Cancun postmortem

The World Trade Organization's two-year attempt to create a new global trade pact collapsed without an agreement on Sept. 14 in Cancun, Mexico. The immediate cause of the collapse, to the shock of many as the Economist reports, is not agricultural subsidies but the so-called Singapore issues which the EU countries have been pushing: rules on foreign investment, competition policy, government purchases and �trade facilitation� (things like customs clearance). As a result of the collapse, the WTO�s own 2004 deadline for a comprehensive reform in world trade may prove impossible to reach.

The deadlock on the Singapore issues, in a sense, preempted the expected showdown on agricultural subsidies. (The developing countries have been continuously pushing for rich countries (EU, US, Japan) to scrap their over-generous subsidies, which total about $300 billion a year, to domestic farmers.) The Economist reports that some cynics believe the Singapore issues were thrown in the negotiations by the EU and Japan to disguise their own intransigence over agricultural subsidies.

Ever since the current round of trade talks was launched in 2001, Japan and the EU have been on the defensive. The Doha round�s focus on agricultural liberalisation has forced them to defend some of the most illiberal but well-entrenched systems of agricultural protection in the world. Japan�s import tariffs on rice go up to 1,000%. The EU spends more on annual subsidies for each of its cows than most sub-Saharan Africans earn in a year. Both insist on progress on the Singapore issues as a quid pro quo for long-overdue agricultural reforms that still seem politically beyond them. If poor countries refuse to yield ground, the EU and Japan can blame them for their inflexibility over the Singapore issues, rather than taking the blame for their own inflexibility over agriculture.

The United States announced at the very start of the negotiations that it was prepared to do away with its own agricultural subsidies provided that the developing countries reciprocate by opening their markets to foreign investment. But as the New York Times reports, this initial posture by the United States was nothing but bluster. President Bush is simply not prepared to alienate his farmers before he gets re-elected. US Trade Representative Robert Zoellick in Cancun was not only negotiating trade agreements but was given the unenviable task of keeping safe President Bush�s 2004 re-election. The New York Times reports:

The farm states voted heavily in favor of Mr. Bush in the 2000 election, and were the backbone of the states that gave him the bulk of his electoral votes. Agribusiness, which profits from the low cost of corn, soybeans and other crops subsidized by American taxpayers, has shifted its allegiance to the Republican Party. Political contributions from agribusiness jumped to $53 million in 2002 from $37 million in 1992, with the Republicans' share rising to 72 percent from 56 percent, according to figures compiled by the Center for Responsive Politics.

The collapse of the talks in Cancun, though, is not all positive for President Bush. It is, Business Week reports, �a serious blow to the Bush Administration's efforts at opening markets worldwide for U.S. exports and shrinking America's massive $500 billion trade deficit with the rest of the world.� With a hurting US economy, Bush Jr. may follow the career path of Bush Sr. come 2004.

Antiglobalization networks, such as our own Focus on the Global South, have been quick to claim victory after the collapse of the trade negotiations. Trade Secretary Mar Roxas is also quoted by the above Business Week analysis as saying, " We are elated that our voice has now been heard."

But as a statement of the coalition led by the Focus on the Global South said, the challenge lies in making concrete the reforms needed to match Mar Roxas's new-found rhetoric.