Hope seen in the ashes of Cancún

WTO trade talks collapse, as Africa and allies stand firm

By Gumisai Mutume, Cancún

Despite failure to reach agreement at the recent World Trade Organization ministerial meeting in Cancún, Mexico, developing countries will look back at it not only as a missed opportunity, but also as a potential turning point for the 148-member organization. The 10-14 September ministerial meeting of the WTO saw the emergence of a coalition of developing countries that helped block the adoption of an agreement which they viewed as largely ignoring their interests. It also laid the foundations for new power relations in the global trade body.

"I am convinced that Cancún will be remembered as the conference that signalled the emergence of a less autocratic multilateral trading system," notes Brazilian Foreign Minister Celso Amorim. As negotiations resume at the WTO headquarters in Geneva, "developing countries will not be reduced to the role of supporting actors in discussions that affect their future development prospects." At the Cancún meeting, Brazil played a leading role among the Group of 21 (G-21) developing countries that presented a united front against the positions of the dominant trading powers -- Canada, the European Union (EU), Japan and the US.

Photo : ©World Bank / Yosef Hadar

The WTO ministerial meeting is the agency's highest decision-making body, convening every two years to review progress on negotiations and set the agenda for the following two years. With member countries wedded to widely divergent positions, this year's meeting collapsed, the second time this has happened in the last three ministerial meetings.

Doha round stalled

The Cancún meeting was held at the mid-point of the current round of trade negotiations launched in Doha, Qatar, in 2001. High on Africa's agenda in Cancún were demands for reforms in agricultural trade that would remove subsidies in industrial countries and provide greater access to global markets. African countries were seeking redress on lopsided agreements of the last round -- the Uruguay Round -- and hoping to secure binding commitments on technical assistance. They have also been calling for a swift conclusion to ongoing negotiations on "special and differential treatment" -- provisions which, for example, would allow developing countries more time to comply with WTO rules.

Because no agreement came out of Cancún, many of these issues, which had already suffered substantial delays and missed deadlines, remain unresolved. When it became clear that no agreement would emerge, ministers adopted a brief statement asking the WTO director general to convene a meeting "at senior officials level no later than 15 December," to continue the negotiations.

"One reason for a lack of agreement was that a large group of developing countries, including many African countries, felt that many of the developed countries were unwilling to do enough to free up agriculture trade, in particular through the reduction of subsidies," says WTO Deputy Director-General Kipkorir Aly Azad Rana. Another obstacle was a demand by industrial nations to extend negotiations to a whole new set of international obligations -- investment, competition policy, transparency in government procurement and trade facilitation. "For their part, developed countries argued that the developing countries should be willing to do more to open their own markets," says Mr. Rana.

According to the Doha declaration, negotiations on these new issues can only be launched through explicit consensus. At Cancún, a group of 70 developing countries, led by Malaysia and including many African countries, refused to give a go-ahead since many issues from the last and the current round remain unresolved. "The call from Africa for a fair and just global trading system has been construed in some quarters to be indicative of a growing radicalization of the African position on international trade issues," noted Trade Minister Jaya Cuttaree of Mauritius, who heads the Africa Group. "Nothing could be further from the truth." He said the continent is merely responding to its weakening trade position, growing poverty and realization that it will fail to meet the world's Millennium Development Goals -- including cutting global poverty in half by 2015 -- in the present climate.

Agricultural subsidies

Since the conclusion of the Uruguay Round in 1994, developing countries have complained that existing rules are tilted heavily in favour of the major industrial nations and are causing the world's poor to sink deeper into poverty. For African and other developing countries, the yardstick for success in Cancún was to have been the resolution of a long-standing dispute over agricultural subsidies. Despite pledges by industrial nations to reduce state subsidies paid out to their farmers, these have continued to grow and now average $300 bn annually -- more than five times greater than official development assistance to poor countries. A few weeks before the Cancún meeting, the EU and US proposed a framework for advancing agricultural negotiations. It offered curbs on subsidies and the lowering of rich-country barriers to developing countries' exports. But the deal was criticized by developing countries because none of the cuts was quantified, no products specified and no binding dates for reform laid out. At the start of talks in Cancún, the offer was immediately rejected as inadequate by the G-21, which had begun forming during the weeks prior to the ministerial conference.

