Lessons from unexpected failure of the WTO at Cancun

Lessons from unexpected failure of the WTO at Cancun

Gusmardi Bustami, Indonesian Ambassador to World Trade Organization,
Geneva

The WTO's Fifth Ministerial Conference in Cancun ended on
Sept. 14 without any agreement on the ministerial text. The
result of the four-day Ministerial Conference therefore boiled
down to a piece of paper in the form of a short Ministerial
Statement read by the chairman, consisting only of a very brief
instruction to convene a meeting in Geneva at the level of senior
officials to discuss some outstanding issues.

All ministers being of the view that the remaining issues
should be resolved properly, they asked the chairman of the
General Council (GC), working in close cooperation with the
director-general of the WTO, to convene a meeting of the General
Council no later than Dec. 15, 2003.

Cancun was expected to produce a comprehensive ministerial
declaration covering a wide range of issues as a basis for
further negotiations of the Doha Development Agenda, which was to
be agreed no later than Jan. 1, 2005. Instead, the entire process
of the conference was dominated and influenced by the negotiating
positions on three trade issues only, namely the Singapore
issues, agriculture, and the cotton initiative put forward by the
poor West African countries.

Starting with the Singapore issues, these were quite plainly
rejected by the developing countries. From the outset, there was
no sign of the possibility of further discussion on the
modalities of the rules governing foreign investment, domestic
competition policies, transparency in government tenders, and
trade facilitation. It was the E.U., strongly supported by most
of the developed countries, which first successfully proposed
these issues for discussion in the 1996 Singapore Ministerial
Conference.

No objection was raised by the developing countries, since the
Singapore mandate prescribed only to study these issues further,
not to discuss the modalities leading to fully-fledged
agreements. However, the hidden agenda behind the Singapore
mandate has today reached an impasse.

The important difference to emerge from Cancun is that while
in the past the developing-country position on the Singapore
issues had often been split, this time they formed a united
front. Over the course of the ministerial conference, more than
70 ministers from the developing countries expressed their
opposition to the launch and conduct of negotiations on all four
issues and called for a continuation of the on-going
clarification processes on these issues.

Agriculture: As the most sensitive and complex issue from the
start, the negotiations were characterized by deeply different
positions among members. The 13th of August 2003 proposal tabled
by the U.S and the E.U has failed to attract meaningful support
as the proposal only accommodated the pair's interests.

Although the US-EU claimed that their joint proposal was
intended to help bridge the deep differences between members'
positions on most of the key elements in the negotiations, the
real purpose of the proposal was essentially to defend developed
countries' interests, in particular where the efforts to maintain
the existence of subsidies were concerned.

The Group of 33, an alliance of countries concerned by the
issues of Special Products (SP), the Special Safeguard Mechanism
(SSM), and Special and Differential Treatment (SDT) want greater
flexibility with regard to a number of "special products" in
relation to food security, livelihood security and rural
development, as well as ensuring the survival of the small
vulnerable, under-resourced farmers.

The other group of countries with an immediate interest in the
agriculture negotiations are the West-African cotton producing
countries, namely Benin, Chad, Mali and Burkina Faso. These
countries' grave concern is the heavily subsidized cotton in the
U.S and EU, which is driving their populations below the poverty
line.

Unfortunately, however, the conference collapsed before the
cotton and agriculture issues could be taken up for final
negotiations.

Aside from the substantive issues, the format and procedures
of the Conference have also created problems.

A first text was prepared by the chairman of the General
Council (GC) under his own responsibility after most delegates
had totally opposed a number of issues in the draft text to be
submitted to Ministers in Cancun. Like the first revised text,
the second revision was also carried out by the chairman of the
Ministerial Conference (Revision 2), with the result that the
polarization in Cancun was intensified rather than reduced.

The developing countries were dismayed that neither text had
ever fully accommodated their concerns, particularly on the
Singapore issues, while the views in some of their formal
proposals had been swept aside. They were outraged at this poor
treatment, which was similar to that meted out to the Cotton
Initiative and Agriculture.

Yet another problem emerged as a result of the initiatives of
the Chairs to prepare and submit the draft text "under their own
responsibility". This practice has meant that no-one knew who was
actually drafting the text, despite the chair's repeated
assurances that all the text elements reflected the views of all
the members during all of the negotiations.

Many developing countries have voiced their concerns in strong
terms regarding this practice to the effect that the Cancun
drafting process has shifted from a member-driven to a chair-
driven exercise.

Instead of negotiating with one another, members have been
negotiating with the chair. This type of exercise fully ignores
the role of members by changing the "rules of the game" of the
usual type of WTO negotiations to a "chair's own initiative",
thereby damaging the interests of other members, particularly
those of the developing countries.

Consequently, it is desirable that issues deemed to be
particularly important be entrusted to a group of, say, five
negotiators designated from among countries that have expressed
themselves firmly on the issues involved.

For the majority of developing countries, the Cancun failure
will be a good lesson to consider how their interests can be
tightly defended against the power of developed countries.

The appropriate procedure is to take a full and active part in
the consultations while restricting the roles of the chairman and
of the Secretariat as much as possible. It can be expected that a
large number of lobbies, as a favorite strategy of the developed
countries to win the game, will tend to overwhelm the
negotiation. It is also quite clear that between now and
December, no significant progress on substance is likely to be
made during the consultations initiated by the chairman of the
General Council.

Yet so much work still remains to be done and the ball should
be kicked off now if we are to remove a heavy burden from our
shoulders. All efforts should therefore be directed at making the
WTO a place where we can play a fair game (and not one where free
competition is the rule).

The opinions expressed in the article are personal views