Simon Duffy: Unless Europe bends the WTO will break

COMMENT

Opponents of "corporate globalisation" will be celebrating after the collapse of World Trade Organisation talks in Cancun. Few will share their joy.

The collapse jeopardises the WTO's development round, and every hour that an agreement is delayed means more unnecessary suffering in poor countries disadvantaged by skewed trade rules.

You don't have to be a free-trade disciple to want the development round to succeed. It's not about unfettered globalisation, it's about rebalancing rules that favour the rich and undermine poor countries.

There has been some talk that the blame for the collapse lies with developing countries, especially a new negotiating block of 22 developing states that put forward a draft agreement which contrasted starkly with a draft sponsored by the European Union and the United States.

Fran O'Sullivan in the Herald wrote disparagingly of developing countries that made a stand in Cancun. The EU and US made "concessions", she said, but the "won't do" developing nations would not. But even with EU concessions, the Europeans' position at Cancun still represented a betrayal of the Doha development agenda.

To appreciate this might require a little background. Since its inception in 1995, developing countries have been going along with the WTO in the hope that it would provide them with improved trade rules and benefit their economies.

For many, an agreement on agriculture is crucial to that aim: agricultural products are their main area of comparative advantage but this is nullified by the gratuitous farm support policies of the EU and US, which effectively shut developing countries out of their markets. The result is the systematic impoverishment of developing nations.

Two years ago at Doha, the carrot was dangled tantalisingly close with the promise of a WTO development round that would focus specifically on issues of importance to developing countries.

The Doha agenda included an agreement in principle to phase out trade-distorting subsidies and domestic support for agricultural products and to greatly improve market access.

But at Cancun, the US, and especially the EU, have reneged on that deal. Not surprisingly, developing countries refused to agree to open the way for WTO talks on any "new" issues until they saw some real results on agriculture.

Why should developing nations have given up more of their rights on issues such as investment and competition policy while receiving nothing of substance in return? Without even so much as a timeline for the removal of export subsidies?

Developing countries struggle to resource negotiations on agriculture. How could they be expected to participate effectively in negotiations on the new issues as well?

By engineering the agenda so that the new issues were discussed before agriculture during last-minute negotiations, the EU managed to deflect attention from its own selfish belligerence. But make no mistake, it was the EU's refusal to bend on farm support that sounded the death knell at Cancun, not the Group of 22.

Nevertheless, the formation of the G22 is an event of historic significance and appears to have given the powerbrokers a serious fright. The group includes China, India, Brazil, Indonesia, Pakistan, Nigeria and Mexico. Those countries alone represent more than 3.1 billion people.

It has never been easy for wealthy countries to sweep the needs of billions of poor people in developing countries under the carpet; they've had to work hard at it. But with the formation of a group representing more than half the world's population and some 60 per cent of its farmers, it might just become impossible.

Of course, the EU and US have at once embarked on divide and rule tactics: offers of increased market access or aid for countries that spurn the alliance, threats to do the reverse if they don't play ball. The last thing they want is for the group to expand. The G22 is a nuisance but the group that eventually rejected the new issues was closer to 70.

The G22 also has major implications for New Zealand and Australia. Our corner of the world has tended to punch above its weight in trade negotiations because of our prominent role in the Cairns Group. But with at least 12 of that cluster jumping ship to join the G22 - including Brazil, South Africa, Argentina, the Philippines, Chile, and Thailand - the Cairns Group might just have been relegated to the flyweight division.

There is also fear that the US will abandon the WTO negotiating process and return to a bilateral approach, which will offer little benefit to the world's developing countries. Nor will it help New Zealand's cause, unless we are willing to allow the US to dictate our foreign policy, which it is to be hoped we are not.

The next few months will be critical for determining whether the promises of the Doha development agenda will be realised or whether the whole multilateral trading system will begin to unravel.

If New Zealand wishes to salvage anything from the wreckage of the WTO, we should aim to play a conciliatory role, maintaining strong links with the former Cairns Group developing nations and, with a softly-softly approach, putting their case to the states that make up the EU block.

Because until the EU bends, the good ship WTO will continue to founder.

* Simon Duffy is a spokesman for World Vision New Zealand.