At the fifth World Trade Organization Ministerial Conference in Cancún, Mexico last 10-14 September, what emerged prominent was the developing countries’ lack of enthusiasm to craft new agreements, somewhat a result of disillusionment with the current free trade regime.

The WTO Ministerial is the international organization’s highest-level decision-making body. As required by the WTO’s founding charter, WTO Ministers meet at least once every two years. The main agenda of this year’s Cancún forum was to pursue talks aimed at reaching consensus on principles with regard to agricultural reforms, lowering tariffs on industrial products, and reducing barriers on foreign investment that will pave the way for new agreements under the Doha Round launched two years ago.

Group of 22
Instantaneously banding together as Group 22 to make their voices heard during the four-day negotiations, developing countries were able to show their united stand for the cutting of farm subsidies of the developed nations, mainly the United States, the European Union, and Japan. They did not yield to pressure from these rich nations to open up more concessions on agriculture which they pointed out caused further trade distortions. Developing countries were also able to stand firmly against the rich countries’ proposed new rules on trade and investment, trade and competition, transparency in government procurement, and trade facilitation comprising the so-called “Singapore” issues (issues brought up in the Ministerial Conference in Singapore). In the resulting deadlock, the future of many of these issues remains uncertain.

With the developing countries making good use of their new-found voice – standing firm on their demand and not letting down their guard – they were able to block progress leading to new agreements, an empty victory poor countries nevertheless celebrated.

A differing view espoused primarily by the wealthy countries is that those that will suffer most from the ministers’ inability to compromise are the poor WTO member-countries. They are saying that resolution of the issues brought forth at the Cancún conference would have provided a more open and equitable trading system which would provide the poor countries with an important tool in alleviating poverty and raising their levels of economic development.

Muted Nightmares
Nonetheless, the failure of the Cancún meeting and the new alliance of developing countries clearly point to negative sentiments with regard to the course the WTO mechanisms have brought these countries thus far. Based on the demands and arguments that poor nations brought forth to the negotiating table at Cancún, one can easily surmise the kind of experiences these countries have had within the multilateral trading system.

These nations probably had not significantly enjoyed better access to international markets – especially the developed nations’– since they joined the no-trade barrier bandwagon about a decade ago. These nations’ industries probably had been competing with a deluge of cheaper imports. These nations could have benefited more from liberalization if it had been more extensive and equitable.

The Cancún meeting only brought up once again previously muted nightmares of developing countries on the possibilities of further liberalization in trade and investment policies – that is, on their end of the bargain. On the one hand, these were the agenda being pushed by the rich nations in the same conference.

Coming Prepared
Prior to the Cancún meeting, President Gloria Macapagal-Arroyo and her cabinet came up with the Philippine position on several international trade issues – a listing of which was to serve as the guiding rule for the country’s negotiators in the Cancún conference. For one, the Philippine trade team was instructed to join other countries in fighting for the substantial reduction and eventual elimination of domestic price supports and export subsidies given by developed countries to their agricultural sectors. Moreover, the government would negotiate to retain exemptions from tariff cuts of essential products such as rice.

In services, the Philippines would oppose any liberalization measure that violates the Constitution. Furthermore, the Philippines would reject further changes in its investment, government procurement, and competition policies.

The Philippines would also lobby for better access to cheap medicines from abroad. The Philippines stands to benefit from the flexibility to access generic medicines and should oppose the counter lobby of the U.S. and other developed countries which protect multinational pharmaceutical companies.

WTO vs. Bilateral Agreements
As far as the US is concerned, rising protectionism in the US and the upcoming presidential elections will make it doubly hard to revive the WTO process in the context of the Doha Round. For the EU part, it is reportedly busy absorbing new members and its current trade team is reportedly set for replacement by the end of the year. These preoccupations are seen to be factors that will cause further delay in the US and the EU’s focusing on multilateral trade negotiations. This gives way to doubts that the talks under the Doha Development Agenda will linger for, maybe, another two years – versus the target of end-2004 for new agreements under this Round - before the US and EU can align their efforts to enable the emergence of new WTO agreements under the on-going Round of talks.

With the breakdown of the Cancún trade negotiations, US officials foresee that more countries or regions will step forward to ask for bilateral trade deals. The US is said to be negotiating free trade deals with 14 countries. Bilateral deals have long been used by the US to hammer out trade deals with stubborn trading partners.

Note, however, that the more bilateral trade agreements are cut, the more the WTO would lose its significance. Also, preferential treatments granted under these bilateral or regional agreements can create further trade distortions.

On the Local Front
The truly relevant question is whether or not the Philippines made an irreversible mistake in signing up as one of the trading partners under the multilateral trading system of the WTO – if at all the country had the liberty of choice to remain unentangled and unencumbered by international trade commitments.

Many are convinced that we had indeed bit more than we can chew. One indication of this is the renewed clamor from local industries for the government to scale down the Philippines’ accelerated tariff reduction schedules almost right after the news on the breakdown of talks at Cancún came out. Some groups are even demanding for the repeal of existing tariff programs – which they say have proven to be damaging to domestic industries and the agriculture sector - to buy time for local businesses.

Some legislators joined the fray by supporting the call for an increase in the country’s tariffs as well as the expansion of import quotas on agricultural products. They also echo the demand for further protection of the agricultural subsectors which are being pestered by dumping from other countries, if not cheaper legal farm imports.

Shortchanged
On a positive note, the collapse of the Cancún negotiations bought time for the Philippine team to further rehash its negotiating stance through more interactions with the various stakeholders of the society before the next WTO meeting in Geneva in December. Hopefully, the Philippine government can take advantage once more of the Group 22 alliance to push for beneficial reforms in world trade.

At the sidelines of this WTO debacle are vigilant Filipinos who are wary that their welfare might be drowned once more by a trading system that have left them shortchanged.