African countries expected the Cancún declaration to produce a timetable for the eventual elimination of subsidies that would take effect at the conclusion of the Doha round, scheduled for 2005. They also hoped for a ruling that would immediately end cotton subsidies. In Cancún, the WTO devoted a plenary session to the "cotton initiative," proposed by four countries -- Benin, Burkina Faso, Chad and Mali -- acting on behalf of West and Central African cotton-producers, which account for 90 per cent of Africa's total cotton output. The four countries proposed that the US and EU embark on a three-year phase-out plan for cotton subsidies and set up a transitional mechanism to offset the losses currently being incurred by African cotton farmers. In 2001 alone, sub-Saharan cotton producers lost $300 mn in potential revenue because of declining world prices, pushed down in part because of the cotton surpluses in Northern countries that subsidize their farmers. The US spends $4 bn on its 25,000 cotton farmers and the EU maintains an equally high subsidy regime on various crops.

The US delegation met with the four African countries before the start of negotiations in Cancún and suggested that they focus instead on diversifying their economies from cotton production to textiles. That way they could then benefit from preferential access to the US market under the African Growth and Opportunity Act. The African countries felt that the offer was an attempt to deflect attention from the core problem. However, their expectations were raised during the plenary session when many countries, including the G-21, supported the initiative. Director-General Supachai Panitchpakdi described the initiative as unusual, but urged WTO members to give it serious consideration. The African countries, he said, were not asking for preferences, but an end to trade distortions. Industrial nations such as Australia and Canada supported the initiative, while the EU announced that it was willing to play its part.

'Not even a mouse'

But when the draft final declaration that had been negotiated over the course of the conference emerged, it ignored the demands of the African cotton producers. Instead, it proposed a cap on existing subsidies at their current average levels. "We are devastated," said Mr. François Traoré, who leads the 25,000-strong National Cotton Producers Union of Burkina Faso. "We did not come here expecting any favours," Mr Traoré told Africa Recovery. "We were merely asking that the rules be applied." He said even after so many declarations of support "from the WTO secretariat and many ministers, the mountain gave birth to a mouse. No, not even a mouse, an ant."

Photo : ©Africa Recovery / Gumisai Mutume

Senegalese President Abdoulaye Wade summed up the feeling among many African delegations, saying that the WTO's policy on liberalizing agricultural trade had "completely failed" the continent. In a message to the meeting, President Wade noted that even after 40 years of international development policies, poverty has not been eradicated in Africa. "I am convinced that agricultural subsidies, which ruin the lot of farmers in the Third World, are among the key factors of our impoverishment, since they destroy all our efforts and deprive us of the only income [emanating from trade] that could have changed our conditions," he said.

Emergence of a new power

The G-21, which is still expanding, offered a strong counter-balance to the negotiating positions of the countries that have traditionally dominated the WTO -- Canada, the EU, US and Japan -- collectively known as the Quad countries. By September 15, the G-21 was made up of Argentina, Bolivia, Brazil, Chile, China, Colombia, Costa Rica, Cuba, Ecuador, Egypt, Guatemala, India, Indonesia, Mexico, Nigeria, Pakistan, Paraguay, Peru, Philippines, South Africa, Thailand and Venezuela. These countries are home to more than 50 per cent of the world's population and more than 60 per cent of its farmers. They produce about 25 per cent of global farm exports.

The G-21 does not represent a "South versus North" approach, says South African Trade Minister Alec Erwin. Instead it represents "the vision and the leadership that the world and our people have long hoped for in the face of the challenge of addressing the imbalances and inequities of the current agricultural trade system."

