Edited by Max Gebhardt
'Mission Impossible" was how one facilitator described the negotiations about the reform of agricultural trade on the second day of the World Trade Organisation (WTO) talks in Cancun.
How prophetic those words were. Now the talks have failed, the finger pointing has begun. Predictably, anti-globalisation organisations have blamed the insensitive West for the collapse of negotiations. The European Union (EU) and the US say it's the fault of developing countries.
The EU's Pascal Lamy complained that the WTO's rules on decision making needed to be revamped. US trade representative Robert Zoellick whinged that too many people spent too much time "pontificating and not enough time negotiating".
The truth lies somewhere in the middle, a place no one seemed able to reach.
But what is astounding is that the EU and US either haven't realised that it was the substance, and not the process, of the discussions that caused the collapse or they have chosen, for political reasons, to ignore this fact entirely.
To call for the reform of how the WTO works because they weren't successful in ramming through points that the developing world thought should not be up for discussion until conclusion had been reached on liberalising agricultural trade smacks of a bad sportsmanship.
It also risks damaging the very foundations of the WTO itself, which will cause even more harm than the failed Cancun meeting.
What is needed is for the US and EU to acknowledge their role in the collapse of talks. It has been clear for a while that developing countries were not going to accept anything less than an agreement by the EU and US to cut their massive farm subsidies.
The attempt by the Europeans and Americans to try to tie negotiations on this issue to lower trade barriers for products from the developed world was always going to result in failure.
In an article written for the UK's Guardian newspaper before the start, Nobel prize winning economist Joseph Stiglitz said:
"The strategy that the US, and to a lesser extent Europe, seems to be following is the usual: hard bargaining, extreme positions, last-minute concessions, arm twisting, peer pressure, tacit threats of cutting off development assistance and other benefits, and secret meetings among a small number of participants are all designed to extract concessions from the weakest."
This tone was set by Zoellick before the Cancun meeting when he said the US was "willing to talk about sizeable cuts if we can get market access".
What Zoellick and Lamy had not counted on was organised resistance from developing countries, which created the scene for a deadlock unless the two gentlemen were willing to find some way out - a prospect never on the cards, especially for farm subsidies.
Trade and industry minister Alec Erwin commented that "this is a change in the quality of negotiations between developing and developed countries."
The worry now is what this will do to future WTO meetings.
The US is already saying it will now focus on bilateral trade negotiations with favoured nations. The threat is very clear. Developing nations might find themselves on the outside of any future bilateral trade deals, overshadowed by the might of the developed world. MG
Old Mutual
Old Mutual's share price has shown some strength over the past week, but broking house Merrill Lynch believes the stock has lagged the UK insurance index since the beginning of the year, amid a strong rerating of UK and European insurance indices.
"Although Old Mutual is up 19.3 percent since the beginning of the year, the life assurance sector in UK/Europe is up 15.5 percent, driven mainly by the European insurance companies. Hence the performance by Old Mutual by contrast is not that strong," said Merrill's.
Stewart Rider, a Merrill's analyst, writes in a research report:
"In an international context [Old Mutual] still appears cheap, but we have highlighted the possible corporate activity as a risk."
Rider was no doubt referring also to the "third leg" of Old Mutual - its UK operations, which are much smaller than its US or local operations. Old Mutual said earlier this year it needed to strengthen its "third leg," possibly with an acquisition. EW
Charter
Everybody wants to know when the financial services empowerment charter is to be finalised.
Although it is impossible to get anything on record, word is the charter is likely to be made public sometime in the middle of October and not the end of this month as originally anticipated.
Discussions are likely to be concluded by the end of the month, but "finishing touches" will take the publication date of the charter into next month, whatever that means.
The banks, in particular, must be heaving a sigh of relief. In some respects, the charter will have already earned its keep, at least as far as banks are concerned. The reason is that the Community Reinvestment Bill has been put on ice until the charter comes out, possibly even shelved forever. Some of the terms of this proposed bill include that banks will have been forced to change their policies of not granting home loans to individuals on the basis of where they live.
Of course the banks, although they supported the bill, understandably wanted more carrot from the implementation, rather than more stick.
Fortunately, the charter should be far more flexible and if the scorecard approach is to be understood, some banks might not even have to tackle the housing issue at all. We will have to wait for the charter to see. EW
source: http://www.busrep.co.za/index.php?fSectionId=553&fArticleId=235922 19sep03
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