Global Policy Forum

By Charles Cobb Jr.

African trade ministers and officials are approaching the fifth World Trade Organization (WTO) ministerial talks that begin in Cancun, Mexico, on Wednesday, with low expectations. Since the collapse of the WTO's 1999 session in Seattle, Washington, the organisation has struggled to come up with a new world treaty on trade. It took about two years before trade ministers met in Doha, Qatar in November 2001 and gave themselves three years to complete work on a new treaty.

The 146-member organization has gotten virtually nowhere. Since launching the current round of world trade talks in Doha, WTO members have missed every deadline they set for themselves. "Up to now globalization has completely failed poor people and the WTO's trade rules have made things worse," says Adriano Campolina Soares, head of the food rights campaign for the London-based advocacy group, ActionAid.

In Washington, last week, President George W. Bush urged WTO negotiators to recover enough lost ground in Cancun to reach a new world trade agreement by the 2005 deadline it set in Doha. But hardly anyone thinks that's likely to be achieved.

An end to the agricultural subsidies in Europe and the United States that make African agricultural products uncompetitive tops the agenda of concerns. The WTO would like to say it is making progress on the issue. But last week, in a statement on behalf of the Africa Group, Morocco criticized a draft WTO declaration on trade for failing to commit to ending subsidies, describing the draft as "a complex set of rules that appear to formalize... the continued use of domestic support. No mention is made of possible time-frames for the elimination of major portions of trade-distorting domestic support, a matter of great importance to the AG [Africa Group]."

But European Union (EU) Agriculture Commissioner Franz Fischler last week indicated that such demands went too far; in a sharply worded rebuff to poor nations pressing for the abolition of subsidies, he said: "If they want to do business, they should come back to mother earth. If they choose to continue their space odyssey, they will not get the stars, they will not get the moon, they will simply end up with empty hands."

Rich countries spend some US$300 billion a year on farm subsidies, about six times more than on development aid. Every EU cow gets about $2.50 a day in subsidies; a Japanese cow gets $7.50 a day. The World Bank estimates that getting rid of farm subsidies in rich countries would cause a 17 percent rise in global agriculture production, adding $60bn a year, or six percent, to the rural incomes of low and middle-income states. Annual cotton subsidies to U.S. farmers of more than $3bn (three times U.S. foreign aid to Africa) "depress world cotton prices and crowd out poor but efficient farmers in West Africa," said the Bank in a report on Global Economic Prospects released last week.

Tens of thousands of anti-globalization protestors are expected in Cancun this week. Even the announcement by the WTO that it had cut a deal to permit developing nations to import cheap generic drugs to combat HIV/Aids, tuberculosis, malaria and other epidemics, was greeted with disappointment and skepticism by several aid agencies. It's largely cosmetic, said an Oxfam spokesperson, although African nations seem pleased. "It's good news for Africa and especially good news for the people of Africa who so desperately need access to affordable medicine," Kenya's ambassador, Amina Chawahir Mohamed, told reporters in Geneva.

The WTO deal requires the drugs to look different - not to be a copy of the originals. The deal may set up a patent conflict with countries like India, whose laws permit copying branded drugs as long as they use a different manufacturing process. But South Africa may benefit. Aspen Pharmacare, South Africa's largest producer of generic medicines, is planning to double production over the next year.

For some, however, the debate over subsidies is largely "peripheral." Economist Mark Weisbrot of the Center for Economic and Policy Research in Washington, citing World Bank figures, says gains from removing all the rich countries' remaining barriers to merchandise trade -- including manufacturing as well as agricultural products -- and removing agricultural subsides will have little real impact. "When the changes are phased in by 2015... an African country with an annual income of $500 per person would then have $503." In Weisbrot's view, the IMF "creditors cartel" and the "unpayable" debt burden, particularly in Africa - and a range of "inappropriate" macro-economic policies [are] "likely to have far more severe consequences."

Nonetheless certain crops subsidized in the West -- like cotton -- are of unquestionably of crucial importance to some African nations. But last month in Nairobi, the chairman of African trade ministers, Jayakrishna Cuttaree, urged the continent's governments not to be side-tracked from issues vital to Africa, as covered in the WTO's Doha Round. "We will not defuse pressure on Doha to new issues of discussion," he warned.

Deep divide

Beyond differences between rich nations and poor nations - and indeed between middle income nations, rich nations and poor nations - on specific issues like subsidies and generic drugs, the deep divide underlying every debate centers on what should the WTO be.

African nations are not only concerned with subsidies but also about the potential negative effects of proposed new rules on investment, competition, procurement policies, and trade facilitations. The lack of transparency in decision-making is another concern. In August, in a draft proposal for the Cancun meeting, eleven African nations called for clarification of the relationship between trade and investment, and expressed concern about "transparency" in trade and procurement.

And there has been bullying of developing nations. A new report released Monday by the Amsterdam-based Corporate Europe Observatory (CEO) documents EU arm twisting at the WTO. The report, based on interviews with WTO negotiators, quotes one unnamed negotiator's complaint: "Both the United States and European Communities trade negotiators take us to the slaughter house at the end of the day. The latter might be more subtle and polite about it, however the end result is the same; we get slaughtered. I do prefer dealing with the US; at least you know exactly where you stand with them."

"There should be fair procedures especially in the final day and hours of the Ministerial Conference," the draft stated. Impromptu "green room" meetings -- a euphemism for private sessions where a few trading partners wheel and deal -- and privately circulated drafts of documents have been hallmarks of previous meetings. "There should not be last-night or last-day exclusive 'green room' meetings," the eleven ministers stated.

In the view of many in the South, the European Union, Japan, and the United States have shaped the WTO as a kind of global governance system reflecting their own interests, reaching far beyond trade. WTO rules - 800 pages of them - often override domestic policies in developing nations - as is the case with generic drug production. And not only developing nations are affected; in 1999, in order to force the Europeans to import U.S. beef raised using growth hormones, the U.S. placed sanctions worth about $117m on European goods.

Developing countries, on the other hand, and African nations in particular, see this as a value-laden policy that creates greater imbalance in world trade. Wealthy nations use their great wealth and power to ride roughshod over Africa's domestic priorities and policies. They would like a WTO with rules that are actually confined to setting the terms of international trade. "Trade rules should [just] cover trade," says Lori Wallach, director of Global Trade Watch.

No one is betting on whether progress will be made, or on how much will be achieved. Last week, suggesting that the Cancun session may fail poor nations, South African president Thabo Mbeki said that maybe poor nations should join anti-globalization protestors. "They may act in ways that you and I would not like - breaking windows in the street and this and that - but the message they are communicating relates to us," Mbeki told a seminar in Malaysia during a visit to strengthen ties between Africa and Southeast Asia.

If agreement can't be reached, "the U.S. will go it alone," warned U.S. Trade Representative Robert Zoellick, Friday. "We will find countries that want to open up markets with the United States. I hope they will be in the WTO. But if they are not, we are not stopping. We are moving with the countries that are willing to go."

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