High stakes in Cancun
There is much at stake for the global economy in the World Trade Organization ministerial conference opening today in Cancun, Mexico, as this meeting will decide on whether the Doha Development Agenda launched during the new trade round in the Qatar capital in November, 2001, will be implemented or end up in a shambles like the one in Seattle in the U.S. in 1999.
The new trade round is especially crucial for developing countries as for the first time it places their needs and interests at the heart of its agenda. The most important issues to be discussed concern the farm and textile trades, intellectual property rights in medicines, and special and differential treatment for developing countries.
A successful conclusion of the Doha trade round is quite vital not only for sustaining the economic globalization process through open, fair trade but also for achieving the Millennium Development Goals of reducing poverty in developing and least developed nations by giving poor people market access so that they may help themselves.
So important is the Cancun meeting that the chiefs of the International Monetary Fund, the World Bank and the Organization for Economic Cooperation and Development considered it necessary to issue a joint declaration last week, urging all WTO members to work hard for a successful outcome.
The joint declaration especially calls on the rich (developed) countries to take the lead in lifting the huge supports and subsidies they provide for their pampered agricultural sectors -- supports and subsidies that have taken markets away from farmers in developing and least developed countries.
The heads of the multilateral organizations lambasted the rich countries for "providing aid with one hand and then using trade restrictions to take development opportunities away with the other". They pointed out that agricultural support costs the average household in the European Union, Japan and the U.S. US$1,000 a year, yet much of this assistance depresses rural incomes in developing countries while benefiting largely rich (corporate) farmers in developed nations.
The removal of trade barriers in agriculture is indeed vital for developing countries. As most of their populations rely on agriculture, fair trade in farm produce is crucial for reducing poverty.
Regrettably, though, the biggest obstacle lies in the farm trade in the form of market distortions caused by the $350 billion in subsidies the developed countries pay annually to support their wealthy farmers. No wonder then that the artificially lower prices of their farm produce have enabled the rich countries to gain control of two-thirds of the world's agricultural trade. What an irony given that farmers in the developed countries account for only around 7 percent of the world's agricultural community.
Will the EU, the U.S. and Japan, who always claim to be the champions of open and fair trade and to be greatly concerned about alleviating poverty in the developing countries, allow the interests of their small numbers of farmers to hijack the whole Doha trade round?
This is a tragedy that could well happen if no significant progress is made in Cancun regarding the modalities with which the rich countries are to reduce their farm subsidies and supports.
The developing countries want to see technical details set out in binding framework agreements on how the rich countries will phase out their farm subsidies, to which agricultural produce this will apply, and over what time frame. Anything less than this might stall most of the agenda of the Doha trade round as the developing countries will refuse to make any compromises on commitments in other areas that have long been demanded by the developed countries.
It is encouraging to note that the WTO approved two weeks ago a plan brokered by the U.S. and four other developing nations that would grant poor countries relief from patent restrictions and allow them to import cheaper medicines to combat diseases like AIDS, malaria and tuberculosis.
If approved by all developed countries, the deal on drugs would enable WTO trade negotiators in Cancun to focus attention on agricultural trade, special and differential provisions for developing countries, and other issues related to non-farm products, services, textiles and clothing, investment and competition, trade-related aspects of intellectual property rights, trade facilitation measures and government procurement.
Whether the promise of the Doha Development Agenda can be realized will in the final analysis depend on the extent to which the disparate members of the WTO -- developed, middle-income and least-developed countries -- will be willing to reconcile their interests to allow the economic globalization process to move on.
Whatever the final outcome might be, it should provide a balance between further liberalizing of trade and providing some policy space to the disparate WTO members to accommodate their inherent political constraints.
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