More than 70 developing countries yesterday announced their refusal to go ahead with WTO negotiations on investment and other new issues, potentially creating a serious obstacle to agreement at this week’s ministerial meeting in Cancun, the Financial Times reports.
Rafidah Aziz, Malaysia’s veteran trade minister, said on behalf of the group said the group was not prepared to trade negotiations on the new issues for gains on agriculture. The EU said yesterday it would not back down. A spokeswoman for Pascal Lamy, trade commissioner, said the EU would continue to insist that negotiations on the four Singapore issues be launched in Cancun. „We think we have a good case,“ she added.
The news comes as AP notes that WTO members struggle for agreement on how to open markets to international trade, one of the biggest fights likely will be whether to even start more negotiations. The European Union and Japan are urging trade ministers to consider adding four new issues to the current round of treaty talks, which are scheduled to be completed by the end of next year. The four topics are known jointly as the „Singapore issues.“
The Economist writes that the EU wants rules on investment, competition policy, government purchases and customs clearance. Some of these rules make sense on their own terms but they would be costly for poor countries to implement and monitor. Worse, if poor countries signed up to the rules, then failed to meet them, they would be vulnerable to trade sanctions.
The Globe and Mail (Canada) meanwhile notes that the US and Europe, the giants of WTO talks that are used to steering negotiations to suit their interests, may have finally met their match in Cancun. A new G21 bloc of developing countries led by Brazil — and backed by China, a growing economic
powerhouse that recently joined the WTO — has emerged as an immovable object to the usually unstoppable force of will that is Washington and Brussels.
The Guardian (UK) notes that the EU, meanwhile, warned [some countries] in Africa and in the Caribbean that their joining the so-called Group of 21 could well endanger their privileged access to Europe’s single market. Washington told Costa Rica, El Salvador and Guatemala that if they left the G21 they would get a „sweetheart deal“ giving them increased access to America’s $10 trillion economy.
Business Day (South Africa) reports South Africa’s lead negotiator at the WTO talks in Cancun, Xavier Carim, said yesterday that the Group of 20 was experiencing a groundswell of support which could be the factor that could spur much needed movement in the current world trade talks, which had reached a stalemate. Carim was commenting on a report yesterday that the South Africans were contemplating withdrawing from the group. Carim said that, as a founding member of the group, South Africa was „absolutely committed“ to the cause. „We feel there is a possibility that this group could generate the movement that is needed in negotiations,“ said Carim.
Meanwhile, US Trade Representative Robert Zoellick told US industry representatives that a stalemate over how to proceed with agricultural negotiations could continue into tomorrow and delay progress in other crucial areas such as lowering industrial tariffs, the Wall Street Journal reports. Mr. Zoellick so far has had little luck wooing key developing countries to support his push for wider market liberalization. The US has promised to slash its huge farm subsidies and eventually to eliminate its tariffs on all goods — but only if other countries show a willingness to lower their trade barriers, too.
Il Sole 24Ore (Italy) reports that the Italian Presidency of the EU warned that if developing countries were to ask the EU to make additional cuts to agricultural subsidies, Italy would threaten to re-discuss the Common Agricultural Policy, declared Gianni Alemanno, the Italian Agriculture Minister. Should an agreement not be reached in Cancun, „everything could happen, including a CAP review asking for less sacrifices to European farmers, “ he said. The Italian idea however does not seem to speak for other EU ministers and EU negotiators. EU trade commissioner Pascal Lamy and EU agriculture commissioner Franz Fischler said that „the Union has no intention at all to modify the CAP reform“.
Kyodo reports that ministers from member states of the WTO failed to bridge gaps in global agricultural trade liberalization talks Thursday as the coordinator of a farm working group planned to draw up a draft paper to deepen discussions. Singaporean Trade and Industry Minister George Yeo Bon, a facilitator for discussions by the working group, will distribute a document on agricultural measures Friday, Japanese officials said. A final version of the text will be included in a WTO ministerial statement to be issued at the conclusion of the ongoing WTO meeting in Cancun on Sunday. A Japanese official said the text cannot be an alternative to an earlier released draft and is aimed at promoting discussion, the officials said.
In a separate piece, Kyodo notes that Japan proposed an alternative Thursday to a liberalization plan on nonagricultural products drafted by the WTO, Japanese Economy, Trade and Industry Minister Takeo Hiranuma said. The alternative proposal calls for „a limited flexibility“ to allow member economies to exempt certain sensitive non-farm products from tariff cuts. The proposal is apparently aimed to protect domestic industries such as leather and fishery products from imports.
The Bangkok Post reports that sugar exporters want negotiating parties at the WTO talks to speed up efforts to reform farm trade including sugar. The Global Alliance for Sugar Trade Reform and Liberalization issued a statement yesterday after meeting in Cancun last weekend, ahead of the fifth WTO ministerial meeting that opened yesterday and runs until Sunday.
The news comes as the FT reports that the EU is chipping away at some of the last unreformed bastions of its common agricultural policy in a move that will also target the EU’s heavily-protected sugar sector. The European Commission is preparing reform proposals for [Tobacco, cotton, olive oil and sugar], though none will be as keenly followed as its plans for the sugar regime. According to draft papers seen by the FT, the Commission is likely to focus on three different policy options ranging from full liberalization to retaining the status quo. However, the most plausible advocates a cut in the guaranteed sugar price and an eventual phasing out of production quotas.
Meanwhile, UzReport.com notes that world cotton trade shows severe policy distortions, but, unlike sugar, the distortions come through producer support rather than from border measures such as tariffs and quotas, according to World Bank’s Global Economic Prospects 2004 report.
In other news, Xinhua reports that the WTO announced on Thursday that 301 disputes have been initiated under the dispute settlement system of the WTO since its creation in 1995. This compares to the roughly 300 disputes brought to its predecessor, the General Agreement on Tariffs and Trade (GATT), during its entire existence of almost 50 years, show the WTO figures.
The New York Times reports that the director general of the WTO said Thursday that he would intervene to address the grievances of four poor African nations whose cotton farmers have been hurt by rich nations‘ farm subsidies.
The Economic Times notes that Lee Jong-Wook, the director-general of the WHO today Thursday that the world body would be willing to offer a helping hand to those who find the conditions attached to the recent WTO deal on access to cheap drugs cumbersome.
The Far Eastern Economic Review notes that a recent World Bank study projected that a new trade agreement would have a giant impact on the global economy. It estimated that an accord promoting free trade would produce annual income growth of between $290 billion and $520 billion and lift 144 million people out of poverty by 2015. In East Asia alone, free-trade policies on agriculture, services, logistics and trade facilitation would create annual benefits of $300 billion, or 10 percent of GDP, within a decade.
Meanwhile, World Bank President James Wolfensohn writes in an op-ed in Le Monde (France) that on average, those living on $2 a day or less — more than 2.7 billion people — face double the trade barriers confronting the wealthy. Yet many rich countries continue jealously to guard trade-distorting policies. Rich countries‘ total farm subsidies, for example, are greater than Africa’s gross domestic product. In the absence of meaningful steps by rich countries, developing countries have been reluctant to liberalize their markets further. Having already made great strides in opening their markets, they want first to see reciprocal action by developed nations. The fate of the Doha agenda does not rest solely in the hands of rich countries. All must play a part.
The Wall Street Journal writes in an editorial that we’ll all be better off if the folks at Cancun keep in mind that the point of trade talks is to get out of the subsidy and import restriction business altogether. The scandal of European and US protectionism is how it assists the politically well-connected rich. The scandal of protectionism in developing countries such as Mexico is how it ensures that those without connections will always remain poor.