Cancun trade talks: Cleavages and compromises at whose cost?
Shafqat Munir
The Trans Atlantic cleavages and compromises continue to emerge, even at the World Trade Organisations (WTO) negotiations. They are being held at various levels on a number of areas particularly on trade in agriculture, with Washington supporting sweeping farm trade liberalisation in the WTO and the European Union arguing for overhauling common agricultural policy (CAP) subsidies. Before hints of certain convergence, there were reports of total divergence of views between the United States, and the European Union with comparatively a hard line by France on subsidies. The analysts believed if both the EU and the U.S. did not express seriousness on this very important issue, the Doha trade round would fail and the 5th WTO Ministerial conference in Cancun, Mexico during September 10-14, 2003 would turn into a replica of the WTO's Seattle debacle in 1999.

Already a mini summit of the trade ministers from 31 WTO member countries that was held in Sharm el-Sheikh, Egypt in 21-22 June 2003 ended without arriving any solution to the current deadlock under the Doha round of trade negotiations. This was the third mini-ministerial of its kind held since the beginning of the Doha round in November 2001 and followed up by a similar meeting of ministers in Tokyo in February. Despite warning from the WTO Director General Supachai Panitchpakdi that the time is running out for a deal, the ministers could not resolve the conflict as French President Jacques Chirac and President Bush continue to sticking to their guns.

The mini-ministerial meeting is seen in the context of a meeting of EU farm ministers who have reached an agreement on farm policy reform, though after serious differences among even the EU members. This comes after the United States, backed by the European Commission, warned that the entire Doha round of trade liberalization talks at the WTO could fail unless agricultural subsidies for the world's wealthiest nations were reformed. The agreement by the EU ministers to reform the bloc's common agriculture policy (CAP) would now see most of the links between farmers' production levels and their subsidies being cut from 2005, and the subsidies being redirected to rural development.

Prior to the EU ministers' agreement on the CAP subsidies issue, a number of developing and developed countries were critical of the EU stand and they threatened that the talks would be derailed if the EU did not reform its farm subsidies. New Zealand trade minister, Mr. Sutton, said "We can expect to see a gradual tailing off of European surpluses being shoveled into certain markets," he added. "The real payoff - the big scale stuff - will accrue to all agricultural exporters in the world as a result of what is now the prospect of a successful Doha round."

A number of countries stressed the need for EU reform in this area in order for the Doha round as a whole to move. Following the meeting, US Trade Representative Robert Zoellick said that, "While we've been discussing ways to move the negotiations forward, it's become clear that whether we move ahead or get stuck very much depends on the European Union". Australian Trade Minister Mark Vaile stressed that, "it is now all eyes on the EU to see what they can do to make sure this process moves forward". Pascal Lamy, the EU Trade Representative, said that talks would progress within the Union, and he was expecting positive results in Cancun. Indian commerce minister reportedly told the Sharm el-Sheikh meeting that any deal on agriculture needed to take the concerns of vulnerable developing countries into account, and that the market access that agriculture exporters were seeking in the negotiations would have to "be tempered" with sufficient provision of special and differential treatment for developing countries.

During the meeting, ministers discussed a request from Singapore for a new draft of a WTO negotiating paper on agriculture modalities, which set out the framework for negotiations. George Yeo, Singapore's trade minister, suggested that a new draft should be circulated among members by the end of July, in time for a final mini-ministerial meeting to take place in Montreal, Canada, from 28-30 July. Japan, South Korea and Switzerland supported the idea, but the U.S. and other agricultural exporters preferred basing talks on the existing modalities draft, fearing that a new draft would be tailored more toward the interests of countries that seek limited change in the area of agriculture.

There seems to be very little hope that the concerned parties will be able to reach an agreement on the modalities for negotiations on agriculture at the WTO ministerial conference at Cancun in September. It is also not surprising that Stuart Harbinson, the chairman of the WTO Committee on Agriculture, may have to drastically revise his draft proposals. The alignment of parties is likely to see a change in the days to come. Harbinson knows this emerging situation for certain and that is why he has kept the ultimate deadline for reaching an agreement on the modalities for agro trade as January 2005.

The trade war has already begun between the two major trading blocs, the United States on one side and the European Union on the other on the issue of genetically modified (GM) food. The European consumers still remain averse to GM foods in general on the apprehension of health and environmental hazards. The US is now bent upon making the European Union agree to lift its de-facto moratorium on GM crops and food. The European Union says it has called for a public debate on GM food across the Union and it seems that the EU's written submission to the US complaint on the de-facto moratorium may not be possible by November 2003, even after the Cancun conference. The EU is alternately planning to introduce the traceability clause and labeling of GM food and products to give its consumers an informed choice. This dispute of GM food moratorium is likely to consume time and a knotty issue to settle. The US has already won the support of Argentina, Canada and Egypt and is trying to solicit the support of African countries by promising them aid and sops in trade.

