Cancun I, Cancun II, and trying to repeat rewritten history?

Geneva, 30 Sep (Chakravarthi Raghavan) - As the World Trade Organization, and the Chairman of its General Council, Amb. Perez del Castillo, as well as some of the leading actors at the WTO’s fifth ministerial conference, are assessing the failure and its causes and regrouping to pursue neo-mercantilist aims under the guise of a ‘development agenda’, there is a distinct air of trying to rewrite history, and force the South, ala post-Cancun I, into US-EU ordained neo-liberal policies.

Cancun-I (1981) marked the end of the post-war international economic system and international cooperation, and the attempts of the South to restructure the system towards a development oriented system.

Just as it took a while for the world to assess the outcome of Cancun-I, it may take a while for the effects of Cancun-II to be understood however, Cancun-II in fact marks the end of the neo-liberal models and systems (of money, finance and trade), and the 20-year attempt of US-Europe to organise and run the world’s economic system for their own benefit, and at the cost of the countries of the South, and even the poor inside their own countries.

However, it is in the nature of power that those wielding it do not let go voluntarily or easily, and end up by harming others, and even more themselves.

The US-led North made clear at Cancun-I that it was not going to negotiate with the South, collectively or individually, but would lay down policies that the South must accept and implement.

The course set at Cancun-I by the US has inevitably led to the present: unilateralism and the US invasion of Iraq which the US is unable to pacify or hold; and the is seeking help from the UN and Europe (but on its own terms), and the major nations of the South (which the US scorned at Cancun-II).

And while the US and Europe find themselves still at logger-heads over the post-Iraq war policy in Iraq and the region, and in turn over the South on political and strategic issues, before and at Cancun-II, Europe and the United States joined hands, believing they could force their joint will on the South.  They failed, but show no signs of reflection and change of course and direction towards cooperation; and instead are showing signs of confrontation and covering up this last by accusing the South of it.

In fact, Lamy in his speech to the European Parliament last week, even implied that the major nations of the South, not able to prevail at the UN over Iraq, tried to assert themselves at Cancun.

After Cancun-I, the neo-liberal policies enforced on the South (but not practised in the North) have proved a failure. Those who benefited from the enforced neo-liberalism in the South (as British free trade over its empire and colonies in the late 19th century) are resisting change in the post-Cancun period, but find it more difficult to continue with such policies, because of resistance.

In the many self-serving analysis and versions of the anatomy of the failure at the WTO Cancun meeting (the latest is an internal EC Commission note to its 133 Committee meeting this week), apart from the threat of pursuing their goals through bilateralism and regionalism, the US and the EU, and their ‘wise men’ are all pointing a finger at the 146 members of the WTO, and the difficulties of negotiating and doing deals by consensus decision-making with 146 members.

The EC’s internal note, even making allowances for the attempts to deflect internal criticisms of members (and the European Parliamentarians) away from Pascal Lamy, suggests that the EC has not only not learnt the lessons of Cancun, but has drawn the wrong lessons - believing for example that if Conference chairman Derbez had not ended the meeting over the discord on Singapore issues, but kept it up for another day, the meeting would have succeeded, presumably by the G-22 being split and broken up, and the ACP and LDCs ‘bought over.’

The EC has blamed the US for the anger among Africans and smaller nations over the cotton issue, but there is some reason to believe that the outlines of the para in the Derbez text on cotton was in fact discussed even before Cancun in a small group that included the US and EC.

The EC’s note admits that at Cancun, Lamy had been willing to give up and take off the agenda of the Doha negotiations, at least three of the four Singapore issues - investment, competition and government procurement - and had made such an offer (in the Green Room on 14 September).

But there is also the suggestion that since it had not been accepted, the EC would now keep them on the table, and may be able to extract a price from the others for giving them up.

What this price is has not been fully spelt out, but seems to involve the G-22 agreeing to share the ‘adjustment burden’ of reducing agricultural subsidies in the US and the EC. Is the price to be by agreeing to the shift from ‘blue’ and ‘amber’ box subsidies to the green box (claimed, but not proved, to be by definition, non-trade distorting)? Also, would it require extending the peace clause in the Agriculture agreement (the continuance is presented as something Americans need!)? And more market openings in agriculture and non-agriculture products by the major developing countries (sought by the US as well as the EU)?

The EC is also seeming to keep open the possibility of requiring plurilateral negotiations on Singapore issues, with options to countries to participate but not join etc. These were known to have been talked about in the corridors at Cancun, though not formally presented in the informal HOD or in the Green Room (14 September).

