commodities
sexta-feira, setembro 19, 2003
estado 19sep03
+++!!!!
Sexta-feira, 19 de setembro de 2003
Mercosul negociará acordo com a China
País torna-se o segundo maior mercado no exterior para os produtos brasileiros
DENISE CHRISPIM MARIN
BRASÍLIA – O Mercosul iniciará negociações com a China, em outubro, para um acordo de livre comércio, informou ontem o chanceler Celso Amorim aos senadores da Comissão de Relações Exteriores. Essa nova frente de negociações, tratada com reservas nos últimos meses, dará substância à estratégia do Brasil e de seus três sócios de manter acordos comerciais com economias expressivas do Hemisfério Sul. Amorim ressaltou que essas iniciativas não substituirão as negociações da Rodada Doha da Organização Mundial do Comércio (OMC), o fórum onde o País considera possível conseguir a abertura de mercado das economias mais ricas.
O acordo com a China complementaria o cenário externo montado para o Mercosul nos próximos anos. O bloco mantém como objetivo prioritário fechar acordos de livre comércio com os países da Comunidade Andina de Nações. A meta ganhou impulso em agosto, após o acerto com o Peru. Em junho, o Mercosul assinou acordo-quadro com a Índia que abre possibilidade para negociar a liberalização nas trocas de bens e serviços. O Mercosul ainda negocia acordo para reduzir tarifas de importação no comércio com o bloco liderado pela África do Sul, que deve se desdobrar no futuro em livre comércio.
“Se congregarmos tudo isso em uma área de livre comércio, seria excelente. Mas essa estratégia, embora extremamente benéfica, não substituirá nossas negociações com os países desenvolvidos”, disse Amorim.
Esse interesse comercial pela China ganhou força com os resultados da balança comercial bilateral neste ano. Em março, a China tornou-se o segundo maior mercado no exterior para os produtos brasileiros, graças a esforços de promoção comercial iniciados pelo governo e por empresários do País em 2000. O mercado chinês ultrapassou parceiros tradicionais do País, como Holanda, Argentina e Alemanha.
De janeiro a julho, as exportações para a China somaram US$ 2,537 bilhões – aumento de 152,56% nas vendas ante igual período de 2002. Essa expansão deveu-se especialmente ao interesse da indústria chinesa pelo minério de ferro e pelo complexo soja do Brasil, e pela garimpagem de negócios de lado a lado nos últimos 3 anos. As importações de produtos chineses somaram US$ 1,072 bilhão – aumento de 32,72%. O superávit comercial para o Brasil chegou a US$ 1,465 bilhão nos 7 meses.
O foco do Brasil nas relações Sul-Sul tornou-se prioridade da política externa do governo Luiz Inácio Lula da Silva. Além do estreitamento dos vínculos com a América do Sul, a partir do Mercosul, a diplomacia reforçou contatos iniciados na gestão passada com China, África do Sul, Índia e Rússia. Em reunião dos chanceleres brasileiro, indiano e sul-africano, em junho, surgiu o Grupo dos Três, orientado mais para a cooperação que para a negociação de acordos.
Nos últimos meses, essas conversas evoluíram para objetivos mais ambiciosos. No início do mês, o País atraiu a África do Sul e Índia para o grupo dos países em desenvolvimento que se opuseram à proposta da União Européia e Estados Unidos para as negociações da questão agrícola na OMC. A China concordou em participar dessa frente.
quinta-feira, setembro 18, 2003
ft 17sep03
Hungry China sets world market price
By Richard McGregor
In the past three years, China has had an explosive impact on the global commodities market.
Exports of iron ore to China outstripped shipments to Japan for the first time this year. Indeed, China's steel industry has, in four years, almost doubled pr oduction.
"China has entered a metals- intensive phase in its growth similar to Japan in the 1950s and 1960s and [South] Korea and Taiwan in the 1970s and 1980s," says Jim Lennon, of Macquarie Securities in London. "The only difference, is that with a population of more than 1bn, its impact on the globe is huge."
As a result of Chinese demand, iron ore prices are rising and mining companies are increasing production and intensifying their ties with Chinese steelmakers.
But steaming coal, abundant in China, is a different story. China now exports to Japan and South Korea, displacing shipments from Australia and forcing prices down.
Chinese coal exports have increased rapidly, giving producers a 54 per cent share of South Korea's import market and 22 per cent of Japan's, at the expense of competing sellers. "China's surplus of coal is playing a significant role in setting the world market price," says Hugh Morgan, former head of Western Mining, of Australia.
As these divergent markets show, China's growth and maturation in the global economy are a double-edged sword for commodities.
On top of iron ore, Chinese demand is pushing prices higher for nickel, copper, alumina and platinum, forcing medium-sized local steelmakers to scramble to secure supplies.
"It's predictable that rising steel production in China and around the world will force the price of steel down and raw materials up," says Liang Xinjun, a director of th e Fosun Group in Shanghai, one of China's largest private steelmakers.
But China is a net exporter of aluminium, coal, tin, magnesium, zinc and metal, all commodities where the country's low capital and labour costs can quickly lead to overinvestment, as has happened in many manufacturing sectors
In aluminium, China was a net importer until 2000, when companies began increasing smelting capacity. "The cost of building the capacity in China is roughly $1,500 a tonne compared with $4,500 in the west, so you get a capital payback within three years," says Macquarie's Mr Lennon.
Smelting capacity in China has risen 25 per cent annually for three years, outstripping the 10-15 per cent yearly increase in demand, forcing it to export excess production. At the same time, the supply of cheap alumina has dried up, putting many smelters under financial strain.
The rising prices of commodities such as iron ore, alumina and nickel, used to make stainless steel, are felt much more acutely in China than other markets be cause of the highly fragmented structure of its industry.
Furthermore, the consolidation of resources has made companies cautious about committing capital expenditure, in turn contracting supply and jacking up spot prices. The spot price for alumina has doubled this year; prices for nickel and copper concentrate have also soared. Attempting to build up supplies, China has increased its imports of nickel 250 per cent so far in 2003 over last year.
"No one wanted to do a long-term contract with China, because they would walk away when the spot price went lower than the contract level," says a London-based trader. "They have realised they don't have a guaranteed source of supply, and they need to honour contracts and behave like the rest of the world."
ft 17sep03
A big future for commodities
By Kevin Morrison and Deborah Hargreaves
Published: September 17 2003 20:34 | Last Updated: September 17 2003 20:34
The rallying cry among some floor traders in the Chicago grain futures trading pits - "Beans in the teens" - recalls the days in the 1980s when soyabean prices went through the roof. Today soyabeans, at just over $6 a bushel, are some way off those highs. But after a summer of drought, future prices for many other agricultural products are rising sharply.
It is not just crop prices that are buoyant. Across a range of commodities, world prices for raw materials are hitting levels not seen in years or, in some cases, decades. Investors are buying record volumes of commodity futures, as even traditionally conservative pension funds are starting to dip a toe into the commodity markets. Many investment banks are expanding their commodity trading desks. New investment funds are being set up.
Hungry China sets the price
In the past three years, China has had an explosive impact on the global commodities market. Read
This activity raises a question: is the commodities market witnessing a cyclical upturn, in part by capturing temporary flows from investors disgruntled with traditional assets? Or is there a structural shift under way that will keep prices high over the longer term?
