The sudden collapse of the fifth ministerial meeting of the World Trade Organisation (WTO) in Cancun last week is arguably the worst setback it has received in its less than a decade of history.
The high hopes generated in recent weeks by the apparent willingness of the developed countries to give some concessions on the question of agricultural subsidies proved illusory.
They were finally dashed when the developing countries found it impossible to agree to a developed country crafted draft agreement, which virtually ignored all the major concerns of developing countries and all but nullified the progress achieved at Doha two years ago. As a result, world trade talks are back to square one, pushed back to the Seattle precipice. It seems highly unlikely that the current round of trade negotiations would be completed by early 2005, as previously envisaged.
Whether the negotiators will be able to pick up the pieces and start again soon is also rather doubtful in view of the preoccupation of the developed countries with the recessionary fears in their economies which fuel the protectionist fire — and the United States increasing involvement in the Iraq, Afghan and Middle eastern conflicts and the heating up of the US domestic political season. Any meaningful revival of the talks is, therefore, seemingly impossible before the US Presidential election in November, 2004. The Bush Administration already has too many chestnuts in the fire to handle this political hot potato in an election year.
Many in the developing world will lament the failure of the talks as they did seem to open a window of opportunity for expanded trade and market access, especially in agriculture and simple manufactures, which could help dent the massive poverty in their countries. However, the monolithic power of the developed countries in international trade demanded a quid pro quo for the meagre concessions the latter were willing to make, which would have proved well beyond the capacity of developing countries to deliver, without incurring serious damage to the already precarious social and economic conditions prevailing in them.
Barring the fringe minority of fundamentalists of different religious and political hues who would prefer the ghettoised existence of the Third World to the rampant globalization of recent years, most people in developing countries would want to benefit from the surge in international trade, albeit on a more equal footing. The failure at Cancun represents therefore a setback, rather than a victory for both the developed and developing countries.
The surprising emergence of unity among the developing countries at Cancun, reminiscent of their clout in the 1970s, is perhaps the most striking and salient development of the Cancun meeting. While heartening to most developing country inhabitants, this unity is likely to pique the developed world and to provoke the ire of their governments, especially the United States, who have treated WTO as a handmaiden to carry out their global interests. Yet this new unity, although still fragile and impermanent, is based less on ideology or defiance of the developed world, which, despite enormous differences in their interests and approaches, often are able to contrive a much more unified posture.
Rather, the emerging cohesion in the considerably fragmented developing world seems to be based on a new perception of their common interests and the need to have their voices heard in global fora. What was also notable about the emerging synergy among the developing countries in Cancun is that it was largely spontaneous and devoid of any sinister motives that are often insinuated against them by the developed countries. Although large countries, such as China, India and Brazil took the lead in forming the Group of 21 on agriculture, other developing countries, especially from Africa, were equally vocal in articulating their own problems, such as the Cotton Initiative designed to end the heavy subsidies given by the developed countries to their cotton farmers which have endangered the livelihoods of millions of African farmers. The voiceless smaller developing countries have now the courage to bring on the high table the concerns of those who are struggling to join the mainstream of development.
The failure of the Cancun ministerial meeting also signifies the impatience of the developing countries about the business as usual attitude of the developed countries who call most of the shots in such meetings and in the WTO Secretariat , even though it is currently headed by a developing country diplomat. At the fourth ministerial conference of the World Trade Organisation held in Doha two years ago, a breakthrough was made when trade ministers agreed to begin global trade negotiations driven by what is known as the Doha Development Agenda, which put the question of development at its core. It acknowledged that trade is a vitally important element in any programme for development, as it can deliver benefits to the developing countries worth many times more than all the development aid they receive. The Doha ministerial meeting also agreed to extend special and differential treatment to the developing countries in meeting their obligations under the Uruguay Round agreements.
