AFRICA AFTER CANCUN

"Participation Builds Unity"

"MADE IN AFRICA - FOR AFRICA"

PRESENTS

AFRICA AFTER CANCUN

Trade Negotiations in Uncertain Times
DECEMBER 2003

SAIIA Trade Report 2 - Edited by Peter Draper and Steven Gruzd

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Three months after the spectacular collapse of international trade talks in Cancun, Mexico, diplomats and trade negotiators will reconvene at World Trade Organisation (WTO) Headquarters in Geneva on 15 December 2003 to figure out what to do next. How has Africa been affected by the collapse at Cancun? Why did those discussions unravel? What is the future of the multilateral trade system? And what should the trade priorities and strategies of African countries be now?

The South African Institute of International Affairs (SAIIA) answers these questions and demystifies the failed trade talks in its latest Trade Policy Report. The report - Africa After Cancun: Trade Negotiations in Uncertain Times - is a collaboration between two projects at the Institute, the Development Through Trade Project and the Nepad and Governance Project. The report brings together seven succinct analytical articles by experts in the field who try to get to the bottom of these complex and controversial negotiations, and examine the prospects of resuscitating the WTO process.

Cancun was intended to jumpstart flagging negotiations in the current round of multilateral trade talks - the Doha Development Agenda - around complex, interrelated global trade matters such as agricultural trade, industrial tariffs and trade in services. But it ended (some would say prematurely) in acrimonious stalemate. This report argues that it is crucial to get the WTO train back on track, for Africa's sake. Despite the rhetoric heard in several capitals, a world without trade rules is unlikely to be a better world. The WTO's rules are certainly imperfect, but walking away is not the solution.

The collection begins with President Yoweri Museveni of Uganda arguing that what Africans really want is more opportunities to trade rather than increased development aid. He admits that African nations were vague about their priorities, and the concessions required for progress. This article illustrates a crucial strategy for Africa - appealing eloquently to the conscience and intellect of the Western public, through mainstream, high-profile media.

Faizel Ismail, head of the South African delegation to the WTO, gives an insider's insight into what happened at Cancun and why. Ismail traces both fundamental long-term differences over agricultural liberalisation as well as the unfolding events in Mexico - an unsatisfactory text by the meeting's chairman, anger about how the plea for redress by West African cotton-growing countries damaged by subsidised rich-country producers was handled, and polarised positions on the controversial 'Singapore issues.' He reflects on the significance of the new G-20+, the powerful bloc of developing countries led by Brazil, China, India and South Africa that coalesced around agricultural issues. Ismail draws lessons from Cancun, including that brinkmanship spells disaster, and that many developing countries could not adapt to changing circumstances.

With the WTO process in limbo, bilateral and regional trade deals are accelerating. Trade experts Peter Draper and Dr Razeen Sally consider how to get the tottering WTO back on course. They paint the background against which African countries must make tough trade choices, by examining the internal dynamics of the world's two economic powerhouses, the United States and the European Union. In 2004, Washington faces elections and ongoing fallout from Iraq, and 10 new states will join the EU. Thus the WTO will slip down the rich countries' agenda. The authors believe that the Doha Round will drag on until at least 2007. They scrutinise the G20+'s staying power, its internal fault lines and the pressures on its members to further liberalise their own economies. They argue that the ball is the developing countries' court to re-energise the talks.

Intellectual property consultant Dr Meir Pugatch critically examines a supposed 'success' of the Doha Round: the resolution of a two-year standoff to allow poor countries to override pharmaceutical patents to produce or import life-saving medicines, clinched just days before the world's trade ministers descended on Cancun. But Dr Pugatch asks whether this deal on 'TRIPs and Public Health' really put some 'development' back into the Doha Development Agenda. Who were the real winners and losers? He exposes the devil in the details and practical pitfalls in the drugs deal.

An intriguing option to get the Doha Round moving again emerges with the expiry of the 'peace clause'. This agreement urges countries to refrain from bringing complaints about agricultural subsidies to the WTO's dispute settlement body, but it is due to end in 2004. Its imminent expiry could mean that the rich countries, which extensively subsidise their farmers, could face mountains of expensive, time-consuming litigation. International trade lawyer Olu Fasan looks at how Africa could bring agricultural disputes against Europe should the peace clause lapse, and the risks for developing countries inherent in this strategy.

Warwick University doctoral candidates Mills Soko and Mzukisi Qobo scrutinise the Africa Group at the WTO, a forum where African members of the global trade body regularly meet and exchange ideas, formulate policy and strategise. They examine the role that this group played at Cancun, analyse the awkward position of South Africa within the Africa Group, and outline the prospects and challenges facing African countries in the WTO in the post-Cancun period. Soko and Qobo suggest how confidence can be restored in the WTO and the Doha Round.

If an agricultural deal were achieved and northern markets were thrown wide open to African food exports tomorrow, few African countries would be able to take advantage of these export opportunities. Steven Gruzd explores what African countries have to do to improve export capacity: comply with stringent health and safety standards in export destinations, modernise outdated farming methods and resuscitate crumbling, inadequate infrastructure.

The prospect of an all-encompassing global trade deal favourable (or at least palatable) to Africa by 2005 looks almost impossible after Cancun. In the absence of an over-arching WTO-wide agreement, countries will scramble for individual free trade agreements. Only a handful of African countries are in line for major trade deals with the US, and most face arduous bilateral negotiations with the EU. Until and unless the Doha Development Agenda is completed, the current inequitable, flawed global trade system will persist. African countries will continue to face restricted access to northern markets, suffer the negative effects of heavy agricultural subsidisation by rich countries and onerous obligations to implement previously agreed trade rules. It is also up to African countries to find innovative ways around the impasse.

PETER DRAPER is the Research Fellow: Development Through Trade; and STEVEN GRUZD is the Research Manager of the Nepad and Governance Project; both at the South African Institute of International Affairs (SAIIA), based at the University of the Witwatersrand, Johannesburg.

Steven Gruzd
Research Manager
NEPAD and Governance Project
SAIIA - the South African Institute of International Affairs
PO Box 31596, Braamfontein, 2017, South Africa
Jan Smuts House, East Campus, University of the Witwatersrand
gruzds@saiia.wits.ac.za
Tel: (+27 11) 339-2021
Fax: (+27 11) 339-2154
www.wits.ac.za/saiia

The full report is available online in PDF format, and can be downloaded for free from www.wits.ac.za/saiia/online.htm
Copies in MS-Word format can be requested from Steven Gruzd gruzds@saiia.wits.ac.za
Printed copies can be ordered from Elizabeth Stanley on +27 11 339-2021 or stanleye@saiia.wits.ac.za

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