To some, the enthusiasm suggests a speculative bubble that recalls the late-1990s dotcom mania for media and telecommunications stocks. Others, however, identify a underlying, longer-term trend in which commodities are re-emerging as a strong alternative asset class, driven in part by a recovery in the global economy and the emergence of Asian economies - in particular China - hungry for raw materials.
"Commodities are a big new investment theme," says Michael Hughes, chief investment officer at Baring Asset Management. "The trend for the next five to 10 years will reverse the downward trend of the past 20 years."
Hugh Hendry, partner at Odey Asset Management, which launched a commodities hedge fund a year ago, agrees. "There have been five bull markets in commodities in the past 100 years," he says, "and this is a big one."
Tangible assets such as gold and oil have always offered security in times of economic and geopolitical uncertainty. Moreover, having been overlooked during the strong bull market for equities in the 1990s, commodities have until recently provided a higher relative return over equities since the equity bear market began in March 2000. Bond prices have also fallen from their postwar highs in June, as economists predicted that the bottom of the interest rate cycle has been reached after the Federal Reserve cut rates to 1 per cent on June 25.
As a result, investors have been making record purchases this year of futures contracts for oil, copper, gold, silver and platinum (see charts). Platinum touched a fresh 23-year high last week. Silver reached a three-year peak recently, copper touched its highest point since March 2001 and nickel last month rose to levels last seen in May 2000. The Gold Bugs index on the American Stock Exchange - a benchmark gold share indicator - rose last week to its highest level since June 1996. Even esoteric commodities such as palm oil are in demand.
Several factors in the real economy lie behind the price rises, says Richard Bronks, chief operating officer for global commodities at Goldman Sachs. Wheat, for example, has increased 20 per cent in Britain and continental Europe following the heatwave that has cut harvest estimates by more than 10 per cent. The European Union may find itself in the unaccustomed position of having to import wheat. As a result, wheat futures have gained almost 20 per cent on exchanges in Chicago, Kansas and Minnesota. Similarly, fires in Canada have helped pushed up timber prices 63 per cent this year.
The most heavily traded indices are the Goldman Sachs Commodity Index (GSCI) and the Reuters/CRB index, which are listed on the Chicago Mercantile Exchange and the New York Board of Trade. The amount invested in GSCI derivatives is now more than $12bn - up from about $2bn in 1996. The index has provided an annualised return of 11.66 per cent since 1970, compared with an 11 per cent return on the Standard & Poor's 500 over the same period.
High prices and record volumes have been a boon for commodity traders. "Volumes have tripled in the past three years," says George Gero, senior vice- president at Legg Mason Wood Walker in New York, who has been a floor trader on Nymex since 1974. "Commodities were forgotten about during the 1990s, but they are now being followed by a lot more people."
One indicator is the record prices currently commanded by seats on the New York Mercantile Exchange (Nymex), the world's largest commodity futures exchange. This month one sold for a record $1.6m - triple the price of three years ago.
In part, demand for trading seats has risen since the New York Board of Trade, home of US coffee, cocoa, sugar and cotton futures trading, moved into the Nymex building, allowing each exchange to trade in the other's commodities. "We are seeing cocoa traders buy gold contracts and oil traders buy coffee contracts," says Mr Gero. "This increases demand for seats on each other's exchange."
In addition, new products are being developed to expand investment opportunities. The London Metal Exchange, the world's largest base metals futures exchange with an annual turnover of about $2,000bn a year, is close to giving the go-ahead for a steel futures contract, the first of its kind in the $900bn a year market. Steel is the world's largest metals market and the only main metal without a derivatives contract.
The World Gold Council is close to launching gold-backed securities on stock exchanges in London, New York, continental Europe and Asia in an effort to make bullion a more attractive investment prospect for both private investors and institutions.
For all the new-found popularity of commodities as an asset class, investment remains a tiny fraction of that poured into equities and bonds. Goldman Sachs is the only large Wall Street investment bank that currently includes a commodity component in its asset allocation recommendations.
There are signs, however, that this may be changing. Other investment banks, such as Merrill Lynch, are reviewing their portfolio weightings. More broadly, commodities are being viewed in a fresh light as part of a debate about the relative merits of real and paper assets.
With interest rates so low, the choice between income-paying securities and tangible assets is less clear- cut. Commodities, argues Mr Hughes at Barings, will gain importance with the recovery in manufacturing-based Asian economies. Prices are likely to be further buoyed by the fact that very little new mining capacity has been developed in the past 15 years.
A new factor that is likely to support prices is the increase of pension fund interest in commodities. A handful of funds are turning to commodities as a way of diversifying away from equities and bonds. Given the massive amounts of cash at their disposal, even a small swing into commodities has a disproportionate effect on prices in the relatively small markets.
Significantly, pension funds tend to be long-term investors. "This money is going to be around for the next few years," says Brian de Clare, head of commodity marketing at ABN Amro. "Pension funds are in it for the medium to long term - they are not hedge funds, which are far more speculative and only look for the biggest return in the shortest period."
Mn Services Investment Management, an €18bn ($20bn) pension fund for Dutch engineering workers, started investing in commodities in 2000 and now has a strategic allocation of 3 per cent. "Commodities fit in our investment policy," says Evert Blom, a strategist. "Over the long term they provide a hedge against inflation, a low or negative correlation to other asset classes and a good return, also compared to equities."
Robert Coomins, manager of alternative assets at ABP, the pension fund for Dutch public sector workers, says ABP moved into commodities in 2001 with a mandate to go up to 5 per cent of its €140bn funds under management. "We are in there for the long term; we are not going to be moving in and out of commodities," he says.
The move into commodities by ABP is part of a broader move into alternative investments including hedge funds, private equity and property. ABP currently has 17 per cent of its funds in alternative investments, with an option to go to a maximum of 20 per cent. Alternative assets provided a healthy return of more than 8 per cent in the June quarter for ABP, easily outperforming fixed interest returns but outpaced by the 14 per cent gain in equities.
ABP's portfolio weighting is 2 per cent but Mr Coomins believes now may not be the best time for others to move into commodities. With the US economy expected to grow strongly next year, "this is a time to be overweight in equities because equities move the most in anticipation of a future event, whereas commodities reflect better what is happening now in the economy", he says.
Other investment strategists remain wary, saying the commodity market's recent performance will prove shortlived.
The Goldman Sachs index jumped 50 per cent in 2000 but fell 32 per cent in 2001 when the US went into recession, only to recover by the same amount a year later. So far this year it has risen 8 per cent. This compares with gains of up to 35 per cent on technology stocks and a rise of 21 per cent in the Nikkei 225, Japan's equity benchmark.
"There is more money in fewer hands, so when money comes into this market, it moves around very quickly and prices react fast," says Steve Bruce, floor trader at the Chicago Board of Trade with Man International.
Moreover, some investment is driven by hedge funds, many of which will rapidly move on to the next "hot" investment. Consumers of metals, such as manufacturers and carmakers, are not buying at current prices, says John Kemp, economist at Sempra Metals in London, but waiting for prices to fall. "This is all speculative buying that has turned into a bubble and is going to be followed by a crash," he warns.
These criticisms arise every time commodity prices start to rise. In the late 1980s, gold, foodstuffs and base metals were all in demand. Strategists trumpeted the arrival of an alternative asset class - but then forgot about it when the long equity bull market took hold.
This time, however, may be different. If China's emergence as a main buyer is sustained and traditional asset classes continue to offer poor returns, commodities may acquire a new status.