Proposals from the Quad countries had served as the basis for the draft declaration that was introduced for discussion in Cancún. On the eve of the first day of the conference, the G-21 countries held a press conference announcing the group's existence and rejecting the proposed draft declaration. They said the declaration was based almost entirely on joint EU and US submissions, while many of the concerns developing countries had expressed since Doha were largely ignored. The G-21 instead offered a counterproposal designed to force more significant reductions in domestic and export subsidies while imposing fewer market access obligations on developing countries.

Unprecedented solidarity

While publicly applauding the formation of the G-21, delegations from industrial countries tried in private to undermine the union, in some cases by offering bilateral deals to individual G-21 countries. Opponents of fair trade are "opting for divide-and-rule tactics against developing countries," said Mr. Erwin. They are "dividing us on the basis of those included and excluded in preferences, on the basis of those more developed and less developed, and on the basis of the continents from which we come."

Open threats were also used. Senator Charles Grassley, who heads the US Senate Finance Committee, said he would use his position to "carefully scrutinize" how countries behaved in Cancún. "The US evaluates potential partners for free trade agreements on an ongoing basis," he said. "I'll take note of those nations that played a constructive role in Cancún, and those nations that didn't."

During the meeting, however, the G-21 did not break up as had been predicted. Midway through the conference, Minister Cuttaree, who headed the Africa Group, announced that it was discussing the possibilities of forging an alliance with the G-21 in areas of mutual interest such as agriculture.

According to UN Conference on Trade and Development (UNCTAD) Secretary-General Rubens Ricupero, the emergence of the G-21 is an important factor for future WTO negotiations, as the major trading nations will be forced to take the new power reality into account.

"The defiant tone and unprecedented solidarity among the G-21 and other groups of developing countries was reminiscent of the anti-colonial struggles of the 1960s and 1970s," noted Mr. Rick Rowden of the non-governmental organization ActionAid. During that period, developing countries broke free of colonial powers through struggles for national liberation and formed the Non-Aligned Movement and the Group of 77 nations at the UN General Assembly, which called for a new international economic order. "During this era, trade talks and foreign aid negotiations used to occur within UNCTAD, where the poor countries could negotiate in large blocs and had strength in numbers when dealing with rich countries," noted Mr. Rowden.

Future uncertain

Upon hearing the news that the talks had collapsed, African civil society groups in the conference centre erupted into song and dance. Many felt that even though there was no agreement, it was better than having walked away with an accord that did not serve Africa's interests, as had happened previously.

Photo : ©AfricaPhotos.com

But because there was no agreement, the fate of many of the outstanding issues remains uncertain. The current round of negotiations, already having missed many deadlines, will almost certainly not be concluded as scheduled by January 2005. Any gains that African countries make under the current round would therefore have to wait until the round's final conclusion, when all new agreements would take effect.

The collapse of the talks also raises serious concerns about the future of the organization. EU Trade Commissioner Pascal Lamy described the WTO as a "medieval institution that needs to be revamped strongly." Analysts warn that the breakdown in Cancún could divert countries away from the multilateral system towards bilateral and regional trade agreements. The US has already indicated it may begin concentrating on these. Some trade experts noted that the Cancún experience shows that the WTO negotiating process, which is based on consensus, is too unwieldy to produce results and needs urgent reform.

Rules negotiated by all

According to Mr. Irungu Houghton of the Kenya office of Oxfam, the WTO is structured in a manner that suits major powers with the ability to field large delegations. "The negotiations in various committees take place simultaneously, and some of them take place throughout the night," Mr. Houghton told Africa Recovery. For instance, the European Commission sent more than 600 technical staff to Cancún -- one for every comma, observers joked. On the other hand, the African Union had only 10 delegates.

In a message to the Cancún meeting, UN Secretary-General Kofi Annan said that for trade to benefit all, there is need for global rules genuinely negotiated by all, "in the interest of all, and adhered to by all." At present, he said, "there is too much closed-door decision-making, too much protection of special interests and too many broken promises." The issues are often technical, and "do not usually lend themselves to dramatic television coverage, like war or extreme weather," said Mr. Annan. "But let there be no doubt, the damage is profound and the victims can be counted in the billions."

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