Cancun, Post-Cancun And Implications For The South

Original Publication Date: 
5 November, 2003
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Cancun, Post-Cancun and Implications for the South

By Aileen Kwa
Focus on the Global South
Geneva, 6 November 2003

1) Dangers of the Blame Game
By most accounts from Geneva-based negotiators, the talks in Cancun collapsed as a result of US’ refusal to move on agriculture, and more specifically on the politically sensitive cotton issue. Whilst the G90 (Africa Group, LDCs, ACP) did refuse to negotiate the new issues, and the Chair concluded the Ministerial at the juncture where there was disagreement between the G90 and the demandeurs of the New Issues such as Korea and Japan to push ahead with all of them, the talks more likely were engineered to end at a particular time when the majors felt that it would be convenient to lay blame on developing countries.

This is merely a cover-up for US’ refusal to put in practice what they preach – agricultural trade liberalization – before the 2004 elections, so as not to upset their powerful and influential agricultural lobbies. Some negotiators in Geneva feel that the cotton issue (raised by four West African countries), even more than agriculture, led to the collapse of the talks.

However, the conclusion of Cancun was cleverly orchestrated to make it seem as though developing countries were being unreasonable – even refusing to accept Lamy’s proposal to drop two or three of the Singapore issues.

Whilst the media reports immediately post-Cancun were nuanced and fairly critical of the developed countries’ attempt to push an unrealistic agenda onto the developing world, EC’s Lamy and various actors in the US have since laid blame on the South thick and fast.

Pressures are also being exerted at the capital level and on Ministers. The spin by the major powers is that developing countries will now have to climb down from mere posturing, and put a reasonable offer on the table. For example, after meetings in Washington DC with the USTR, Mr. Robert Zoellick, EC commissioner Pascal Lamy has been quoted as saying that the EC and the US "will be waiting for a number of positive signals coming from other parts of the trade community," such as the G-20 and the G-90 (African, the African-Caribbean-Pacific countries and the LDCs).

The US Commerce Under-Secretary, Mr. Grant Aldonas said that there was "not a lot of incentive" for the US and the EU to "lower politically sensitive trade barriers if poor countries refused to lower theirs."

For the South to acquiesce under such pressures would be self-defeating. It is clear that the Uruguay Round agreements did not benefit the majority of developing countries. Unless developing countries continue to be very firm about their goals to attain some equity and benefits, the objectives of the QUAD – more market access – for the Doha Round will further aggravate the present imbalances. This is clear from what the major powers have already tabled in the agriculture and non-agriculture market access (NAMA) negotiations.

The issues developing countries were defending and insisting on in Cancun are still pertinent. There is therefore no reason why the South should capitulate on their Cancun positions now. Agricultural subsidies in the North continue to be high, and is expected to increase in the coming years. The new issues of investment, competition, transparency in government procurement and trade facilitation will only serve the interests of the developed world’s corporations at the expense of domestic enterprises, and should therefore be dropped from the already overloaded agenda.

2) Using the Collapse of the Multilateral Trading System as A Threat
Developed countries are also threatening the developing world that should they not cooperate in the multilateral trading system, bilateral agreements would proliferate.

The reality though is that bilateral agreements are already proliferating. Furthermore, the ‘multilateral’ system, in the form of the WTO as it currently stands, has not reflected true multilateralism or cooperation. The WTO instead has been used by the developed countries as an instrument to pry open markets, whilst the major countries themselves have liberalized or protected themselves according to what is in their best interest.

Currently, both the multilateral and bilateral foras are used in a complimentary manner to achieve the same goals of market opening and de-regulation. One fora also works to strengthen the other.

The reality is that the major powers will not allow the multilateral system to collapse. This is merely a threat. The European Union needs the WTO to open up markets. The US has more capacity to do that bilaterally, but would require the WTO to help them keep the Europeans in check.