In his book Adventure Capitalist, Jim Rogers, co-founder of the Quantum Fund with George Soros, writes: "The 21st century will be the century of China. The best way to play China is to buy things the Chinese need and will buy." Those things are commodities.
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terça-feira, setembro 16, 2003
nyt editorial 16sep03
hammers on developed nations...
September 16, 2003
HARVESTING POVERTY
The Cancún Failure
ancún means "snakepit" in the local Mayan language, and it lived up to its name as the host of an important World Trade Organization meeting that began last week. Rather than tackling the problem of their high agricultural tariffs and lavish farm subsidies, which victimize farmers in poorer nations, a number of rich nations derailed the talks.
The failure by 146 trade delegates to reach an agreement in Mexico is a serious blow to the global economy. And contrary to the mindless cheering with which the breakdown was greeted by antiglobalization protesters at Cancún, the world's poorest and most vulnerable nations will suffer most. It is a bitter irony that the chief architects of this failure were nations like Japan, Korea and European Union members, themselves ads for the prosperity afforded by increased global trade.
The Cancún meeting came at the midpoint of the W.T.O.'s "development round" of trade liberalization talks, one that began two years ago with an eye toward extending the benefits of freer trade and markets to poorer countries. The principal demand of these developing nations, led at Cancún by Brazil, has been an end to high tariffs and agricultural subsidies in the developed world, and rightly so. Poor nations find it hard to compete against rich nations' farmers, who get more than $300 billion in government handouts each year.
The talks appeared to break down suddenly on the issue of whether the W.T.O. should extend its rule-making jurisdiction into such new areas as foreign investment. But in truth, there was nothing abrupt about the Cancún meltdown. The Japanese and Europeans had devised this demand for an unwieldy and unnecessary expansion of the W.T.O.'s mandate as a poison pill — to deflect any attempts to get them to turn their backs on their powerful farm lobbies. Their plan worked.
The American role at Cancún was disappointingly muted. The Bush administration had little interest in the proposal to expand the W.T.O.'s authority, but the American farm lobby is split between those who want to profit from greater access to foreign markets and less efficient sectors that demand continued coddling from Washington. That is one reason the United States made the unfortunate decision to side with the more protectionist Europeans in Cancún, a position that left American trade representatives playing defense on subsidies rather than taking a creative stance, alongside Brazil, on lowering trade barriers.
This was an unfortunate subject on which to show some rare trans-Atlantic solidarity. The resulting "coalition of the unwilling" lent the talks an unfortunate north-versus-south cast.
Any hope that the United States would take the moral high ground at Cancún, and reclaim its historic leadership in pressing for freer trade, was further dashed by the disgraceful manner in which the American negotiators rebuffed the rightful demands of West African nations that the United States commit itself to a clear phasing out of its harmful cotton subsidies. American business and labor groups, not to mention taxpayers, should be enraged that the administration seems more solicitous of protecting the most indefensible segment of United States protectionism rather than of protecting the national interest by promoting economic growth through trade.
For struggling cotton farmers in sub-Saharan Africa, and for millions of others in the developing world whose lives would benefit from the further lowering of trade barriers, the failure of Cancún amounts to a crushing message from the developed world — one of callous indifference.
wsj 16sep03
wsj editorial
hammers europe subsidies but does not protect the us either, thinks losers are developed world service and business sectors who stand to lose from lack of more open markets BECAUSE of stupid farm subsidies. ends with proposal of unilateral free trade!
September 16, 2003
REVIEW & OUTLOOK
Cancun's Silver Lining
The collapse of global trade talks Sunday in Cancun, Mexico, is giving everyone the chance to proclaim the death of free trade, but let's make sure we toe-tag the right corpse. What really died on Sunday was the developed world illusion, especially in Europe, that farm subsidies are untouchable.
The world's rich nations escaped the last successful world trade round in the 1990s without budging on agriculture. They'd hoped to finesse the matter in Cancun too. But this time an alliance of poor countries and free-market exporters (Australia) called their bluff, and Europe in particular was exposed as the cynic that wants freer trade for everyone except its own pampered farmers. The EU's failure to offer more than token reductions in its 45 billion euros-a-year agriculture subsidies gave India and others cause to walk away.
The Cancun collapse will yet lead to progress if this farm lesson is driven home to those parts of the European, American and Japanese economies that depend on expanding global markets. Farmers account for just 5% of the EU's population, and a mere 2% of its GDP, yet agriculture has been wagging EU trade policy for years.
The failure to break down Third World trade barriers in the future is only going to hurt German manufacturers, French bankers and American software designers. These and other service and high-tech providers are the big losers coming out of Cancun, and maybe they will begin to tell their home-country politicians just how destructive First World farm subsidies have become.
The U.S. has to shoulder some of the blame here. In the wake of the failure yesterday, Bush Administration officials were fingering Third World countries, and no doubt some of them were looking for an excuse to maintain their own trade barriers. But the task of the world's economic leader and largest global market is not to give them that excuse. U.S. Trade Rep. Robert Zoellick did put a worthy subsidy-cutting proposal on the table last year. But last year's $17-billion-a-year farm bill left him with too little credibility or moral authority to challenge Europe's subsidies. He also failed to enlist the same African allies he had at the start of this trade round in Doha in 2001.
One irony here is that Cancun really does prove how "globalization" has become a reality. The developing world couldn't afford to ignore agriculture in the EU and America any longer because it has come to understand that subsidies keep global farm prices artificially low. Cotton subsidies in Mississippi literally drive cotton farmers in West Africa out of business. The subsidies also raise prices for American consumers, but in the developing world it is a question of hope or poverty.
The World Bank estimates that a new round of market opening would raise global output between $290 billion and $520 billion and lift some 144 million people out of poverty by 2015. Dan Griswold of the Cato Institute cites a May 2002 International Monetary Fund paper showing that ending agricultural protectionism alone would add $100 billion to global growth. Some $92 billion of that would go to the developed world, in the form of lower prices and better allocation of resources, and $8 billion would go to poor countries.
Where to go from here? Cancun doesn't yet mean this Doha trade round is dead. The Uruguay round took eight years before it succeeded in 1993. Mr. Zoellick, the U.S. trade czar, has also stressed that he will continue to pursue bilateral and regional trade pacts with willing partners. Australian Prime Minister John Howard said yesterday that he expects to reach such a deal with the U.S. as early as next month.
Perhaps we also need to rethink the size of these huge multilateral trade rounds. Once upon a time trade liberalization concerned only the tariffs and border rules for tradable goods, whether agricultural or industrial. But lately the talks have become loaded down with proposals on investment, labor law and the environment, among other things. It's possible they've become too unwieldy.
From a free trader's view, after all, the World Trade Organization is a protectionist device. It allows countries to justify, on grounds of treaty reciprocity, limits on trade that otherwise make no economic sense. Perhaps it's time for the U.S. and other countries that benefit from open global markets to begin once again practicing unilateral free trade.
Such a policy kept Britain rich for decades in an earlier era, and it would do the same for us now. And the example for the rest of the world would do more for free trade than all the Cancun conferences from here to the next century.
URL for this article:
http://online.wsj.com/article/0,,SB106367026017230500,00.html
Updated September 16, 2003
nyt 16sep03
us farm groups praising zoellick's good job in defending farm subsidies
September 16, 2003
Coming U.S. Vote Figures in Walkout at Trade Talks
By ELIZABETH BECKER
ANCÚN, Mexico, Sept. 15 — It may be more than a year away, but the United States presidential election is already throwing a long shadow. Here in Cancún this week, it was enough to touch off a walkout by delegates from developing nations at the World Trade Organization talks who were convinced that it was hopeless to expect any realistic negotiations with the Americans this year on farm subsidies.
