Cancun a cause for celebration: for once, the developing world found its voice and would not allow itself to be trodden over by the richer countries at the WTO conference in Cancun, Mexico (10-14September). In the ashes of Cancun rose a new lobby group for the poor--the G21. It was a cause for celebration.

The World Trade Organisation's (WTO) Ministerial Conference in Cancun, Mexico--aiming to promote 'free trade' in goods and services between richer and poorer nations-ended in a spectacular manner. "It's over" declared George Odour Ong'wen, a Kenyan delegate. "The differences were very wide and it was impossible to close the gap."

The Malaysian trade minister, Rafidah Aziz, blamed the rich world for being intransigent. "They kept demanding things that others couldn't deliver," she said. What surprised most observers was the show of unity among developing nations, in past events, trade negotiations were heavily dominated by the US, Europe and Japan. Developing countries, comprising four-fifths of the WTO's membership, were expected to take a backseat. The wealthy nations frequently used a "carrot and stick" approach by offering enhanced trade opportunities and debt relief to persuade poor nations to accept their distorted agendas.

The failed meeting at Cancun, however, produced one good thing: the rise of a new lobby group--the G21. Led by Brazil, China, India and South Africa, the G21 represents half of the world's population and two-thirds of its farmers, and will hopefully become a powerful voice to shift the balance of power within the WTO to favour the developing world. Hajime to, director of Japan's trade ministry, said: "Compared with the past, the role of developing countries has changed. They have been able to achieve a homogenous position that they could not in the past."

For the first time, poorer members demanded action on their own agenda, such as radical cuts in the developed world's huge farm-subsidies and its trade barriers, although the US, Europe and Japan were keen to discuss investment roles and anti-trust policies affecting service industries.

The Cancun agenda was tough and far-reaching. The WTO's Doha Round, launched in late 2001, has a number of objectives such as the liberalisation of agricultural trade by the slashing of the tariffs on farm products and the elimination of export subsidies.

In addition, it seeks to reduce industrial tariffs, especially in industries where poor nations enjoy a competitive edge such as textiles and garment manufacture, and a liberalisation of the services market. At Cancun, farm trade proved to be the ultimate divide between rich and poor countries.

Four of the so-called "Singapore issues" had also caused much resentment. These are how the WTO's 148 member countries should treat foreign investors; competition policy including codes for anti-monopoly and anti-cartel laws; a greater transparency in government procurement that might help multinational companies win lucrative public-sector contracts; and trade facilitation--or the elimination of bureaucratic procedures, such as the simplifying of customs regulations. But most developing nations feel threatened by global rules, especially on foreign investment, because it may undermine their control over strategic industries. Rich countries are keen to sell services like telecoms, power, water and transport to poorer ones.

The latter argue that opening public services to foreign companies can improve service provisions. But experience has shown that consumers are usually charged higher prices for services provided by foreign investment, perhaps because poor countries lack the technical expertise to negotiate complex micro issues and subsequently implement them.

The European Union (EU) had made agreement on the "Singapore Issues" a criterion for introducing its own very modest farming reforms. Oxfam, the development organisation, commented: "In the past, rich countries made deals behind closed doors without listening to the rest of the world. They tried it again in Cancun, but developing countries refused to sign up to deals that would fail the world's poor people."

It is obvious that wealthy states have little intentions of dismantling farm subsidies and lowering barriers on poor countries' exports, although poor countries are pressed to lower their own tariffs and improve access for foreign investment.

Vijay Makhan, the African Union's trade commissioner, feels African nations should leave the WTO. "Cancun did not deliver on promises to eradicate poverty or raise living standards."

Pascal Lamy, the EU trade commissioner, claimed that "there are only losers, in the same way that everyone would have emerged as a winner if we had been able to roach agreement". The Doha Round, if not clinically dead, is now "certainly in need of intensive care," he added.

Slow progress on the trade front bodes badly for a sluggish world economy. The UK Treasury Department remarked: "In our view, this puts at risk the sustainability of the global recovery." It widely thought that a workable, global trade pact would inject momentum into the world's economy. A World Bank analysis claims that "sweeping liberalisations" can add $520bn to global incomes by 2015, and about two-thirds of those gains would accrue to the developing world, lifting 144m people out of poverty.

