WTO: THE FAILURE AT CANCUN

 

 

By Syed M. Aslam
Sep 22 - 28, 2003
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The failed Cancun conference hints at the emergence of a new power balance in a 146-member states of the World Trade Organisation. The 5th Ministerial Conference of the organization ended on the 14th of this month when Mexico's Foreign Minister Luis Ernesto Derbez presiding over the meeting announced that it no longer seemed possible that the member countries would finalise any agreements. The failure at Cancun round calls for "attention", as Argentina's permanent ambassador in Geneva and the chief negotiator at the WTO Alfredo Chiaradia said, because "we can no longer operate like we did before".

What he actually meant was that the WTO can no more function as an organisation which protects the interests of the rich nations at the cost of the poor. It also meant that developing nations should be allowed to play their due role in the world trade with deck not stacked in favour of few rich counterparts. It also means the honouring of promises thus remaining unfulfilled by the rich nations which have taken it as their right to dictate the global trade with poor countries on onerous terms.

It is not surprising that the meeting has failed. It would, however, been surprising if it had succeeded. The needs of the deprived majority of the world were conveniently ignored by the European trade commissioner Pascal Lamy and US trade representative Robert Zoellick. Just how unfair a deal, the developing world is offered under the promoted guise of 'barrier free trade' is evident from the fact that though the recent talks were launched with the premise of reducing, or altogether elimination, of the tariffs, particularly those of products of export interest to developing countries, a new paper introduced by the US and EU a week prior to the Cancun meeting delivered a crushing blow to a number of developing nations. The paper proposed that the poorest countries must do their level best to cut their trade taxes. It proposed that Bolivia and Kenya must reduce their tariffs by 80 per cent, the EU by 28 per cent and the US by just 24 per cent. Developing countries like Bolivia and Kenya may be poor but they are certainly not stupid to see that it was an extremely unfair proposal detrimental not only to them but by expansion also to every other developing country.

Just how unfairly the deck is stacked against the developing countries is evident from a report published by international charity organisation Oxfam recently. The report shows that the poorer a nation is, the higher the rates of tax it must pay to export its goods. The US imposes tariffs ranging between zero and 1 per cent on major imports from Britain, France, Japan and Germany but levies/taxes of 14-15 per cent on the import of produce from Bangladesh, Cambodia and Nepal. Britain is no different Sri Lanka and Uraguay pay 8-times more to sell their goods in the country than the US. Talk about equitable trading constantly drummed by the WTO.

Pakistan played an active role in the newly formed bloc the G-22 Group- which also includes Argentina, Brazil, Bolivia, Cuba, Mexico, South Africa, Chile, China, Cambodia, Egypt, India, Thailand and Turkey. Its other members are Colombia, Costa Rica, Ecuador, El Salvador, Guatemala, Paraguay, Peru, Philippines and Venezuela. It's formation begun just weeks prior to the WTO's 5th ministerial conference as a counterweight to the US and the EU whose proposal served as the basis for the draft declaration that the WTO authorities presented to the negotiators at the now failed Cancun meeting. Other blocs from the developing world also adopted almost common positions many of them taking a united stand to protect their agriculture sector. The importance of the loosely formed G-22 bloc is evident from the fact that it houses over half of the world's population and almost two-third of the world's farmers. Secretary-general of the United Nations Conference on Trade and Development, Rubens Ricupero, praised the role that the G-22 played at Cancun in his address to diplomats from developing countries at the meeting.

Pakistan's Trade Minister Humanyun Akhtar Khan addressing the conference stressed the need for the removal of trade barriers from the international trading system to make it equally beneficial for both the developed and the developing countries. "We need to be creative and flexible... expanding the WTO to include new areas under its rubric needs to be approached in a careful and calibrated manner while taking into account the sensitivities and reservations of the developing countries. This is the only way that we can add $ 400 to $ 500 billion to the global income and boost the income of developing countries by $ 150 a year in an otherwise gloomy economic environment... Let us not fail."

However, many term the failure at Cancun a blessing in disguise for the developing nations as it reflected the dissatisfaction of the developing world with the injustices of the past and the collective revolt by the developing countries to demand for a just and equitable trading terms.

The mood of the developing nations can also be judged by the statement made by the Malaysian trade minister Rafidah Aziz who blamed the failure on the refusal of the rich countries to heed the objections of the developing world. "They kept demanding things that others couldn't deliver", she said. The failure to come out with agreements at Cancun would mean postponement of the implement of the Development Agenda agreed at Doha earlier which was seen as the roadmap for multilateral trade liberalisation adopted by the WTO in 2001.