Opinions were divided about the impact of the decision by the developing nations known as the Group of 21 to reject a draft proposal in which they would have opened up their markets to foreign investment in return for cuts in agricultural subsidies. But there was widespread agreement — outside the United States — that they had little choice.
A few trade experts did question the wisdom of the developing countries. Stefan Tangermann, the agriculture expert at the Organization for Economic Cooperation and Development, said he feared that the countries had given up a rare opportunity to start cutting down the $300 billion in annual agricultural subsidies that distorts world trade and undermines the poorest farmers around the world.
"It is a very deplorable outcome," he said, shaking his head.
But several senior delegates from advanced countries with little at stake in the agricultural talks said the Group of 21 — which is led by Brazil and includes China, India, South Africa, Egypt and Indonesia — had little choice but to walk out given the restraints caused by the upcoming presidential campaign.
Robert B. Zoellick, the United States trade representative, had promised that Washington was prepared to cut its multibillion-dollar farm subsidies. But the compromise proposal essentially left that farm program intact. It also gave American cotton farmers a reprieve despite appeals from four of Africa's poorest nations.
"Bob Zoellick is a master at strategy and I think he had little room," one senior delegate said. "President Bush was not going to upset his farmers before his re-election."
Before the talks broke off, American farmer groups attending the conference here said they were pleased Mr. Zoellick was able to protect most of the farm bill passed in 2002, which raised subsidies by $40 billion.
"He did his very best," said Robert Stallman, head of the American Farm Bureau Federation. "The ambassador has done an excellent job."
The farm states voted heavily in favor of Mr. Bush in the 2000 election, and were the backbone of the states that gave him the bulk of his electoral votes. Agribusiness, which profits from the low cost of corn, soybeans and other crops subsidized by American taxpayers, has shifted its allegiance to the Republican Party. Political contributions from agribusiness jumped to $53 million in 2002 from $37 million in 1992, with the Republicans' share rising to 72 percent from 56 percent, according to figures compiled by the Center for Responsive Politics.
Peter Gaemelke, the head of the European farmers group and the counterpart of Mr. Stallman, said Mr. Zoellick had done his job a little too well. "This should not be a meeting just to elect Mr. Bush," Mr. Gaemelke said.
Mr. Zoellick implicitly rejected such calculations on Sunday night when he said the United States was one of the "very few countries" prepared to negotiate big changes that favor developing nations.
"They missed the opportunity to cut our subsidies," he said.
The American farm provisions, while the central issue, were not the only reasons for the Group of 21's decision to quit the talks. Europe's demand that the world trading body negotiate new rules covering investment, trade facilitation and two other areas were also cited.
In the long run, whether the Group of 21 gains or loses as a result of the breakdown in negotiations may be beside the point. What counts, its members asserted, was the statement that had been made. They said they had established themselves as a power bloc to be reckoned with.
"This is a change in the nature and quality of negotiations between developing and developed nations," said Alec Irwin, South Africa's trade negotiator. "While we are disappointed, there is no doubt today we are all optimistic in the medium and the long run."
segunda-feira, setembro 15, 2003
on cancun failure: wsp, wsj and nyt
September 15, 2003 4:36 a.m. EDT
PAGE ONE
Trade Talks Fail
Amid Big Divide
Over Farm Issues
Developing Countries
Object to U.S., EU Goals;
Cotton as a Rallying Cry
By NEIL KING JR. and SCOTT MILLER
Staff Reporters of THE WALL STREET JOURNAL
CANCUN, Mexico -- In a severe blow to the future of global trade negotiations, talks here among 146 countries collapsed in a dispute between rich and poor countries who failed to bridge differences over farm subsidies and other issues that have plagued trade-liberalization efforts for years.
The breakdown of the World Trade Organization talks was reminiscent of one four years ago amid massive demonstrations in Seattle. But this round of talks began in Doha a few months after the terrorist attacks of Sept. 11, 2001, and was billed then as a rare beacon of hope for a sputtering world economy and a testament to international cohesion after the Seattle debacle.
From the start, however, the talks in this Caribbean resort exposed raw differences between the world's rich and developing countries over what further trade liberalization means.
The talks all along hinged on how deeply the rich countries, particularly Europe, would be willing to slash their huge farm-subsidy programs. Developing countries say the $300 billion a year in rich-country farm payments depress world-wide crop prices, making it difficult for their own farmers to compete.
But with the subsidies as backdrop, the talks actually collapsed when developing countries refused to launch negotiations over trade-enhancing measures such as investment rules and antitrust policies that the Europeans and Japan said were key to their overall aims. Having received few assurances of deep farm cuts, the developing countries said they had no interest to bargain on other issues.
When all sides realized that the divisions were insurmountable, they pulled the plug on the talks hours before they were originally set to end late Sunday. Amid howls of glee from hundreds of antitrade activists, trade diplomats in the stuffy convention hall where the talks took place said countries would now have to regroup and see what was worth salvaging.
"This collapse does not stop the agenda, but it does mean that everyone is going to have to rethink what we have set out to achieve," said Richard Bernal, a top negotiator for the Caribbean countries.
The Cancun summit was the last meeting scheduled to agree on a framework for trade agreements, intended to be completed in detail next year. A complete breakdown of the Doha round of negotiations would be a serious setback for U.S. businesses ranging from car makers to express delivery services. Manufacturers hoped to bring down industrial tariffs in large developing countries such as India, while farmers wanted to see a reduction in import duties, which now average around 62% outside the U.S. The talks are also supposed to include a comprehensive agreement to open up new markets for everything from insurance to architecture.
It's unclear what Cancun means for the WTO itself. Many here hailed the sudden strength of a core bloc of developing countries, led by Brazil, as the dawn of a new democracy within one of the world's most unwieldy organizations. But the stalemate could prompt powerful countries like the U.S. to spurn the WTO and seek their own trade deals, a trend already well under way. That could jeopardize the WTO mission of creating a system of universal trade rules for all.
The Doha round was launched in the hope of giving a boost to developing countries. But that objective became increasingly contentious over the past year as negotiators feuded over how to make concessions amid a global economic slowdown. Over the weekend, ministers from many developing countries declared the benevolence all but dead.
"The pretense of the development objective has finally been rejected and discarded," said a furious Indian Commerce Minister Arun Jaitley. Instead of special treatment for poorer countries, he said, the WTO was creating new carve-outs for powerful developed countries.
Some delegates said the shifting balance of power within the WTO contributed to the impasse. Not long ago, the U.S. and the EU could largely dictate events at the global trade body. But developing countries have become increasingly well organized and willing to throw their weight around.
With Brazil at the helm, an upstart alliance of more than 20 developing countries banded together here to fight against rich-country farm subsidies in a development with little precedent in WTO history. An exultant Brazilian foreign minister, Celso Amorim, said after the talks fell apart that he was proud to see the alliance -- known by the end as the Group of 22 -- hold together "and show a unified platform on agriculture." He predicted that "the pieces will be picked up ... and the process will go on."
