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EU/WTO: CANCUN TRADE TALKS END IN CHAOS.

Doha Round schedule in doubt.

Luis Ernesto Derbez, Mexico's Foreign Minister and chairman of the meeting, declared the talks over at lunchtime on September 14. For European Trade Commissioner Pascal Lamy, who had been instrumental in launching the Doha Round two years ago, it was a bitter disappointment, and it looks like the Round will not be completed by the time he steps down from his post at the end of next year. "Cancun has failed", he said. "This is not only a severe blow for the World Trade Organisation but also a lost opportunity for all of us, developed and developing countries alike." He said that his aim had been to reach a halfway point at Cancun, 50% of the negotiation, but now he estimated at just 30%. Earlier, Mr Lamy went back to the Member States to ask permission to "unbundle" the Singapore issues. This meant dropping investment and competition, and although he never received explicit permission from the Ministers - the 133 Committee of trade experts gave cautious support - he nonetheless floated the idea at a meeting of the EU, US, China, South Africa, Brazil, India, Malaysia and Kenya. When Mr Derbez reconvened the meeting, the EU offer to withdraw investment and competition was rejected outright by Botswana, speaking for the African, Caribbean and Pacific nations (ACPs). At the same time, South Korea refused to accept that any of the four Singapore issues should be dropped.

The ACP move was supported by other poor nations. "Developing countries do not have the capacity to deal with the new issues. We are still grappling with WTO negotiations on agriculture and non-agricultural products", said Rini Mariani Sumarno, Indonesia's Trade Minister. Malaysian Trade Minister Rafidah Aziz blamed the failure of the talks on the refusal of rich countries to heed the objections of the developing world. "They kept demanding things that others couldn't deliver", she said.

What now?

As for the future of the Doha Round, Mr Lamy said it was bleak. "I wouldn't say that the Doha Round is dead, but it needs intensive care." Many countries immediately pledged to continue negotiations at ambassadorial and technical level at the WTO's Geneva home, and indeed, Mr Lamy insisted that everything the EU had offered up to and including Cancun was still on the table. But he did not expect much to emerge by the December 15 date set for a Geneva meeting of the WTO's General Council of Ambassadors. "I don't think the Ambassadors in Geneva can agree things that Ministers in Cancun cannot", he said. "And I have never known an Ambassador to be fired for saying no."

But the Commissioner insisted that the Ministers had come close. "We listened during the course of this week, we learnt and we adjusted our proposals. What was finally on the table had the potential for a fair deal for all the membership, a potential deal that would have gone beyond what any of us would have thought six months ago", he said. Agriculture Commissioner Franz Fischler agreed. "Most of us agreed that the gaps on farm trade had narrowed. And we have accepted that rich countries must shoulder the main burden of liberalisation", Mr Fischler said. British Trade Secretary Patricia Hewitt was also convinced negotiators had come close. "There was a deal to be done, and it is a bitter disappointment that we haven't reached agreement."

Mr Lamy refused to blame countries or even groupings, but instead focused his attention on the WTO's decision-making process. "The WTO remains a medieval organisation", he said, repeating a complaint from Seattle. "The procedures and rules of this organisation have not supported the weight of the task. There is no way to structure and steer discussions amongst 146 members in a manner conducive to consensus. The decision-making needs to be revamped." However, Mr Lamy did have a dig at some - unnamed - Ministers, saying: "A lot of developing country Ministers were not that keen to learn the intricacies of difficult technical issues." Mr Fischler had earlier blamed the G-21 for failing to move beyond merely requests, and not taking responsibility for their own duties. "The G-21 has shown no ambition at all. We have shown flexibility, we are showing flexibility and we will show flexibility but there are limits", he said. "Without flexibility on their side, the talks will go nowhere."

In a letter sent on September 16, Mr Lamy was more caustic about the celebrations by certain African nations and NGOs when it became clear the meeting was over. "I was appalled when I heard that some had been cheering the failure of the conference", he wrote. "I think they didn't realise just how much we have all lost through this failure. I am also struck by the difference between the inside and the outside view of events: some say that the conference failed because rich countries refused to open up farm trade. Well, we didn't even get around to discussing that in the final Ministerial discussion! And it is just too facile to say that this was all a big North-South confrontation: in Cancun, we saw the emergence of several Souths (the more advanced group of countries in the G-21, the G-90 regrouping the African countries and the least developed ones)."

Picking up the pieces.

WTO Director-General Supachai Panitchpakdi insisted that real progress had been made on agriculture, industrial tariffs, and even Singapore issues. He said he remained determined to work towards a solution in Geneva, even though the matter had become more complicated, he said. He added that the WTO reaffirmed all its Doha declarations and decisions of 2001 and would continue to work on outstanding issues with a renewed urgency.

