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Why Cancun did not succeed

BS Economy Bureau in New Delhi | September 20, 2003 16:58 IST

It took just five minutes for Mexican Trade Minister Luis Ernesto Derbez to make up his mind on calling a halt to the deliberations at the fifth ministerial meeting of the World Trade Organisation at Cancun early this week.

The apparent provocation was the move by the African group of countries on the fifth day of the talks to oppose the inclusion of any of the four components of the Singapore issues (investment, competition, transparency in procurement and trade facilitation) under WTO negotiations.

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The abrupt decision, however, has baffled the developing countries since they had come very close to working out a compromise formula and adopting a statement at the end of the Cancun meeting.

They also cannot understand why Derbez, the chairman of the meeting, was in such a big hurry to close the talks and did not explore other options like extending the meeting for a couple of more days. Which is what has given rise to the speculation that there were other and more powerful forces at work that did not allow any agreement to be formalised at this juncture.

Participants at the Cancun meeting confirm that the unique development at the just concluded talks was the emergence of G-22, a group of countries led by India, Brazil, South Africa and China, which proved to be a powerful counterpoint to the combined might of the US and the European Union.

"The balance of control in the WTO this time has changed. It used to be completely driven by the US and EU. Now there is a change in the equilibrium in favour of the developing countries," said a senior member of the Indian delegation on his return from Cancun.

The coalition of developing countries not only managed to stay intact during the negotiations, but also fought off deliberate campaigns at misinformation about how some members of this group had defected.

On its part, the developing countries' group also used novel means to confuse the US and EU by rotating among themselves the lead role for taking up different issues at different times.

This showed maturity and understanding among the G-22 members, even as such tactics often misled the developed countries into believing that the coalition might have weakened. India's strategy also witnessed a refreshing change.

It was no longer defensive in its approach. It decided to engage with the developed countries on talks on trade issues.

It was aggressive and carried the debate over protectionism and market access to the developed countries' camp. India's trade delegation members even addressed members of some non-governmental organisations, just to ensure that India's position was heard at this forum.

What dealt a crucial blow to the Cancun meeting was the draft circulated among members on the fourth day of the talks.

It only took care of the US and European Union interests. For instance, while the US and EU were to reduce their farm tariff by 36 per cent and 41 per cent, respectively, India was to reduce its tariff on farm goods by 71 per cent.

There was no categorical time frame given for reducing in farm subsidies by the US and EU either. On the other hand, two of the Singapore issues -- trade facilitation and transparency in procurements, were proposed to be included while the talks on investment were to start within six months.

In about five hours of the presentation of the draft text of the agreement, the developing countries evolved a common approach to oppose it.

Brazil took the lead in opposing the draft proposals on agriculture.

India was the third speaker at this session, which tore apart the draft for meting out a differential treatment to the developed countries, while ignoring the concerns expressed by the developing member-countries.

India declared that the draft had buried the development rhetoric of the Doha round and it seemed that the only agenda now left to be pursued was to further the development of the developed world.

By late evening, the facilitators of the meeting realised that things were getting out of control and there was need to narrow down the differences.

Six trade ministers-- representing the US, European Union, India, Brazil, South Africa and China, got together to salvage the draft. Three hours of talks later, the trade ministers emerged out with the focus once again returning to the Singapore issues.

Much to India's relief, the contentious elements of the Singapore issues were beginning to get resolved.

The US had already opposed the inclusion of competition in trade talks.

The EU offered to drop investment and later offered to postpone negotiations on transparency in procurement.

That left only trade facilitation, to which India and other developing countries did not have much opposition.

On agriculture, a "defensive" proposal was worked out seeking to reduce export subsidies and domestic support for farm goods within a pre-determined time frame.

Even as trade ministers began nurturing hopes of an agreement that would take care of the legitimate concerns of the developing countries, the sudden emergence of the African countries to reject all the Singapore issues (when in reality only one issue was left on the table) changed the course of the Cancun meeting.

Derbez declared the meeting closed, even though many members were debating whether the chairman enjoyed the power to take such a decision.

As a senior member of the Indian delegation observed, the Cancun meeting was something more than a failure, because a document appeared to be a distinct possibility and why it did not happen makes one wonder if there is something more than meets the eye.

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