In the end, though, the EU was as much to blame for the collapse of the Cancun talks as any of the more intransigent developing countries. The EU insisted that negotiators early Sunday plunge into the thicket of proposed international investment rules and other trade-enhancing measures, known as the Singapore issues. But countries such as Malaysia and India balked outright, saying they would not agree to negotiate these issues under any condition.
The EU had made the Singapore issues a precondition for making cuts in its farm subsidies. "It's a sad day for world trade," the European Union's commissioner for agriculture, Franz Fischler, said as he exited the convention center. "There is no reason to stay in Cancun."
U.S. Trade Representative Robert Zoellick came to Cancun hoping to draft a basic understanding that would lead toward the EU agreeing to slash its massive farm-export subsidies. The Bush administration also was intent on gaining better access to foreign markets for U.S. agricultural and industrial goods. In return, it was willing to further open the U.S. market and -- unlike Europe -- make more substantial cuts to farm subsidies.
Despite four days of intense talks, negotiators in the end never returned to the issues of most concern to Washington. Mr. Zoellick showed some bitterness at the breakdown in talks, blaming the impasse on countries that preferred speech-making to real negotiations. "Many countries just thought this was a freebie," he said, "and now they will have to face the cold reality of going home with nothing."
Mr. Zoellick said it was now hard to believe that the talks could wrap up on time, underscoring the fear shared by many that the Doha round might now sputter on for years in the way of past global trade negotiations. Trade ministers said they now needed what one called a brief "cooling off" period. Senior trade officials are now set to meet next at the WTO's Geneva headquarters by Dec. 15 to discuss how to proceed.
The U.S. already is pursuing an array of regional and two-country deals more actively than any other country -- and is promising to seal a host of new deals over the next year. The WTO has argued against such an approach, saying it puts small countries at a disadvantage when negotiating with trading powers such as the U.S., but Mr. Zoellick suggested that the deadlock at Cancun may leave the U.S. with no choice but to take its trade aims elsewhere.
For talks to resume, the U.S. -- but much more so Europe -- will almost certainly have to be willing to give much more on cutting agricultural subsidies. If the EU had offered much steeper subsidy cuts, developing countries might well have shown more flexibility on the issues of interest to the richer countries.
In Cancun, cotton became a serious focal point for how farm subsidies in developing countries can wreak havoc in villages thousands of miles away. Delegates from four West African countries pleaded for the WTO to end all cotton subsides over three years, and to pay cotton farmers in the world's poorest countries a total of $250 million a year to get back on their feet. The U.S. spends around $2.5 billion a year and the EU another $700 million helping their cotton farmers, a fact that many say has helped depress cotton prices to historic lows.
But a compromise text put out Saturday by Mexico outraged many poorer countries by supporting a U.S. proposal to make cotton part of continuing negotiations over textiles and offering no immediate relief.
Rich nations, too, found plenty of cause to be unhappy with the compromise text. The EU, for one, adamantly rejected proposals to set a specific date to eliminate agricultural export supports -- a longstanding aim of the U.S.
The EU, which spends about $3.3 billion a year directly subsidizing farm exports, has offered to work toward reducing the subsidies and even to eliminate them on certain goods of particular importance to poor nations. But it refuses to consider eliminating them altogether.
Write to Neil King Jr. at neil.king@wsj.com5 and Scott Miller at scott.miller@wsj.com6
washingtonpost.com
Rich-Poor Rift Triggers Collapse of Trade Talks
By Kevin Sullivan
Washington Post Foreign Service
Monday, September 15, 2003; Page A01
CANCUN, Mexico, Sept. 14 -- Global trade talks collapsed abruptly this afternoon in an unprecedented uprising by scores of the world's poorest nations against the United States, European Union countries and other wealthy nations.
"They were not generous enough; there was just not enough on the table for developing countries," said Richard L. Bernal, a delegate from Jamaica, as anti-globalization activists cheered and sang nearby. "If the developed countries had offered more to the developing countries, it would have created an atmosphere more conducive to a settlement."
The impasse among the 148 nations of the World Trade Organization threatens to derail prospects for a global trade agreement that was supposed to be concluded by 2005. Negotiations were launched two years ago in Doha, Qatar, to lower trade barriers with special emphasis on increasing development in poor nations.
Talks at this Caribbean resort were intended to further that process; instead, their failure has exposed a deep philosophical rift between rich and poor nations about the effects of the trade liberalization that has swept the world in recent decades.
The United States and other rich nations argue that free trade has created jobs and wealth around the world, and that reducing more barriers to trade would expand that success. But poor nations argue that the rules of global trade have been tilted too heavily in favor of major industrialized nations, causing some of the world's most vulnerable people to fall deeper into poverty.
The rich nations' view has long dominated discussions at the WTO, a global body formed nine years ago to help harmonize trade rules and practices in an increasingly interconnected world. But here in Cancun, for the first time, developing nations were able to unite to turn their growing frustration into a powerful counterbalance against the United States and Europe.
"We won't move forward unless we do something for these poor people who have so much to lose," said Ivonne Juez de Baki, a delegate from Ecuador, which is a member of a group of 22 nations -- including Brazil, China and India -- that played a key and contentious role this week in pressing the United States and the European Union for concessions.
Their main complaint was over the $300 billion in annual subsidies that rich governments provide to their farmers, which they say leads to overproduction that floods world markets with artificially cheap food and costs millions of farm jobs in Africa, Latin America and parts of Asia.
"We have won a lot; it's not the end, it's the beginning of a better future for everyone," Juez de Baki said at a news conference.
"In the past, rich countries made deals behind closed doors without listening to the rest of the world," said Phil Bloomer of the British organization Oxfam. "They tried it again in Cancun. But developing countries refused to sign a deal that would fail the world's poorest people."
U.S. Trade Representative Robert Zoellick said the conference failed largely because some countries used "rhetoric as opposed to negotiation." He said the United States had been prepared to make deep cuts in subsidies but that other countries, which he did not name, had not been willing to negotiate the tariff reductions and other measures the United States was seeking.
"Whether developed or developing, there were 'can-do' and 'won't-do' countries here," Zoellick said in a statement. "The rhetoric of the 'won't-dos' overwhelmed the concerted efforts of the 'can-dos.' "
At a news conference later, Zoellick said: "A number of countries just thought it was a freebie; they could just make whatever points they suggested, argue, and not offer and give. And now they are going to face the cold reality of that strategy: coming home with nothing. That's not a good result for any of us."
Sen. Charles E. Grassley (R-Iowa), chairman of the Senate Finance Committee, called it "a sad day for the global economy" and said he would use his position to "carefully scrutinize" countries' behavior in Cancun. "The United States evaluates potential partners for free trade agreements on an ongoing basis. I'll take note of those nations that played a constructive role in Cancun, and those nations that didn't."
Delegates at the talks approved membership for two additional nations, Nepal and Cambodia.
Delegates and analysts here said the failure of the Cancun talks was a setback for the WTO and for global trade. But almost all predicted that the negotiations were not mortally wounded and would continue.
"The pieces will be picked up again, and the negotiation will go on," said Celso Amorim, Brazil's foreign minister and key spokesman for the Group of 22 developing nations.
J. Bradford DeLong, an economics professor and trade expert at the University of California at Berkeley, said today's failure meant that relations between rich and poor nations are stalled where they have been since the mid-1990s. But he said the overall volume of world trade would continue to increase.
"The world will become a more integrated place, with more goods traded across borders," he said. "It's just not going to do so under freer trade rules, at least not for a while."
