Cancun

[Jagat]

<h3>Your teeth don't scare us</h3>

Cancun was no failure. It showed the richest countries that developing nations have fangs, too. The new power blocs could lead to a WTO with more bite, says trade guru DAVID WOODS

 

Thursday, September 18, 2003 - Globe&Mail

 

Alec Erwin, South Africa's Trade Minister and probably the developing world's most experienced ministerial-level trade negotiator, said it well: "We have seen a change in the quality and nature of negotiations between developing and developed countries."

 

He was referring to Sunday's collapse of the World Trade Organization talks in Cancun, Mexico, and in particular, to the decisive emergence of a group of developing countries -- known as the G21 -- that shook the rich nations' trade negotiators to the point of near panic. The sight of senior political leaders from China, Brazil, India and South Africa sitting together on a press conference platform in Cancun was sobering: The G21 nations represent more than half of humanity and most of the world's farmers. They also happen to be the future.

 

Their commercial interests and policy approaches to development may differ, but they stood together and made the WTO take their proposals on agricultural trade negotiations as seriously as it had already taken the joint proposal of the United States and European Union. They may not act jointly in the future. But they demonstrated, last week, what has been on everyone's mind for years: The dominance of the U.S., EU, Canada and Japan in international economic affairs cannot remain unchallenged. The accession of China to the WTO in 2001 was the turning point.

 

The American response -- political, congressional and business leaders in unison -- was as uncouth as ever: "We know where the ministers of countries daring to associate with the G21 live and we shall be paying them a call." Europe was subtler, but not much.

 

The emergence of the G21 was not the only power play in Cancun. Indeed, the conference collapsed when the "ACP" (African, Caribbean and Pacific countries) group refused a green light to negotiations on the new issues on the Doha agenda.

 

These issues -- investment, competition policy, government procurement and trade facilitation -- would all benefit countries seeking to find a place in the global economy. But the poorest countries do not trust the industrial powers -- principally Europe and Japan -- that insisted on the inclusion of these dossiers in Doha. And agreements could carry significant political, institutional and economic costs. Poor countries would therefore need a lot of support to implement them.

 

And they're not confident that they would get that support. After all, this is supposed to be the Doha Development Agenda. In the two years since it was launched, the industrial nations have scurried away from any development commitment that would deliver real commercial benefit to poor countries but entail political discomfort at home. Nowhere is that more the case than in agriculture.

 

Confidence and trust are scarce commodities in the WTO at present. Ask the four west and central African countries whose presidents got together to present a proposal on their one export commodity, cotton. They called for trade-distorting subsidies in the U.S., EU and China to be eliminated and, in the interim, their farmers to be offered some compensation for the exports foregone because of collapsing world cotton prices. What they got for their WTO commitment was a text -- bearing all the signs of having been drafted in Washington -- essentially suggesting that Africa stop growing cotton!

 

True, finding consensus among 148 countries is bound to be difficult. As the meeting folded, U.S. Trade Representative Robert Zoellick and EU Trade Commissioner Pascal Lamy both lashed out at the antique negotiating structures of the WTO.

 

They were probably right. Certainly the habits, relationships and procedures -- as well as the delegate structures -- in Geneva, where the WTO is based, are far from optimal. In the face of endless posturing by diplomats in Geneva, ministers are constantly left to sort out unmanageable agendas in just a few days. Despite the lessons of the Seattle debacle in 1999, within a few months the Geneva-based ambassadors had ensured their old and favoured practices would remain untouched. After Cancun, it is to be hoped that genuine institutional reform will be back on the agenda.

 

In the meantime, how will the major traders react to the failure of the conference, and the emergence of a stronger and better-organized developing-country voice?

 

Washington and Brussels' initial, knee-jerk response was to imply that if other WTO members were not prepared to play the game the way the big boys expect, then they would take their ball and play elsewhere. "Elsewhere" means, of course, the regional and bilateral game. Is it a hollow threat?

 

Well, there is nothing to stop Washington responding to the many developing countries clamouring for favourable access to the U.S. market. However, in global trade terms, these would be pinpricks. The big prize is the Free Trade Area of the Americas -- and that means facing precisely the same countries that stood tough in Cancun, notably Brazil. The demands will be the same: agriculture and U.S. anti-dumping rules. The response will be just as difficult -- perhaps more so.

 

Naturally, there are other options. Both the U.S. and EU may be tempted by bilateral deals or limited regional deals in Asia. But getting from temptation to workable, concrete reality is hard. A transatlantic trade agreement between the two might be doable, but the political fallout from creating just one more rich-man's club would be immense. In any event, agriculture would remain the Achilles heel.

 

Ultimately, everyone must make the WTO deliver again -- for developing countries and agricultural exporters. That means the EU reforming its support for its farm sector; the U.S. being ready to wind back the subsidies Congress voted last year; Japan coming out of the shadows on access to the rice market -- and even Canada doing some work in its protected farm sectors.

 

At the same time, if poorer countries want some value out of their WTO membership, they must accept that trade negotiations are not one-way streets. The new balance of power is to be welcomed, but if it leads to immovable, absolutist positions then it will be self-defeating.

 

Given all that, the Doha round can be a big success. The perspective after Cancun may offer the prospect of a more valuable deal than was envisaged before. But we may have to wait until well after the U.S. presidential election. That's no disaster; the time can be well-used.