3) Cancun Talks Will Gain Pace After US 2004 Elections
GATT/WTO talks have collapsed before. But they have always resumed momentum after some time. This is true of the Montreal, Brussels as well as the Seattle meetings. The United States, after their elections, will have more appetite for the negotiations, and will no doubt be back at the table, using the multilateral forum to open up markets where their bilateral agreements have as yet not reached.

4) Current Dangers for Developing Countries: The Problem with the Derbez Text
Already, the blame game seems to have slightly shifted the resolve of some developing countries. In some quarters, there seems to be willingness to use the Derbez text produced in Cancun as the basis of negotiations at least for agriculture and NAMA. These Members argue that it is difficult for them to refuse, given the fingers pointed at them and that this is a gesture to illustrate their readiness to sit at the table, not necessarily to accept what is in the text.

It should be remembered that in these two areas, the Derbez text largely reflects the interests of the EU and US. In agriculture for instance, the paper is very close to the US/EU position paper that was tabled in August 2003. Similarly in NAMA, the text does not reflect developing country concerns promised to them in the Doha Declaration (eg. the concept of less than full reciprocity), but developed countries’ interests (eg. the sectoral initiative and a non-linear formula).

To use this text as a basis of negotiations would severely tilt the negotiating agenda in favour of the developed countries. It would make it much more difficult for developing countries to remove certain undesirable items from the text, or make any major changes to it. This is not impossible, but requires tremendous political capacity, not merely negotiating capacity.

Agriculture Negotiations– Pitfalls
In agriculture, the Derbez text would allow developed countries to continue, even increase their subsidies and thus dumping on the developing world, undercutting third world producers. This will increase rural unemployment as well as deprive subsistence farmers of their livelihoods as domestic prices will drop further.

NAMA Negotiations- Pitfalls
In this area, UNCTAD is already predicting that many countries, with their fragile industrial base, will face further deindustrialization. This again will have consequences on employment, but also could permanently damage many countries’ future development prospects.

5) The Way Forward: Coalition Building and Co-ordination of Strategies
The best way forward today is for developing countries to double their efforts to maintain those coalitions that worked together in Cancun, and actively strengthen them – such as the G20, the G90 (African Union, ACP and LDCs) and the G33 (the Alliance on Strategic Products and the Special Safeguard Mechanism).

These coalitions, particularly the G20 and G90 played a key role in ensuring that the major powers were not able to ride rough shod over them in Cancun. It is likely that these coalitions will be a permanent feature of WTO negotiations. This is quite possibly why the EC is giving a lot of thought to their post-Cancun strategy. Pascal Lamy does realize that these coalitions will now have to be taken seriously.

This ‘threat’ felt by the developed countries should be used as political and negotiating capital by the developing world. This political capital could be further increased if the various coalitions could make full use of the media and make public their collective strength and positions.

The other interesting feature of developing country coalitions formed in Cancun was the ability to put aside differences for the sake of bigger goals. This should be built upon post-Cancun to ensure that when the US and EU are finally ready to again engage, developing country groupings are not caught sleeping, but already have a co-ordinated strategy in place.

The G90 for instance, should try to engage in talks with the G20 and vis versa. The groups may not necessarily merge. However, it would be useful both at the Geneva and Ministerial levels, for Members to already be anticipating the negotiating pressures ahead, and start forging common positions. After all, whilst there are differences between developing countries, these differences are not insurmountable for larger common objectives (eg. holding together on the issue of US and EU’s agriculture subsidies).

6) Other Immediate Next Steps: Substantive Negotiations

  1. Developing countries should put the development issues back on the agenda. The Chairman of the General Council is currently holding consultations on only four issues – agriculture, NAMA, Singapore issues and Cotton. In the Doha Development Agenda, Special and Differential Treatment issues, as well as Implementation issues were promised to developing countries as priority issues to be tackled on a fast track. Not only has this not taken place, there is a real danger that these issues, critical to addressing the current imbalances developing countries face in WTO Agreements will be conveniently overlooked.

