Cancun and WTO

In september 2003 took 5th WTO’s ministerial conference place in Cancun. The WTO holds its main ministerial conference roughly every two years and they are the WTO’s highest authority. Let’s take a brief look on what was on the agenda at Cancun.
At Cancun WTO ministers negotiated the “Doha Agenda” (which is the current round of trade negotiations launched at the last Ministerial Meeting in Doha, November 2001)as well as four new issues: investment, competition policy, transparency in government procurement and trade facilitation. Also the huge number of negotiations on issues like agriculture, market access and drug patent rules were included.

The “hot topic” these days is the agriculture and how Northern subsidies hurt developing countries, especially Africa. Some people may ask what do agricultural subsidies have to do with Africa. The answer is simply, everything. The thing we shouldn’t overlook is that one of the many economic differences between developed and developing countries is that developed countries subsidize farmers while developing countries tax them. In Africa agriculture has been the backbone of it’s economy. This sector employs about 70 per cent of the labor force. Agriculture is also its main generator of export revenue. Agricultural subsidies in developed countries reduce world prices and thus the incomes of African farmers. The strongest subsidizer of agriculture are the US but EU also subsidize its farmers heavily.

Just to have an idea what this means in numbers developed countries subsidize their farmers at a rate of about 250 billion dollars a year,25 times more than the annual amount the UN estimates is needed worldwide to combat AIDS. Or from the other point of view World Bank studies suggest that US subsidies alone reduce West Africa’s annual revenue from cotton exports by 250 million dollars a year. Moreover, in May 2002 US president George Bush signed a farm bill that would increase subsidies by 83 billion over a period of 10 years which will raise subsidies to cotton growers by more than 60 per cent. So it’s clear that we should not expect the world price of cotton to go up anytime soon. Another thing is that countries are allowed to increase subsidies on “sensitive” commodities which are in practice commodities whose producers have strong political background. Considering all mentioned issues we can expect just a modest reductions in subsidies in nearest future.

Back to the conference in Cancun a it’s conclusion. It didn’t really make a step towards finding a solution to this problem or even making a compromise. The Chair of the conference also felt that agreement was still too far away and decides to end the meeting without any substantive declaration. Despite such an abrupt ending, optimists might claim that the outcome is not a negative one. It was the only option for the developing countries as no deal is better than a bad deal at this stage.