- The Washington Times - Thursday, September 11, 2003

CANCUN, Mexico — Developing nations are forging powerful blocs at the World Trade Organization conference, changing the dynamic of negotiations in key areas and aggressively pushing goals that run counter to the United States and European Union.

“I’ll tell you why. We have become much wiser,” said Rafidah Aziz, head of Malaysia’s delegation to the WTO talks.

Trade ministers from 146 nations are meeting in Cancun, Mexico, this week to assess progress and try to forge a consensus for new global trade rules. Because the WTO requires unanimity, any nation or group of countries can stall the negotiations.

In the past, the United States and the 15-nation European Union were typically the major groups at odds, and a consensus between the two often would settle a dispute.

“In [past negotiations], there was a sprinkling of developing countries who knew exactly what the round was about,” Ms. Aziz said.

“Now, years have passed and we have learned a lesson,” she added.

The ad-hoc alliances among developing countries form around specific demands often running counter to those of the biggest WTO members, the United States and Europe, and would affect sensitive political constituencies, especially farm interests.

Yesterday, 16 countries led by Malaysia rejected calls that WTO rules include provisions on investment, government procurement and other domestic laws. Brazil is leading a group of 21 nations, named the G-21, to push for major changes to U.S. and European agriculture policies. And four African nations are adamant that U.S. cotton subsidies be eliminated.

“There is an agreement that we have to act as a bloc,” Celso Amorim, Brazil’s foreign minister, said of the group that includes such diverse nations as India, China, Egypt and Guatemala.

U.S. and EU trade officials are hesitant to discuss a divide between the developed and developing world, and many issue-based alliances cut across geography and economy.

But the newest alliances have altered the way negotiations are playing out.

“Something new has happened here,” said Brink Lindsey, director of the Cato Institute’s Center for Trade Policy Studies, a think tank based in Washington that supports free trade.

Brazil, the African nations and others are pushing areas that could benefit trade but could demand too much of the United States and Europe, he said.

“The stakes have gone up,” said Mr. Lindsey, who is in Cancun to observe the talks.

Agriculture remains the key issue and the focus of negotiations.

The United States and the European Union last month submitted a joint proposal on agriculture, which spurred negotiations and counterproposals, including by the G-21.

The United States and Europe, now less unified, are trying to gain supporters for their own positions here, a move that could divide existing coalitions.

“Our strategy is to get a broad coalition of countries that want liberalization across the board. We feel the majority of the G-21 are in that camp, and we will continue to work with them,” said a senior U.S. trade official, who asked not to be named.

The European Union sees the Brazil-led alliance as temporary.

“The only important thing is that we talk substance now,” said Gregor Kreuzhuber, agricultural spokesman for the European Union.

Developing countries, which usually cannot afford to subsidize their farmers, demand a sharp reduction in support that wealthier governments offer to their own agricultural goods.

But they do not want to cut tariffs, the fees companies pay when they send their goods into another country, as deeply as the United States, European Union and other wealthy nations would.

For example, Brazil’s agricultural tariffs average 12.5 percent, while the United States’ average 4.7 percent, according to WTO figures.

One-sided concessions would be politically unpalatable in Congress, which must approve the final agreement.

“I’m disappointed by the position of many of the countries in the so-called G-21. These nations, many of which have widely divergent economic goals for their individual nations, seek additional cuts in domestic subsidies but many of them are unwilling to open their own agricultural markets,” Sen. Charles E. Grassley, Iowa Republican, said in a statement.

“As chairman of the Senate Finance Committee, which has jurisdiction over trade policy in the U.S. Senate, I won’t support such a result,” he said.



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