This commentary which was published in the New Sunday Times on 28 September 2003 is representative of the official, and general, view in Malaysia on the recently concluded WTO talks in Cancun.

The Big Picture: Cancun: Don?t take us for a ride
Munir Majid

THE current Doha Round of negotiations on world trade came to a halt in Cancun earlier this month because the rich countries were playing silly buggers. They tried to bring to the agenda new issues which only served to widen areas of disagreement between rich and poor, while offering nothing meaningful in agricultural trade liberalisation ? the main focus of the Doha Round ? after the Uruguay Round had failed to sufficiently address American and European farm protectionism.

The attempt to introduce the socalled “Singapore issues” on matters such as liberalisation of investment rules, government procurement and competition caused total disagreement at Cancun on the way forward for the Doha Round.

While Cancun was not intended to result in substantive agreement in the negotiations, it was hoped that the talks would move forward the principles in the agenda on the Doha Round. In the event, they collapsed on Sept 14 with no agreement whatsoever reached, in acrimony and subsequent recrimination.

All is not lost, and the trade ministers are scheduled as part of the whole negotiating process to meet again in Geneva in December, but there is a bitter taste in the mouth and the danger of a backlash against the multilateral trade system. Pointing Fingers
THE proposals for investment rules on competition, trade facilitation and transparency in government procurement were never meant to be in the Doha Round, but European insistence on bringing them on board was a prime cause for the collapse of the Cancun talks.

It has been put about at the European Commission that they were part of a Machiavellian calculation to assuage fears, especially among the French, of the concessions that had to be made with respect to the protectionist Common Agricultural Policy (CAP) in the European Union (EU). It had apparently been imagined that once the question of agricultural subsidies was put on the agenda, the proposals for investment rules, etc would be pulled out and ? Hey Presto! ? the contentious issue of CAP would be ensconced in the Doha Round.

If true, it is clear that this devious scheme backfired. Brinkmanship does not work in multilateral negotiations. Actually, these “Singapore issues” on investment rules, etc took a life of their own and became a dangerous threat of an imposition on developing countries, whereas no principles on concessions in agricultural protection were put on the table by the EU, America and Japan. You don’t play such games in negotiations if you approached them in good faith.

A clear indication of Malaysia’s views on the investment rules, etc lark was given by Datuk Seri Dr Mahathir Mohamad in his Budget speech on Sept 12, and in Cancun. Seventy countries, led by Malaysia’s Datuk Seri Rafidah Aziz, flatly refused to allow negotiations on a global treaty on investment and competition to go ahead.

Throughout the history of multilateral trade negotiations, the developed countries which already had more, got more, and the developing countries, assiduously engaged to embrace the benefits of multilateralism, got the crumbs. The much-vaunted GATT (General Agreement on Tariffs and Trade), signed in 1947, dismantled trade barriers mainly in manufacturing where developed countries were predominant, while continuing to protect their textile and clothing industries where developing countries were lower cost manufacturers.

When the World Trade Organisation (WTO) was created in 1995 as successor to GATT, with a present membership of 148 countries, there was hope of a more balanced global approach to trade issues, especially in agriculture which was critical to poor countries, first recognised by the Uruguay Round and then taken on in the Doha Round from November 2001. And then, there is this attempt to mix it with investment issues solely for the benefit of the rich countries. They cannot concede, even before principles in agriculture which they ask others to practise, without smuggling in new issues and taking new benefits. The rich countries linked their agricultural subsidies issue to greater investment and procurement openings in developing nations.

The GATT pattern was about to repeat itself.
Farm Crumbs
THE rich countries refused to meet demands of poorer nations for drastic reform of agricultural subsidies. The EU is the main recalcitrant, forking out US$51 billion (RM193.8 billion) a year to five per cent of its population who contribute just two per cent of GDP. For example, the subsidies for sugar beet are just absurd. At Cancun, the EU Trade Commissioner was unyielding.

The US, too, protects its farmers, and drives African cotton farmers, for instance, to destitution. Last year, the US passed a law giving its farmers US$180 billion over 10 years. Japan has notoriously protected its rice farmers against more efficient producers, for example, the Vietnamese.

Some estimates have it that the agricultural subsidies cost the world US$100 billion in loss of potential growth ? some of which, of course, would benefit poor countries. Half the world’s population is asking for justice from the Doha Round; they represent 68 per cent of the world’s farmers. Instead, subsidies are given out by the rich countries which benefit the likes of the Duke of Westminster and Ted Turner, among the richest men in the world.

At Cancun, the poor countries got organised and rolled back the attempt of the rich countries to call the tune as they have always done. On agriculture, a new troika of Brazil, India and China developed around the G21. Rafidah was quoted as having said: “No more are we sitting outside in the corridors being given sweeteners. No more.” It has been wondered in developed countries if the EU and US are now regretting their efforts to persuade China to join the WTO. “It has become something of a rock ? too big to bully and threaten ? around which the unattached nations have begun to cluster”, according to a newspaper commentary.

Of course the modus operandi of the WTO itself would come under attack in the rich countries, in the process of recrimination. It proceeds by consensus rather than by weighted voting, as in the IMF and the World Bank. The poorer countries thus numerically form the majority. An attempt to bring about undemocratic change, however, will set the world down the slippery slope to global trade disorder.
Backlash and Lessons
ALREADY, some threatening noises are being made. The US Trade Representative, Robert Zoellick, has said America will consider more bilateral trade agreements, even if the EU has stated it remains committed to multilateral trade negotiation. America has signed bilateral agreements with Chile and Singapore; 14 more are on the cards, and many more are promised. The US is also pursuing a regional trade agreement for the Americas.

Of course, all this indicates that the US was already chasing deals outside the WTO framework even before Cancun, but it can be expected that after Cancun they will be pursued with greater drive and determination. In such a situation, those left outside the agreements ? the poorest countries ? could suffer, again.

Also, in bilateral arrangements, the bigger party can be high-handed and could extract many unfair advantages. With protectionist sentiments getting even stronger in the US and the 2004 presidential election approaching, it would be all too easy to give in to them and, internationallly, blame Cancun for it. If this happens ? and it does look likely ? the Doha Round would be at serious risk, and certainly would not be completed by December 2004 as planned.

There would thus be yet another failure of American leadership in the world, and a continued denial of the many injustices that plague it. Therefore, it would be far better for the world to calmly learn the lessons of Cancun, rather than to gloat or lash out. The failure of the talks is not a cause for celebration, or recrimination, but for reflection and review.

There must be the political will to negotiate in good faith on farm subsidies without trying to barter with other extraneous issues. There must not be any attempt to bribe, blackmail and bully, to divide and rule, and to test the newly found unity of the poorer countries.

The poorer countries, on the other hand, should not gloat about what they were able to stop at Cancun, because it is no cause for celebration ? only further demonstration of the rich countries’ reluctance to make principled and meaningful concessions. All effort must be made to break the impasse and to start talking again.

  

Posted on September 29th, 2003 by jl
Filed under: WTO