The meeting of the World Trade Organization (WTO) in the Mexican
resort town of Cancun will be a crucial test of the organisation's relevance and whether international trade can be made to work for the poor.
Developing countries are expecting their issues and concerns to be given particular attention, given that this round of WTO trade negotiations is called the "Development Round". But can the WTO deliver on this? There are few signs so far that it can.
When the "Development Round" was announced two years ago at the WTO ministerial conference in Doha, there were statements made on the need to work for a fairer distribution of the benefits from trade, and for measures to strengthen the links between trade and poverty reduction.
Currently, low-income countries account for more than 40 per cent of the world's population, but only three per cent of world exports. On the other hand, rich
countries account for 15 per cent of world population, but 75 per cent of world exports.
For developing countries, the success or failure of the Cancun meeting will be judged by what happens on three key issues - agriculture, market access, and
access to affordable medicines.
Agriculture is perhaps the most important. The European Union (EU) and the US now spend around $1 billion a day on agricultural subsidies, roughly six times
what they spend on aid. These subsidies generate large surpluses that are dumped on world markets at prices that bear no relation to production costs. From cotton
farmers in West Africa to corn farmers in Mexico, millions of producers in developing countries receive lower prices for their products and get unfairly pushed out
of markets as a result. The livelihoods of millions of the world's poorest farmers
are threatened by these subsidies.
At Cancun there must be a commitment to phase out all subsidies that generate surpluses and finance export dumping. At the same time, developing countries should
retain the right to restrict imports of certain agricultural products in the interests of poverty reduction and food security.
The second benchmark for Cancun is market access. Improved access to markets is a vital part of making trade work for poor people.
The problem is that too many rich countries preach free trade but practice protectionism, thus denying trading opportunities and markets to poor countries.
To make matters worse, rich countries use the WTO to demand rapid import liberalisation by developing countries, ignoring their special needs and circumstances. It is
a matter of "do as we say, not as we do".
Developing countries exporting to rich countries currently face trade barriers four times higher than those faced by industrialised countries. Shirts produced
by Bangladeshi women enter the US market with import duties some 20 times higher than that imposed on goods imported from Britain. Vietnam pays more in US customs
duties than the Netherlands, despite accounting for a far smaller share of imports.
What is needed at Cancun is a move by industrialised countries to grant duty-free and quota-free access to goods from low-income countries, and an average tariff
on developing country imports no higher than on those from developed countries.
The third benchmark, access to affordable medicines, has been resolved somewhat, although not satisfactorily, by a pre-Cancun agreement. The issue is the right
of a developing country to override the patent rights (guaranteed by a WTO agreement) of pharmaceutical companies in order to manufacture cheap generic drugs for its
own people, or to export to another country where there is a health crises but
no drug manufacturing capacity. The agreement signed last week is full of restrictions
and difficult processes and it remains to be seen whether these will render it
Another factor to watch at Cancun is the move by the EU and some other nations
to add new negotiations, including the liberalising of investment, to the WTO
agenda. This should be resisted as it would lead to rules that developing countries
do not want, do not need and cannot afford - and will overload an already overcrowded
The WTO ministerial is a defining moment for the world body. It could provide
an opportunity to reform the unfair trade rules that systemically disadvantage
the world's poorest countries and people, and reduce the inequalities that divide
rich and poor. Or, if it fails, it could trigger a resurgence of protectionism,
which would ultimately fragment the world into hostile trading blocs. Power-based
unilateralism would become the order of the day, and global economic growth would
inevitably suffer. The stakes are high.