    The Chair of the General Council is planning for some decisions on the way forward to be endorsed by the senior officials meeting on 15 December in Geneva. Developing countries must insist on Special and Differential Treatment issues, as well as Implementation issues to be addressed as priority issues.

  2. A variety of texts should be used in the negotiations on agriculture and NAMA, not only the Derbez text produced in Cancun since the text did not represent developing countries’ positions put forward both in Geneva as well as in Cancun itself. The various proposals developing countries had submitted in the process towards Cancun, should also be used in the negotiations.

    Furthermore, to accept the Derbez text now would be to legitimize the process by which the draft was knocked together, which was clearly illegitimate. The Chair of the Ministerial abused his capacity by producing a text which ignored completely developing countries’ positions. It did not even correspond to the conclusions that some facilitators in Cancun had arrived at as a result of their consultations (eg. Canadian Minister Pettigrew concluded on 12th September that there was no consensus to begin negotiations on any of the new issues, but the text on the 13th September endorsed negotiations). It would also continue to give the green light to the WTO Secretariat, working in tandem with the major powers, to draft texts which do not even capture the positions of the majority.

  3. There should be negotiations on modalities, and not frameworks as in accordance with the Doha Declaration mandate. Negotiating ‘frameworks’ on agriculture and NAMA became a pre-Cancun objective largely pushed by the majors because it was clear to all that there would not be political will to arrive at concrete numbers that would constitute ‘modalities’. However, many Geneva-based developing country negotiators now realize the danger of negotiating ‘frameworks’. Since no concrete numbers are being discussed in framework negotiations, but only general formulas, it will be difficult, if not impossible for developing countries to ascertain what they are in fact getting from the negotiations. This is dangerous. Depending on the numbers finally agreed to in the more detailed modalities negotiations, it could be very possible that the developed countries in fact give no real concessions, but developing countries are the ones undertaking liberalisation. (It is clear from the Derbez text in both agriculture and NAMA, that this is the intention of the US and EU). Developing countries could also potentially be trapped into ‘paying twice’ for the major powers to make concessions, once when negotiating the framework, and later in negotiations on modalities.

  4. Drop the Singapore Issues from the Doha Development Agenda. Unlike the Seattle Ministerial conference which was adjourned without conclusion and the mandate thus carried back to Geneva, the Cancun Ministerial did come to a conclusion. As such, developing countries can legitimately argue for the Singapore issues to be dropped from the negotiating agenda. The Doha Declaration had asked for modalities in the Singapore issues to be agreed upon by explicit consensus at the Fifth Ministerial. Since no agreement was reached, and the Fifth Ministerial was concluded, the mandate has expired. They should therefore not be part of the single-undertaking in the Doha Development Agenda.

    The EC is currently brainstorming the possibility to include some of these Singapore Issues as plurilateral agreements ie. agreements only amongst signatories and not the entire membership. This will not be a good strategy for developing countries. Many developing countries, at the end of the day, will be pressurized by the developed world into joining these plurilateral agreements. Countries themselves may also feel obliged to sign on if they exist, under pressure to compete with others to give a positive signal to investors.

  5. Maintain positions on the cotton initiative. Cotton is a critical livelihood issue for many of Africa’s cotton farmers who have been severely affected by US subsidies. It is therefore a legitimate right for African countries to continue pressing for US and others’ subsidies to be removed, as well as for a mechanism for compensation. The US proposal, that countries borrow from the Bank and Fund in order to help them diversify from cotton is a slap in the face to the West Africans. The African Union must continue to insist on changing the structural trade imbalances perpetuated by the US, which is in direct contradiction to the spirit of the WTO.

    There may also be attempts by the US and others to persuade African countries to incorporate the cotton issue in the overarching agriculture negotiations. Such a proposal should not be accepted since there is little guarantee in the agriculture negotiations that subsidies will not merely be shifted and relabeled, for instance, into the Green Box (as has been the case in the implementation of the Uruguay Round).

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