September 7, 2003

Their aim was to try to achieve consensus on a tortuously negotiated draft text that is meant to be agreed when Ministers meet from September 10 to 15 in Cancun at the 5th ministerial meeting of the World Trade Organisation (WTO).

Despite this, outside of the US and EU, confidence is limited about the likelihood of a positive outcome in Mexico. While progress has been made in Geneva in some areas, deep disagreement remains over how much further and in what way the 146 WTO member states should press ahead with further trade liberalisation. More acutely there is a widespread belief in the developing world that the WTO’s development agenda that was agreed when ministers last met in Doha has not materialised.

Since late 2001 there have been an endless succession of preparatory meetings to discuss all of these issues but until very recently there has been little genuine movement on matters of substance. The result is that almost all that has occurred in the last few months has been driven largely by the EU and US in the face of continuing doubt or downright hostility from the newer WTO political heavyweights; Brazil, China, India, Mexico and South Africa.

During the course of August, the EU and US agreed a joint approach intended to unlock the issue that almost everyone agrees will make or break the Cancun meeting; namely the liberalisation of trade in agriculture. The two have outlined a scheme to reduce the levels of subsidy on their domestic farm production and agricultural exports. They have agreed also, with some reluctance, to strike a deal that will provide at lower cost, essential medicines to the poorest nations.

Despite this, the majority of the WTO’s members, 120 or so developing nations, regard the failure of the EU and US to turn their proposals on agriculture into a formal negotiating offer as problematic. They believe it indicates the political difficulty that both Brussels and Washington have respectively in delivering their own member states and farming lobbies. Developing nations without preferential arrangements such as Brazil also complain loudly that neither the US or EU is likely to offer what they want most: deep cuts in the developed world’s barriers to their agricultural exports.

Part of the problem in moving forward any agreement at the Cancun and at subsequent WTO ministerial meetings is that the WTO decides everything by consensus. This may have been viable when the developed world effectively agreed and controlled the agenda, but today the WTO no longer has a homogenous trade agenda.

Starting in Seattle in 1999 and moving on through Doha in 2001, the debate within the WTO has become increasingly acrimonious. Nations outside of the wealthy OECD group have recognised the need to flex their muscles if they are not to be disadvantaged. The result is that WTO Ministerial meetings have become a form of war without bloodshed.

In this process, the developing world has come to realise the importance of creating solidarity and a largely south-oriented consensus. Seattle and Doha showed the importance of emerging economies acting with less powerful developing nations to counterbalance an often aggressive EU and US view of trade liberalisation and a singular political view of the world.

The result is that almost all developing nations have become more assertive in trade negotiations and are no longer prepared to enable a consensus that is not in their interests. So much so that one of the Caribbean’s smallest nations has noted in private it will oppose anything the US proposes in Cancun unless there is movement on its WTO dispute with Washington.

Cancun will be different. There is a profound desire in developing nations for greater equity in world trade. If Seattle forged that awareness, Doha showed the opportunities that the WTO potentially offers. The result is that developing nations in Africa and the Caribbean go to Cancun with more confidence. They know that despite differences, they can by working with the emerging economies in South Africa and Brazil ensure that there will not be any movement forward in the global trade agenda without significant concessions from the world’s wealthiest nations.

This means there is an unusual degree of uncertainty about whether Cancun will result in progress on core issues. So much so that there are signs that senior figures in Europe, Australia and other developed nations are qualifying their public optimism. In private they are suggesting that Cancun may be just a step further along a difficult road. Success, they suggest, could be a framework agreement that leaves the details of cuts in agricultural subsidies or tariffs to 2004.

However, if Cancun fails to make progress on agricultural issues it is hard to see how it will not have a significant effect on the ways in which many nations come to regard the whole process of trade liberalisation.

Failure to make progress will encourage doubts, new alliances and a greater emphasis on solidarity and the principle of equity. It would suggest that the whole process of globalisation will slow and that much greater emphasis may be placed on regional economic integration.

India has begun to signal that it has much to gain from the establishment of free trade agreements with the nations of South East Asia. Brazil is already seeking new trade agreements arrangements with Africa. For its part the US may try to move forward more rapidly the wide range of sub-hemispheric free trade agreements it is already negotiating in the Americas while Europe may seek to consolidate its previous gains.

All of this may not be a bad thing for the Caribbean as it may allow some breathing space in which to complete successfully the single market and better order priorities in its trade negotiations with Europe and in the Americas. As one senior figure on his way to Cancun noted recently:

“For the Caribbean no agreement at all in Cancun may be better than a bad agreement.”