China Shows Quiet Leadership at Cancun WTO Trade
Talks
China, which just joined the World Trade Organization
(WTO) in 2002, played a leading role for the developing
nations, in the talks which collapsed in Cancun, Mexico
yesterday.
In this round of discussions, the developed nations,
led by the US, EU and Japan, pressed the developing nations
to discuss liberalization of investment rules on a global
basis. The developing nations, led by China, Brazil and
India, in a group known as the Group of 22, refused, saying
that the developed nations had to discuss reducing and
then abolishing farm subsidies in the US and EU. The developed
nations refused, continuing to press the view that the
talks should focus on investment and not farm subsidies,
which led to the collapse of the talks.
The collapse of the talks is widely seen as a victory
of sorts for the developing world, especially its farmers.
Many farmers from around the world congregated in Cancun,
and in one dramatic gesture, a South Korean farmer stabbed
himself to death to protest farm subsidies in the developed
world.
Both the US and EU provide massive subsidies to their
farmers, which allow them to sell their products to developing
countries at less than market prices. In many cases, this
has meant that local farmers in developing countries are
unable to provide a living for their families, and have
stopped farming. The worst provider of farm subsidies
is the EU, followed by the US. Over the past years, the
US has pressed the EU to abandon farm subsidies, but the
EU has steadfastly refused.
Before the Cancun talks, Brazil was the leader of the
developing countries. But, Brazil did not have the diplomatic
and economic clout which China brought to the table. As
the world's largest exporter, and a leading diplomatic
and military power, China brought focus and backbone to
the developing countries. Even though the developing nations
tried to drive wedges between the developing nations'
agenda by appealing to narrow national agendas, the united
front held. This was largely due to quiet backroom diplomacy
by China to hold the developing nations together.
In a break with the past, China did not pursue an ideological
course, but a pragmatic course. In the 50s and 60s, China
was a leader in the non-aligned movement, and denounced
the US for imperialism and exploiting poorer nations.
Even in China's domestic Chinese language media, China
has avoided all ideological arguments about the failure
of the trade talks. All of that talk has disappeared,
as China seeks to drive a pragmatic road in increasingly
dogmatic times in the US and EU.
Instead, the Chinese delegation argued that China had
made massive concessions to western countries and companies,
by opening up China's domestic market to foreign competition
in the services sector. The Chinese put forward the argument
that it was time for the developed nations to start making
some tough concessions on farm subsidies on their own
part, instead of only asking developing nations to open
their markets more without making any sacrifices. Essentially,
the Chinese said that it was in everyone's best interests
that globalization become a two-way street, instead of
only driving demands on the developing nations for market
liberalization.
But, this will be a very bitter pill for the developed
world, especially the EU, to swallow.
China Business Strategy believes that
the next year will be crucial for the WTO. If the developing
nations refuse to budge, the US will push its own group
of bilateral agreements under NAFTA, which have now expanded
to include Chile and Singapore, the EU will try to push
expansion and integration in Europe, and China will push
expansion of a loose Asian trade bloc and free trade zone.
The developing nations are a wild card.
If this trend takes root, the WTO will become largely
meaningless, and nations and blocs will form, which negotiate
bilateral agreements that bypass WTO.
In any case, China would push to expand its trade with
all trade blocs in a quiet and diplomatic manner, while
reducing any direct confrontations.
In today's world, China is the least dogmatic power of
all, because it knows from direct experience how much
dogmatism has hurt its national and economic development.
In short, the dogmatic countries are now making the mistakes
which China already knows led to a dead-end.
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