its promises made at Doha in 2001 on agricultural issues, promises that have been on the agenda of trade talks for over 13 years. The participants did not agree on how to dismantle $300 billion in subsidies that rich states pay their farmers. In 1994, the Uruguay round did limit doles to farmers, but caps were set so high that the US continues to enormously increase farm subsidies. On the eve of the Cancun conference, the US and the EU made a declaration of intent to cut farm subsidies but without specifying figures or deadlines. The concessions offered came too late and were found to be too little. The South responded by refusing to negotiate on issues, first raised in 1996, relating to cross-border investment, competition policies, trade facilitation and government procurement. The developing nations view these as a move to advance the interest of multinationals at the cost of their domestic industry.

The underlying principle at stake in farm and investment policies is non-discriminatory liberalization of multilateral trade, based on clear, fair and effective rules. As UN Secretary-General Kofi Annan has stated, the WTO should abolish practices that keep the developing nations mired in poverty. The North has imposed tariffs on imported farm products that are eight to 10 times higher than those levied on industrial goods. Tariffs are much lower on items traded between developed nations as compared to the rates on imports from developing countries. It has not been realized yet that an impoverished Third World cannot be a thriving market for the first world, currently burdened with excess industrial capacity and sluggish domestic consumer demand. When countries are afflicted with an economic slump or recession, they, like the US, tend to become protectionist, though it is increased foreign trade that can pull economies out of crises. The truth is that the industrialized states, America in particular, are trying to retain their dominant position in the world market instead of making genuine efforts to reform the global economic system with the active cooperation of the entire international community.

As the Cancun deadlock indicates, multilateral organizations cannot work efficiently unless they are democratized to give the Third World an effective say in the WTO, as also in the World Bank, the IMF and the United Nations. The good point is that by shutting off or curbing access to developed markets, the industrialized states will provide further impetus to South-South cooperation and regional trade. Since the 1999 WTO meeting, regional trade agreements have grown in number by no less than one-third to 142. By 2005, such arrangements may cover 55 per cent of the world trade. The North will have to accept the improved bargaining position of the South led by the G-20 and the economic strength the developing nations have gained over the years.

Instead of pursuing self-serving policies in the global market, industrial countries should acknowledge that world trade can grow only on the basis of each nation sticking to exports where it enjoys a national advantage. It makes no sense, for instance, for Japan with huge trade surpluses to grow rice at an exorbitant cost. Cheaper imports of rice from neighbouring states could enrich East Asia and place it in a better position to import Japanese cars and electronic goods. If the industrialized world does not provide an even playing field in trade to the developing states, globalization will be retarded and there will be slower economic recovery that would benefit neither the North nor the South.

League unity move

THE Muslim League’s Sisyphuses are at work again, labouring to unite its many factions. Although they have a heavyweight on their side this time, it remains doubtful whether the effort will succeed where so many attempts have failed in the past. Prime Minister Mir Zafarullah Jamali is in the thick of it, but the unity move depends on the redoubtable Pir Pagara, who normally prefers to watch from the sidelines as fellow politicians squirm in discomfort at the hands of the military or their own friends. The prime minister met Pir Pagara again on Monday, and another meeting, with other Muslim Leaguers also participating, is expected shortly. Chaudhry Shujaat Hussain, who heads the ruling PML-Q, supports the move, although he could not be oblivious of the catch in the situation. This relates to suggestions that the head of a united Muslim League should also be the country’s chief executive. This is not possible without amending the law governing political parties, but who said it is difficult in our country to mould laws to one’s purpose? If it is changed, will it be Mr Jamali who as prime minister will also head the united PML or will Chaudhry Shujaat seek to become also the chief executive? Or will some clever Leaguer propose that it is in fact President Musharraf who should simultaneously head the party? It has happened before.

In fact, that has been the Muslim League’s trouble — its proneness to be part of the establishment and, in the process, to blur the distinction between party and government offices. This goes back to the early days of Pakistan, and it is the root cause of its repeated splintering into groups. There are at least five factions at present, and some of them can only be described, in that picturesque phrase from our political lexicon, as “tonga parties”. This applies particularly to the Zia league, which can leave ample space even in a tonga. The Muslim League has become the party of establishment par excellence, and every unrepresentative government has found it a ready handmaiden. The manner in which the PML-Q has come into existence vividly illustrates the point. Even the Nawaz League owes its rise to patronage from dubious sources. The People’s Party has behaved no differently when it has been in power, but at least it emerged as a party of opposition and some of that original spirit continues to motivate it.

The League unity move is taking shape at this time because of the difficulties the ruling faction is facing in dealing with the LFO tinder-box. The pressure is beginning to tell, with strains within the party and reports of dissatisfaction in its rank and file: the party organization in Sindh has been dissolved, and disputes over office-bearers have erupted in the NWFP. President Pervez Musharraf had gathered some 40 parliamentarians recently and exhorted them to unite and be more proactive. The LFO is a bad brief to carry, and even if the various Muslim League groups unite, they will not be able to stay together for long. Unless political parties are based on principled policies rather than on changing power expediencies, they will remain subject to fissiparous tendencies, as the Muslim League has learnt to its cost.