Also, with the US and EC both blaming civil society for giving wrong advice to the developing world, as if their governments can be so easily led up the garden path, they seem to be aiming to restrict both civil society and critical media access to the WTO and its processes.

The EC and US also are trying to spotlight and blame the leading nations of the South that stood firm and together, and did not allow themselves to be bought by piffles.

When the WTO was assembling at Cancun early this month, there were many who recalled the failed 1981 Cancun I, the meeting of 22 heads of state/government, the political leaders from North and South, but few remembered that the meeting, an outcome of the report of the Brandt Commission, was in fact aimed at international and multilateral cooperation, away from the ‘unwieldy’ structures of the United Nations and the ‘Global Negotiations’, and towards a more manageable one.

The leading South countries went to Cancun-I prepared for such a deal, but were in fact spurned by the United States, and Europe (most were socialist or social democratic governments) which fell in line with the US.

The Cancun-I Conference, which met in October 1981, had been put off for some months, to enable the newly elected President of the United States, President Ronald Reagan, to have a little time after assuming office. It was intended by Brandt, and by several of the leaders of Europe, to put the world, North and South, on a path of cooperation for development, and not what was seen by the World Bank (under President Robert McNamara) as the sterile course of South-North confrontation in global negotiations.

If the US Federal Reserve (even under President Carter) acted against the South by the giant interest hike, and forced an end to economic cooperation, Reagan at Cancun-I delivered the political coup de grace.

Cancun-I had met against the background of East-West super-power relations and rivalries, but the Soviet leaders though invited declined to attend.

After the Cancun-I meeting, some from the South, who were there as observers, and one or two as aides of their leaders, initially put an optimistic gloss, and suggested that a momentum had been generated at the meeting, that there was willingness shown at the highest levels to address North-South problems, and that it could prove a launching pad for future negotiations.

All of them thought that though the US had said ‘No’, others in the North would continue their policies of cooperation and dialogue.

UNCTAD Secretary-General Gamani Corea, who was at Cancun-I as observer for the UN Secretary-General, gave a positive assessment at the Trade and Development Board, and called for momentum to be maintained and utilised (#SUNS 402, Nov 1981).

On the same day that Corea spoke at the Board, the Group of 77 in New York were complaining about the agriculture protectionism in the North and called for the phasing out of tariff and non-tariff barriers against agricultural products from the South - a problem that hasn’t gone away even now, but has been aggravated, and acknowledged by most as responsible for failure at Cancun-II.

After Cancun-I, Willy Brandt himself (whose Independent Commission initiated the idea), and Amir Jamal (Tanzanian Finance Minister and member of Brandt Commission and aide to President Julius Nyerere at Cancun-I), at a conference in Budapest of European development and research training institutions were slightly more cautious on what would unfold. Brandt said that global discussions had been accepted at Cancun by all participants as a fundamental principle, and that even the US had not rejected it outright. Jamal viewed the meeting as an ‘important step’, but added: “...whether anything that might happen in the next few months would be linked back to Cancun remains to be seen.” (SUNS#408).

After Cancun-I, some of the principals, heads of state/government from the South, were disappointed, but kept their counsels for a while, to make their own assessments and policies.

Two of the principal leaders of the South at that Cancun-I meeting, Indian Prime Minister Mrs. Indira Gandhi, and the Tanzanian President Julius Nyerere, publicly kept their counsel and did not speak out, but appear to have come back from the meeting, feeling that the countries of the South, and their own countries, had to depend on themselves.

In India, Indira Gandhi agreed with her Finance Minister (Mr. R.Venkatraman, later President of India) and decided not to draw on further instalments of an IMF loan, but pay back the borrowings, and adopt policies to enable the country to be more self-reliant and not dependent. And she earned the wrath of the IMF and its Managing Director, in 1983, for her views (in an address) that were critical of the IMF.

In looking back, much later (in 1987, after he had voluntarily retired as his country’s President), at the time of the establishment of the South Commission, Nyerere spoke of Cancun-I, the hopes with which the leaders of the South had gone there (at the instance of Willy Brandt and his report and recommendations.  Incidentally that report was rewritten, after jettisoning its secretariats drafts, at the instance of McNamara and acting through his nominee on the Commission, Washington Post’s Katherine Graham).

Said Nyerere (of the initial optimism at Cancun-I of the South, the Group of 77, and their efforts to restructure the post-war international economic relations, and its failures and despondency in the South):

“When we met at Arusha (1979 Ministerial meeting of the Group of 77 for UNCTAD-V)... there was optimism and hope about the thrust for NIEO etc...even at Cancun (1981), there was still some hope. But the hopes were dashed there because Reagan said ‘no’ and that was it.