The final straw in the negotiations was the insistence of rich countries, mainly from the European Union, that developing countries accept global rules in a variety of new areas, including foreign investment and government procurement. Poor nations and activists argue that those rules meddle in domestic affairs and should not be part of WTO negotiations.
Many anti-globalization activists, who say the WTO is stacked against poor countries, were almost gleeful about today's result. To the tune of the Beatles' "Can't Buy Me Love," they sang "Money can't buy the world" and danced in the convention center.
But the mood among most delegates was one of resignation.
"This was not an antagonistic environment. This was just a fundamental disagreement over certain key issues," said Bernal, the Jamaican delegate. "Everybody has to take some of the blame."
But "no deal is better than a bad deal," he said.
Staff writer Paul Blustein in Washington contributed to this report.
--------------------------------------------------------------------------------
September 15, 2003
Poorer Countries Pull Out of Talks Over World Trade
By ELIZABETH BECKER
ANCÚN, Mexico, Sept. 14 — World trade talks intended to help the developing nations unexpectedly collapsed today when delegates from Africa, the Caribbean and Asia walked out, accusing wealthy nations of failing to offer sufficient compromises on agriculture and other issues.
While not as disastrous as the breakdown of talks in Seattle four years ago, the failure to reach an accord today was widely regarded as a huge setback for the World Trade Organization, the 146-nation group that was presiding over the talks here. The group, based in Geneva, will now almost certainly fail to make its self-imposed deadline of January 2005 for reaching a new agreement that dismantles global trade barriers.
The failure today also means the faltering global economy will not receive a jump-start by the expansion of markets, which some economists contend would inject hundreds of billions of dollars into international commercial activity.
"We all could have gained here and now we have all lost," said Pascal Lamy, the European Union's trade negotiator, commenting on the collapse of the talks.
Robert B. Zoellick, the United States trade representative, sounded less pessimistic but still spoke with some frustration. "The harsh rhetoric of the `won't do' overwhelmed the concerted efforts of the `can do,' " he said.
Wealthy nations had hoped an agreement at the five-day talks in this resort city would help fend off a new wave of protectionism, especially in the United States, where manufacturing jobs have been disappearing by the tens of thousands. Already, questions about the benefits of unfettered world trade have infected the presidential campaign.
Supachai Panitchpakdi, the director general of the W.T.O., tried to be optimistic tonight, saying, "We must return to the task before us with renewed vigor," to complete this round of trade negotiations, which will continue at a low level at the group's Geneva headquarters.
"If we fail, the losers will be the poor and weaker nations," he said.
The immediate cause of the breakdown was proposed new trade rules for investment and government procurement, which had been promoted by the European Union but opposed by the poorer nations. But agriculture was the pivotal issue. Developing nations had established themselves as a potent force in talks here this week, challenging the earlier supremacy of the United States and Europe in trade talks.
Banding together in what was known as the Group of 21, the developing nations thought they had made their case that the $300 billion in subsidies paid every year to the world's wealthiest farmers undermined the livelihoods of millions of poor farmers around the world. But they said the proposals made by the United States and Europe to redress what the developing nations regard as a major injustice fell far short of their expectations.
Richard L. Bernal, a delegate from Jamaica, said a group of African, Caribbean, Asian and Latin countries felt they had little choice but to quit the talks. The United States and Europe, he said, were not generous enough on reducing their agriculture subsidies, on helping poor African countries dependent on cotton, or on understanding their difficulties in taking on such complex trade responsibilities as investment.
"There is nothing for us small countries in this proposal," he said. "We don't want any of this."
Yet those nations said tonight that they blamed no one for the failure and vowed to work for a trade agreement on agriculture now that the talks move back to Geneva. Celso Amorim, the Brazilian minister of foreign affairs and a spokesman for the group, said those nations had demonstrated that they were a new force in the trading organization.
"This is the real start in negotiations over agriculture," he said. "Whatever the process, the pieces will be picked up again."
Mr. Zoellick said he would move ahead on free-trade agreements with individual nations or regions, noting he had a long list of countries that wanted to negotiate with the United States. Meanwhile, he said, he would wait for things to "calm down" at the World Trade Organizat
on cancun failure: wsp, wsj and nyt
September 15, 2003 4:36 a.m. EDT
PAGE ONE
Trade Talks Fail
Amid Big Divide
Over Farm Issues
Developing Countries
Object to U.S., EU Goals;
Cotton as a Rallying Cry
By NEIL KING JR. and SCOTT MILLER
Staff Reporters of THE WALL STREET JOURNAL
CANCUN, Mexico -- In a severe blow to the future of global trade negotiations, talks here among 146 countries collapsed in a dispute between rich and poor countries who failed to bridge differences over farm subsidies and other issues that have plagued trade-liberalization efforts for years.
The breakdown of the World Trade Organization talks was reminiscent of one four years ago amid massive demonstrations in Seattle. But this round of talks began in Doha a few months after the terrorist attacks of Sept. 11, 2001, and was billed then as a rare beacon of hope for a sputtering world economy and a testament to international cohesion after the Seattle debacle.
From the start, however, the talks in this Caribbean resort exposed raw differences between the world's rich and developing countries over what further trade liberalization means.
The talks all along hinged on how deeply the rich countries, particularly Europe, would be willing to slash their huge farm-subsidy programs. Developing countries say the $300 billion a year in rich-country farm payments depress world-wide crop prices, making it difficult for their own farmers to compete.
But with the subsidies as backdrop, the talks actually collapsed when developing countries refused to launch negotiations over trade-enhancing measures such as investment rules and antitrust policies that the Europeans and Japan said were key to their overall aims. Having received few assurances of deep farm cuts, the developing countries said they had no interest to bargain on other issues.
When all sides realized that the divisions were insurmountable, they pulled the plug on the talks hours before they were originally set to end late Sunday. Amid howls of glee from hundreds of antitrade activists, trade diplomats in the stuffy convention hall where the talks took place said countries would now have to regroup and see what was worth salvaging.
"This collapse does not stop the agenda, but it does mean that everyone is going to have to rethink what we have set out to achieve," said Richard Bernal, a top negotiator for the Caribbean countries.
The Cancun summit was the last meeting scheduled to agree on a framework for trade agreements, intended to be completed in detail next year. A complete breakdown of the Doha round of negotiations would be a serious setback for U.S. businesses ranging from car makers to express delivery services. Manufacturers hoped to bring down industrial tariffs in large developing countries such as India, while farmers wanted to see a reduction in import duties, which now average around 62% outside the U.S. The talks are also supposed to include a comprehensive agreement to open up new markets for everything from insurance to architecture.
It's unclear what Cancun means for the WTO itself. Many here hailed the sudden strength of a core bloc of developing countries, led by Brazil, as the dawn of a new democracy within one of the world's most unwieldy organizations. But the stalemate could prompt powerful countries like the U.S. to spurn the WTO and seek their own trade deals, a trend already well under way. That could jeopardize the WTO mission of creating a system of universal trade rules for all.
The Doha round was launched in the hope of giving a boost to developing countries. But that objective became increasingly contentious over the past year as negotiators feuded over how to make concessions amid a global economic slowdown. Over the weekend, ministers from many developing countries declared the benevolence all but dead.
"The pretense of the development objective has finally been rejected and discarded," said a furious Indian Commerce Minister Arun Jaitley. Instead of special treatment for poorer countries, he said, the WTO was creating new carve-outs for powerful developed countries.
