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Cancún: Real Progress or Another Seattle?

The WTO Meets in Cancún: Real Progress or Another Seattle?

• Today’s opening of the WTO meeting in Cancún will seriously test the organization’s ability to overcome the bitter impasse between rich and poor nations that has characterized recent negotiations.

• The debate over agricultural subsidies and tariffs will be the most contentious item on the table, with a new alignment of 21 developing nations squaring off against Washington, Brussels and Tokyo in an attempt to eliminate one-sided protectionism.

• The meeting could have serious implications for all of Latin America, with Brazil emerging as the developing world’s most active leader in a possible prelude to the upcoming FTAA negotiations.

As representatives from the 146 member-nations of the World Trade Organization (WTO) convene in Cancún today to begin the fifth Ministerial Meeting of the Doha Round of free trade talks, the prospect of real progress is once again being overshadowed by a growing disenchantment on the part of developing nations with the WTO and, more broadly, with the doctrine of economic liberalization from which it was spawned. After the organization’s 1999 meeting in Seattle, at which over 50,000 clamoring protestors issued a powerful wake-up call to the delegates gathered nervously inside, the United States and other wealthy nations baptized the next round of negotiations, set to begin in Doha, Qatar in November 2001, the “development round” of talks – implying that they would place special emphasis on helping developing countries escape the margins of the world economy. Yet Doha proved no more effectual than Seattle, and since then, a series of progressive deadlines has come and gone unmet. Now in Cancún, pessimism permeates the atmosphere before the official talks have even begun. With enraged demonstrators flocking to Mexico from throughout the world determined to derail the negotiations, a recurrence of the Seattle debacle is a not-too-distant possibility – especially because a majority of the citizens of the host nation are deeply suspicious of Washington’s authenticity on the issue of fair trade.

Doomed to Failure?

The central issue behind this air of discontent is that the United States, the European Union, Japan and other advanced economies, while prescribing a regimen of unfettered free trade and capital flows as the means for the third world to “catch up” to the first, have been unwilling to reduce the high tariffs and subsidies protecting their own economies. Given the intricacies of the world economy, and fueled by powerful organized interests, this protectionism is far from novel, and creating a genuinely level playing field for the global economy is a grueling, costly and politically painful process. Yet, a confluence of factors—the expectations raised by the initiation of the “development round,” the growing crescendo of anti-globalization voices, the strategic imperatives of the war on terror—has made reaching a concrete agreement at Cancún essential, possibly even a make-or-break point for the WTO regime.

Unfortunately, striking a consensus will be no easy task. Although issues ranging from investment to the environment are on the table for debate, the two most contentious items will be agriculture and intellectual property rights. The poorer member nations, which account for four-fifths of the WTO membership, view the reduction of farm subsidies as the cornerstone of the “development round;” yet Washington has doubled its domestic subsidies since 1994, Japan posts a 500 percent tariff on imported rice, and the average European cow receives more in subsidies than half of the world’s population earns for a living. Intellectual property rights are an equally hot-button issue, with Washington resisting mounting pressure from poor and rich nations alike to loosen restrictions barring access to generic pharmaceuticals that could be used to treat AIDS, malaria and other life-threatening diseases in Sub-Saharan Africa and other poor regions. Another related but less-publicized topic in the intellectual property rights debate is biopiracy, which occurs when multinational companies patent traditional foods and drugs used by indigenous cultures, forcing developing countries to unwittingly pay royalties on their own natural resources.

The recent slowdown in the global economy has only reinforced the tenacity with which wealthier nations tend to cling to their trade barriers. Collusive meetings between U.S. and E.U. officials in recent months suggest that they likely are prepared to resort to the obstinate, coercive strategy that has characterized previous rounds of talks in order to ensure that concessions are kept to a minimum. This in turn has led a group of 21 poorer nations (dubbed the “G-20”) to band together behind their own hard-line bargaining position, although whether this heterogeneous alliance can maintain its solidarity remains to be seen. With both sides digging in their heels, averting the impasse that seems all but inevitable will present an extraordinary challenge for all parties at the table.

Brazil: Ambassador of the Developing World

At the forefront of the G-20 bloc of developing nations is Brazil, whose president, Luiz Inácio “Lula” da Silva, has shown an unprecedented enthusiasm for the Cancún talks that has propelled his nation onto the mantle of third-world leadership once occupied exclusively by India. Yesterday, Brazilian Foreign Minister Celso Amorim met with his counterparts from China, India, Russia and the remaining G-20 nations to forge a common bargaining stance based on the position that removing the agricultural barriers protecting advanced economies will be a precondition for future liberalization of developing ones. Amorim, a career diplomat widely respected for his shrewd negotiating skills, has adamantly maintained Brazil’s stance, even threatening that “should Brazilian negotiators retreat from this position, we will have to wait for another WTO round, and there may be none in 10 years.”

