World Trade Organization Unit
at
Center of Excellence in Management at Kuwait University
Seminar on the Effects and Results of the Cancun Conference
Kuwait
March 13, 2004
Beyond Cancun: Issues of a Global Dimension
Speech and Dialogue with
Talal Abu-Ghazaleh
Chairman of the Talal Abu-Ghazaleh Organization –Arab States
www.tagi.com
Vice-Chair, United Nations Information and Communication Technologies Task Force (UN ICT TF), New York
www.unicttaskforce.org
Chair, Commission on E-Business, Information Technologies and Telecoms, International Chamber of Commerce (ICC), Paris
www.iccwbo.org
Chairman, The Arab Regional Network of the United Nations Information and Communication Technologies Task Force (UN ICT TF), New York
www.unicttf-ara.org
Chairman, Licensing Executives Society –Arab Countries
www.lesarab.org
Chairman, Arab Knowledge and Management Society – New York
www.akms.org
Chairman, Arab Society of Certified Accountants
www.ascasociety.org
Chairman, Arab Society for Intellectual Property
www.aspip.org
1- Seattle: a success or failure?
2- Doha: a success or failure?
3- Cancun: a success or failure?
4- Beyond Cancun: a success or failure?
- The Doha Development Round which started in November 2001 and is supposed to end by 2005
- Cancun was an assessment of the path of the Doha Development Round
- Since the conclusion of the Doha conference, advanced nations started the pressures so that priority could be given in the Doha Round to their topics which are (the environment, investment, governmental purchases, facilitation of trade), instead of the issues of the developing nations.
- The topic of agricultural subsidies was the most significant of the Cancun items and negotiation had started on this in 2000 in accordance with Article 20 of the Agriculture Agreement. When the world talks about reform, then the first reform that is needed is liberalization of trade in agriculture through the reduction of subsidies until their removal according to the agreement and the timeframe agreed upon in Doha. None of this has taken place yet.
- Rather, for the achievement of this, Europe and America requested compromises from developing countries represented in the reduction of customs tariffs before industrial goods.
- The Egyptian ambassador to Greece, Dr. Majida Shahin, who is an expert in affairs of the global trade system, prepared a research that was published in the Al-Ahram newspaper as a reference on the topic that was utilized. The research stated that when four African nations (Benin, Chad, Burkina Faso and Mali) stood up to the USA in Cancun in the subsidies it grants to cotton farmers in the USA which reached 3.3 billion dollars annually and its dangerous effect on those developing countries (whose exports in cotton represent 80% of their total exports), and demanded compensation as a result of the losses arising from this unfair competition, the response was asking these countries to turn to the production of textiles and clothing in order to benefit from the preferential treatment in the American market instead of exporting raw cotton! This enraged the developing states and brought to mind the alleged quote of Marie Antoinette to her people “Let them eat cake”, when the people complained of the lack of bread.
- As a reminder, what the wealthy member-nations of the OECD provide reaches 1 billion dollars daily! This number equals two-thirds of the national income of Africa and more than four times the development assistance to all the globe’s poor countries.
- Priorities are different; America and Europe want a reduction in customs tariffs in addition to the Singapore topics (which means the topics submitted at the Singapore conference in 1966 for the first time) and these are:
1- Investment
2- Competition
3- Governmental purchases
4- Facilitation of trade
And these are issues that the developing states under the leadership of the group of 21 (that was formed within the framework of agriculture negotiations) - and at the forefront are China, India, Brazil and South Africa- believe are too early to discuss. In light of the resistance of the developing states to the pressures of the advanced countries for the issuance of a decision in Cancun to start negotiation on the four topics, the conference failed in reaching a final declaration.
- Historical integrity however demands that we praise the stand of the American trade representative in the Doha conference and the positive role this played in reaching an agreement, which makes the American position in Cancun all the more surprising.
- We mention here that the income of a cow in Europe (the amount of money spent on it daily) is more than 2 dollars worth of support and in Japan it is more than seven dollars, whereas the income of half the world’s population is less than 2 dollars a day!
- The international status does not serve us in the agriculture negotiations as America while at the verge of presidential elections is in no position to anger its farmers. Also, greater Europe is reorganizing its internal order and a decrease in agricultural subsidies is the last thing on its mind. So the burden remains on the developing and poor countries and we must understand their position in taking care of their farmers’ interests.
- The upcoming stop is in Geneva in December and I don’t expect any progress there.
- In commenting on the failure of Cancun, the World Bank states that reaching an agricultural agreement in the interest of developing states will lead to an annual half a trillion dollars in interest and will lead to an increase in growth in developing countries resulting in lifting 140 million persons from poverty by the year 2015.
- The US Trade Representative Robert Zoellick explained the failure of Cancun by stating that there were nations who believed that agreement was possible and others believed agreement was impossible, and those who believed that agreement was impossible prevailed which led to the non-agreement. He added “We failed because of the Singapore topics yet the important lesson is that agreement between 148 nations requires a genuine desire to focus on work and not speeches in order to reach a balance between ambition and flexibility.”
