Brazilian President Luiz Inacio ‘Lula’ da Silva gestures as Mexican President Vicente Fox watches

Following the failure of Cancun, developed nations may have realized that these same smaller trading partners, when united together, may well become a force to be reckoned with.
Cancun saw the formation of the G22, an ad-hoc group led by Brazil, China and India, that was formed around the Cancun agenda and has become a powerful lobby for developing countries. They have now become the face of opposition to the protectionist ’super economies’ - namely the US and the EU.
The meeting of the world's 146 trade ministers was supposed to mark the mid-point of the latest round of WTO talks, dubbed the ‘Development Round.’ While the results of Cancun may well have been foreseeable, many experts say the greatest failure was that economic superpowers did not deliver the necessary measures to help their poorer counterparts, a fundamental goal of the Doha Round of talks launched in the capital of Qatar in November 2001.
So in what was a first in the WTO’s 50-year history – multilateral trade talks directed toward developing nations – failure was a dismal sign.
According to the latest World Bank statistics, which draws the line of poverty at an income of one dollar a day, there are a whopping 1.2 billion poor people in the world.
Even leading WTO trade experts now admit to the increasing weight of developing nations in trade debates, whose joint economic structures represent some 35 to 40 percent of world trade.
But despite the original enthusiasm for lofty goals of giving developing nations a voice, Cancun failed when negotiations on crucial issues, like freeing agricultural and industrial trade barriers, slashing agricultural subsidies in highly protective markets and freeing up trade in services, all seemed doomed to failure as countries, rich and poor, pedaled backward along a path that has lasted some two years.
Hungary's trade officials were also present at Cancun, although, observers say, theirs was mostly a symbolic role. The Central European country, once so committed to the Third World, would not, ahead of EU accession, take part in the world's latest power partition.

Agricultural subsidies caused a rift between the wealthy and developing nations in Cancun

From the moment delegates arrived at the negotiating table, there seemed to be little chance for progress at Cancun - even though some rays of hope had appeared over the summer. On Aug. 30, members of the WTO finally agreed that poor countries could, in cases of emergency, import cheaper, generic versions of drugs to fight epidemics such as AIDS and malaria, just a few of the illnesses that threaten to paralyze a number of developing economies.
Despite the enthusiasm over the deal, the fact is that this target was missed by two years, following an original deadline set for 2001. Only a World Bank report projecting the disastrous outcomes the epidemics would have on international economies seemed to have finally convinced the US and the EU to lessen the pressure from pharmaceutical companies on the issue.
However, on some of the more fundamental issues, like agriculture (which matters most to poorer countries), natural exporters of farm products and the large population of subsistence farmers, there had already been signs of problems before trade officials even arrived at Cancun. Trade representatives from developing countries had already alerted WTO officials in Geneva, during preparation for Cancun, that trouble was ahead.
According to Miklós Somai, research fellow at the Hungarian Academy's Institute of World Economy, one reason for concern was the joint proposal of the EU and the US on agricultural issues, signed Aug. 13 following four long weeks of debates.
The proposal was, in fact, requested by other WTO members so that, unlike other WTO negotiations, time in Cancun would not be spent on the two superpowers trying to reach an agreement. But many developing countries got frightened that the proposal could in reality be just another way of locking smaller players out of establishing the rules in multilateral trade. US Trade Representative Robert Zoellick and EU Chief Trade Negotiator Pascal Lamy both were offended at others questioning their intentions and commitment to free trade.
But while both economic powerhouses made some vague commitments to "reconfirm the objective to establish fair and market-oriented system through fundamental reform in agriculture," their promises did not touch overall farm subsidy programs. Such programs allocate some USD 88 billion each year to farmers in the EU and USD 52 billion to farmers in the US.
Developing countries argue, meanwhile, that these levels of funding result in distorted and unrealistically low market prices, which in turn facilitates developed country farmers to dump their products on poor markets, making it impossible for their farmers to compete.
In this light, and even though the World Bank had projected that a good deal in Cancun could have lifted some 144 million people out of poverty, it is no surprise developing countries remained reluctant to touch their own tariffs - which are also trade-distorting measures that hurt poor countries as they try to reach markets further afield.
But as the economic boom of the 1990s is relegated to a thing of the past, with slowing growth persistent and unemployment on the rise in the world's two top economies, it is clearer than ever that sentimentalism about the world's poor belongs to the realm of charity.
" The truth is each of the world's economies just want to go up and get ahead," Somai says.
István Major, deputy state secretary at the Ministry of Foreign Affairs, and part of the Hungarian contingent in Cancun expressed the same view when he said it would be an illusion to think the main concern of economies is helping the poor.
This is also the case for Hungary, a founding member of the Cairns group of exporting countries, once the most powerful opposition to protectionist economies like the EU. However, Hungary’s presence at the Cancun trading round could be said to have been largely symbolic, as the country has now resigned itself to tow the line of the EU.
" Hungary has already committed itself, there was no need to try our power out at Cancun," said Major.
In fact, many of the states that consist of the G22 are Hungary's former allies in international trade talks. Some global tariff and export subsidy cuts that were meant to be achieved in September would have served the country, even after May 1, 2004.
" It could have been good for Hungary had there been changes towards lower export tariffs," Somlai argues. "It could have helped the country in its trade relations with neighboring countries like Croatia [who are not set to join European Union in May]."

And even though Hungary will be limited in its ability to have an agenda different from Brussels in international forums, there are fears that Hungary will share similar trade woes as its former allies in the developing world.
" Hungary faces the problem that once an EU member, imports will flow into its market without any barriers," Somlai explains.
It is said, that of the 964,000 farms in Hungary, only one in 20 is able to compete with EU counterparts. And even though in certain protected sectors the EU would intervene to protect a failing sector under its Common Agricultural Policy (CAP), the fact remains that 95 percent of farming assistance is direct subsidies, for which there will be a 10-year, gradual implementation period.
With traditional agricultural sectors such as pork and poultry production facing an in-flow of cheaper and higher quality EU imports, experts project that the agriculture sector will have to reinvent itself.
The fear of instability in agricultural sectors in developed societies is real: the more advanced an economy is, the more money it spends on agriculture – and not just because it can afford it. Farming in most cases would not even turn a profit without government help and not subsidizing farmers would lead to a potential migration from the countryside to already overcrowded cities.
It is politically unlikely that EU governments would turn their backs on their farmers for the sake of free trade. In order to keep the political balance, they have to ensure that a farmer's earnings are close to what a city dweller takes home at the end of the week. With its cautious silence at the round table of Cancun, this is just the kind of balance Hungary may want to achieve.