 

David Woods, the managing director of World Trade Agenda Consultants, spent 13 years as director of information at the GATT and the World Trade Organization.

[Jagat]

<h3>We're all to blame for the trade talks' collapse</h3>

 

By JEFFREY SIMPSON

Saturday, September 20, 2003

Japan, guilty. Korea, guilty. The European Union, especially France, guilty. The United States, guilty. Canada, guilty, sort of.

 

These are the countries that should be in the dock of world opinion for the collapse of world trade talks. That those talks just failed in Cancun, with revival uncertain, had nothing whatsoever to do with the usual collection of demonstrators.

 

The talks collapsed instead because the rich countries still insist upon obscene subsidies for their farmers, to the detriment of their consumers and taxpayers, and the developing world.

 

Finally, after years of being jerked around by the rich countries, developing countries led by Brazil, India and others stomped out, saying they wouldn't accede to requests to open parts of their markets until the rich countries stopped, or at least reduced, their subsidies. They were right to walk out, although the risk now becomes that the entire trade round will fail, a failure that will hurt the developing countries more than the rich ones, no matter what the demonstrators say.

 

Rich countries give more to their farmers in agricultural subsidies -- $300-billion (U.S.) -- than they give in foreign aid. Rice farmers in Japan and Korea, cotton, sugar beet, peanut and wheat farmers in the U.S., all kinds of farmers in the EU -- they all suck mightily at their government's fiscal teat, yet they represent only 3 per cent or less of their populations.

 

Why do these few people exercise so much political muscle? In part, it's because hell hath no political fury like an aggrieved French farmer or a U.S. wheat grower or a Quebec dairy producer.

 

Farmers have been dependent on government assistance for so long that they have developed brilliant skills of political manipulation, from the street theatre of demonstrations to discreet lobbying.

 

But there is more. In each of these countries -- and in Canada, too -- for all the talk of modernization and urbanization, institutions and timetables are still set as if agricultural life still predominated.

 

The school system, for example, maintains the long summer break as if students were needed to help on the farm, as they were a century ago. In some areas, clocks are set according to daylight hours to maximize farmers' time in the fields.

 

Political maps reflect population patterns that no longer exist, and therefore give disproportionate weight to rural areas. The Liberal Democratic Party of Japan gets the farmers' votes in constituencies that have far fewer electors than urban ones. It's the same pattern everywhere, the Japanese one just being more blatant than the others.

 

In the U.S. Senate, an agricultural state such as North Dakota has the same number of senators as industrial Michigan. In Canada, rural ridings sometimes have half as many voters as big urban ones. In any Parliament, the number of questions asked about agriculture vastly eclipses those about cities.

 

But there is still more. In each country, according to its traditions, mythologies have grown up about the farmer. In France, le beau paysage français (and it is a beautiful countryside) is deemed part of the nation's soul and heritage, so that government protection for farmers has become part of a national self-image.

 

In Japan and Korea, the very shortage of farmland has been twisted into a mistaken belief in the need for self-sufficiency in rice, as if these countries could not be sure of buying supplies on the world market.

 

Myths have developed in Canada, too, the sturdiest being that somehow the supply-management system does not disturb world trade. True, we do not dump excess capacity on world markets, as the European Union does, but we restrict imports with vast tariffs on eggs, dairy and poultry, which makes Canada guilty, sort of.

 

When the federal and provincial agriculture ministers meet in Ottawa Monday, however, we can be sure their tone will be of virtue sullied, as if Canada's hands were clean in the messy business of the Cancun collapse. Such a pose works well at home, whatever its divergence from the facts.

 

This protection here, as elsewhere, is justified by recourse to the noble countryside, the fine people who work it, and the gratitude we should all feel to those who produce what we eat, whatever the cost. In fairness, Canadian grain farmers do have cause for complaint, since Canadian per farmer subsidies pale beside those of the United States and European Union.

 

For confirmation, check out the annual reports on agricultural subsidies from the Organization for Economic Co-operation and Development. The numbers are all there, and they tell a depressing story.

 

The developed world's hypocrisy knows no limits. The rich countries and the institutions they control, such as the International Monetary Fund, the World Bank and the regional development banks, exhort developing countries to get with the program and produce things efficiently.

 

But when they do, the rich countries say sorry. Our farmers are at the trough, and we're petrified of their ire.

 

jsimpson@globeandmail.ca

[Guest guest]

We should get rid of farm subsidies. Once upon a time 50% of all Americans were farmers, and the subsidies developed over time due to major price competition that caused wildly fluctuating prices. This in turn would destroy small farmers in a day. Today with the options market smart businessmen can avoid fluctuating prices. But today less than 1% of Americans are involved in farming, and these farms are all multi-hundreds of billion dollar a year operations. ConAgra, ADM etc.... The price subsidies cause double taxation on the American consumer. First, we pay taxes to keep farmers from producing, or to purchase the products at inflated prices. Second, this causes the prices of the foods that get to market to be higher thus causing a second tax on the public. Get rid of corporate welfare. If third world countries agree to certain regulations to monitor quality of food products, pesticides etc... then let their goods come in. We spend tens of billions of dollars every year on farming subsidies, when we could put that same money into schools.