The developing countries has begun to show signs for the first time in two decades to get united to protect their interests refusing to trade on terms which are sided on the side of the developed nations. They have refused to open up their markets to farm and industrial products produced in the developed world, particularly the former which enjoys subsidies which runs in hundreds of billions of dollars annually. The US and EU taxpayers fork out $ 400 billion subsidies to their farmers President George W. Bush has announced a $ 180 billion farm subsidy. The failure of the WTO to enforce existing rules on dumping has allowed the US companies to flood poor countries with farm products at half the price of local products to push the local farmers out of their own markets. They joint rejection by the developing nations of the demand forced on them by the rich nations to abolish farm subsidies clearly show they have matured enough to understand that while they kept their promises all along the developed countries have broken all theirs. They want the developed world to fulfil its promises now be it in the matter of tariff reduction, farm subsidies, equitable access to market, etc., etc.

Just how the WTO has failed it poor members is evident from the fact that it has made no progress on farm subsidies in the last nine years. The rich countries had agreed in 1994 to phase out the farm subsidies if the poor countries promised to open their markets to corporations in the West which remains as adamant today as it was then to keep providing heavy farm subsidies to its farmers. On the other hand, the developing nations were forced to cut, or altogether abolish, subsidies not only on farm products but such essentials as power and gas which is conveniently blamed on international lending institutions such as the World Bank and IMF which makes no difference to the people. The examples of such cuts are much too evident here in Pakistan as well.

Though developing nations don't agree on every single issue their first-ever attempt, and that too successful, to thwart the designs of their rich counterparts at Cancun this time around speak volumes about how dissatisfied they are with the WTO to protect their just interests. For instance, four African cotton producers; Mali, Chad, Benin and Barkina Faso submitted a proposal for elimination of cotton subsidy and other support which was placed on the agenda by the WTO director general at the Cancun. Pakistan, a major cotton producing nation, supported the move along with Canada, Australia, Argentina, Cameroon, South Africa, Bangladesh, Senegal and India though its textile-products exports is mostly dependent on the domestic production of cotton. It may be mentioned that cotton and made-ups the major contributor to Pakistani exports. The country produces nearly 9 per cent of the cotton produced in the world and its support to the proposal meant to cut subsidy on the cash crop everywhere, including the US and EU, the US alone provides a hefty subsidy of $ 4 billion a year to its cotton farmers, due to which Pakistan is not able to export its surplus cotton there. The subsidy by US and the EU to their cotton farmers is really an attempt to keep the of the precious commodity low in the world markets.

The Cancun ministerial meeting was also promoted as a 'development round' to hide its shady gray colour. The inaugural address of the Director General of the WTO Supachai Panitchpakdi at the recent Cancun meeting were, "We will only achieve the objectives of trade and development if there are benefits for all... We face a choice here". The failure of Cancun clearly proves that these were hollow words as poor nations which make up the majority at the WTO, were never offered a choice thus forcing them to collectively reject the proposals resulting in the failure of the meeting.

The attempt to forcefully promote the now failed meeting as a 'development round' was aimed to protect the few rich members of the organization the names of whom are no secret. It was aimed to allow the rich nations to force the developing nations to grant foreign corporations, the same rights as the domestic ones, to open their public services such as water, energy, transportation, education, to the private sector and to invite foreign companies to bid for running them. What this means in reality was that the rich were aiming to control the economy of the poor because almost all the multinational corporations are based in the rich countries. The rejecting of such demands by the rich nations were successfully rejected by the developing nations and in that particular sense the failure at Cancun was really a success for the developing countries which collectively represent the majority of the poor humanity.

Just what kind of a boost the latest WTO round at Cancun has given to Pakistan is evident from the statement made by Federal Minister for Trade Humayun Akhtar soon after his return from Cancun: "We were able to protect the agricultural and industrial interests at the Cancun meeting. At one stage the US agreed to abolish the farm subsidies and also the tariff on farm imports but the EU did not agree. The Pakistani delegation also asked the developed countries to cut tariffs on import of industrial goods and also asked that developing countries, like us, should be given appropriate time to reduce these tariffs. We also made it clear that despite reduction in import tariffs we would keep providing our industries certain protections through duties."