He was echoed by Ministers from the G-21. "Whatever happened at this meeting, the pieces will be picked up again", said Celso Amorim, Foreign Minister of Brazil and leader of the group whose numbers even he had difficulty counting. Martin Redrado, Argentina's chief trade negotiator, said delegates would have to "pick up the pieces" and look for a new consensus. "No one can feel satisfied with a failure", Mr Redrado said. "All of us would have been better with new rules." Ecuador's Foreign Trade Minister Ivonne Baki agreed, saying: "It's not the end - it's the beginning." Celso Amorim, the Foreign Minister of Brazil said: "We will not abandon the WTO. It's a setback not to have a result now. But we are optimistic in the long run". "We must find ways to go forward", said Alec Erwin, South Africa's Trade Minister. Canada said it would "continue to work on getting this agenda back on track". Mr Erwin also hailed what he saw as the unity and effectiveness of the G-21. "This is the first time we have experienced a situation where, by combining our technical expertise, we can sit as equals at the table", he said. "This is a change in the quality of negotiations between developing and developed countries."

Zoellick blames posturing.

However, US Trade Representative Robert Zoellick was less diplomatic than Mr Lamy, accusing some governments of sabotaging the meeting by engaging in rhetoric and tactical games. No progress could be made unless all WTO members were committed to negotiating seriously. Mr Zoellick made clear that unless they did so, the US would press ahead with bilateral and regional trade deals as an alternative to the Doha Round. "We warned that too many countries were spending too much time pontificating and too little time negotiating", he said. "Whether developed or developing, there were `can do' and won't do' countries here. The rhetoric of `won't do' overwhelmed the concerted efforts of the `can do'. There was too much time spent on inflammatory rhetoric, and as a result, all walked away empty-handed." He was also more downbeat on the prospects for the Doha Round ending by 2005: "It is hard for me to believe, in the position we are now, that we will be able to finish on time", he said. US Agriculture Secretary Ann Veneman also warned that those who were most set to benefit from the success of the Doha talks remained those millions in developing nations.

But British Socialist MEP Glenys Kinnock said Mr Zoellick was being disingenuous. "What the G-21 has done is to provide expertise and professionalism. I don't think they have done any more posturing than the US or the EU", said Mrs Kinnock, who is Vice-President of the African, Caribbean and Pacific States ACP-EU Joint Assembly. She was also dismayed at the result. "I don't take any pleasure at what has happened. It is bad news that we have reached this impasse."

Many NGOs said the breakdown should provide a warning to the rich. Phil Bloomer, of Oxfam said: "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 a deal that would fail the world's poor people." Greenpeace blamed the US and the EU for the failure, and called for an international conference to create an alternative trade system, that "must actively and effectively put an end to policies that promote the destruction of ecosystems and human wellbeing". And the World Wide Fund for nature (WWF) said the WTO should now focus on how trade can contribute to sustainable development. "This is a wake-up call to the international community to develop and strengthen other multilateral institutions so that they can begin to deal with complex and difficult issues such as investment, precautionary principle, eco-labelling and unsustainable consumption and production patterns", said Tom Crompton, WWF head of trade.

However, the European trade lobby EuroCommerce was more despondent, describing it as a lost opportunity to achieve more liberalisation, more multilateralism and more development. "Improved market access for goods and services, a stronger multilateral framework of rules and ambitious negotiations on trade facilitation are in the interest of all countries", said EuroCommerce President Dr Bernert. The International Confederation of Free Trade Unions (ICFTU), meanwhile, said the meeting collapsed today because of the WTO's failure to tackle the needs of developing countries or to confront the social problems of trade, stated the international trade union movement. "The collapse of yet another WTO Conference has further undermined the credibility of the WTO", said Guy Ryder, ICFTU General Secretary. "This crisis will continue as long as WTO members refuse to tackle development, poverty, employment, and workers' rights."

Agriculture progress.

Earlier, on September 12, a draft compromise text had been released by the WTO which has attempted to close the gaps on farming. On domestic support, the text added provisions capping product-specific Aggregate Measurement of Support (AMS) levels to their average levels during a reference period that remains to be determined - a key demand of the G-21. On market access, the major change was the addition of bracketed text creating a minimum level of overall tariff reductions across all agricultural products. The draft also explicitly identified measures for special and differential treatment (S&D) of developing countries, including new language on special products. However, while the G-21 had proposed formula cuts only for rich nations, the draft also proposed applying formula cuts to an (unspecified) percentage of developing country tariff lines. It also called for developed countries to provide duty-free and quota-free access to products originating from least-developed countries (LDCs).

Meanwhile, the four impoverished West African countries - Mali, Burkina Faso, Benin and Chad - as well as their sympathisers - expressed outrage over the new draft text on the cotton initiative. Under the initiative, the countries seek a total elimination of export subsidies, as well as compensation to LDCs for lost income while subsidies are being phased out. Closely reflecting the US suggestions, the draft instructed the Chair of the WTO Trade Negotiations Committee to consult with the Chairs of the Agriculture, Non-agricultural Market Access (NAMA), and Rules Negotiating Groups to "address the impact of distortions that exist in the trade of cotton, man-made fibres, textiles and clothing to ensure comprehensive consideration of the entirety of the sector". It instructed the Director-General to consult with the relevant international organisations to effectively direct 'existing' (rather than new) resources toward economic diversification. In a sop to the cotton producers, the draft said Members "pledge" not to use the discretion allowed under the agriculture draft on domestic subsidies to avoid making reductions in domestic support for cotton.
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Publication:European Report
Geographic Code:4E
Date:Sep 17, 2003
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