Post-Cancun: EU, US Adamant On More Divisions Within Third World

Written by Malcolm Subhan | Brussels, Oct 6: | Updated: Oct 7 2003, 05:30am hrs
Divide and win. Divide the developing countries and win access to their markets. This was the strategy the worlds two leading trading entities, the 15-nation European Union (EU) and the United States, had adopted before the Cancun summit. And it clearly is the strategy they plan to follow after the failure of the recent WTO ministerial meeting. Neither the EU nor the US had anticipated the emergence of the G-22, whose core membership consists of India, China, Brazil, Argentina and South Africa. But neither do they expect it to last. India is congratulating itself on having successfully challenged in the WTO the quota-free access to the European market which Pakistan had extracted from the EU, under the provisions of the EUs generalised system of preferences (GSP) aimed at combating drug trafficking.

It was not the show of strength displayed by the G-22 that led to the breakdown of the negotiations at Cancun. The ministerial had ended in disarray after Kenya and some of the smaller African countries walked out over the Singapore issues. But they also walked out because they had feared that the G-22 was preparing to strike a deal with the EU and the US over agriculture. The G-22 failed, in other words, to meet the concerns of the least developed countries, including Bangladesh, and many of the African, Caribbean and Pacific countries that are linked to the EU through a comprehensive trade-and-aid agreement, known as the Cotonu agreement. It is these divisions within the ranks of the developing countries themselves which the EU and US are now exploiting.

Within a fortnight of the collapse of Cancun, US trade representative Robert Zoellick left Washington to finalise a regional free trade deal with five Central American countries. This will be the first regional free trade agreement (FTA) the US has signed since it concluded the North American free trade area some 10 years ago. Next month it will start talks in Miami with Latin American countries on the FTA of the Americas.

Not to be outdone, the EU successfully concluded negotiations for a new political dialogue and cooperation agreement here with five Central American countries Panama, Nicaragua, Guatemala, Honduras and El Salvador. The agreement, concluded earlier this week, includes plans for new economic cooperation, and paves the way for an FTA when the time is ripe.

But the most important event in the EUs relations with the developing countries since Cancun is the launch of the negotiations with two separate regional groupings in Africa. EU chief trade negotiator Pascal Lamy and head of its programme of development cooperation Poul Nielson are in Africa this week for this purpose.

They will open negotiations for economic partnership agreements (EPAs) with the economic community of western African states (Ecowas) and the central African economic and monetary community (Cemac). The Ecowas is a 15-member regional grouping founded in 1975, which includes Nigeria, a member of the G-22. The Cemac consists of six countries.

Now, it can be argued that these talks are in the framework of an agreement which the EU had entered into with the African, Caribbean and Pacific countries some 25 years ago. The agreement is the Lome Convention, the latest version of which was concluded by the EU with 77 countries three years ago in Cotonu, the capital of Benin, on the west coast of Africa.

Before leaving for Africa, Lamy had declared that the setback of Cancun has not diminished our ambition to ensure that trade contributes to the development of poor countries. A key objective in the negotiations with the two African regional groupings is to help them tear down barriers to trade among themselves, (which) is the necessary complement to the almost full access to the EU market already enjoyed by these countries.

For Lamy, the multilateral road has been blocked, following the breakdown at Cancun. Bilateral and regional negotiations with selective trading partners might, therefore, be a more efficient and simpler solution for the EU, as he told the European Parliament earlier this week. He had admitted, however, that the bilateral path might also make multilateral negotiations more difficult in the future.

The fact is that the EU, unlike the US, is itself divided over the wisdom of following the bilateral and regional path. Since becoming the EUs chief trade negotiator some four years ago, Lamy had refused until now to open fresh talks for bilateral and regional agreements.

The European Parliament continues to favour the multilateral approach to trade liberalisation. For members of European Parliament, the Doha development round continues.

In its resolution on Cancun, the European Parliament had welcomed the new level of organisation and assertiveness of the developing countries, which offers the prospect of the emergence of a new and fairer world order. It had expressed particular regret at the failure in Cancun to agree to the abolition of trade-distorting subsidies, particularly (those) paid to the US cotton producers.

Like Lamy, the European Parliament accepts the need for far-reaching reforms, both of the WTO itself and of its place in the wider framework of global governance. These reforms should, however, maintain the multilateral character of the world trading system.

India, too, seems to be divided in its approach to trade talks. It clearly favours the multilateral path, with the G-22 spearheading the drive for a more just and fairer world trading system, under the WTO banner. But it is not averse to entering into an FTA with Asean, for example. Indeed, a former Indian ambassador to the EU had put forward the idea of an FTA between the EU and India some 15 years ago. But the suggestion was shot down by the EU as impractical, if not unrealistic. How times have changed!