WTO-CANCUN: Farm Trade Clash Will Be Decisive – UNCTAD

By Gustavo Capdevila Reprint | | Print |

Gustavo Capdevila

GENEVA, Sep 4 2003 (IPS) - The rapid response of 20 developing countries to the agricultural trade reform plan put forth by the United States and European Union is among the most notable events in the lead-up to the WTO Ministerial Conference in Mexico next week, says a United Nations trade official.

The outcome of the polarised agricultural trade negotiations at the World Trade Organisation meet in the resort city of Cancun, Sep. 10-14, will determine the fate of discussions on international investment and other trade issues, says Rubens Ricupero, secretary-general of the United Nations Conference on Trade and Development (UNCTAD).

In comments accompanying his presentation Thursday of the UNCTAD ”World Investment Report”, Ricupero referred to the two poles, one being aligned with the position staked out by the United States and European Union on agricultural trade, which is shared by most of the industrialised North.

The two trade superpowers, which head the bloc of wealthy nations that implement farm sector protections at a cost of nearly a billion dollars a day, on Aug. 13 presented a document proposing light reforms of the current agricultural trade regimen.

The other pole, known as the Group of 20, includes the majority of the developing countries that are most active in the trade talks that take place in Geneva, such as Brazil, China, India, Mexico, Pakistan, Philippines, South Africa and Thailand.

The Group of 20 presented a counter-proposal to the EU-U.S. approach a week later. The creation of this ”very impressive coalition of developing countries” is, in Ricupero’s opinion, ”unprecedented either in the old GATT (General Agreement on Tariffs and Trade) or the WTO in the sense that it comprises all the major developing countries.”

”What I see now is a clear polarisation of positions,” but, added the UNCTAD chief, ”I’m not using polarisation in a negative sense.”

Although it can be described as a ”North-South divide”, as EU trade negotiator Peter Carl recently did, it is not ”in the old ideological interpretation because even inside this group of 20 countries you will find nations that have sharply different orientations in relation to trade liberalisation,” Ricupero said.

The group includes countries like India and Brazil on the one hand, and Chile, Mexico and Costa Rica on the other – WTO members that ”usually don’t take the same positions on trade liberalisation matters.”

”So it’s not a matter of a North-South differences on ideological grounds, but as consequence of their position; the fact that they are developing countries,”

The Group of 20 said that theirs is an inclusive proposal, an attempt to take the interests of all parties into account. Therefore, ”much will depend on the reaction of the other ministers, and this will make Cancun a very interesting opportunity,” said the official.

Because the agricultural issue is likely to determine the fate of the Cancun meet, it is premature to I speculate about negotiations on investment, and ”it is my view that if this issue is not resolved, the rest is of secondary importance,” he said.

UNCTAD presented its ”World Investment Report” in several capitals Thursday, an annual publication that examines foreign direct investment trends.

According to the report, FDI should stabilise this year with respect to the low levels recorded in 2002, and could rebound slightly in 2004.

FDI flows declined in 2002, for the second consecutive year, to 651 billion dollars, the lowest since 1998 and half the record-breaking 1.4 trillion dollars of 2000.

One section of the UNCTAD report takes up the matter of strengthening the development-related dimension of international treaties on investment. Ricupero pointed out that this aspect of the study was not conceived as a means to influence the WTO’s Cancun process.

Among the matters on the trade ministers’ agenda in Cancun are trade rules and investment. The industrialised countries, and the EU and Japan in particular, are keen on launching negotiations to establish rules regulating investment.

In contrast, the vast majority of developing countries, with India in the lead, oppose any such initiative, saying that embarking on new areas of negotiations requires greater previous study.

In diplomatic circles here, the belief is that the EU and Japan are trying to make up for their negotiating weaknesses in agriculture by laying out proposals in other areas in which they play a more dominant role, like investment, competition, transparency in government procurement, and customs regulations.

The tactic of the developing countries, meanwhile, is aimed at recuperating positions lost in previous trade negotiating rounds, both in the WTO, and its precursor, the GATT.

Apparently with this in mind, Ricupero noted that reinstating balance in international trade liberalisation is the most important goal of the current round of multilateral negotiations, which were launched at the last WTO ministerial conference in Doha, Qatar, in 2001 and are slated to conclude by January 2005.

This imbalance is not limited to farm trade, the sector lagging farthest behind in market liberalisation, but extends to other areas of strategic importance to developing countries, such as trade in textiles and clothing.

Even after the industrialised countries dismantled their import quota systems, textile trade remains marked by very high tariffs, noted Ricupero.

The UNCTAD chief said he hopes the ministers meeting next week in Cancun will work to correct these imbalances, as this is the mandate of what is known as the Doha Development Round.

With respect to the foreign direct investment question, Ricupero said it is reasonable to expect a recovery. It will depend on the strength of the industrialised countries’ economies, and some have already shown signs of improvement.

But the economic factor is not the only one affecting investment. The international political atmosphere influences investor confidence and expectations about the global economy – an issue, said Ricupero, where predictions are bound to be premature.