- The Washington Times - Monday, October 13, 2003

In wake of the collapse of trade talks in Cancun, a rift is dividing the Group of 21 developing countries that walked out on negotiations last month. This schism represents a change in the dynamics of trade negotiating groups, which pitted the United States, Europe and Japan against poor and emerging-market countries. Although it isn’t clear what effect the division will have on global trade talks, it could lead to an acceleration of bilateral and regional trade talks.

Colombia, Peru and Costa Rica have all defected from the Group of 21. The splintering of the group is a clarion call for the United States to break ranks with Europe on one of the most important issues of the current trade round: agricultural subsidies. If developing countries intent on propelling trade talks forward can break from Group 21, then the United States can distinguish itself from Europe, which proposed paltry measures to liberalize its farm industry. The United States, by closing ranks with Europe at Cancun, was guilty by association.

But this need not be the case. U.S. farm groups have said they would be willing to forfeit many subsidies if Europe and other trading partners follow suit. These groups have also said they understand and accept that special standards would be made for developing countries, as long as these exceptions were kept within limits. And the Bush administration has proposed bold measures to liberalize agriculture around the world, such as its suggestion last year that members of the World Trade Organization cut their production-linked farm subsidies to 5 percent of their total farm output. The United States should continue supporting this drive to liberalize the farm industry, while Europe should be held accountable for its protectionism. On the issue of farm trade, the United States has an opportunity to champion the developing world.

Meanwhile, poor countries shouldn’t let Brazil and India speak for them on all trade issues. Just as the Group of 21’s efforts to reform agricultural trade could benefit taxpayers and consumers in rich countries, the drive by rich countries to make government contracts more transparent in poor countries would likewise benefit the emerging market world.

According to the World Bank, a successful trade round could generate an increase in the global economy of $2.8 trillion (about a quarter of U.S. gross domestic product) by 2015. Developing countries would reap more than half of this gain. The splintering of the Group of 21 could moderate the positions taken by poor countries — which could be helpful for talks. Rich nations should stand ready to give something substantive in return. The United States has signalled its willingness to do, and should remind the world of this position.

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