Outline the issues under discussion at Cancún - Why did talks fail?

Authors Avatar

Daniel Colton                        

        The Doha round of World Trade Association talks were started in November 2001, and since then every step of the way has been fraught with problems. The WTO was seen to be globally failing the poor and developing countries, and the talks were designed to change rules and redistribute some of the benefits of international trade. The vast majority of the 148 member countries of the WTO agreed that the needs of the developing countries had been neglected in the previous rounds of talks in Uruguay in 1994, which had largely been dictated by lobbying from developed countries, and Seattle in 1999, a round of talks that collapsed, mainly through the revolt of developing countries. The Cancun talks were to be taken at a very slow pace owing to the hugely differing views on every subject, the scale of what was being discussed and the number of people whom the talks affected. The failure of the talks cannot be put down to one reason, but a myriad of problems through lack of action, external pressure groups, protectionism, previous grievances and most importantly in the most part a complete lack of compromise.

        There were several key issues under discussion at Cancun, all of which affected a huge number of people around the world, but some were even more contentious than others. Possibly the most contentious issue of all the talks was trade in the agricultural markets. The basic problem was the protectionist problems in place in the US, Japan and most importantly the EU, all of which were enormously subsidising domestic agricultural industries in order to protect domestic production. Agriculture is almost always an industry where developing countries have a comparative advantage, so preventing trade with these countries is only beneficial to one group of people, domestic producers in developed countries. Consumers, tax payers and farmers in LEDCs all loose out. The tariffs between developing and developed countries is almost five times greater than the tariffs between developed countries, thus showing how the developed countries are in no position to preach free-market principles as they have tried to do in the past. Revenue duties collected in the US are the same from Bangladesh as they are from France.  The affects that these tariffs and subsidies are having are very detrimental to the developing countries. Firstly this is shown below with the effect of a subsidy diagram in fig 1.1. This subsidy will mean that the developed countries are able to undercut the developing counties, and the 900million people around the world who earn less than $1 dollar a day and rely on farming for income.

Join now!

        The most extreme example of an excessive and unnecessary subsidy is the US subsidy of its 25,000 cotton farmers. According to the laws of comparative advantage the US should be a massive importer of cotton due to its relatively high costs of production due to expensive labour and disadvantageous weather conditions compared to many equatorial regions. However, it is actually the biggest net exporter of cotton in the world with net exports worth $3bn, in an industry that is subject to $4bn of subsidies every year. This puts ...

This is a preview of the whole essay