World Trade Negotiations Collapse

CANCUN, Mexico, September 15, 2003 (ENS) - The World Trade Organization's Cancun Ministerial Conference collapsed Sunday without consensus on the key issue of reducing the agricultural subsidies wealthy countries give to their farmers, which make it tough for farmers in developing countries to compete in the global marketplace.

The delegates were sidetracked from the agricultural issue and became deadlocked over the so-called Singapore issues - trade and investment, trade and competition policy, transparency in government procurement, and trade facilitation.

Some delegations, such as those from the European Union and Japan, favored launching negotiations immediately on all these issues. But a group of 21 developing countries were against any negotiations on the Singapore issues until the agricultural subsidies were addressed.

Mexican Foreign Minister Luis Ernesto Derbez chaired the Cancun ministerial meeting. (Photo courtesy Government of Mexico)

The breakdown touched off celebration among environmentalists, protesters and victory statements from some developing country officials. But World Trade Organization Director-General Supachai Panitchpakdi said there was no hiding the fact that the deadlock was a setback.

Dr. Panitchpakdi said he was "disappointed but not downhearted." He said it is important to ensure the negotiations are put back on track. If the Doha Development Agenda fails, the losers will be the poor of the world, he said. He pledged to work hard for a successful outcome.

U.S. officials also said the breakdown would hurt developing countries most by delaying world economic recovery and forestalling reduction of poverty.

U.S. Trade Representative Robert Zoellick, who led the U.S. delegation, said, "Whether developed or developing, there were 'can do' and 'won't do' countries here. The rhetoric of the 'won't do' overwhelmed the concerted efforts of the 'can do.'

"'Won't do' led to impasse," he said.

"Today we stalled because of the Singapore issues," Zoellick said, "but the larger lesson of Cancun is that useful compromise among 148 countries requires a serious willingness to focus on work - not rhetoric - to attain the fine balance between ambition and flexibility."

Pineapples produced in developing countries face many trade obstacles before they reach the international market. (Photo by G. Bizzard courtesy FAO)

European Commission President Romano Prodi said, "It would be useless to try and blame anyone for the outcome for we are all equally responsible - and we all lose if we allow the Doha Development Round to fail."

Prodi called the failure of the WTO Cancun Ministerial meeting, "a serious disappointment for all and a severe blow for the World Trade Organization," but said, "We must not lose heart."

"What is evident," Prodi said, "is that the organization couldn't support the weight of the task it was given."

"Even though the WTO should not be criticized for the lack of its member states' willingness to accept compromise, we should, however. consider ways to make the WTO function more effectively," Prodi said.

Brazilian Minister of External Relations Celso Amorim expressed the views of the developing countries in the so-called Group of 21 (G-21) in his address to the delegates on Thursday. "None of the other issues in these negotiations remotely compares to the impact that the reform of agriculture can have on the alleviation of poverty and the promotion of development. This awareness was what brought together a large number of developing countries of different sizes, from different regions and with different economic structures."

U.S. Trade Representative Robert Zoellick meets with Brazilian Minister of External Relations Celso Amorim in Cancun (Photo courtesy USTR)

India's Arun Jaitley, minister of commerce and industry and law and justice, told the delegates that the Doha Work Programme was heavily overloaded and included issues that are not trade related.

"We are engulfed in a sense of deep disappointment that the development dimension envisaged under the Doha Work Programme has been given short shrift," Jaitley said. "In our view the draft Cancún Ministerial Text is grossly inadequate," he said. "We cannot escape the conclusion that it does not accommodate the legitimate aspirations of developing countries and instead, seeks to project and advance the views of certain developed countries."

"Agricultural subsidies in developed countries are not targeted to keeping small struggling family farms in business but to provide hefty rents to large farmers or corporates," Jaitley said. "In many developed countries, the average income of farmers is higher than the national average, reaching almost 200 percent of the average in certain cases."

Agricultural subsidies provided by the industrialized countries are more than six times what they spend on official development assistance for developing countries," Jaitley said.

The World Trade Organization does not reach agreement by majority vote, but by consensus, and when the G-21 would not agree to address the Singapore issues, and the industrialized nations did not address agricultural subsidies, consensus was not possible in Cancun.

Zoellick expressed doubt that this Doha round of WTO negotiations, launched at Doha, Qatar in 2001, could be completed on schedule by the end of 2004. He added that the United States would vigorously continue negotiating free trade agreements with willing partners.

Friends of the Earth said that developing countries' rejection of the "new issues," referring to the Singapore issues, "demonstrated the resolve of poor nations to stand up to the rich countries and their multinational corporations who were lobbying for greater access to developing countries' markets."

Friends of the Earth International Trade Coordinator Ronnie Hall said, “No deal is better than a bad deal. Despite intense pressure from the business lobbies and bullying by the European Union and the US, developing countries have stood their ground. This is a great development for people, small businesses and the protection of the environment."

Flowers, banners and photos are placed during a large protest march Saturday to mark the suicide of Korean farmer Lee Kyueng Hae September 10 in protest of the WTO. (Photo by Danielle Hickie/Greenpeace)

"The collapse of the talks is a missed opportunity to solve huge global injustices like agricultural subsidies but will hopefully serve as a wake-up call to the rich countries and multinational businesses that they can no longer plunder the planet for profit alone," Greenpeace said.

“The WTO is finally seen for what it is - an institution with no legitimacy, working to promote corporate interests. The world must now come up with new proposals based on fair and sustainable economies for everyone," said Hall speaking on behalf of Friends of the Earth.

At the end of December, a provision of the 1994 WTO agriculture agreement called the peace clause is scheduled to expire. The Cancun meeting never considered an extension favored by the United States and European Union.

The peace clause prevents WTO challenges to agricultural subsidies under the 1994 subsidies agreement. Whether the expiration will result in a surge of WTO challenges to U.S., EU, Japanese and other agricultural subsidies is not known.

A written statement issued in Washington by Senator Charles Grassley, Republican chairman of the Senate Finance Committee, pointed out that the President's trade promotion authority to negotiate agreements, known as the fast track, is scheduled to expire in June 2005.

"While this authority can be extended," Grassley said, "it is by no means certain that the U.S. Congress will agree to do so."

WWF, the conservation organization, said the WTO should focus on how trade can contribute to sustainable development and rely on other institutions to deal with fundamental development and environment issues.

Tom Crompton, WWF Head of Trade, said, “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, ecolabelling, and unsustainable consumption and production patterns."