Cancun - hope in midst of collapse

Posted: 22 September 2003

Author: John Madeley

The collapse of the The World Trade Organisation's fifth ministerial meeting in Cancún on its final day, September 14, destroyed all hopes that the talks might achieve some form of consensus. But, says John Madeley, who covered the meeting for this website, the new alliances among developing countries could change the future balance of power in the WTO.

Developing counties refused to accept a draft ministerial text which they said did not reflect their views and would not have brought them any improvement. Brazil's minister of agrarian development Miguel Rosseto said that no deal was better than a bad deal.

The talks floundered largely because developing countries do not want to extend the remit of the WTO - which lays down the rules of international trade - to include new issues, such as an investment treaty. This could allow western companies unfettered and unregulated access to invest in poor countries, with damaging economic, social and environmental consequences.n.

Stumbling blocks

Developing countries were put under considerable pressure by the European Union to accept talks on new issues. But on the final day, a number of African countries, also India and South Korea, made it clear that they would not accept a ministerial declaration that called for negotiations on these issues. As the WTO works by consensus, the meeting was brought to an end.

But the talks also floundered because nothing of substance was offered to developing countries on other key issues, notably agriculture, and special exemptions from the WTO's trade liberalising rules.

Jamaican delegate Dr Richard Bernal said not enough had been offered on agriculture and on special treatment "to make it worth us giving ground on new issues".

Rice farmer

A powerful new alliance, the Group of 20, which includes India, Brazil and China, had submitted a paper on agriculture to the meeting which called for sizeable reductions in the agricultural subsidies which cause over-production and dumping in developing countries, to the detriment of local farmers.

Rice from California sells into Korea, for example, for a third of the price of local rice. Many thousands of Korean farmers have lost their livelihoods as a result and some have committed suicide. The meeting was marred by the death of Korean rice farmer, Lee Kyung-hae. Under a banner "WTO kills farmers", he was protesting about these cheap imports. Lee Kyung-hae had a bigger impact on the Cancun meeting that was immediately realised. South Korea was one of the first counties to say no to the draft ministerial text.

With US and EU not prepared to give any firm commitments on agricultural subsidies, neither did they offer much on special exemptions.

Subsidised soya

Thirtythree developing countries formed an alliance to press for a "Special Products and Special Safeguards Mechanism" in WTO rules. This would allow developing countries to designate products of special interest to poorer farmers, for example, that would be exempt from the WTO's liberalising rules.

Indonesia's trade minister Rini Sumarno Soewandi said that almost a million soya farmers in Indonesia have been ruined since the WTO was set up in 1995 because of cheap, subsidised soya imports. These have come overwhelmingly from the US. The soya flooded into Indonesia following trade liberalisation.

"By allowing poor countries exemption from liberalising certain agricultural sectors, the WTO could safeguard the livelihoods of millions of people, and allow small farmers to survive", said Ms Soewandi.

But the draft declaration, said Ms Soewandi, "falls far short of adequately addressing developing countries food and livelihood security and rural development problems...and would perpetuate poverty, hunger and social problems".

Cotton producers

African countries were also annoyed that a proposal to help West African cotton producers - also severely affected by US farm subsidies - was not part of the proposed declaration, despite having widespread support.

When negotiations on the trade issues in the Doha development agenda resume at the WTO in Geneva, these new alliances seem hopeful for developing countries, putting them in a stronger position to get a better deal from trade. By the end of the Cancun meeting, the G20 had grown to the G23, with the addition of Egypt, Indonesia and Nigeria.

Ivonne Juez de Baki, the trade and industry minister of Ecuador, a member of the G23, said "We have done something historic. This is the beginning of a better future for everyone".

Hard bargaining

But some hard bargaining lies ahead and Western counties are likely to still move at a snail's pace on key issues such as agriculture reform.

The question is whether developing countries cannot wait for the EU and US to reduce their subsidies, or whether they would now be wise to develop a bolder strategy, refusing, for example, to accept imports of dumped products from Western countries. As the rules of international trade benefit the rich rather than the poor, there may also now be questions as to whether it is wise to put too many eggs in the trade basket. A strategy of more production for local consumption rather than for trade could now have more appeal.

But there are also questions over the future of the WTO. The collapse of the Cancun meeting was reminiscent of the collapse of the WTO's third ministerial meeting in Seattle in 1999. Two failed ministerials in four years does not auger well fo its future. The WTO's decision-making processes seem inadequate and too unwieldy to deliver results. Developing countries proposals for reforming these processes - put foward in February 2002 - were blocked by the EU. But without reforms, can the WTO dare risk another ministerial?

Related link:

Spotlight: WTO in Cancun (Christian Aid's site on Cancun)