Analysis

What is at stake at Cancun?
Comment by Alan Oxley

Trade Ministers assemble at Cancun in Mexico on 9 September to do a mid term stocktake of the negotiations in the World Trade Organization (WTO). Their task is to ensure the negotiations continue. They are likely to do that. Cancun itself will not imperil the WTO, but the things that can will be on show for all to see.

Agriculture is the first challenge. With world subsidies running annually at about US $300 billion and trade barriers blocking access to the world’s biggest markets, this is the biggest task. Negotiations stalled earlier in the year when EU Leaders declared that proper reform of EU policies would be deferred for a decade. They restarted in June when the EU announced it could change how it paid its subsidies.

The shift by the EU was minor when measured for its overall effect. It would only reduce farm production by three percent by the EU’s own calculations. A much bigger result than this is needed, and from the US as well, if the WTO is to going to cut global protection of farming.

Neither Brussels or Washington are ready to make such commitments by 2005 when the Doha Round is due to end. The negotiations will have to be extended for two to three years if the EU and the US are to get the time they need to commit to serious reform. But no extension will be proposed at Cancun. Negotiating etiquette requires pretense that everything is on track. Deadlines are only extended in the WTO after they have been missed.

So the basic business at Cancun will be to set up a new framework for negotiating over agriculture. This will enable them to get negotiations back on track, at least until they run out of steam around the middle of 2004 when the US Presidential elections get into full swing.

There is no doubt that if the authority of the WTO will be damaged if ultimately it fails to tackle protection of farm trade. There are other threats. It is said bilateral and regional free trade agreements undermine the WTO. With most world trade conducted at trade barriers averaging five percent or less, and locked in with commitments under WTO rules not to raise those tariffs, the risk is slight.

There is a much more ominous threat. That is the pronounced drift to make trade conditional on observance of labor rights and environmental standards. This will be on display at various events organized outside the conference rooms by Green NGOs and the EU.

On the day the conference formally opens, the EU will host a “Sustainable Trade” seminar. It will air proposals to reduce trade barriers for products which meet its environmental standards. It has already unilaterally introduced over thirty new environmental trade barriers in the last decade, with more in prospect.

Developing countries are fundamentally opposed to weighing down the WTO with these conditions. It would destroy their ability to compete on world markets. The EU is listening instead to NGOs who are baying for these restrictions.

Other NGOS, lead by Oxfam and North American Groups will organize a “Fair Trade Fair” at Cancun. “Fair Trade” means trade which is organized by community groups, not commercial business, and by enterprises which apply Western labor standards. The EU is now also on this bandwagon. In July it adopted a directive that in every trade agreement it negotiated, it would seek linkages to observance of labor rights.

The NGOs have also had impact in the US. They have pushed Democrat policy on trade firmly in this direction. US trade law obliges US negotiators to try to secure recognition of environmental and labor standards in bilateral agreements.

The WTO basically stops members from playing politics with trade in this way. It is the fundamental reason western NGOs like Worldwide Fund for Nature (WWF), Greenpeace, Friends of the Earth and Oxfam have become leaders in the global attack on the WTO. They do not care about the damage this does to the trade of developing countries

If the EU continues to do their bidding, the damage to the WTO will be far greater than any failure to reform world farm trade.

News

New Capacity Building Program in Financial Services

A new Advisory Board has been established to continue the APEC Study Centre's work in contributing to capacity building in the financial services sector in developing APEC economies. The Board will guide the Centre's work for the next three years in continuing and expanding the successful Managing Regulatory Change in Life Insurance and Pensions (MRC) program.

This year sees the final stage of the original MRC Program. The Program was a response to the needs of developing APEC economies which were brought into sharp focus by the ASian Economic crisis of the late 1990s. It was quickly recognised that strengthening regional financial systems and institutions was an urgent task. Over the past three years six training courses and three symposia of senior regulators have been held.

A key element in the success of the MRC program was the involvement of Australian Government, regulatory agencies and the private sector in providing high level expertise to the program. Funding was provided by AusAID, the Asian Development Bank, the Commonwealth Bank, and Axa Asia Pacific Holdings.

