The World Trade Organisation - An Australian Guide
- 2006 Edition -
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WTO: The Latest Episode

Developing Countries Fight Back

Since the establishment of the WTO's predecessor - the GATT - in 1944, rich countries have tightly controlled the global trade agenda, using WTO rules to extract large concessions from poorer countries while maintaining both high tariffs and high subsidies for their own industries.

But at the WTO's 2003 meeting in Cancun, something different happened for perhaps the first time in almost 60 years: developing countries fought back. The biggest developing nations - China, India and Brazil - joined with small developing countries to form the "G20" group of countries. The G20 demanded that the US and EU make real concessions to the developing world if they wanted any further trade liberalisation. The developing countries' stand caused the Cancun meeting to collapse when the US and EU refused to cooperate.

In the lead up to the WTO's 6th Ministerial in December 2005 in Hong Kong, the US and EU have again demanded significant concessions from poor countries on services, and NAMA and offering very little in return. And while most developing countries have been hostile to these negotiations - since they are heavily weighted in favour of US and EU corporations - they may be forced to make a deal in order to get concessions from the US and EU on agriculture.

The concern among many observers is that once again the poor countries may give concessions without getting anything in return. The US proposal leading up to Hong Kong demanded that developing countries cut their tariffs more than rich countries, and in return, promising real cuts in its agricultural subsidies of only 2% (74). Europe is also refusing to make substantial cuts to its multi-billion-dollar subsidy regime. The prospect of reaching an agreement of true benefit to the world's poor looks bleak indeed.

Next Section: How to Respond: One No, Many Yeses

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