Egypt is struggling to balance its national interests with its international commitments at the WTO meetings in Cancun. Niveen Wahish looks into the issues at stake Delegations from 146 World Trade Organisation (WTO) member states started their fifth bi-annual ministerial meeting on 10 September in Cancun, Mexico. This four-day meeting of trade ministers constitutes the WTO's most senior decision-making body, and is scheduled to review the progress made from negotiations under the framework of the Doha Development Agenda (DDA). The DDA, adopted during the fourth WTO ministerial meeting in Doha, Qatar, in 2001, revolves around a range of subjects including agriculture, non- agricultural market access, implementation, trade-related aspects of intellectual property rights and several new issues: investment, competition, government procurement and trade facilitation. The original declaration set January 2005 as the date for completing all negotiations. A five-member Egyptian delegation headed by Minister of Foreign Trade Youssef Boutros-Ghali is attending the meetings. Ghali will also be acting as the meetings' deputy chairman, and should be instrumental in pushing for consensus among developing countries on potentially contentious issues. Egypt, along with India and Brazil, is a leading player among developing countries within the WTO. The Egyptian delegation comes armed with a document explicitly outlining their negotiating positions. According to a high-level trade source, the documents constitute a framework of the areas within which negotiators can move: where they can give concessions if they get something in return and what lines they cannot cross. Ahmed Ghoneim, an assistant professor at Cairo University' Faculty of Economics and Political Science, describes the WTO negotiations as a "mercantilist process". Topping the agenda of the four-day meetings is the thorny issue of agriculture, which single-handedly delayed the conclusion of the Uruguay round from 1990 to 1994. Since the DDA was launched two years ago, member countries had failed to agree on a framework on establishing modalities in agriculture until a breakthrough two weeks ago. The US and the EU have regularly taken opposing sides on agricultural negotiations, including questions of market access, domestic support and export subsidies. While the US tended to favour full liberalisation, the EU was held back by its Common Agricultural Policy (CAP). In August the EU and US seemed to have reached some sort of compromise when they presented a joint proposal for agricultural negotiations. The draft Cancun ministerial declaration follows the structure of that paper but introduced some concepts from other draft texts submitted by other members in response to the EU-US text. Although the EU and US seem to have possibly reached a détente, experts expect developing countries to complicate agricultural negotiations in Cancun. "Developing countries are much more aware now than they used to be in the Uruguay round. They will not accept anything that is not in their interest", observed Ashraf Mukhtar of the WTO Unit in the Ministry of Foreign Trade. Egypt is one of many countries that supports the liberalisation of agriculture, in the belief that it is one of the areas where developing countries enjoy a comparative advantage. One of the things that Egypt would like to see in any agreement on agriculture, said Mukhtar, is that developing countries need not cut their tariffs on the entry of agricultural goods into their markets as much as developed countries and they should be granted a longer transitional period to carry out those cuts. Moreover, agricultural goods of relative importance to developing countries should be granted special, larger quotas and exempted from tariffs upon their entry to markets of developed countries. Egypt and most nations are in favor of lifting all forms of market-distorting export subsidies. Egypt has also come out in favour of lifting domestic price support. Cotton is the primary Egyptian export crop facing problems in foreign markets because of the massive subsidies channeled to rival farmers in the United States. The lifting of domestic support, said Mukhtar, would open up many chances for Egyptian exports. However, full liberalisation definitely has its negative aspects. "We must not forget that Egypt is a net food importer," said Ahmed Ghoneim, of Cairo University. He explained that the reduction or elimination of domestic price supports would mean that agricultural products worldwide would become more expensive. "That means that net food importers will suffer because the import bill will inflate." He acknowledged that higher world market prices are a clear incentive for farmers to produce for export, but on the other hand, arable land and water resources in Egypt are in scarce supply, limiting the potential of an export-based agricultural boom. Although rural-urban income disparities would decline, the primarily urban consumers of agricultural produce would bear much of the cost. Another area to be discussed during the meetings is market access for non- agricultural goods. The objective is to reduce and possibly eliminate tariffs as well as non-tariff barriers. While any such cuts applied by developed countries would no doubt benefit developing countries, it has its drawbacks for developing countries who use tariffs as their last resort for protecting their industries. While there may be nearly unanimous agreement with the principle, sharp differences will arise over the formula to be adopted. One issue where progress is expected with little real dissent is public health and intellectual property protection. In late August, multilateral representatives agreed to legal changes facilitating the importation of cheaper generics made under compulsory licensing if the countries are poor and unable to manufacture the medicines themselves. In Doha, WTO members had agreed that TRIPs (Trade-Related Aspects of Intellectual Property Rights) should not prevent members from taking measures to protect public health. Such measures include "compulsory licensing" by which a government may allow a company to make a patented product or use a patented process under license without the consent of the patent owner, but only under certain conditions in order to safeguard the legitimate interests of patent holders. Despite