In February 2003 a survey of the senior regulators participating in the MRC Program resulted in new capacity building programs in life insurance and pensions being developed by members of the MRC Advisory Committee.

In reaction to this challenge and other international regulatory developments, the Australian APEC Study Centre and the Department of Finance, Faculty of Economics and Commerce, University of Melbourne has developed capacity building programs in banking and securities.

These programs will be undertaken in collaboration with regional financial regulation organisations, departments of the Australian government, the Australian financial industry and academic institutions.

The public/private approach to capacity building, which has proven to be highly effective by the MRC program, will be extensively utilised. Membership of the APEC Study Centre’s Advisory Board on Capacity Building in Financial Services includes:

The dedicated website of the MRC program at www.apec-finsecreg.org will continue as a contact point for the expanded financial services capacity building programs, or information can be obtained from Mrs Shayne Walsh at the Australian APEC Study Centre 61 3 9903 8031

A 'Stocktake' of Liberalisation in the Telecommunications Sector

The Australian APEC Study Centre is conducting a program to assess progress and help shape the agenda for liberalisation of the Telecommunications sector in APEC economies. The stocktake will revisit liberalisation goals set by Ministers several years ago to assess progress made toward the stated goals, to assess the scope of the goals are wide enough to encompass the key issues facing the sector and to recommend necessary adjustments or additional measures.

The project has five overall goals

1. Assess progress made toward the stated goals as outlined by the Telecommunication and Information Ministers at TELMIN 2 (1996);
2. Assess whether the scope of the list was wide enough to encompass the key issues facing the sector;
3. Assess whether each element is still appropriate as an identifier for a fully liberalised telecommunications market;
4. Provide a “reality check” on the expectations for liberalised markets;
5. And recommend necessary adjustments or additional measures.

The preliminary results of the research will be presented at a special workshop to be held in conjunction with the Telecommunications and Information Working Group (TEL) Meeting in Chinese Taipei during October. A more extensive report, including the results of the workshop will be published early in 2004 and presented to the next meeting of the Telecommunications and Information Ministers.

The lead consultant for the project is John de Ridder who has had extensive experience in the reform of the Australian Telecommunications Sector. Also in the team are international telecoms policy expert Patrick Xavier, and Alice Chou, Research Fellow and telecommunications expert from the Taiwan Institute of Economic Research (TIER). The Australian APEC Study Centre is pleased to be successful in leading a collaborative project with a fellow member of the International Consortium of Study Centres.

The project is being funded by the APEC Secretariat and is being conducted under the supervision of a TEL reference group.

Star Symposium Report Released

In June 2003 the APEC Study centre conducted the Symposium of Maritime Experts to Assist in Implementation of the Secure Trade in the APEC Region (STAR) Initiative. The three-day Symposium was attended by delegates from a number of APEC developing economies and a number of government, port and business experts from Australia. A major concern addressed was the need for all APEC economies to upgrade their systems to meet new International Maritime Organization standards by 2004. The Symposium was funded by AusAID.

The report includes presentations by invited experts, reports from selected APEC developing economies and a summary of the recommendations and conclusions of the Symposium. The report is available online from the Australian APEC Study Centre.

Visiting researcher reports on investor rights

Rafael Pacquing is currently a Visiting Researcher at the Centre as part of his course of Master of Arts in Asia Pacific Policy Studies at the University of British Columbia. He has particular interest in the investment provisions of international trade agreements, in particular with Chapter 11 of NAFTA. He has prepared a paper analysing the Canadian experience in arbitrating disputes under Chapter 11 to make some recommendations on how a similar clause in the Australian-US FTA could work.

The paper, Investor Rights in an FTA: What Australia Can Learn from Canadian Experience with Chapter 11 - Investor-State Arbitration in NAFTA has been published as an issues paper of the Australian APEC Centre.

1. entrepreneurship development
2. business creation, capital formation and financial access for SMEs and micro-enterprises
3. capacity building for and addressing the impediments to SME exporters

The meeting also endorsed the Action Plan to Promote Micro-Enterprise in APEC economies and further co-operation between APEC SME, other APEC fora and sub-fora. The Ministers released a Statement Strengthening an APEC Entrepreneurial Society. The Statement, along with other documentation can be downloaded from the Meeting Website