- The goals of the global trade system were development and globalization (global trade and money markets). Yet this was not in the interest of the developing world because it did not take into consideration the social dimension in development.
- Probably the only good news in Cancun is that while everyone was divided and no agreement could be reached on all the topics discussed, there was no disagreement on the issue of services negotiations. Why? Because this was not discussed.
- Since multilateral negotiations on the trade of services (which is an important topic) will continue for a number of upcoming years, the US Trade Representative announced in September 2003 that his country will seek more free trade agreements (FTAs) that include services. The American side says that FTAs with NAFTA at the forefront are a good alternative to liberalization of trade in services. For example, the agreements for the accession of Singapore and Chile to the free trade markets, achieved a style of liberalization –by adopting a negative list- that negotiators could not achieve at the multilateral level. Therefore the American side believes that there are better opportunities in that fashion in liberalization of services than in multilateral negotiations where the positive list is the adopted method.
I would like to point out here that in the GCC Banking Conference organized by the Central Bank of Oman in 2002, I demanded following the method of the positive –instead of the negative- list and my suggestion did not receive much enthusiasm at the time.
- Getting back to the Doha conference, the Doha Round decided upon a comprehensive negotiations schedule that includes:
1- Liberalization of trade in services
2- Reform of the agricultural system
3- Reform of the rules of antidumping, subsidies and countervailing measures
4- Intellectual property rights in the case of health disasters
5- Reform of the system for disputes’ resolution
- In Doha, China joined after 15 years of negotiation and thus 97% of the world’s trade became subject to the system of the World Trade Organization (WTO).
- His Excellency the current ambassador and Canadian minister and former chairman of the WTO’s General Council and Canada’s representative at the WTO says that among the challenges facing the globe:
1- We did not commit to fulfilling what we promised at the time we committed to it.
2- We did not fulfill the hopes of three quarters of the WTO members (namely the developing states) in reforming the agricultural system.
3- We did not provide enough technical assistance to needy countries.
4- We did not provide an improvement in the preferential treatment of developing and less developed nations.
5- The ambitions were not achieved in invention rights in pharmaceuticals to face epidemics in poor countries including AIDS, tuberculosis and malaria.
6- The need for American leadership as was the case in Doha to solve problems with a spirit of empathy with developing nations.
7- There are around 250 regional trade agreements ongoing in the world. We have begun to see more regional and cultural agreements. Despite this, the WTO remains the framework for multilateral agreements and we cannot permit this tendency to distract us from our main objective.
- In January 2004, the US Trade Representative Robert Zoellick directed a letter to WTO members recommending focus on the following main topics:
1. Agriculture
2. Opening markets before services
3. Beginning negotiations on the facilitation of trade
4. The study or exclusion of the issues of governmental bids, investment and competition
He also suggested the convening of a ministerial conference at the end of this year in Hong Kong. Further, he suggested the appointment of a new chairperson for the WTO’s General Council from a developing nation despite the fact that the rotation for this appointment this year is allotted to the advanced countries.
- It is known that no significant progress took place after Cancun, and that the meeting for the WTO’s General Council last December failed in resolving any of the items that led to Cancun’s failure.
- This presentation is considered an attempt to find a middle ground that combines the demands of all parties and resolves the issue from the American point of view. It does not represent a positive step worth studying.
- The complications resulting from the changes in agricultural alliances, and the diminishing significance of the Carnes Group, have created a north-south dimension for agricultural negotiations. If we add to this the demand of African nations of reducing subsidies in advanced countries to cotton products which is the argumentative sensitive emotional issue, then trade negotiations in agricultural materials have the atmosphere tense. And even though the European Union offered, albeit lately, the elimination of the two subjects of investment and competition which were refused by the developing nations among the Singapore topics, the Group of African, Caribbean and Pacific countries known as the ACP States (ACP) - that were angered on the issue of cotton and supported by non-governmental organizations opposing trade- refused to negotiate on any of the four Singapore topics.
- The negotiations broke down in the “green room” known in ministerial conferences of the region that included thirty states. During the week, the USA warned that the demands of some countries were based on slogans and not on the desire to negotiate. Zoellick warned that America will find itself forced to follow bilateral and regional negotiating as an alternative to multilateral negotiation. The organization was criticized for its method in decision-making.
- It is known that the ministerial meetings need to conclude at midnight on the fifth day in any case. I remember in Doha that the meetings went past midnight and into the morning and the ministerial declaration was issued on the date of the previous day. The question is why didn’t this also take place in Cancun to give the opportunity to find solutions? It is worth noting that shouts of joy were heard in the green room by the ACP States when news of the breakdown of negotiations was announced and NGOs also started celebrating the event. As for the group of 21, it did not announce that it was happy about it and affirmed it wanted fair negotiation. As for the American and European side, they declared their disappointment. I myself didn’t attend the Cancun conference because I had a hunch that this would be the outcome. I will not attend the conference for the same expectation. Then what about the short and long-term future? I hope to share those expectations with you at our next conference here in Kuwait on November 24th of this year, by the will of God.