Brussels, 15/09/2003 (Agence Europe) - "There's no beating about the bush: Cancun failed" admitted European Commissioner for trade at the end of the four days' work at the ministerial conference of the World Trade Organisation (WTO), "rich" and "poor" countries having been unable to overcomes their deep dissension on the agriculture and trade "facilitation" dossiers. "It is not only a severe blow to the WTO, but also a wasted chance for all of us, developed and developing countries alike. We had everything to gain. We lost the lot", said Pascal Lamy. "I don't go as far as saying that the Doha round is dead, but it is certainly in intensive care", he added, stating that if it is to be concluded in time (by the end of 2004), 50% of negotiations should have been finished at this ministerial, whereas "we managed 30%". Mr Lamy largely imputed the failure in Cancun to the structure of the WTO, an organisation he described as "medieval". Referring more to the content of negotiations than to the WTO's rules and procedures, his colleague for agriculture, Franz Fischler, criticised the fact that the work ran aground on the so-called Singapore subjects (investments, competition, public procurement and "facilitation" of exchanges), finding this the more regrettable as "dissension on the liberalisation of trade in agricultural products had finally started to abate" and that "agreement on agriculture would have been possible".
Agriculture was, without a doubt, the main stumbling block to the work for the duration of the meeting in Cancun, but ultimately it was the refusal of developing countries to discuss new rules to facilitate trade by reducing bureaucracy (reform of customs procedures) which made failure certain. This failure spoke volumes about the growing influence of developing countries- which represent three-quarters of WTO members- and which possibly points to an under-estimation on the part of richer countries of their negotiating powers. From the beginning of the ministerial, the poorest countries and especially the G21, a somewhat disparate coalition of twenty-one countries- mostly developing countries- led by Brazil, India and China stuck to their guns on the dismantling of subsidies to agricultural exports from rich countries. In other words, no common ground could be found on the rate at which subsidies granted by rich countries to their farmers should be stopped. This in spite of a draft compromise tabled on Saturday by the (Mexican) Presidency of the meeting, but which went too far for the rich countries, but not far enough for the poor ones. Pascal Lamy said that the draft, presented by Mexican Foreign Affairs Minister Luis Ernesto Derbez was, however, an "acceptable" basis for negotiations to continue, except with regard to provisions forcing the EU eventually to get rid of its subsidies to agricultural exports, as the text proposed a date for these to be abolished. In exchange, the document presented by Mr Derbez provided for poor countries to commit to opening up their own agricultural markets, currently highly protected, thus answering a demand by the United States. these countries should also accept negotiations to begin on rules on foreign investment, as requested by the UK and Japan, and rejected by more than seventy countries, including India and Malaysia. "This document crosses several red lines the EU has clearly set out", said Franz Fischler, who nonetheless agreed with his colleague that it constituted "a basis on which we are prepared to work". A wasted effort, in that Brazil criticised the whole text "which is limited and fails to support the requests of G21", the poorest countries- and especially the countries of Africa, the Caribbean and the Pacific (ACP)- who called the draft "unacceptable", in that "the themes related to development have been sidelined" and that it did not include the request by four African countries to get rid of subsidies to the cotton sector.
But at the end of the day, it was the poor countries' refusal to countenance new rules put forward by the EU and Japan to reduce customs bureaucracy and to facilitate trade that put the kibosh on the ministerial. The developing countries' argument ran: these rules cost too much to apply and would reduce their leeway in economic policy matters. South Korea, Taiwan and Switzerland joined the EU to ask for discussions on the Singapore subjects, in other words new regulations on foreign investment, competition, public procurement and the fabled reduction in bureaucracy. Faced with the immovable developing countries, who would not hear of any of it, Pascal Lamy (for fear of conciliation and having received authorisation from the Fifteen) even accepted tackling the Singapore subjects separately, and launching negotiations in Cancun only on two of them: public procurement and the "facilitation" of exchanges. In vain. Explaining the position of the developing countries, the Malaysian Trade Minister Rafidah Aziz criticised the rich countries for having continued to formulate requests their partners could not agree to.
