Tue, 16 Sep 2003

World Trade talks collapse

The World Trade Organization (WTO) failed to make any progress in its ongoing campaign to develop an open, fair, global trading system after its Fifth Ministerial Conference ended on Sunday in Cancun, Mexico, without agreement on new commitments to reduce tariff and non-tariff barriers.

Mexican Foreign Minister Luis Ernesto Derbez, who chaired the conference, closed the final session after talks collapsed amid growing divisions among member countries over several important issues, notably farm trade and issues related to investment, competition, government procurement and trade facilitation measures.

The conference only approved a six-paragraph ministerial statement, which, among other things, instructs officials of member countries to continue working on outstanding issues and taking fully into account all the views expressed in Cancun.

This is perhaps the most positive note of this conference, in that member countries remain committed to following up on what they have agreed on in the declarations and decisions that were adopted in the fourth WTO ministerial conference in November 2001 in Doha, Qatar. This conference launched what is now known as the Doha round of global trade negotiations with its highly publicized Development Agenda.

It had widely been predicted that the group of developing and least developed countries would not budge on their firm demand for gradual lifting of farm subsidies and support in developed countries. They held firmly to the stance that no deal would be better than a poor deal, meaning that they would not make any commitments on other issues unless significant progress was made in liberalizing agricultural trade in the rich countries.

The developing and least developed countries implemented their determination by forming two coalitions to strengthen their bargaining and negotiating positions. The two coalitions -- one group of 22 countries led by Brazil, India and China, and the other consisting of 23 countries, headed by Indonesia -- had slightly different priorities, but basically focused their campaign on getting definitive commitments from the United States, European countries and Japan to phase out their agricultural subsidies and support.

Failing to get anything from the rich countries, developing countries declined to negotiate on the so-called Singapore issues, such as investment, business competition, government procurement and trade facilitation measures. The developed countries, notably the EU and Japan, have striven aggressively since 1996 to put these issues on the WTO negotiating agenda.

The move taken by the developing countries is the right one. After all, reciprocity has been a motivating principle not only of the WTO system, but also of negotiations to reach agreements within the multilateral organization.

It is therefore mind-boggling to try and comprehend as to why the rich countries have so stubbornly refused to phase out their farm subsidies, which have benefited only a small number of their population -- even at the risk of further impoverishing billions of farmers in developing and least developed countries.

The rich countries should have realized how vital the removal of farm subsidies is in the interests of the farming communities that make up the majority population in the developing and least developed countries.

The developed countries should have been fully aware that the issue of farm subsidies was the biggest fight and the main bone of contention throughout the five-day talks in Cancun, and that any significant progress in this area would have broken the ice for negotiations over other issues.

Yet, the rich countries persisted with their irrational arrogance, apparently not realizing that the developing and least developed countries are now better organized and have significantly improved their negotiating and bargaining leverages. The breakdown of the Cancun conference did underscore the growing clout of the developing nations that make up more than 75 percent of the WTO membership.

In the meantime, the group of developing and least developed countries should realize the importance of continuing the Doha round of trade negotiations, because such multilateral trade negotiations as those under the WTO, rather than bilateral haggling, are the best alternative to forge trade deals with the rich countries.

There is now too much at stake for the world economy. Sooner or later, trade protectionism should be removed.

Hopefully, further trade talks between representatives of member countries at WTO headquarters in Geneva will be able to finish the Doha round negotiations before the December 2004 deadline.