Although the Doha ministerial declaration did not articulate the concerns that developing countries on several issues, particularly those relating to the manner in which the Uruguay Round agreements have been implemented, there was one significant outcome of the conference, viz, the declaration on TRIPs agreement and public health. This declaration was included primarily because of the pressure brought by the developing countries on the issue of access to medicines at affordable prices. These countries have been focusing on impact of the exercise of patent monopoly by multinational drug companies, which was strengthened in the agreement on TRIPs, giving rise to unaffordable prices of HIV/AIDS drugs in Africa. As a result, the Doha declaration on TRIPs agreement and public health included the concerns of the developing countries in a forthright manner. A significant agreement was reached last month on access to essential medicines for the poorest countries, making it easier for poorer countries to import cheaper generics made under compulsory licensing if they are unable to manufacture the medicines themselves. The measure was earlier opposed by the United States.
The two most contentious issues at Cancun were agriculture and the four new or Singapore issues (raised during the first ministerial meeting of WTO in Singapore in 1996) of investment rules, competition policy, transparency in government procurement, and trade facilitation. On the first, the developing countries, led by the Group of 21, believed they had made their case that the $300 billion in subsidies paid every year to the world’s wealthiest farmers undermined the livelihoods of millions of poor farmers around the world. But the proposals made by the United States and Europe to address this key issue did not go far enough and fell far short of their expectations.
While seeking substantial tariff reductions on both agricultural products and manufactures, the developed countries balked in meeting their commitments to phase out agricultural subsidies to their farmers. The developed countries did not show enough sensitivity to asymmetries in the situation facing the developing countries in terms of resource availability and bargaining power and were too eager in their insistence on the one-size-fits-all maxim was blindly followed. A measure of such insensitivity is illustrated by the case of four of Africa’s poorest nations which had asked that the African farmers be paid $300 million in compensation for the losses they suffered because of unfair competition from American and European cotton farmers who receive $300 billion in subsidies from their governments. Instead, a draft proposal suggested the question be studied and the African farmers plant other crops.
Having avoided the question of agricultural subsidies in earlier rounds of trade negotiations they tried to finesse their half-hearted commitment in Doha by raising tenuous arguments and extraneous issues. The Singapore issues were indeed a red herring to avoid facing the central issue of the talks. Ever since the Singapore issues of investment rules, competition, trade facilitation and transparency in government procurement were put on the table seven years ago, they have never been taken seriously either by the developed or the developing countries (witness the defence contract scandals under US Occupation in Iraq or the more commonplace World Bank contract corruption parables about South Asia).
Indeed, a Financial Times article (19 September, p. 16) attributes the idea behind them to the British diplomat, Sir Leon (now Lord) Brittain, who was then the European Union’s Trade Commissioner, as a Machiavellian manoeuvre to overcome France’s reluctance to enter a post-Uruguay Round trade negotiation, with agriculture on the agenda. France was sure the developing countries will not accept these new issues and therefore the new Round will be a non-starter. In the event, the developing countries agreed, if reluctantly, to these issues which they hoped would be introduced gradually and with due safeguards for their interests.
The straw that broke the camel’s back and resulted in the developing countries’ walk-out on the final day of the Cancun meeting was the developed countries’ insistence on negotiating the investment issues as a quid pro quo for any deal on farm subsidies. Developing countries were afraid that if they allowed the developed country camel to put its foot in their tent it would be too intrusive and limit their freedom to regulate the environment or workers’ rights in the face of international trade laws protecting foreign investors.
In the past, the developed countries have tried to thwart the unity among the developing countries by dealing with individual or small groups of countries and offering them bilateral trade concessions. Not surprisingly, the US Trade Representative, Mr. Zoellick, who blamed the developing countries for their rhetorical attitude , in contrast to the developing world’s balanced and candid attitude, said after the collapse of the Cancun talks, he would move ahead on free-trade agreements with individual nations or regions, noting he had a long list of countries that wanted to negotiate with the United States.
Cancun has demonstrated that developing countries can enhance their bargaining power vis a vis the developed world in achieving a more equitable world order if they stick together in a principled way. If the unity displayed at Cancun has to be preserved to achieve positive results, it would be incumbent on the larger developing countries to keep the interests of these smaller countries in mind while negotiating at the global level and not be guided simply by those countries which already have achieved a high level of development and have a substantial bargaining power vis a vis the developed countries.
e-mail: sm naseem @ hotmail.com