BY EVA CHENG
On September 15, one day after the dramatic collapse of global trade talks at the World Trade Organisation's fifth ministerial summit in Cancun, Mexico, US Senate finance committee chairperson Charles Grassley declared that while the US wasn't going to drop the WTO completely as a tool to achieve its "free trade" objectives, it will prioritise bilateral agreements to achieve the same ends.
"The United States evaluates potential partners for free trade agreements on an ongoing basis... I'll take note of those nations that played a constructive role in Cancun, and those nations that didn't", Grassley threatened.
The US rulers' move away from prioritising "multilateral" trade agreements through the WTO toward bilateral free trade agreements (FTAs) has been increasingly evident since the collapse of the 1999 WTO ministerial meeting in Seattle. The US has negotiated, or is negotiating, FTAs with some 14 countries, including Australia.
Many countries are keen to have bilateral FTAs with Washington in order to gain easier access to the enormous US market. But such FTAs are no "free lunch", since Washington always demands political and economic favours in return.
Formally, the WTO's nearly 150 member-countries are equals. But in reality, only selected members, dominated by the largest of the rich countries — the US, the main European Union member-countries, and Japan — made the critical negotiations.
During the September 10-14 Cancun meeting, to counter the rich countries' usual tactic of bulldozing their agenda through the meetings by presenting them as the "consensus" agreement, poorer countries formed alliances over various negotiation areas to strengthen their collective voice.
US National Association of Manufacturers vice-president Franklin Vargo said in the wake of the failed talks that the Third World alliances at Cancun had made a "major miscalculation" and failed to recognise that the US has options other than the WTO.
International Chamber of Commerce secretary-general Maria Livanos Cattaui launched a similar attack on September 14, saying "it became obvious early on at Cancun that some governments were not here to negotiate, but rather to grandstand or simply reiterate untenable positions".
Those "untenable positions" seem to be the underdeveloped countries' persistent demands in the lead-up to and at Cancun that the rich countries should now honour the promises they made in 1994 to open their markets to agricultural and manufactured goods exports from the Third World.
The delay in implementing these promises was made possible thanks to rigged WTO rules which rich countries themselves largely drew up in their favour. By contrast, underdeveloped countries were unable to escape their WTO obligations to open their markets to exports and investments from the developed capitalist countries.
As a consequence of such one-sided "free trade" arrangements, many Third World economies have been devastated, leading to a reluctance on the part of underdeveloped countries to agree to any new "free trade" demands from the rich countries unless the old promises are genuinely delivered.
Unexpected collapse
Even though no-one expected smooth sailing at the Cancun summit (given the preceding two years of largely fruitless negotiations), most governments anticipated some level of compromise agreements to emerge from the WTO meeting. But, after five days of uneventful negotiations, the last day of the summit focused on a highly contentious area — the so-called Singapore issues — that the EU has been most aggressively pressing for.
Those issues include investment, "competitive policy", government procurement and "trade facilitation" (i.e., customs standards and procedures) that could greatly increase the power of rich-country corporations at the expense of Third World member-governments and their options for development-oriented domestic policies.
For years, rich countries have wanted to force poorer countries to start formal negotiations on these new issues but, given their potentially devastating consequences, poor-country governments strongly resisted this. The resistance continued at Cancun.
At the 11th hour, the EU suddenly declared it would insist on starting formal negotiations on government procurement and trade facilitation only rather than on all four issues as a package. But that demand was still rejected by many Third World countries. Instead of salvaging for some results from the summit by seeking, for example, a last-minute agreement in other areas, summit chairperson Luis Ernesto Derbez who is also Mexico's foreign minister, abruptly and unexpectedly declared an end to the ministerial meeting.
Some commentators attributed the collapse of the Cancun meeting to a tactical error by Derbez. But the debacle only expressed in dramatic terms the deep-seated conflicting interests between the developed and underdeveloped members within the WTO and how the rules have for a long time been rigged to favour the powerful developed members.
