Trade Ministers Scramble to Reach Deal at Cancun | Business| Economy and finance news from a German perspective | DW | 14.09.2003
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Trade Ministers Scramble to Reach Deal at Cancun

WTO trade ministers meeting in Mexico pushed for agreement on the last day of talks on trade liberalization, marred by deep divisions between rich and poor nations on the central issue of agricultural subsidies.


Protests, at times innovative, have dodged WTO talks in Cancun, Mexico.

Trade ministers from the 146-nation World Trade Organization (WTO) meeting in Cancun, Mexico for a critical round of talks aimed at securing a deal on dismantling trade barriers to global trade made a renewed effort to reach a deal before the scheduled end of discussions on Sunday night.

"The central role of the WTO is to negotiate, not pontificate," Deputy U.S. Trade Representative Josette Shiner said, warning that the poor had most to lose if talks fail. "We hope all take seriously what's at stake here – the chance to spur global growth and to address serious distortions in trade. Because it's the world's most vulnerable economies that will hurt the most if we leave empty-handed."

The talks over the past four days have been bogged down by wrangling between rich and poor nations over the central issue of agricultural subsides.

Germany hits out at draft declaration

On Sunday there was further acrimony over a draft declaration drawn up by chairman of the WTO ministerial meeting, Mexican Foreign Minister Louis Ernesto Derbez, which called for the United States and Europe to make some concessions on their huge farm subsidy programs in return for a commitment by developing countries to open their own heavily protected agricultural markets. But both sides remained unhappy with aspects of the plan.

Ministerpräsident Wolfgang Clement

Wolfgang Clement

German Economics and Labor Minister Wolfgang Clement (photo) said in Cancun on Saturday evening that the compromise plan wasn’t acceptable and threatened that if it wasn’t amended, the entire European Union would boycott it.

The minister criticized that the draft text included comprehensive concessions in the area of agriculture, but not substantial ones on tariffs as demanded by Germany. The minister also called "disappointing" the conditions adopted by a WTO position paper on the so-called "Singapore topics" governing WTO rules on foreign investment, competition policy, customs facilitation and government procurement.

The four issues were first raised at a WTO meeting in the Asian city state in 1996, and are being pushed by Europe and Japan. Germany, would like to see poor countries committing themselves to launching negotiations on all four points.

Developing nations unhappy with compromise plan

A newly formed coalition of developing countries led by Brazil, India, China and South Africa also complained strongly about the draft declaration, saying it didn’t put enough pressure on the U.S. and the EU on phasing out massive agricultural subsidies to its farmers.

"If there is not important movement in areas of interest to us, I think that there is a risk ... of going nowhere," Brazilian Foreign Minister Celso Amorim said.

Indian Commerce Minister Arun Jaitley, said the revised draft "arbitrarily disregarded views and concerns" of developing countries. "We still believe that this conference must be brought to a successful conclusion. We hope that circumstances and environment will be created to enable us to participate constructively," Jaitley said.

EU makes concessions to poor nations

Pascal Lamy

EU Commissioner for Trade Pascal Lamy

However European Union Trade Commissioner Pascal Lamy (photo) made a concession to poor nations later on Sunday by agreeing that disputed plans for rules on investment and competition be treated separately. "We are ready to go for unbundling of the four issues," Arancha Gonzalez, a spokeswoman for Lamy said. However they are bitterly opposed by a group of poor nations, led by Malaysia and India, who fear they would hinder their ability to regulate their own economies.

Deep rifts between rich and poor nations

Agricultural subsides, which lie at the heart of the WTO negotiations, have created a sharp North-south divide at the meeting.

Poor countries say both the EU and the U.S. must deliver on the promise made in Doha and eliminate $300 billion in subsidies they hand out each year to their farmers – six times more than they provide in development aid. They insist the handouts and tariffs give the rich countries an unfair trade advantage by denying the poorer nations access to rich-country markets and discriminating against their farmers at home through heavily subsidized imports from rich nations.

The EU and the U.S. say progress in Mexico has been seriously blocked by the coalition developing countries. "You really need countries starting to compromise if you are going to reach a successful conclusion," Allen Johnson, the top U.S, agriculture negotiator told the Financial Times.

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