To counter the U.S. moves on GM foods, the European Union is yet to begin its venture for winning over support of developing countries. The European Union will find it difficult in convincing the developing world about its proposed introduction of traceability clause in agro trade. Many developing countries will find difficulties in setting up a suitable mechanism for monitoring traceability. Besides, the developing countries apprehend that this proposed traceability clause may at times be used as a weapon to stop their exports to the developed world. Much will depend upon the European Union to convince the developing world about its proposed traceability clause in the days to come.

The US is opposed to mandatory labeling of GM foods and the proposed traceability clause. It considers such measures as 'protectionism in trade'. US corn farmers are losing more than $200 million a year due to the European Union's de facto moratorium. The hunger-stricken African countries had very recently rejected the American GM food aid. The US finds itself completely isolated on the GM food issue and is, therefore, ready to fight it out at the WTO. The EU trade commissioner Pascal Lamy has claimed, "the EU's regulatory system for GMO's authorization is in-line with WTO rules. It is clear, transparent and non-discriminatory. There is, therefore, no issue that the WTO needs to examine. The US claims that there is a so-called moratorium but the fact is that the EU has authorized GM varieties in the past and is currently processing applications. So what is the real US motive in bringing a case?"

Amid U.S.-EU controversy over the GM foods, Egypt is coming under pressure of both the European consumers and the United States on this issue. On June 19 2003, The United States announced it would request the establishment of a WTO dispute settlement panel to examine its complaint against the EC's continued de facto moratorium on the approval of genetically modified organisms (GMOs). In a letter to the European Consumers' Organisation, Egypt declared its intention not to join the motion of arbitration launched by the US. It remains unclear, however, whether Egypt will launch a separate dispute as announced by the US on 13 May. Egypt is reportedly engaged in internal consultations to determine whether the country is actually negatively affected by the EU's moratorium and whether it has an interest in launching a dispute. The pressure on Egypt to join the dispute is growing in the U.S. In a letter to Egypt's Minister of Foreign Affairs Ahmed Maher, U.S. Senator Chuck Grassley, chair of the Committee on Finance, suggested that a decision against a complaint might harm Egypt's prospects for a free trade agreement (FTA) with the U.S. "One of the criteria that ought to be used to determine with whom the United States negotiates future FTAs is whether a country shares the same vision of the global trading system as does the United States," he noted. "I certainly would like to be able to include Egypt in that camp."

Europe seems right in stating that its consumers have the right in deciding what food they should take. It has, therefore, called for a public debate. It has also alleged that the US has so far opposed the Cartegena Protocol on Bio-safety, which has been signed by over 100 countries including India and is intended to ensure through agreed international rules that countries, exporters and importers have the necessary information to make informed choices about GMOs. But the EU will have to gain the confidence of the developing world if it wants to keep in place its existing legislation on GMOs or plan to introduce its traceability clause or labeling of GM foods.

Other issues discussed at the Sharm el-Sheikh meeting included access for developing countries to essential drugs. The U.S. continued to voice concerns about potential infringements on patent rights, but said it was working to find a solution prior to Cancun. The U.S. Trade representative said he was engaged in talks with the pharmaceutical industry, as well as with African countries and key developing country producers of generic drugs, such as India and Brazil. Another US official indicated that the US, which rejected a deal in December 2002, could consider abandoning the idea of a restricted list of drugs to be covered under a deal. The idea of a list had been put forward by the US due to a fear that generic producers would begin to manufacture drugs geared toward developed country markets, such as those to treat obesity, or Viagra -- a lucrative business for the pharmaceutical industry. Following the meeting in Sharm el-Sheikh, Harvey Bale, president of the International Federation of Pharmaceutical Manufacturers Associations, said, "getting a solution by Cancun is important to all of us. We feel we are wrongfully being blamed for holding up progress in certain parts of the (Doha) negotiation". He went on to say that while the pharmaceutical industry is interested in helping countries in need, it would be a "gross exaggeration and a gross distortion" to give more advanced countries such as India and China the same rights as "poor states like Haiti, Namibia or Bangladesh".

The mini ministerial relatively experienced some success in clarifying a number of important issues on the road to Cancun, such as special and differential treatment for developing countries and implementation issues. They further agreed to "intensify" negotiations on the so-called 'Singapore issues' of investment, transparency in government procurement, trade facilitation and competition policy. However, India said it had strong reservations in this regard, stating that the time was not yet ripe for launching negotiations, and that the clarification process must continue. Egypt's commerce minister Youssef Boutros Ghali said the meeting had taken place in a positive spirit, and with regard to the overall Doha round, he still believed that members were close enough on track to meet the January 2005 deadline.

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