“It was all very revealing,”Nyerere said. “The other members from the North at Cancun, at least some elements of them, agreed with much of what we had been talking about ... We from the South thought that even if we cannot persuade Reagan, the rest of them who agreed with us would go ahead. What was very revealing, and very depressing was that after Reagan said ‘no’ the other leaders from the North said that was the end.” (cited in ‘Recolonization: GATT, Uruguay Round and the Third World.’)

With the IMF and the World Bank pressuring developing countries through conditionality loans, Northern-led coalitions like the Cairns Group helping to break up the unity of the South, the GATT launched the new round of trade negotiations at Punta del Este, resulting in the Uruguay Round agreements.  These, at least post-facto has been found by the developing world as not having provided any gains of trade liberalisation, but forcing them to bear the costs.

Even when the Uruguay Round was launched at Punta del Este in 1986, it was clear that the trade liberalisation policies and programmes would be as unsuccessful for development as the 19th century liberal policies were for continental Europe and the United States.

Several respected mainstream economists, but not the ‘free trade ideologues’, had by then begun to see the limitations of liberalisation, but the IFIs did not allow these views to ‘sully’ their ideologies or policy conditionalities forced on the developing world.

But since at least the latter half of the 1990s, there is overwhelming literature, and studies based on empirical evidence, that show that the theories and policies of liberalisation of trade and investment do not promote growth, or development in developing countries, nor ameliorate poverty, and that governments need to direct and intervene, if necessary adopt protective policies and use trade and tariff barriers to foster industrialization.

The widespread disappointments and disillusionment in the developing world over the outcome of the Uruguay Round - with all the benefits going to the developed world and all the costs to the developing world - as well as the way the WTO has been manipulated by the majors, both in processes and on substance, and the hypocrisy of the countries of the North in not practising what they preach to the developing world, set the stage for the failure at Cancun-II.

On the eve of Cancun-II, UNCTAD Secretary-General Rubens Ricupero, had recalled the sudden on-the-spot formation of the coalition of the Latin American agricultural exporters at Montreal 1988, resulting in the collapse of that meeting (when the US and EU joined hands to put aside agriculture).

Ricupero contrasted it with 2003 when the US-EU joined hands ahead of the Cancun-II meeting to formulate a joint framework paper on agriculture (accommodating each other’s interests and attempting to push back the demands from the South to reduce and eliminate agricultural subsidies in the North), and the formation as a counter to this of the Group of 17 (subsequently the G-22) of the countries of the South on an alternative agricultural framework.

After the failure at Cancun-II, both the US and EU have blamed the G-17/22, and their ‘confrontational’ demands over agriculture. While the initial comments of Robert Zoellick at Cancun and in Washington, and of Pascal Lamy at Cancun (and on his return) could be viewed as inevitable immediate reactions, the EC Commission’s internal note to its 133 Committee meeting on 3 October, shows some anger, if not venom, over the success of Brazil, India and China in forming the coalition, and countering the US-EC moves in agriculture.

There is every sign of efforts by the US and EU to regroup and counter-attack the countries of the South - in an attempt to repeat the followup to the Montreal Uruguay Round mid-term review failure, by the April 1989 official level meeting of the Trade Negotiations Committee in Geneva.

There is every indication that the EC is now planning to keep all the four Singapore issues on the table, and try to extract a prize for giving up one or most of them for binding multilateral rules as part of the Single Undertaking, but leaving the door open for plurilateral talks and agreements (that at some future point could be made as multilateral obligations on everyone, just as the many Tokyo Round codes became Uruguay Round agreements).

The EC is also seeing that ministerial conferences with 146 ministers as no longer useful (for the majors) to be forced into decisions (ala Singapore, Geneva and Doha). This EC stance has only to be contrasted with the EC view, in August, at the informal General Council and the HOD, that only Ministers could ‘decide’ on the Singapore and other issues, and the Representatives of countries at the General Council could not substitute themselves for the Ministers.

The role of the Chair of the Ministerial Conference is sought to be down-sized by the EC, which no longer wants to give the Chair the power to organise and run the conference - the Singapore and then Doha examples are no longer seen as useful and productive.

Instead, it wants the conference to be more a forum for political discussions - and convert the present ‘mini-ministerials’ into a formal Executive or Steering Committee of the WTO to take decisions.

And it also wants to “reinforce the role of the Director-General to give him a solid basis for putting forward unbiassed proposals and compromises that can only be prepared by a highly competent and politically independent secretariat.”

These are qualities that, judged by the output and results so far, seem to be in short supply, if not absent, at the WTO (and in many other parts of the international system), as also perhaps in the EU Commission and its trade and other directorates. – SUNS5430

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