this earlier step, the issue of compulsory licensing had not been resolved for countries without sufficient domestic manufacturing ability for production. It was feared that drugs imported by these countries might be diverted onto the black market, finding their way into countries other than the ones in need. But after a campaign led by the US trade representative, US pharmaceutical companies, which had originally opposed the agreement, agreed to accept it. Some 30 developed and developing countries have given assurances that compulsory licensing will be used strictly for genuine health reasons and not for commercial purposes. Another major heading in the meeting is trade in services. This is one of the less conflict-ridden topics, with a greater degree of freedom in choosing how to apply liberalisation. Country delegations are currently at the stage of making proposals to liberalise certain aspects, while responding to similar requests from other countries. All countries believe that liberalisation of this sector is generally a desirable outcome, said Ghoneim. He believes that Egypt can only benefit from further liberalisation of services, as this sector has high demand for increased foreign direct investment (FDI) and there is little chance of Egyptian firms having to downsize due to liberalisation. Labour mobility is one of the stumbling blocks in this agreement, particularly since 11 September and the subsequent tightening of security measures around the world. Not only is it facing opposition from developed countries, but also from some developing countries. Kuwait and Egypt are both refusing to back calls for greater labour mobility, although the former is a net labour importer and the latter is reliant on exporting labour, according to Ghoneim. However, there may yet be a breakthrough in the form of a special visa for temporary movement of labour. Egypt has already made commitments in several fields, including the financial, transport, construction and tourism sectors. In telecommunications Egypt signed up with the Basic Telecom Agreement in 2002 and the Information Technology Agreement in 2003. Ghoneim argued that the audio-visual sector has particularly strong growth potential if Egypt were to sign binding agreements, since the industry's main problem is insufficient financing. "If it is anchored in our commitments, it could attract investors," he said. One of the areas where developing countries are expected to put up fierce resistance to the WTO agenda is that of "Singapore issues", adopted in 1996, including investment, competition, government procurement and trade facilitation. Industrialised countries are pushing for the right of foreign companies to compete equally with local firms in domestic markets, whereas many developing countries still want to protect certain infant industries. According to Mukhtar, developing countries want each of these topics to be treated separately and not as a monolithic entity. Any agreements reached at Cancun are likely to only be on establishing modalities for later, tougher negotiations. Maamoun Abdel-Fattah, WTO expert, warns that these issues are crucial to Arab countries because "they are going to include obligations that will affect the major aspects of their economies." In a paper presented to a regional experts meeting organised by the Centre for Economic and Financial Research and Studies in collaboration with Friedrich Ebert-Stiftung, Abdel-Fattah recommended that an agreement on the Singapore issues explicitly allow government the right to regulate investment. He described negotiations in this area as a "wrestling match between the right of the government to regulate investment and the right of multinational companies for more freedom of action". On the issue of competition, Abdel- Fattah argues that Arab countries should push for exemptions in favour of their industries, which generally are unable to hold their ground against multinational companies. Moreover, adds Ghoneim, to date Egypt does not have any kind of competition law. He argues that negotiating an agreement related to competition will be difficult "especially if the understanding of the competition law and policy is not still clear domestically". On the topic of transparency in the government procurement of goods and services, Abdel-Fattah believes that Arab countries should not agree to widen the scope of transparency to cover contracts and awards, but that this should be limited to national-level laws and regulations, and remain immune to the WTO dispute settlement mechanism. Trade facilitation, Abdel-Fattah said, is not just about the questions of procedures and transparency, but also includes very sensitive issues of sovereignty where customs procedures may drag countries into dispute settlements. With these issues in mind, Egypt and other developing countries are expected to drag their feet and obstruct progress on these issues. Instead, they will stress the need for further understanding and the availability of technical and financial assistance to absorb these agreements. While the interests of Egypt in general are very much in correlation with those of other developing countries, sometimes sticking with the developing countries' broader interests may prove harmful -- such as with market access for textiles. Ghoneim predicts that Egypt's textiles and ready-made garments industry will contract severely as soon as the quota system is abandoned. Currently, a certain quota is allotted to each country dictating how much it can export to the markets of industrialised countries. Once that quota is lifted, Ghoneim explained, "we will lose our preferential treatment," and more competitive industries such as those in Pakistan and Bangladesh will win out. While negotiators may have headed to Cancun with a certain position in mind, the end result is never predetermined. Ghoneim believes Egypt to be well- prepared for the challenge, but the outcome of the negotiations depends on unforeseeable circumstances and the degree of coaxing and coercion applied by the various parties. Ghoneim stressed that Cancun is only a progress evaluation for the WTO, and the failures to reach agreements in some subjects should not be considered disastrous. As he points out, the issues tackled here are very complicated in detail, and besides, "90 per cent of deadlines in the WTO are not met."