Some delegates said the shifting balance of power within the WTO contributed to the impasse. Not long ago, the U.S. and the EU could largely dictate events at the global trade body. But developing countries have become increasingly well organized and willing to throw their weight around.
With Brazil at the helm, an upstart alliance of more than 20 developing countries banded together here to fight against rich-country farm subsidies in a development with little precedent in WTO history. An exultant Brazilian foreign minister, Celso Amorim, said after the talks fell apart that he was proud to see the alliance -- known by the end as the Group of 22 -- hold together "and show a unified platform on agriculture." He predicted that "the pieces will be picked up ... and the process will go on."
In the end, though, the EU was as much to blame for the collapse of the Cancun talks as any of the more intransigent developing countries. The EU insisted that negotiators early Sunday plunge into the thicket of proposed international investment rules and other trade-enhancing measures, known as the Singapore issues. But countries such as Malaysia and India balked outright, saying they would not agree to negotiate these issues under any condition.
The EU had made the Singapore issues a precondition for making cuts in its farm subsidies. "It's a sad day for world trade," the European Union's commissioner for agriculture, Franz Fischler, said as he exited the convention center. "There is no reason to stay in Cancun."
U.S. Trade Representative Robert Zoellick came to Cancun hoping to draft a basic understanding that would lead toward the EU agreeing to slash its massive farm-export subsidies. The Bush administration also was intent on gaining better access to foreign markets for U.S. agricultural and industrial goods. In return, it was willing to further open the U.S. market and -- unlike Europe -- make more substantial cuts to farm subsidies.
Despite four days of intense talks, negotiators in the end never returned to the issues of most concern to Washington. Mr. Zoellick showed some bitterness at the breakdown in talks, blaming the impasse on countries that preferred speech-making to real negotiations. "Many countries just thought this was a freebie," he said, "and now they will have to face the cold reality of going home with nothing."
Mr. Zoellick said it was now hard to believe that the talks could wrap up on time, underscoring the fear shared by many that the Doha round might now sputter on for years in the way of past global trade negotiations. Trade ministers said they now needed what one called a brief "cooling off" period. Senior trade officials are now set to meet next at the WTO's Geneva headquarters by Dec. 15 to discuss how to proceed.
The U.S. already is pursuing an array of regional and two-country deals more actively than any other country -- and is promising to seal a host of new deals over the next year. The WTO has argued against such an approach, saying it puts small countries at a disadvantage when negotiating with trading powers such as the U.S., but Mr. Zoellick suggested that the deadlock at Cancun may leave the U.S. with no choice but to take its trade aims elsewhere.
For talks to resume, the U.S. -- but much more so Europe -- will almost certainly have to be willing to give much more on cutting agricultural subsidies. If the EU had offered much steeper subsidy cuts, developing countries might well have shown more flexibility on the issues of interest to the richer countries.
In Cancun, cotton became a serious focal point for how farm subsidies in developing countries can wreak havoc in villages thousands of miles away. Delegates from four West African countries pleaded for the WTO to end all cotton subsides over three years, and to pay cotton farmers in the world's poorest countries a total of $250 million a year to get back on their feet. The U.S. spends around $2.5 billion a year and the EU another $700 million helping their cotton farmers, a fact that many say has helped depress cotton prices to historic lows.
But a compromise text put out Saturday by Mexico outraged many poorer countries by supporting a U.S. proposal to make cotton part of continuing negotiations over textiles and offering no immediate relief.
Rich nations, too, found plenty of cause to be unhappy with the compromise text. The EU, for one, adamantly rejected proposals to set a specific date to eliminate agricultural export supports -- a longstanding aim of the U.S.
The EU, which spends about $3.3 billion a year directly subsidizing farm exports, has offered to work toward reducing the subsidies and even to eliminate them on certain goods of particular importance to poor nations. But it refuses to consider eliminating them altogether.
Write to Neil King Jr. at neil.king@wsj.com5 and Scott Miller at scott.miller@wsj.com6
washingtonpost.com
Rich-Poor Rift Triggers Collapse of Trade Talks
By Kevin Sullivan
Washington Post Foreign Service
Monday, September 15, 2003; Page A01
CANCUN, Mexico, Sept. 14 -- Global trade talks collapsed abruptly this afternoon in an unprecedented uprising by scores of the world's poorest nations against the United States, European Union countries and other wealthy nations.
"They were not generous enough; there was just not enough on the table for developing countries," said Richard L. Bernal, a delegate from Jamaica, as anti-globalization activists cheered and sang nearby. "If the developed countries had offered more to the developing countries, it would have created an atmosphere more conducive to a settlement."
The impasse among the 148 nations of the World Trade Organization threatens to derail prospects for a global trade agreement that was supposed to be concluded by 2005. Negotiations were launched two years ago in Doha, Qatar, to lower trade barriers with special emphasis on increasing development in poor nations.
Talks at this Caribbean resort were intended to further that process; instead, their failure has exposed a deep philosophical rift between rich and poor nations about the effects of the trade liberalization that has swept the world in recent decades.
The United States and other rich nations argue that free trade has created jobs and wealth around the world, and that reducing more barriers to trade would expand that success. But poor nations argue that the rules of global trade have been tilted too heavily in favor of major industrialized nations, causing some of the world's most vulnerable people to fall deeper into poverty.
The rich nations' view has long dominated discussions at the WTO, a global body formed nine years ago to help harmonize trade rules and practices in an increasingly interconnected world. But here in Cancun, for the first time, developing nations were able to unite to turn their growing frustration into a powerful counterbalance against the United States and Europe.
"We won't move forward unless we do something for these poor people who have so much to lose," said Ivonne Juez de Baki, a delegate from Ecuador, which is a member of a group of 22 nations -- including Brazil, China and India -- that played a key and contentious role this week in pressing the United States and the European Union for concessions.
Their main complaint was over the $300 billion in annual subsidies that rich governments provide to their farmers, which they say leads to overproduction that floods world markets with artificially cheap food and costs millions of farm jobs in Africa, Latin America and parts of Asia.
"We have won a lot; it's not the end, it's the beginning of a better future for everyone," Juez de Baki said at a news conference.
"In the past, rich countries made deals behind closed doors without listening to the rest of the world," said Phil Bloomer of the British organization Oxfam. "They tried it again in Cancun. But developing countries refused to sign a deal that would fail the world's poorest people."
U.S. Trade Representative Robert Zoellick said the conference failed largely because some countries used "rhetoric as opposed to negotiation." He said the United States had been prepared to make deep cuts in subsidies but that other countries, which he did not name, had not been willing to negotiate the tariff reductions and other measures the United States was seeking.
"Whether developed or developing, there were 'can-do' and 'won't-do' countries here," Zoellick said in a statement. "The rhetoric of the 'won't-dos' overwhelmed the concerted efforts of the 'can-dos.' "
At a news conference later, Zoellick said: "A number of countries just thought it was a freebie; they could just make whatever points they suggested, argue, and not offer and give. And now they are going to face the cold reality of that strategy: coming home with nothing. That's not a good result for any of us."
Sen. Charles E. Grassley (R-Iowa), chairman of the Senate Finance Committee, called it "a sad day for the global economy" and said he would use his position to "carefully scrutinize" countries' behavior in Cancun. "The United States evaluates potential partners for free trade agreements on an ongoing basis. I'll take note of those nations that played a constructive role in Cancun, and those nations that didn't."
