Facing up to strategic error

A cou­ple of weeks ago I was in Lagos (Nige­ria) talk­ing to a busi­ness group about world trade and the WTO. I sug­gest­ed that the deci­sion of the African-Caribbean and Least Devel­oped Coun­tries group at the WTO’s Can­cún Min­is­te­r­i­al meet­ing to walk away from the nego­ti­a­tions on issues such as trade facil­i­ta­tion and invest­ment was a strate­gic error that I hoped African busi­ness would try to cor­rect. The next speak­er at the seminar—a Niger­ian trade consultant—said I was wrong: the Can­cún walk-out was an effec­tive blow that the devel­op­ing coun­tries of the South had deliv­ered to the indus­tri­al­ized North. He got a round of applause from the busi­ness peo­ple present. Oth­ers in Africa, how­ev­er, share my view. Here’s a com­ment from ‘The Nation’ (Kenya) this week: bq. There are some polit­i­cal lead­ers and oth­er observers who false­ly por­tray WTO issues as a sim­plis­tic North / South con­flict. The real­i­ty is that the African economies (which account for less than five per­cent of world trade) are not viewed as a threat by devel­oped coun­tries. bq. Iron­i­cal­ly, at Can­cun, some very pro­tec­tion­ist states were allowed to hide behind the rhetoric of “Third World sol­i­dar­i­ty,” while tru­ly strug­gling economies like Kenya are in fact far more hurt by the trade-dis­tort­ing poli­cies of oth­er devel­op­ing economies (via “AllAfrica.com”:http://allafrica.com/stories/200403020021.html) Devel­op­ing coun­tries might repeat the Can­cún mis­take unless their busi­ness com­mu­ni­ties start tak­ing the WTO talks seri­ous­ly and insist that their gov­ern­ments stop play­ing pol­i­tics with real mar­ket oppor­tu­ni­ties. This means under­stand­ing why the refusal to nego­ti­ate at Can­cún was a strate­gic error: # You can play the ‘walk-out’ card just once or it los­es it’s impact. Expe­ri­enced nego­tia­tors know that when you walk out you must make it very clear what you want as the price of your return—or you waste the play. The African etc. group at Can­cún walked out say­ing they didn’t want some­thing (nego­ti­a­tions on the ‘Sin­ga­pore issues’ to which they had agreed at Doha). This neg­a­tive was the weak­est pos­si­ble strate­gic objec­tive when much stronger objec­tives were on offer such as, for exam­ple, the elim­i­na­tion of export sub­si­dies that were under­min­ing their agri­cul­tur­al economies
# The ‘neg­a­tive con­di­tion’ was, in fact, a pro­found mis­take. African etc. economies (Nige­ria, per­haps most of all) des­per­ate­ly need progress on trade facil­i­ta­tion and invest­ment. Part­ly at the urg­ing of glob­al NGOs, the Africans at Can­cún walked out on pre­cise­ly the wrong issues. What did Africa get out of Can­cún? In my view, noth­ing but delay on mat­ters that they real­ly need to progress. They let the indus­tri­al­ized coun­tries off the hook, so they could face elec­tions (USA), and the exten­sion of agri­cul­tur­al sub­si­dies to 10 new coun­tries (EU) in 2004 with­out out­side pres­sure on the pro­tec­tion­ist aspects of their trade poli­cies.

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