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G. Srinivasan

Cancun , Sept. 12

AS setting the agenda for the five-day ministerial occupied much of the first day of the conference here, trade ministers of 146 countries confront the difficult choice over the next couple of days of how to address imbalances in farm trade, improve market access for industrial goods, and whether to launch negotiations on the Singapore issues of investment, competition policy, enable transparency in government procurement and trade facilitation.

Conference sources said ministers would be considering the draft ministerial text made in Geneva outlining decisions for all areas under negotiations even as it imparts a general framework, leaving targets, timeframes and deadlines blank.

They said WTO members are yet to endorse the draft text and its seven annexes, which were forwarded to Cancun not as an agreed text nor as one that reflects all positions, but as a "Chair's text", i.e., issued on the personal responsibility of the Ambassador, Mr Carlos Perez del Castillo, as the Chair of the WTO General Council.

In a covering letter, Mr Castillo with the Director-General, Mr Supachai Panitchpakdi, highlighted areas where wide divergence exists. This process has provoked criticism from a host of developing countries as well as civil society organisations, a few representatives of whom marched into the media centre carrying anti-WTO placards even as the inaugural was taking place in the same building upstairs.

More than anything else, it has been pointed out that the success of the Cancun negotiations relies on whether the WTO members could agree on the "modalities" for negotiating new tariff and subsidy cuts in the realm of agriculture. In the face of growing schisms over the issue — with dissatisfied developing countries banding together as the G-21 and submitting a text on agriculture on Tuesday here — "basing" the Chair's text on agriculture now seems to be in doubt.

As if the agriculture issue is not enough to make the Cancun proceedings troubled and troublesome, the European Union, Switzerland, Norway, Japan and Mauritius — dubbed the "Friends of Multifunctionality" — insist on their demand for consideration of non-trade concerns such as environmental protection and animal welfare.

Many net food importing developing nations plead special and differential treatment such as longer timeframes and less radical reforms for poorer nations to safeguard the livelihoods of their weak rural populations against cheap food imports from subsidising advanced countries.

To compound the cup of woes, attempts to address a spate of "issues of interest but not agreed" listed in the draft text, including highly polemical ones such as the extension of the so-called peace clause or geographical indications (GIs) to products other than wines and spirits, could open a Pandora's box and is likely to stymie the process.

On the crucial issue of non-agricultural market access or industrial goods, many members have already begun linking the progress on decreasing tariffs on industrial goods to positive developments in agriculture negotiations. While developing countries object to the draft requirement for steeper tariff cuts on their relatively higher tariffs, developed countries contend it does not go far enough in cutting duties.

Developing countries expressed reservation on the "dangerous" elements in the Cancun draft that include commitment to a "non-linear formula" approach, according to which the higher the tariffs, the higher the reductions (as most of the developing nations have higher bound tariffs, they would be hit much harder than developed countries where most industrial tariffs are low) and mandating the developing world to increase the coverage of its tariff bindings to at least 95 per cent and then reducing the tariffs. India, for instance, has undertaken tariff bindings of only 68 per cent.

The draft text also commits all members to a "sectoral initiative" of bringing tariffs to zero through fast-track timeframes for seven sectors. Hence, the developing countries apprehend that if the draft text was accepted in its present form in Cancun, the policy space available for industrial development would drastically decline, with the viability of many firms and industries and millions of industrial jobs being jeopardised.

Besides these two controversial areas, the most significant mandate for ministers to decide in Cancun — "by explicit consensus" — is whether or not to begin negotiations on the Singapore issues. The draft text provides for two options — the start-negotiations approach led by the EU and Japan or only continue discussions led by the developing countries.

But the "start negotiations" group has an unfair gain in that its version of modalities is included in Annexes, despite being objected to by the developing nations.

Finally, the ministerial draft was a dampener to developing world on what constitutes the systemic bid to rectify several imbalances in the multilateral trading system, viz., implementation-related concerns and the special and differential treatment provisions.

That the mood in the conference is less upbeat was amply borne out at the inaugural when the UN Conference on Trade and Development (Unctad) Director-General, Mr Rubens Ricupero's fervent appeal for addressing development concerns in the Doha Round was greeted with warm applause. Mr Ricupero said the rhetoric of global trade is filled with promise even as the reality of the global trading system does not match the rhetoric.

Highlighting "the awesome responsibility" and "a great opportunity" being bestowed on the trade ministers in the next four days at Cancun, Mr Ricupero told them that their decisions could make "the difference between poverty and prosperity and even between life and death for millions of people".

He urged them to say "no to trade policies that aggravate poverty and no to trade practices that undermine aid and say yes to bold but sensible steps that will revive the global economy and set a new course for development".

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