What really happened at Cancun?


Since the breadown of talks last week in Mexico, economics commentators around the globe have been all asking themselves the same question: what happened and why. The economist, whilst blaming the EU for not being sufficiently prepared to give ground, and the ONG's for firing unreasonable expectations amongst the poorest countries, seems to have little doubt where the responsibility should be placed for the proximate cause of the breakdown: the problem of cotton subsidies.

While the fight between Europe, America and the G21 received most attention, another alliance of poor countries, most of them from Africa, was also worried about agriculture, but for different reasons. They feared that freeing farm trade would mean losing their special preferences. (Europe's former colonies, for instance, get special access to the EU's markets for their bananas.) They were even more worried about cutting tariffs than India, fretting that imports would ruin their small farmers. And many, particularly a small group of countries in West Africa, worried most of all about cotton.

Prodded and encouraged by non-governmental organisations (NGOs), especially Oxfam, a group of four West African countries - Benin, Burkina Faso, Chad and Mali - managed to get cotton included as an explicit item on the Cancun agenda. Their grievances were simple, and justified. West African cotton farmers are being crushed by rich-country subsidies, particularly the $3 billion-plus a year that America lavishes on its 25,000 cotton farmers, helping to make it the world's biggest exporter, depressing prices and wrecking the global market.

The West African four wanted a speedy end to these subsidies and compensation for the damage that they had caused. Though small fry compared with the overall size of farm subsidies, the cotton issue (like an earlier struggle over poor-country access to cheap drugs) came to be seen as the test of whether the Doha round was indeed focused on the poor.

But the draft text that emerged halfway through the Cancun meeting was a huge disappointment. The promises on cotton were vague, pledging a WTO review of the textiles sector, but with no mention of eliminating subsidies or of compensation. Worse, it suggested that the West African countries should be encouraged to diversify out of cotton altogether.

This hardline stance had American fingerprints all over it. Political realities in Congress (the chairman of the Senate agriculture committee is a close ally of the cotton farmers) made American negotiators fiercely defensive of their outrageous subsidies. For the Africans, the vague text was a big blow. It caused "anger and bitterness" said one delegate. As a result, the poorest countries dug in their heels when it came to the other big controversial area: that of extending trade negotiations into the four new Singapore issues. Along with many other poor countries, the Africans had long been leery about expanding the remit of the trade talks at all.
Source: The Economist
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Now what the Economist seems to be suggesting here is quite important. They are suggesting that the US allowed a draft text to emerge halfway through the meeting in the full knowledge that it would be resisted by the four 'agrieved' west African countries, who would then proceed to become more obstructive on other matters, like the Singapore issues, and thus place any possibility of worthwhile agreement greatly in jeopardy. If the passage of time allows more credence to be placed on this version, it will certainly be worth while asking what has caused the United States to act in this way? Certainly it cannot be the issue of cotton subsidies alone. Possibly the whole problem of another round of trade expansion is just too much for the US to handle in election year. Or again, we might ask ourselves the question: are we witnessing the beginings of a turn in the tide of globalisation itself?