The Cancun conundrum
ALOK MUKHERJEE
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Echoing the 1999 Seattle experience, this year's World Trade Organisation meet at Cancun too turned out to be a failure. Why? Read on to find out ...
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Students at a rally to stop liberalisation of world trade.
There was an element of mystery at Cancun — the venue of the World Trade Organisation (WTO) Ministerial meeting in mid-September. Just as Trade Ministers from 146 member countries were close to hammering out an acceptable draft for adoption, the Chairman of the conference, the Mexican Trade Minister, Luis Ernesto Derbez, abruptly called a halt to the deliberations. Cancun, thus, turned out to be another failure for the WTO talks — just as in Seattle in 1999.
Non-Governmental Organisations (NGOs) and others were quick to claim victory because the talks had failed and India, along with other developing countries, had nothing to lose since no agreement had been arrived at. But the issues taken up at the Cancun meeting remain alive; only a decision has been postponed.
The agenda before the WTO is varied and complex, but two issues stood out prominently at the Cancun conference. One was agriculture subsides, especially the generous amounts doled out by the United States and the European Union which distort global trade in agricultural products since it becomes very difficult for developing countries to compete against their highly subsidised products. The second was what has now come to be known as the "Singapore Issues", which include foreign investment without conditions, global competition, transparency in procurement policies and trade facilitation.
Lampooning leaders of the G8 countries.
On agriculture, the developed and the developing worlds had different views. The developed countries wanted a reduction in import tariff so that their products could easily penetrate Third World markets. Developing countries wanted the U.S and the E.U. to drastically reduce their agricultural subsidies so that there could be fair world trade in these products. They also wanted a different tariff reduction regime, basically to gain more time before they could open up their markets completely.
On the "Singapore Issues", the developing countries were adamant that they should not form part of the WTO agenda as yet. A trade minister from a developing country put across the opposition's point effectively. Retorting to the U.S. and the E.U. demand that foreign companies be treated on par with domestic companies, she said: "Just because I let a man come into my house does not mean that I treat him as my husband." The U.S and the E.U. negotiators were stumped.
But what came out of the Cancun meet was the bonding of the developing countries. Just a few days before the meeting began, the WTO secretariat circulated a Ministerial draft, which was to form the basis for the final declaration. India was among the first to sense that the draft was heavily loaded against the developing countries. Quickly, moves were made to drum up a coalition against it. Almost overnight, 13 countries joined in to oppose the draft and, by the time the Indian delegation left for Cancun, 19 countries had signed up, including formidable ones like Brazil, South Africa and the new WTO member, China. The EU sensed a "rebellion" and its Trade Commissioner made some vague noises that these countries had no common interest and would not hold together. That is where the EU and U. S. strategy failed — the coalition not only held together, it ended up as a group of 23 and growing, so much so that it is now called G+.
An anti-globalisation protest in Cancun.
At Cancun, another coalition was formed, the G-15, of developing countries opposed to the "Singapore Issues". This too was a formidable combination, which the U.S. and the EU could not shake off. By the time the meeting ended, the U.S. shed its demand for a competition policy and the EU gave up its demand for foreign investment and also offered to postpone its demand for transparency in procurement policies. Only trade facilitation remained on the agenda, to which most developing countries, including India, had little objection.
On agricultural subsidies, there was some movement as both the U.S and the EU agreed to reduce them gradually. But before all this happened, the Chairman of the conference, the Mexican Trade Minister circulated a draft final declaration that simply ignored most of the points raised by the developing countries during the conference and only included the points of the EU and the U.S. Sensing a failure of the Cancun meeting, the WTO officials resorted to the practice of the "Green Room" discussions where six Trade Ministers — from the U. S., EU, India, China, South Africa and Brazil — got together to salvage the meeting. Just as they were about to clinch the deal, the African countries suddenly announced that they were opposed to the Singapore issues and were walking out of the conference, despite the fact that most of the Singapore issues had been pushed back.
Mr. Derbez then announced the surprise decision — to declare an abrupt end to the meeting. Informed opinion now says that a few hours of extension would have seen a successful Cancun outcome. But that did not happen. Did the U.S. and the EU negotiators give in too much leading their Governments to pull the plug, using the African nations as a ploy? That remains the mystery of Cancun.
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