The collapse of the 1999 Seattle ministerial was the result of four years of implementation of the rules agreed in 1994, during which the lack of seriousness of the rich countries in delivering the trade-offs they promised the underdeveloped countries became increasingly obvious.
During those same years, social tensions within Third World countries rose as their governments strived to fulfill their market opening obligations.
At the Seattle meeting, the demand by these governments for reciprocal market access from the rich countries was largely ignored by the latter, leading to the collapse of the meeting and the failure to launch a new round of global trade talks.
The new round was finally launched at the 2001 ministerial in Doha, Qatar, in the face of resistance by Third World countries to the rich countries' agenda. But the rich countries' demands were rammed through during an illegal extension of the summit by an extra day through a 36-hour session, seasoned by more market-opening promises from rich countries.
The Cancun summit was to be a mid-term review of the Doha round. The negotiations can and will still continue despite the collapse of the Cancun ministerial, but it is highly doubtful that negotiations will be completed by the scheduled December 31, 2004, deadline. The previous 1986-94 Uruguay round was completed more than three years behind schedule.
Rich countries split?
Technically, the Cancun summit collapsed because of the "Singapore issues" on which the EU led a high-profile battle, with the US taking a back seat.
Despite sharing fundamental interests as imperialist powers, the negotiating stances of the EU and the US trade officials have diverged as times have gotten harder for the competing corporations they represent.
The rate of profit of big US corporations have fallen since the late 1990s, a decline accelerated by the 2001-02 US recession and its subsequent feeble recovery. Similarly, the profit rates of big European corporations have fallen as the biggest economies in the EU — Germany, France and Italy — have recently contracted.
With Japan's economy continuously oscillating since the late 1980s between short spurts of anemic growth and frequent recessions, the early years of the second century of corporate capitalism have been marked by an increasing tendency toward economic stagnation and sharpening trade competition between the imperialist powers.
While this has led to growing trade disputes within the EU-US-Japan imperialist triad that dominates the world economy, it hasn't stopped the imperialist powers from collaborating to press their common interests against the neo-colonial countries of Latin America, Africa and Asia.
On agriculture, for example, despite mutual public criticisms of each other's specific variety of subsidies to their own agribusiness corporations, both the EU and the US presented a joint position at Cancun as a more forceful means to repel Third World demands for the abolition of these subsidies.
However, the EU and US have tactical differences over the "Singapore issues", with the EU seeking to have them dealt with as an integrated package at Cancun, while the US advocated "unbundling" the four issues.
Third World alliances
Having had been screwed by the rich countries time and again at WTO ministerials, Third World countries were more organised for Cancun. Alliances were formed and formal demands lodged with the WTO bureaucracy before the event.
The so-called Group of 21 countries (G21), focusing on agricultural issues (a crucial issue for most Third World countries), is the most prominent of such groupings. Its members include Argentina, Bolivia, Brazil, Chile, China, Colombia, Costa Rica, Cuba, Ecuador, Egypt, El Salvador, Guatemala, India, Mexico, Pakistan, Paraguay, Peru, the Philippines, South Africa, Thailand and Venezuela. It is expected to play a key role in confronting the US and the EU in post-Cancun negotiations.
Another alliance is the Group of 23. It builds on the demand for underdeveloped countries to have the right to name and receive special protection for certain crops critical to their economies as well as the ability to take extraordinary measures to counter any flood of cheap imports. Headed by Indonesia, G23 also includes G21 members in its ranks. But its member-countries tend to have smaller, more vulnerable economies than the G21 members.
An alliance of 70 countries in the African, Carribean and Pacific Group (ACP), the African Union and the least-developed countries jointly expressed their concern in a formal statement declaring that the draft text for the Cancun summit expressed the rich countries' interests to the exclusion of those of the poorer countries.
Together with some Asian countries such as India and Malaysia, the ACP countries have also rejected accepting any of the "Singapore issues".
The next main battle on the international trade front will be the November 20-21 ministerial in Miami of the 34-member Free Trade Area of the Americas — Washington's project to entrench US corporate domination over capitalist Latin America.
From Green Left Weekly, September 24, 2003.
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