March 2004

The Cancun WTO Meeting

In September 2003 the WTO held a Ministerial meeting at Cancun, at the half-way point of the Doha Round (scheduled to go from 2001 to 2005). Developing countries had been expressing their frustration with the WTO processes and the unreasonable position of many rich countries for many months leading up to the Cancun meeting. One of the most important issues is agricultural reform.

Under WTO rules, developing countries had to reduce tariffs and open their markets to agricultural imports. But rich countries like the EU and the US have kept their export subsidies for agriculture, which lower their prices on world markets. The markets of developing countries have been flooded with cheap subsidised imports, ruining many small farmers.

The lack of movement in agriculture is in a context where new demands are being placed on developing countries. The Cancun talks foundered because developing countries refused to negotiate new WTO agreements on Investment, Competition Policy and Government Procurement, pushed by the EU and the US as a condition for reducing their own unfair farm subsidies. These proposed new agreements are known as the ‘new issues’ or ‘Singapore issues’ (named after the Singapore meeting where they were suggested). There is more on these below.

At Cancun a new bloc of developing countries emerged, called the G20 group, led by a number of large nations across a range of regions - Brazil, India, China, Argentina, South Africa, Nigeria and Indonesia. It also includes Bolivia, Chile, Cuba, Egypt, Mexico, Pakistan, Paraguay, the Philippines, Thailand, Venezuela, Tanzania and Zimbabwe. This group refused to be bullied and put forward its own positive agenda for fairer agricultural trade. They were supported by over 70 other developing countries, and by global networks of civil society groups which campaigned against the new agreements and for fairer trade rules.

The Cancun meeting collapsed, and since then one positive development is that the new issues have been effectively removed from the agenda of the WTO.

The WTO is still in crisis because of its non-transparent processes - dominated by the powerful economies - and its failure to meet the needs of developing countries. However the emergence of the G20, supported by global networks of civil society organisations, could re-shape the WTO.

Now the US is pushing more vigorously for bilateral and regional trade agreements, where it has a greater negotiating power than in the multilateral WTO negotiations. This bilateral and regional focus is being taken up by other countries, including Australia.

The ‘new issues’ at Cancun

Lobbying groups for multinational corporations pushed hard for these agreements, because in important ways they would prioritise the interests of multinationals above developing country policy-making.

These new agreements would mean that developing countries would have reduced development options. For example, they would require countries to treat foreign investment as if it were local investment. Governments could not have limits on foreign investment in particular industries, or require foreign investors to transfer skills and technology, use local products or develop relationships with local firms, or place any of these conditions in government purchasing contracts. This is the discredited agenda of the Multilateral Agreement on Investment, which was attempted through the OECD but defeated by community campaigning in 1998.

Developing country governments have strongly opposed such agreements, as they recognise that they need to be able to regulate foreign investment to ensure that it contributes to local development. The group of Least Developed Countries have demanded that before such negotiations are considered the WTO should address the development promises made at Doha that remain unmet.

At Cancun the G20 stood firm on this, and when the EU and US insisted that the new issues should be discussed before there would be reform of agricultural subsidies, the talks collapsed.

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