The world's poorer peoples have been badly let down by the Cancun failure

Responsibility for the collapse of the World Trade Organisation (WTO) talks in Cancun, Mexico, can be laid firmly on the richest countries in the world - the United States and the European Union.

The breakdown in the talks marks a turning point in international trading relations and raises critical issues for Australia's trade reform strategy.

We have missed an historic opportunity to transform the lives and livelihoods of millions of poor farmers around the world. It is staggering that with so much at stake, it could have gone so wrong. This was a chance to address global poverty, to build confidence in a rules-based multi-lateral trading system, and as WTO Director General Supachai noted, to boost confidence in the global economy. We take no satisfaction in the outcome of these talks.

In Cancun, the two "agricultural subsidy superpowers" refused to concede any meaningful ground on agricultural trade issues to developing countries. This slap in the face was compounded by Europe's insistence on pushing highly contentious new issues on to an already overloaded negotiating agenda.

This ministerial conference was supposed to progress the "Development Round" launched two years ago in Doha, Qatar. As the name suggests, issues of concern to developing countries were intended to be at the centre of negotiations. By and large this means agriculture. More than 900 million poor farmers living in the developing world are desperate for changes to improve their lot.

Central to their aspirations is the need to end the massive agricultural subsidies and to open up rich country markets for their produce. However the draft conference text backtracked on previously agreed commitments, representing a massive act of bad faith on the part of the rich countries.

The EU and the US overplayed their hand and misjudged the strength of feeling and unity of the developing world. Even before the talks were over the blame game began, with accusations against developing countries and the NGOs campaigning to make global trade rules fair. But this is the spin. The fact remains that the key WTO deadlines have been missed, and the EU has failed to achieve meaningful reform of its Common Agricultural Policy - meaning the negotiations on agriculture went nowhere. Against this background, blaming developing countries is insulting and disingenuous.

A classic example of the approach taken by rich countries was on the issue of cotton. African delegates urged the US to cut the US$3.9 billion in subsidies paid to 25,000 American cotton growers; subsidies which are devastating the livelihoods of 10 million West African cotton farmers. In response, the US proposed measures to "help" African countries diversify out of cotton. How's that for warped logic?

In the weeks leading up to the Cancun talks, developing countries, coalescing around the G-21 group (including countries such as India, South Africa, Brazil and China) became more assertive in arguing their case. Stimulated by the already evident intransigence and limited vision of the EU and US, they have become better organised, more coherent and confident in advancing their agenda. It is clear that this new group promises to be a permanent one.

So where to now for the World Trade Organisation, for the Doha Development Round and for Australia's trade reform strategy?

Oxfam Community Aid Abroad wants a successful round of talks and Cancun's breakdown is a missed opportunity to begin to change the rigged rules and double standards which plague international trade.

A fundamental change in approach from the rich countries is required. They must listen to the views and concerns of the developing world. This means focusing on agriculture: cutting subsidies, opening up rich country markets and recognising the special needs of developing countries.

Australia's trade reform strategy is at a crossroads following Cancun. For the past two decades a bipartisan policy of working with the Cairns Group of agriculture-exporting countries has meant that we have had influence at the negotiating table. But with the emergence of the G-21, involving many members of the Cairns group, the future of the Australian-led coalition is under question.

Australia is in an unusual position as a rich and developed economy with an export profile that more closely resembles that of a developing nation. If developing countries continue to grow in strength and influence, international trade negotiations will become more complex. For Australia, this will include managing the relationship between the Cairns and G-21 groups on the one hand, and balancing Australia's critique of US trade restrictions with a bilateral trade deal on the other. Importantly, it will also include ensuring that regional insecurity fuelled in part by poverty in the developing world is not exacerbated by a failure to reform trade.

Following Cancun, world trade negotiations will never be the same again. It will be a test of the skill and commitment of trade ministers worldwide - including Australia's Mark Vaile - how well they can adjust to, and shape this new reality.