Trade rift casts shadow over Mexico talks

Clock is ticking for Cancun

Larry Elliott and Michael White

Tuesday June 3, 2003 The Guardian

The failure of the world's leading industrial nations to resolve their deep differences on trade left the future of global liberalisation talks in Cancun, Mexico, later this year hanging by a thread last night. Hopes that the G8 summit in Evian would provide political impetus to the deadlock in the world trade organisation negotiations were dashed after the rift between the United States and the European Union over agriculture proved too wide to bridge.

Rather than risk the already tense annual gathering of G8 leaders erupting into a full-scale row, the summit pledged to complete the talks on schedule by the end of 2004 but skirted round all the issues that have so far prevented progress. The statement called for a "further substantial opening of trade in all areas" and urged better market access for all WTO members, particularly poor countries, but left trade ministers with the task of settling disputes on agriculture, low-cost drugs for poor countries, liberalisation of trade in services and cuts in tariffs when they meet in Cancun in early September.

A communique on trade mentioned neither American complaints about an EU ban on genetically modified food imports, nor disputes over support by the US and the EU for their farmers. The G8 leaders called for fairer trade for poor countries, but, following opposition from the US, made no reference in their statement to a proposal by the French president, Jacques Chirac, for rich states to suspend subsidies on farm exports to Africa. "Unfortunately there has been no decision," Germany's representative on Africa, Uschi Eid, told reporters.

With time running out before the Cancun meeting, Tony Blair admitted that finding an agreement would be hard. "Britain believes in free trade and I think there is a general acceptance the negotiation is going to be difficult," he said. "But we have got to break down the barriers on agricultural subsidies". The round of trade talks launched in Doha in November 2001 has been stalled since the deadline at the end of March to set the framework for agricultural negotiations was missed. "The G8's statement on trade is completely vacuous.

There is nothing new in it," said Justin Forsyth of Oxfam. Barry Coates of the World Development Movement said: "The G8 have repeatedly refused to end their abuse of the system through massive agricultural subsidies and barriers to exports of processed goods and textiles. Yet they are pushing developing countries to open up their markets. They are playing fast and loose with the multilateral trading system." The G8 nations agreed to find a solution allowing poor countries cheap access to patented medicines to combat major epidemics in time for the Cancun meeting.

Some officials remain optimistic that a breakthrough on affordable drugs may be announced on the eve of Cancun. They admit, however, that progress will depend on concessions from the US drug industry.