Delegates at the talks approved membership for two additional nations, Nepal and Cambodia.
Delegates and analysts here said the failure of the Cancun talks was a setback for the WTO and for global trade. But almost all predicted that the negotiations were not mortally wounded and would continue.
"The pieces will be picked up again, and the negotiation will go on," said Celso Amorim, Brazil's foreign minister and key spokesman for the Group of 22 developing nations.
J. Bradford DeLong, an economics professor and trade expert at the University of California at Berkeley, said today's failure meant that relations between rich and poor nations are stalled where they have been since the mid-1990s. But he said the overall volume of world trade would continue to increase.
"The world will become a more integrated place, with more goods traded across borders," he said. "It's just not going to do so under freer trade rules, at least not for a while."
The final straw in the negotiations was the insistence of rich countries, mainly from the European Union, that developing countries accept global rules in a variety of new areas, including foreign investment and government procurement. Poor nations and activists argue that those rules meddle in domestic affairs and should not be part of WTO negotiations.
Many anti-globalization activists, who say the WTO is stacked against poor countries, were almost gleeful about today's result. To the tune of the Beatles' "Can't Buy Me Love," they sang "Money can't buy the world" and danced in the convention center.
But the mood among most delegates was one of resignation.
"This was not an antagonistic environment. This was just a fundamental disagreement over certain key issues," said Bernal, the Jamaican delegate. "Everybody has to take some of the blame."
But "no deal is better than a bad deal," he said.
Staff writer Paul Blustein in Washington contributed to this report.
--------------------------------------------------------------------------------
September 15, 2003
Poorer Countries Pull Out of Talks Over World Trade
By ELIZABETH BECKER
ANCÚN, Mexico, Sept. 14 — World trade talks intended to help the developing nations unexpectedly collapsed today when delegates from Africa, the Caribbean and Asia walked out, accusing wealthy nations of failing to offer sufficient compromises on agriculture and other issues.
While not as disastrous as the breakdown of talks in Seattle four years ago, the failure to reach an accord today was widely regarded as a huge setback for the World Trade Organization, the 146-nation group that was presiding over the talks here. The group, based in Geneva, will now almost certainly fail to make its self-imposed deadline of January 2005 for reaching a new agreement that dismantles global trade barriers.
The failure today also means the faltering global economy will not receive a jump-start by the expansion of markets, which some economists contend would inject hundreds of billions of dollars into international commercial activity.
"We all could have gained here and now we have all lost," said Pascal Lamy, the European Union's trade negotiator, commenting on the collapse of the talks.
Robert B. Zoellick, the United States trade representative, sounded less pessimistic but still spoke with some frustration. "The harsh rhetoric of the `won't do' overwhelmed the concerted efforts of the `can do,' " he said.
Wealthy nations had hoped an agreement at the five-day talks in this resort city would help fend off a new wave of protectionism, especially in the United States, where manufacturing jobs have been disappearing by the tens of thousands. Already, questions about the benefits of unfettered world trade have infected the presidential campaign.
Supachai Panitchpakdi, the director general of the W.T.O., tried to be optimistic tonight, saying, "We must return to the task before us with renewed vigor," to complete this round of trade negotiations, which will continue at a low level at the group's Geneva headquarters.
"If we fail, the losers will be the poor and weaker nations," he said.
The immediate cause of the breakdown was proposed new trade rules for investment and government procurement, which had been promoted by the European Union but opposed by the poorer nations. But agriculture was the pivotal issue. Developing nations had established themselves as a potent force in talks here this week, challenging the earlier supremacy of the United States and Europe in trade talks.
Banding together in what was known as the Group of 21, the developing nations thought they had made their case that the $300 billion in subsidies paid every year to the world's wealthiest farmers undermined the livelihoods of millions of poor farmers around the world. But they said the proposals made by the United States and Europe to redress what the developing nations regard as a major injustice fell far short of their expectations.
Richard L. Bernal, a delegate from Jamaica, said a group of African, Caribbean, Asian and Latin countries felt they had little choice but to quit the talks. The United States and Europe, he said, were not generous enough on reducing their agriculture subsidies, on helping poor African countries dependent on cotton, or on understanding their difficulties in taking on such complex trade responsibilities as investment.
"There is nothing for us small countries in this proposal," he said. "We don't want any of this."
Yet those nations said tonight that they blamed no one for the failure and vowed to work for a trade agreement on agriculture now that the talks move back to Geneva. Celso Amorim, the Brazilian minister of foreign affairs and a spokesman for the group, said those nations had demonstrated that they were a new force in the trading organization.
"This is the real start in negotiations over agriculture," he said. "Whatever the process, the pieces will be picked up again."
Mr. Zoellick said he would move ahead on free-trade agreements with individual nations or regions, noting he had a long list of countries that wanted to negotiate with the United States. Meanwhile, he said, he would wait for things to "calm down" at the World Trade Organization.
"I hope we can help those countries come around," he said, without identifying them.
Mr. Zoellick said he believed that the talks were unlikely to reach a conclusion by their deadline. The message he heard from many members, he said, was "not now."
Mr. Lamy, the European trade commissioner, said the failure in Cancún "is not only a severe blow for the world trade organization, it is a blow to all." Still, he said, "We are going to remain committed to strengthening this rules-based multilateral trading system."
Progress toward a new agreement on trade, which was started two years ago at a W.T.O. meeting in Doha, Qatar, has repeatedly been stalled. Trade officials had missed every deadline until last month.
Then the United States broke an important political and emotional deadlock. American negotiators agreed to accept a proposal they had rejected last December to give the world's poorest countries access to life-saving medicines. That agreement — which is unaffected by the setback today — breathed life into the trade negotiations and demonstrated that the United States would join Europe in working out a compromise over initial objections from their pharmaceutical firms.
Members of some antiglobalization nonprofit groups that have been demonstrating outside the heavily guarded talks broke into song when the collapse was announced, cheering that the talks they considered unjust had failed.
But Phil Bloomer, director of Oxfam's campaign against the agriculture policies of rich nations, said he took no delight in the failure of the talks, which he said was a blow to poor nations that needed immediate relief for their farmers.
"It appears the United States and the European Union were not prepared to listen and take the necessary steps to make global trade rules work for the poor as well as the rich," he said.
If a new agreement is reached, the World Bank has estimated, global incomes would increase by as much as $520 billion by 2015, and 144 million people would be lifted out of poverty.
But developing nations said no deal was better than a bad deal.
Several delegates said they walked out today rather than negotiate new trade rules covering investment or government procurement, in part because they feared the new rules would be too intrusive and limit a country's freedom to regulate the environment or workers' rights in the face of international trade laws protecting foreign investors.
"We wanted to negotiate issues that are essential for us — agriculture subsidies, closed markets," said Yashpai Tandon, a delegate from Uganda. "Why would we now add investment? It is too much."
He singled out the dispute over cotton subsidies as a major disappointment. Four of Africa's poorest nations had asked that the subsidies given to American and European cotton farmers be reduced and the African farmers be paid $300 million in compensation for the losses they suffered because of unfair competition from wealthy farmers. Instead, a draft proposal suggested that the question be studied and that the African farmers plant other crops.
"It got to be too much for us," said Bakary Fojana, a delegate from Guinea. "The cotton offer was unjust and ignored what was demanded by African nations. Coming into this meeting everyone said, `yes, cotton is an important question; yes, agriculture is important.' But when it came down to negotiations, our daily problems were ignored."
