Mexican Standoff: the West is Rumbled

From: http://www.guardian.co.uk/wto/article/0,2763,1042074,00.html

Date: 15 September 2003 By: Larry Elliott

Eyebrows were raised when Cancun agreed to host a meeting of the World Trade Organization. A man-made Mexican playground for American hedonism was an odd venue for byzantine talks on tariffs, quotas, intellectual property regimes and competition policy. The doubters were wrong. Cancun was a perfect choice. Sure, it had the pelicans swooping low over the Caribbean and miles of dazzling white sand, but it was also crammed with low-paid Mexicans working as bellhops, chambermaids, golf caddies, security guards and waiters in the Marriotts and Hiltons. This was a meeting at which ministers from rich countries piously intoned their mantra about making globalization work for poor people. Yet all they had to do was open their eyes to see that there is scant evidence of that happening in Cancun. Mind you, there's plenty of evidence of how poor people are being made to work for globalization.

Encouragingly, there have been signs in the past week this message has been received and understood in the developing world. For many years, the interests of developing countries were ruthlessly ignored in successive rounds of trade liberalization talks. This approach reached a climax with the Uruguay round in 1993, when the United States and the European Union used their muscle to prise open markets in poor countries while offering minimal concessions themselves.

The howls of anger from the developing world when they discovered the extent to which they had been duped meant the neocolonial approach to trade talks was quietly dropped in western capitals. As an alternative, they came up with the third-way approach to trade - the west cares about poor people, really it does, and is committed to using trade as an instrument of poverty alleviation. Rich countries will do their bit in reducing trade barriers but poor countries must also be prepared to accept the warm embrace of tough love and reduce their own protectionism. The language is of dialogue and partnership in pursuit of mutual prosperity.

In Cancun, it has been clear that developing countries have seen through this as well. They have rumbled that, as far as the west is concerned, the third-way approach to trade liberalization talks means wrapping up a whole heap of nothing in pretty rhetoric and calling it a development round.

As a result, Cancun has been a seminal event. The high politics of the meeting will have more far-reaching effects than any resulting individual proposals. For the first time, a coalition of developing countries, the G21, led by China, India and Brazil, organized themselves and showed a willingness to take on the EU and the US. It was like seeing the birth of a trade union, with developing countries discovering the power of solidarity, discipline and confrontation.

And, boy, did Washington and Brussels not like that. After all the talk about building capacity in developing countries so that they could take part in trade talks in a meaningful sense, they whinged like mad when this capacity was used to articulate a convincing case for rich nations walking the walk as well as talking the talk. They tried bullying the developing countries, and that didn't work. They tried divide and rule, and that didn't work. As the meeting reached its climax yesterday they were trying to exert all their power and influence in backstairs meetings. As the haggling continued yesterday, it was unclear whether this would work either.

China's involvement was, of course, crucial to this process. India and Brazil have tried to form a developing-country bloc in the past but have always been vulnerable to economic or political pressure exerted by Brussels. China is simply too big and too important to be pushed around. With China, the coalition counts; without it, it doesn't.

What's more, China does things in its own time and at its own pace. It has provided cover for those developing countries who feel they are being railroaded into premature liberalization of their markets. This is all to the good. Even so, the important message from the meeting was that there still is life in multilateralism. The WTO is a far from perfect organization. Many of the criticisms of it are wholly justified. But it is a forum in which developing countries - if they can find common cause - have far more power than they would have if negotiating bilateral deals with the EU and the US. Acting together they were treated as equals, acting apart they are treated as supplicants.

Politicians in the west had trouble adjusting to the new reality. Publicly they welcomed the emergence of the G21, privately they deplored it.

Three conclusions stem from this. The first is that north and south are on different planets when it comes to trade. As Duncan Green of Cafod put it, western trade ministers said the deal was good for developing countries compared with what they had before, while developing countries said it was bad when compared with what they needed to escape from poverty.

The second is that, just as trade unions are ultimately taken seriously only if they are prepared to strike, so the G21 and the other emerging coalitions of developing countries will succeed only if they are prepared to walk away from the talks. Yesterday, the EU and the US were playing the endgame with some cunning, putting the developing countries in the position where they were unhappy with the package on offer but did not want to be blamed for the collapse of the meeting.

Finally, it was evident that the developed world lacked the vision to cope with the new politics. What was needed was political leadership, but what we got was crab-like movements by bureaucrats. Some politicians and development campaigners believe trade could be the equivalent of the post-war Marshall plan for Europe. But you will never get a Marshall plan from trade negotiators.

Nowhere was the lack of leadership more evident than in the UK delegation, which spent the week arguing that there was no disparity between the diametrically opposed views it was articulating. On the one hand, it maintained it supported developing countries in their fight to break down western protectionism. On the other, it said the botched reform of the common agricultural policy represented a massive breakthrough in this process, even though developing countries rightly noticed that the EU's own research shows that without further reform it will not reduce the mountains of surplus food Europe dumps on world markets, depressing prices and bankrupting poor farmers.

Britain has a good recent record on providing leadership in the west for new anti-poverty initiatives, but the only evidence of it in Cancun was Clare Short, in her new role as roving reporter for the Today programme. A copy of the media briefing prepared for ministers fell into the hands of the Guardian, and Patricia Hewitt, Margaret Beckett, and Mike O'Brien never deviated from it. So, even though the EU has already ratted on its commitment made at the launch of the trade round in Doha two years ago to eliminate export subsidies, ministers were told to welcome the offer to cut export subsidies by 45% as "a real step towards ending dumping".

The best gloss that could be put on the UK performance was that its refusal to oppose the EU line was an attempt to exert maximum influence in the endgame. A less charitable explanation is that the UK, for all its attempts at spin, had no purchase on the debate. Tony Blair wields influence on the global stage, as does Gordon Brown. Clare Short did. Trade is now a big political issue and requires the attention of the heavy hitters. In Cancun we had the B team, dutifully reading out positions prepared by officials. As the dynamics of global politics were changing, Britain had the chance to catch the wind. Instead, we had a bunch of Jim Hackers mouthing the words of Sir Humphrey in true Yes, Minister style.

It was profoundly depressing.