Trade talks break down at Cancun – a victory for developing countries?

Trade talks break down at Cancun – a victory for developing countries?

Trade talks break down at Cancun – a victory for developing countries?

The World Trade Organisation (WTO) ministerial meeting in Cancun, Mexico, in September 2003 collapsed and resulted in the standoff between developing and developed countries. Many see the emergence of coalitions of developing and transitional states at Cancun, as evidence that the industrialised nations can no longer get away with manipulating and controlling trade negotiations.  But can this be true?  Rather, several problems within the WTO seem to be largely responsible for the failure of the Cancun meeting.

An article from the Universities of Cambridge andManchester argues that the collapse of the Cancun talks should be seen as theinevitable result of deep-rooted problems within the WTO – in terms of the way itwas designed, the manner in which it functions, the agreements on which it isbased and the expansion of its agenda.

The rules and regulations for the WTO were not designedespecially at the outset, but they simply evolved from its predecessorinstitution, the General Agreement on Tariffs and Trade (GATT). It has thereforeinherited the GATT practice of making rules based on improvisations; a systemof one vote per member on paper but in practice decisions are made by consensus;there is a minimal role for the Secretariat and informal diplomacy is used toreach an agreement.

However, unlike GATT, the WTO is not a ‘rich-nations club’where other countries are sidelined. Developing countries, which now constitutesome four-fifths of its 148-strong membership, are no longer willing to standon the sidelines waiting for decisions to be made in off-the-record ‘GreenRoom’ meetings (special meeting rooms for a set of negotiators that are closedto others). Developing countries realise they are more vulnerable to pressuresand threats in bilateral meetings if they are unable to keep track of theselective meetings to which they may not be invited.

The researchers argue that Cancun showed how the WTOsuffers from undemocratic ways of functioning, random improvisations and lackof clear rules. Instances of such irregularities include:

  • The Chair of the WTO’sGeneral Council issued, without consultation and without authorisation from WTOagreements, a text which was seen to shape the Cancunagenda to the detriment of developing countries.
  • It is unclear how the concept of ‘explicitconsensus’ that was introduced at the preceding Dohameeting differs from a normal consensus: the EU used the ambiguity to pushforward discussions on contentious issues (investment, government procurement,trade facilitation and competition policy) which led to the collapse at Cancun.
  • Developing countries lack enough negotiatorswith expertise in all areas of trade and related law: while the US and EU delegations both had over 800 people, Nigeria was only able to send 12.
  • Selectionof ‘Friends of the Chair’ (facilitators appointed to organise discussion inidentified areas) was made without election or consensus.
  • Theconference was abruptly brought to a close by the Mexican foreign minister –some alleged as a result of US pressure.

The G22 (a group of 22 developed and developing countries)protested at the attempt of the USAand the EU to arrive at a deal between themselves to limit access to their protectedagricultural markets. Despite intense pressure used to divide the coalition,the G22 – headed by Argentina,Brazil, China,India and SouthAfrica – held together. Several othercoalitions emerged too.  And, the refusalof African states to give in to the Singaporeissues brought support from other coalitions finally leading to the birth ofthe G90. The emergence of the G90 and the persistence of the G22 despiteconsiderable pressure is certainly a sign of victory for developing countries,but organisational problems within WTO enabled such new coalitions to combinein Cancun.

Building a successfulmultilateral trade system is not just a matter of covering up the political differencesthat was established in Cancun. It willrequire:

  • arationalisation of the WTO’s rules and regulations
  • a slowerbut longer-lasting and sustainable process of rule making
  • safeguards to preventinappropriate uses of power and influence.

At Cancun, developing countries found some reassurancefrom the formation of large coalitions but are unlikely to be similarlycomforted outside the WTO, as the USA vows to pursue its trade goals bilaterally.Unless the WTO is redesigned, developing states will find it harder to resistpressures to agree to open up markets and to lobby for reductions in US subsidyregimes.