HEATHER SCOFFIELD
The Globe and Mail
Monday, June 26, 2000

Geneva -- Rich countries, including Canada, have finally agreed to enter into contentious negotiations with poor countries to address their concerns that international trade rules treat the poor unfairly.

But many participants are cynical about the talks, even though they just started last week, saying the rich countries are only paying lip service to the overwhelming needs of the poor.

The negotiations, if successful, could pave the way reviving the new round of broad trade talks that died last fall in Seattle. A failure could very well block any progress in other areas of trade liberalization talks, including agriculture.

"The multinational trading system as we know it today is not good for all countries," said Nacer Benjelloun, Morocco's ambassador to the World Trade Organization, who often speaks and negotiates on behalf of African nations.

Many of the poorest developing countries have seen their exports drop rather than rise after joining the WTO. And they are now finding that the WTO rules that were intended to give developing countries flexibility and leniency don't carry any weight.

Failure to give the poorer countries a good reason to keep an active membership in the world trading system and abide by WTO rules will undermine the credibility of the WTO, said one diplomat from a developing country.

"It will cause much more dismay and disappointment in this organization," he said.

The developing-country talks could put Canada and other rich countries under pressure to erase their textile quotas, give developing countries more leeway in trade disputes, and to lift drug patent protections so that crucial medicines become cheaper for the Third World.

On textiles especially, developing countries repeatedly single out Canada, the United States and the European Union as the main perpetrators of protectionism, keeping out what is often a key export for many poor countries. While the rich countries have agreed to phase out most of their import restrictions on textiles and clothing over the next couple of years, Canada, the EU and the United States seem to be leaving most of the required changes to the last minute.

And Canada will no doubt resist any movement to speed up the removal of its textile quotas, especially since many of the textile factories protected by the import restrictions are based in or near the Montreal riding of Trade Minister Pierre Pettigrew.

"Textiles is a sensitive area for us and the United States," Canada's ambassador to the WTO, Sergio Marchi, acknowledged in an interview. "The question is, how much more generous can we be when you match it with Canadian jobs . . . back home."

African countries don't buy this argument. Under textiles agreements signed in the past, Canada, the United States and the European Union were given 10 years to phase out most of their quotas. The deadline is in 2002, but so far, according to developing-country statistics, the United States has only phased out 1.7 per cent of its industry. The EU has phased out 3.8 per cent, and Canada is ahead with 9.5 per cent.

While the big trading powers are not technically in breach of any international trade rules, the developing countries argue that they have violated the spirit of the WTO by resisting any liberalization of their markets until the last minute.

"This is lack of leadership from developed countries," Mr. Benjelloun scorns. The rich countries should confront their withering textile industries, open their markets to Third World textiles, and then use some of their ample budget surpluses to retrain textile workers who find themselves out of work, he says.

"There is no future in textiles in the West. Since you have excess budgets, you can retrain those people."

The cynicism shown by Morocco is widespread among the developing countries at the WTO headquarters in Geneva. Knowing this and realizing that a new round of trade talks could be held hostage to their concerns, the industrialized countries announced a special initiative for the world's poorest countries last month.

Thirteen rich countries announced they would look for ways to unilaterally open up their markets to the poorest of the world's poor countries, and also try to find ways to help the Third World develop the expertise to administer WTO rules on health and safety regulations and customs valuation.

Still, the initiative has floundered. Canada has not said specifically what it will do yet. And the United States and the EU largely said their participation in the project would include measures they had already implemented.

"It's an empty bag," Mr. Benjalloun said, "because none of the things that were meaningful were included there."

Many developing countries say it's a major step forward that the rich countries actually agreed last week to negotiate until the end of the year on poor countries' concerns. But the developing countries' list of demands is long and complicated, and many delegations are already pessimistic about the industrialized countries' dedication to the process.

At the top of their list is a request for technical assistance -- something rich countries seem ready to agree to.

But many developing countries are also asking for refinements of agreements signed under the previous Uruguay Round of trade liberalization. And some developing countries actually want to renegotiate some of the provisions in those agreements. They want more lenient rules for poor countries on subsidies, on anti-dumping and on intellectual property. They want exceptions for health and safety rules, textiles and investment rules. And they want more freedom to keep subsidies in agriculture, while asking the rich countries to take stronger measures to end their own domestic subsidies.

In the area of drug patents, some countries want the World Health Organization's list of crucial medications to be patent-free so that pharmaceuticals to treat AIDS and malaria, for example, will be cheaper for the poor. This demand stands a chance of being accepted, analysts say, even though it would cause problems for countries such as Canada that are host to multinational drug companies that rely on patents for their profits.

But many of the richer countries, led by Canada, South Korea and some Eastern European states, say the list of developing-country demands is so long that they can't expect the rich to give without taking something in return.

"That's difficult without being in a round [of multilateral trade liberalization talks]," Mr. Marchi said.

The most the poor countries can expect in the developing-country talks is bits and pieces from the rich countries, international trade analyst David Wood said.

"It's a bogus process. If you want the serious stuff, you'll only get it through [broad] negotiations."

That way, the rich countries can win something in return for the concessions they grant developing nations, he explained.

That attitude makes some developing countries bristle.

"You cannot say 'let us confine everything to the new round,' " said one WTO diplomat from a developing country.