The World Trade Organisation's (WTO) Ministerial Conference in Cancun, Mexico--aiming to promote 'free trade' in goods and services between richer and poorer nations-ended in a spectacular manner. "It's over" declared George Odour Ong'wen, a Kenyan delegate. "The differences were very wide and it was impossible to close the gap."
The Malaysian trade minister, Rafidah Aziz, blamed the rich world for being intransigent. "They kept demanding things that others couldn't deliver," she said. What surprised most observers was the show of unity among developing nations, in past events, trade negotiations were heavily dominated by the US, Europe and Japan. Developing countries, comprising four-fifths of the WTO's membership, were expected to take a backseat. The wealthy nations frequently used a "carrot and stick" approach by offering enhanced trade opportunities and debt relief to persuade poor nations to accept their distorted agendas.
The failed meeting at Cancun, however, produced one good thing: the rise of a new lobby group--the G21. Led by Brazil, China, India and South Africa, the G21 represents half of the world's population and two-thirds of its farmers, and will hopefully become a powerful voice to shift the balance of power within the WTO to favour the developing world. Hajime to, director of Japan's trade ministry, said: "Compared with the past, the role of developing countries has changed. They have been able to achieve a homogenous position that they could not in the past."
For the first time, poorer members demanded action on their own agenda, such as radical cuts in the developed world's huge farm-subsidies and its trade barriers, although the US, Europe and Japan were keen to discuss investment roles and anti-trust policies affecting service industries.
The Cancun agenda was tough and far-reaching. The WTO's Doha Round, launched in late 2001, has a number of objectives such as the liberalisation of agricultural trade by the slashing of the tariffs on farm products and the elimination of export subsidies.
In addition, it seeks to reduce industrial tariffs, especially in industries where poor nations enjoy a competitive edge such as textiles and garment manufacture, and a liberalisation of the services market. At Cancun, farm trade proved to be the ultimate divide between rich and poor countries.
Four of the so-called "Singapore issues" had also caused much resentment. These are how the WTO's 148 member countries should treat foreign investors; competition policy including codes for anti-monopoly and anti-cartel laws; a greater transparency in government procurement that might help multinational companies win lucrative public-sector contracts; and trade facilitation--or the elimination of bureaucratic procedures, such as the simplifying of customs regulations. But most developing nations feel threatened by global rules, especially on foreign investment, because it may undermine their control over strategic industries. Rich countries are keen to sell services like telecoms, power, water and transport to poorer ones.
The latter argue that opening public services to foreign companies can improve service provisions. But experience has shown that consumers are usually charged higher prices for services provided by foreign investment, perhaps because poor countries lack the technical expertise to negotiate complex micro issues and subsequently implement them.
The European Union (EU) had made agreement on the "Singapore Issues" a criterion for introducing its own very modest farming reforms. Oxfam, the development organisation, commented: "In the past, rich countries made deals behind closed doors without listening to the rest of the world. They tried it again in Cancun, but developing countries refused to sign up to deals that would fail the world's poor people."
It is obvious that wealthy states have little intentions of dismantling farm subsidies and lowering barriers on poor countries' exports, although poor countries are pressed to lower their own tariffs and improve access for foreign investment. …