Highly irritated at the end of the conference, Pascal Lamy highlighted the EU's efforts to reach a fair agreement with its partners at the WTO. He said that "after a painful process of internal reform of our agricultural policy", the EU "stood ready to eliminate export subsidies on products of interest for developing countries" and "we offered to significantly reduce trade distorting support to farmers… We were ready to significantly cut down our tariffs and open our markets to farm imports. An agreement on agriculture was within reach after key moves by key players, far beyond what would have thought possible in July." He went on: "On industrial products, our offer was designed to maximise developed countries' concessions while allowing great flexibility for developing countries and sheltering the world's poorest countries. The EU also tabled specific proposals to give practical effect to special and differential treatment for developing countries. On Singapore issues, which are key to harnessing world trade, we played a constructive role… After intensive talks these last days and in order to forge consensus, we even accepted the chair's proposal to drop two issues and retain trade facilitation (key to small and medium companies) and transparency in public procurement. On cotton, the EU listened carefully to the requests coming from African countries and said we would be ready to even eliminate the most trade distorting support…"
Echoing Lamy's comments, the Italian deputy minister for industry at the foreign ministry, Adolfo Urso, whose country is currently responsible for the EU's rotating Presidency, recommended reforming the WTO and confirmed the EU's commitment to the world trade system. Similar thoughts were expressed by Elly Plooij-Van Gorsel (ELDR, the Netherlands), spokesperson in Cancun for the Liberal, Democrat and Reform group at the European Parliament, who expressed her group's faith in the multilateral approach and called for an examination of ways to reform the WTO negotiation procedures to avoid similar defeats in the future. European business leaders see the need for a genuine round of negotiations to make progress in terms of market access and investment, and lamented the breakdown of talks in Cancun. In a press release, Eurocommerce described Cancun as a "lost opportunity". "Additional benefits would have arisen from the immediate launch of negotiations on trade facilitation. A multilateral agreement on simplification and harmonisation of customs procedures under the WTO would have brought a substantial reduction in the costs of trade transactions", commented the retail, wholesale and international trade lobbying group to the EU.
In quite another style, the Greens Group at the European Parliament, speaking through the voice of Caroline Lucas from Britain, considers that it was hardly conceivable for the EU and the United States to have continued their unilateral agenda till the very last minute, given the contrary opinion of developing countries, the ecologist movement and the civil society that gave clear warning that negotiators were on the wrong track. The challenge, Ms Lucas continued, is now to consolidate the very new alliances between developing nations and to exploit their energies in favour of a truly equitable and democratic trade system. Her colleague, Paul Lannoye (Greens, Belgium) considers that "we must applaud the courage shown by developing countries in resisting pressure and their resolve to have their voices heard and their votes weighed. The arrogance of the rich countries of the North is stupefying. In answer to a request by four of the country's poorest countries for an equitable market on unprocessed cotton exports, they have stuck to their guns by refusing to eliminate subsidies and applying anti-dumping rules". The European Consumers Bureau (BEUC) considers that, without a clear EU commitment to abolish all forms (direct and indirect) of dumping of food products on the world market, WTO negotiations in Cancun could but fail. The CAP, BEUC Director Jim Murray said, has virtually assassinated all progress during trade talks in Cancun. The organisation for the defence of consumer interests notes, moreover, in a press release that developing countries remained inflexible in their will to gain concrete advantages during the talks. It concludes that this is a new situation on which the key actors of this world should reflect. BEUC nonetheless invites the EU to give up multilateralism, but to continue to work to achieve a result that is to the advantage not only of the developing countries but also for the EU.
Hardly had the failure in Cancun been announced when the WTO announced on Sunday evening that the next ministerial meeting would be held in Hong Kong. It did not, however, give a date. Two years ago in Doha the WTO officials had agreed to develop a new treaty governing international trade before January 2005, but this goal has seemed somewhat unrealistic since the weekend. Had Cancun been a success, a summit would probably have been organised in Hong Kong during the second term of next year. In the current circumstances, however, this date could be brought forward in order to relaunch negotiations with a view to reaching an agreement within the time set.