Agreement at Cancun still problematic

Wide differences between rich and poor nations, as well as anti-globalisation protests at the conference site and worldwide threaten failure for the 146-nation World Trade Organisation's (WTO) fifth ministerial meeting, starting on Wednesday in the east Mexican holiday resort of Cancun.

The third ministerial in Seattle, November 1999, failed for the same reasons. Two years later, the fourth ministerial in Doha, UAE found enough common ground to launch the most extensive ever round of multilateral trade negotiations - the Doha Development Round - due to culminate in the adoption of a 'single undertaking' on January 1, 2005.

However, since Doha, agreement on basic negotiating rules has eluded WTO members' representatives meeting continuously at WTO's Geneva headquarters. Deep rifts remain between the European Union and the United States, between each of them and developing countries and within the developing country bloc itself (two-thirds of WTO's membership). So instead of just formally adopting a consensus draft declaration previously agreed by their officials, ministers in Cancun must struggle to find minimum consensus on just some key issues to enable actual negotiations to get started.

A WTO member since its establishment in 1995, and of its predecessor the General Agreement on Tariffs and Trade (GATT) since 1974, Malta will be represented by Edwin Vassallo, Parliamentary Secretary in the Ministry of Finance and Economic Affairs. At a meeting in Palermo in July, Malta and all other EU accession states formally aligned their positions for Cancun with that of the EU - represented at Cancun by Trade Commissioner Pascal Lamy, closely watched by EU trade ministers. Mr Lamy recently expressed doubts about Cancun's successful outcome.

The 150,000 anti-globalisation protesters or 'globaphobes' converging on Cancun will be contained by security forces several miles away from the conference venue. But there are fears of violent clashes between these security forces and thousands of Mexican peasants, who have vowed to block all access routes for government delegates.

Globaphobes - including parliamentarians, farmers, trade unionists, development, environmental, women's and human rights NGOs from around the world - will hold their own counter-conferences, court the world's press covering the WTO meeting, and organise demonstrations, paralleled by demonstrations in many parts of the world.

WTO has betrayed its mandate, contained in its foundational document, the World Trade Agreement, 1994 to manage the world's resources to serve sustainable development, globaphobes claim. Instead, trade liberalisation is pursued for its own sake. But, they insist, ever freer trade will exacerbate, rather than solve the problems of planetary environmental decline and third world poverty (with three billion people having less than €2 a day). Hunger suffered by over 800 million people can only be overcome by 'food sovereignty', enabling poor countries to design agricultural strategies to feed their people and ensure rural livelihoods, rather than meet trade liberalisation goals mandated by WTO.

The four dominant WTO powers - EU, US, Japan and Canada (the 'Quad') - are accused of running trade negotiations for the benefit of rich countries and big business, the latter given a central role in designing confidential government negotiating positions parliamentarians and civil society organisations are not allowed to see. Secretive and undemocratic WTO procedures mean that smaller countries are pressured into accepting deals to their disadvantage worked out in secret between major players.

South African President Thabo Mbeki said last week that developing countries should ally with the globaphobes to force rich countries to radically change their trade and economic policies.

This change is unlikely to start in Cancun, as ministers strive to generate a 'package' of agreements on a few critical issues, including special treatment for developing countries, agriculture, trade in industrial goods, investment.

While the Doha Round is supposed to bring major benefits to developing countries, major divergences prevail on how exactly the Special and Differential Treatment they have been promised will actually be translated into negotiating rules across the board. Frustrated at the slow implementation of special measures agreed in the previous Uruguay Round of negotiations which ended in 1993, developing countries now insist that any Cancun 'package' must guarantee them major benefits from the Doha Round - and full implementation of its predecessor.

Developed countries' $311 billion annual support to its agriculture, six times total development aid to poor countries, is a major bone of contention. Last month, US and EU sank their differences to present a 'lowest common denominator' joint proposal aimed at reducing, but not eliminating this support.

Subsidised exports from US and EU are undercutting poor countries' own farmers in their domestic markets, while developing country agricultural exports face a host of protective barriers in the markets of rich nations. A group of developing countries has countered the EU-US offer with a demand for far greater concessions. Developing countries also want special rules to protect their vital food crops and rural development, exempting a range of strategic products and support measures from liberalisation.

Tariff and non-tariff barriers facing industrial goods have been lowered in successive GATT negotiations over the last 50 years - but remain high in many developing nations. Developed nations want to see deep cuts, but poor countries fear that reducing protection to their own vulnerable industries will damage development prospects and employment goals.

EU supported by Japan, Switzerland, Norway and South Korea is pressing for the post-Cancun start of negotiations on four topics never addressed within GATT - even though basic negotiating rules have not been agreed. The topics are international investment; competition policy; government procurement and trade facilitation.

Developing countries see little gain for themselves from new WTO agreements on these issues, fearing instead severe restrictions on their domestic policy-making and a strengthening of global corporate power. But they will be under heavy pressure to agree - in order to gain greater access for their agricultural goods, and other key concessions from rich nations.

Will failure at Cancun wreck the world economy? Australia's WTO representative David Spencer is not sure. "If the WTO closed down tomorrow, I am not sure whether world economic confidence would be shattered or not", he told The Financial Times.