And for good reason: Brazil is one of the world’s leading exporters of agricultural products, ranking as the largest producer of coffee and tobacco and the second-largest producer of sugar and soybeans. However, U.S. protectionism historically has forced the South American nation to export the majority of its goods to countries overseas rather than to the lucrative U.S. market. Brasilia also has a strong interest in the intellectual property rights debate. The indigenous peoples of the Amazon basin have been among the major victims of biopiracy, as multinational pharmaceutical companies have capitalized on Brazil’s lack of enforced patent laws to reap the profits of medicines and nutritional supplements prescribed over the ages by local traditional healers. Despite the WTO’s Trade Related Aspects of Intellectual Property Rights agreement, which was instituted in 1993 during the Uruguay Round of negotiations in order to curb such exploitation, Latin American economies continue to lose as much as $4.3 billion a year as a result of biopiracy.

Mexico: On the World Stage

For this year’s host country, the WTO meeting has become a podium from which historical grievances can be aired for the entire world’s attention. While Mexico City—eager to both be a good host to the WTO and pursue further free trade agreements—has not so much adopted Brasilia’s adversarial negotiating position, Mexico’s experience over the last decade epitomizes the complexities of trade liberalization. The North American Free Trade Agreement (NAFTA), implemented in 1994, unquestionably has raised the country’s overall gross domestic product, but at a heavy cost of widespread alienation and impoverishment, as the newly-opened economy has failed to expand fast enough to absorb the millions of Mexicans displaced by the sudden contraction of formerly protected sectors, particularly small-scale agriculture. With President Vicente Fox avidly pushing an agenda of trade liberalization that includes his Plan Puebla-Panama initiative (which would create an expansive free trade zone across southern Mexico and all of Central America), as well as the proposed Free Trade Area of the Americas (FTAA, which would encompass the entire hemisphere), those who have been hurt by trade liberalization recognize that the WTO meeting provides them with a rare forum from which their plight can be broadcast across the world.

Dozens of Mexican groups, ranging from peasant organizations to labor associations to the Zapatista National Liberation Army, have joined forces with the international anti-globalization movement in Cancún with hopes of disrupting the negotiations and further weakening the legitimacy of the WTO itself. Today’s massive rally, which will include thousands of Mexicans among the estimated 50,000 people gathered to protest the event, is being coordinated with a blockade of the cross-border bridge between El Paso, Texas and Ciudad Juarez, Mexico, as a symbolic statement against NAFTA, the WTO and the disconformities of globalization in general. A representative of the non-governmental organization Global Exchange told the Financial Times on Monday that the protests would be “larger, more widespread, and better organized than originally anticipated,” adding that “the protesters may well surprise everyone, including themselves, by upstaging and indeed derailing the WTO!”

FTAA: Prelude to a Unified Front?

Though tangible issues such as agriculture and intellectual property rights will take first priority in Cancún, delegates from the Western Hemisphere undoubtedly have another round of talks in the back of their minds. Brazil under President da Silva has tirelessly campaigned to unite Latin America under its leadership in a regional front that could counter the raw bargaining power that Washington will bring to the upcoming FTAA negotiations, which are scheduled for completion in 2005. Lula has been among the hemisphere’s leading skeptics of the benefits of a hemispheric agreement, which he believes will only perpetuate the tilted playing field on which Washington has forcibly opened other nations’ economies while keeping its own disproportionately closed. The Brazilian president already has joined forces with Argentina’s Néstor Kirchner to resuscitate the near-moribund Mercado Común del Sur (MERCOSUR) trading bloc, which was devastated by the region’s successive financial crises in the 1990s but has recently rebounded to incorporate Peru as an associate member, with Colombia, Venezuela and Ecuador poised to join in upcoming months.

If Brasilia succeeds in wrangling any significant concessions from the Washington-Brussels-Tokyo entente through its leadership of the G-20 bloc, the effects on the FTAA negotiations would be astronomical. Not only would this establish a standard operating procedure for collective action among developing nations, but it could also convince Brazil’s neighbors—many of whom are sitting squarely on the fence as to whether to appease Washington with free trade concessions or to join Brasilia in a unified bargaining front—to tilt towards the latter. Thus, the next five days could have profound implications not only for Brazil and Mexico, but for every hemispheric nation.

If the Cancún talks proceed as recent WTO rounds have, such high-flying developments are exceedingly unlikely. However, this time around the stakes are much higher: a failure to reach an agreement would not only mark another setback for the majority of the world’s population that wants to see a fairer, more equable global economy; it would also represent a major blow against the Bretton-Woods free trade regime, which progressively has lost legitimacy as a growing number of people throughout the world have felt the detrimental effects of one-sided trade liberalization.

Over the past few years, a number of high-ranking personnel in both the International Monetary Fund and the World Bank—the other two arms of the globalization triumvirate—have begun to recognize that their agencies’ policies will not only fail to produce the desired results, but will often backfire, in the absence of stable democratic societies, strong health and environmental standards, and a genuinely level playing field on which all countries rich and poor can reap the benefits of free trade. The WTO delegates currently gathered in Cancún would do well to heed this message, because failing to do so would only widen the great divide between rich and poor, north and south, white and black, and modern and traditional societies.

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