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