Cancun – Moral Victory for Developing  Countries

By David King, Secretary General of IFAP

US Ambassador Zoellick and EU Commissioner Lamy clearly see the WTO Ministerial Conference held in Cancun as a failure. They blame developing countries for coming to Cancun “to make a point” and not “to make a deal”. The UN is the place for political speeches, they say, not the WTO.

Developing countries see things differently. They consider the derailment of the Cancun Conference as a moral victory for the developing countries. Cancun saw the developing countries getting organised and building alliances, for the first time. The G-20+ Group, led by Brazil, brought together the developing countries of the Cairns Group with India, China, Egypt, Indonesia and Nigeria. This group represents most of the world’s population. Compared with the position of the EU and US, the G-20 goes further in its demands on the industrialised countries to liberalise, and makes fewer demands on the developing countries.

The poorer developing countries also built alliances. Initially organised into three groups - the African Union, the ACP group, and the Least Developed Countries group – these smaller developing countries built an alliance in Cancun of all three groups to represent 90 countries in total (G-90). The main focus of the G-90 was to protect developing countries from import surges. They also insisted on preserving existing trade preferences. Figures presented by FAO at a seminar in Cancun show that since 1995 when agriculture was brought into WTO, net food imports into the developing countries have increased, and import surges have increased, with displacement effects on local production.

What do developing countries expect from the WTO?

The economies of developing countries are mainly based on agriculture. Developing countries are therefore looking to the WTO to establish international trade rules that facilitate the development of their domestic agriculture. In particular, they are seeking:

- rules to end the ‘export dumping’ of surplus agricultural products onto their local markets,

- sufficient tariff protection to allow for food security needs and the development of local agriculture,

- increased market opportunities to sell their agricultural products in the industrialised countries, where consumers have the highest purchasing power.

Special and differential treatment for developing countries is a key part of the present round of WTO negotiations. There were several new provisions for developing countries in the proposals that were on the table in Cancun. Also, an effort is being made to tackle, as a priority, the trade distortions that most affect developing countries. However, there are few details in the proposal as yet – it is simply a framework – so it is difficult to see what sort of a deal it really offers developing countries.

Agriculture is the priority

A good agreement on agriculture is critical for developing countries, since agriculture is seen as the vehicle for poverty alleviation. The negotiating mandate, known as the Doha Development Agenda, puts priority on achieving an agreement on modalities in agriculture (deadline March 2003), before new items are added to the negotiating agenda (September 2003). The March 2003 deadline was missed for reaching agreement on agriculture, and yet in Cancun the main industrialised countries wanted to maintain the September deadline for adding to the agenda negotiations on the Singapore issues , so reversing the order of priority. For developing countries, this was unacceptable, and they were sufficiently organised to make the Conference fall on this issue.

Farmers in developing countries are disappointed

Farmers from developing countries are disappointed that the lack of agreement in Cancun will delay the implementation of increased market access, and a reduction in export subsidisation, for at least a year if not more. However, the Uruguay Round took seven years to negotiate, so it was always ambitious to think that the Doha Round could be completed in three years. Developing countries also feel that progress in agriculture is insufficient in relation to the imbalances they face in the multilateral trading system.

Farmers from West Africa were not satisfied with the ‘brush off’ that they received on cotton. Their negotiators had proposed a phase out of subsidies in cotton (mainly in the USA) and compensation for the African producers in the interim. In response, the draft Cancun text would have send the issue back to the WTO Director General in Geneva to examine distortions in trade in the whole chain – cotton, man-made fibres, textiles, and clothing, and encourage the World Bank, IMF, ITC and FAO to help cotton exporters to diversify their economies.

Farmers in developing countries are also disappointed since the lack of result in Cancun lets their domestic governments of the hook. Instead of investing in agriculture, developing country governments can continue to blame subsidies in the industrialised countries for their ills.

WTO is not a development agency

WTO is a forum for negotiating trade concessions and international trade rules. It is not a development agency. In order to achieve an improvement in the livelihoods of farmers in developing countries, a concerted and co-ordinated effort by many agencies and national governments is necessary.

For example, many developing countries and not have the capacity to meet the health, quality and traceability requirements to export to industrialised country markets. Neither do they have adequate marketing and transportation infrastructure. Thus, a major technical assistance effort is needed to help developing countries to exploit any trade opportunities they receive from the WTO negotiations. This requires investment in agriculture. After 10 years of neglect, priority for agriculture is increasing slightly. Under NEPAD , African countries agreed to allocate 10 per cent of their annual budgets to agriculture – compared with 2-5 per cent currently. The World Bank has increased lending for agriculture to 9 per cent of its budget, after falling to an all-time low of 8 per cent last year. Industrialised countries have agreed to raise the level of development assistance nearer to the target of 0.7 per cent of GDP and increase the portion for agriculture.

A critical element in the whole development process is that trade preferences and technical assistance to developing countries must lead to benefits for farm families and rural communities. If large multinational companies reap all the benefits from increased trade, then poverty elimination and balanced global economic development will not be achieved.