Poor nations are "net losers" if trading conditions remain stagnated. The Kenyan Institute of Economic Affairs, commenting on the Cancun meeting, stated: "In the long-term, we lose out. It means the developed world will take even longer to reduce their subsidies."

Reviving stalled negotiations requites trust and compromises on both sides. Alec Erwin, South African's trade minister, said: "We must find ways to go forward." As the opening Uruguay Round took eight years to conclude, between 1986-93, the deadline for finishing the Doha Round by the end of 2004 was looking increasingly unrealistic even before the Cancun deadlock.

Some observers believe that the failure to reach agreement at Cancun will encourage bilateral and regional trade deals, thus undermining WTO's core aim of promoting multilateral trade liberalisation. According to Oxfam, "there is a risk that rich nations could shun the multilateral trading system in favour of bilateral deals. They have to decide whether multilateralism is an end in itself or just a means to an end, extending their trade reach."

In recent years, the US and EU have signed free-trade pacts with several countries. Robert Zoellick, the US trade representative, expects to conclude future deals with countries in the Middle East, Africa and Central America, providing they support American foreign policy.

This will exclude the likes of Cuba and Syria. But such bilateral accords may actually harm the poorest nations because they lack bargaining power in dealing with major trading blocs.

The Bush administrations hawkish stance may now extend to trade matters. Charles Crassly, chairman of the Senate Finance Committee (which oversees trade policy) has threatened to "punish" WTO rebels. The senior Republican senator, warned: "The US evaluates potential partners for free trade agreements on an ongoing basis. I will take note of those nations that played a constructive role in Cancun and those nations that did not."

The proponents of liberalisation have long argued that free trade generates wealth-creation in rich and poor regions alike. The IMF notes that the rapid growth of international trade since World War 11 has coincided with an unprecedented pace of global economic expansion and "liberalising trade will help unlock the opportunities of globalisation for millions of people." The World Bank also claims that greater exposure to competition raises productivity and exports.

Global trade has skyrocketed from mere $200m in 1950 to $6.13 trillion in 2002, But this growth has been unevenly spread. The North has benefited most and some developing countries (notably East Asians) have expanded by producing more manufactured goods. Others in Africa reliant on primary commodities--have lagged further behind.

The 49 least developed countries (LDCs), the majority of which are African and South Asian, have not reaped the fruits of globalisation. In 2002, LDCs comprised a paltry 0.6% of world trade. By contrast, the world's top-five exporters--the US, Germany, Japan, France and Britain--represent 37% of world trade.

Kofi Annan, the UN secretary-general, has commented that "the victims of unfair trade could be counted in their billions. There are too many barriers that stunt, stifle, and starve [developing countries]. These barriers and subsidies in developed countries must be phased out, as fast as possible, for the sake of humanity".

Existing restrictions on sensitive manufacturing sectors, notably textiles, footwear and agro-processed products, are deterring export-diversification in poorer countries. The rich world's protectionist measures cost the developing world $40bn in agricultural exports per annum, according to the International Food Policy Research Institute, while Africa's farm exports earn just $12bn annually. Agriculture remains the key obstacle to free trade. The WTO's poorer members appear to have reached a consensus that they should not agree to further liberalisation of their service industries without substantial concessions from the developed world on farming.

The US, EU and Japan spend about $320bn a year on farm subsidies, while poor regions receive $56bn in aid handouts. Hefty subsidies lead to the dumping of artificially cheap produce on world markets, thus hitting the earnings of African farmers.

Prosperous farmers benefit most from subsidies. The World Bank estimates that the largest 25% of EU farms receive 70% of all support. The bitter irony is that the total aid for the EU's dairy industry is equivalent to over $2 a day for each cow yet more than half of the globe's population survives on less than $1 a day.

Fifty-three African countries represent one-quarter of the WTO's membership and account for 2% of world trade indicating that Africa desperately needs open markets to boost the incomes of its hard-pressed farmers and manufacturers. According to the Economic Commission for Africa, if the rich world dismantled subsidies and import-barriers, Africa's non-mineral exports could rise by 14%, and annual GDP by 1.2%.

In reality, genuine liberalisation is highly unlikely for several years. Powerful farm lobbies in America and Europe will not permit free trade in the agriculture sector. As James Wolfensohn, the World Banks president, correctly observes: "Our planet is not balanced. "Two few control too much, and many have too little to hope for."