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Synthesis/Regeneration 33   (Winter 2004)

Thinking Economically

Factors Behind the Breakdown of Negotiations

by Andrew Kennis

In September 2003, trade ministers from every corner of the world returned—empty-handed—to their respective countries after attending the 5th World Trade Organization (WTO) Ministerial Conference, located in the island paradise of Cancún, Mexico. The gathering resulted in no agreement, and left developed countries frustrated and unsatisfied.

Conversely, underdeveloped countries forged new alliances. Generally, they viewed the meeting’s failure to reach an agreement as a victory and a show of renewed strength among the world’s poorest, and often most populous, countries.

The round of trade policy talks that took place in Cancún was initiated two years ago in Doha, Qatar. In the wake of the massive Seattle protests of 1999, which resulted in the cancellation of the opening ceremonies and the crippling of the talks, the leaders of the WTO chose this remote and inaccessible location for their next annual meeting. Qatar’s advantages, from the WTO’s point of view, included laws against public assemblies of five or more people without specific government permission, as well as its considerable distance from most centers of resistance to corporate globalization.

…more than 70 underdeveloped countries issued a formal presentation…on the four contentious topics known as the “Singapore Issues:” foreign investment, competition policy, government procurement and trade facilitation.

The Doha talks, protected as they were from public demonstrations, did result in an agreement of sorts. Participants launched goals that would supposedly help poor countries develop and rise above the structural and trade-related barriers that keep the world’s poorest populations in destitution.

On September 12, more than 70 underdeveloped countries issued a formal presentation to the WTO, clarifying their position on the four contentious topics known as the “Singapore Issues:” foreign investment, competition policy, government procurement and trade facilitation. The huge block of countries, mostly located in the Southern hemisphere (the so-called “Global South”), demanded that an explicit consensus be reached on these issues before formal negotiations could take place. In fact, this request merely restated a key provision that was already agreed upon and codified in the Doha Declaration. It was also understood that the South wanted to see more concessions from developed countries including cuts in the multi-billion dollar agricultural subsidies that have effectively barred small farmers from underdeveloped nations from participation in the international agricultural export market.

The following morning, the second revision of the Draft Cancún Ministerial Text was released by Mr. Luis Ernesto Derbez, the chair of the conference and Foreign Affairs Minister of Mexico. The paper made it clear that the requests put forth by the South had been completely disregarded by the authors of the document. From the perspective of the “Southern” nations, this text was worse than the first one in many important respects—for all intents and purposes, it reflected the economic interests of the European Union (EU) and the United States alone. The text made it clear that the EU and US (as well as other subsidy giants, such as Japan) were not willing to make significant cuts to their enormous agricultural subsidies, despite their insistence that less economically developed nations remove their trade tariffs. The Doha Declaration’s stipulation that the explicit consensus of all members must be reached before negotiations were launched was also completely disregarded.

…the EU and US…were not willing to make significant cuts to their enormous agricultural subsidies…

Special meetings further exemplified the northern attempt to strong-arm southern countries into accepting policies that would benefit only the most developed nations. Benin, Burkina Faso, Chad and Mali, four of the poorest nations in the world, managed to garner a meeting with US trade representative Robert Zoellick to discuss the effect of the US cotton subsidies on world agricultural trade. In the US, $3 billion worth of cotton is produced annually by 25,000 cotton farmers, most of whom are subsidized by the federal government to the tune of $4 billion annually. These subsidies, which clearly contradict the spirit of “free trade” that the US espouses, result in an astounding average payment of $160,000 to every American cotton farmer.

Conversely, 10 million farmers live in the countries of Central and Western Africa, and most live on an average of $2 per day. US cotton subsidies sink the price of cotton almost below the cost of production for these farmers, which results in a cost to African farmers totaling $1 billion per year. If the American cotton subsidies ceased, Africa’s huge concentration of small farmers could pull themselves out of poverty, and these nations could revitalize their economies.

The African delegations raised these questions at their meeting with Trade Representative Zoellick, and not surprisingly, Zoellick told them that all he could offer was a vague plan that would supposedly help build up African textile industries. No cuts or changes of any kind to the current agricultural subsidy policies were even considered, despite African pleas for a greater reciprocity in the practice of free trade.

Not since the days of Ronald Reagan, some commentators pointed out, has US trade policy reveled in such staunch protectionism. The difference between then and now, however, is that the US and other developed nations are trying to impose unilaterally tough free trade policies abroad, which they themselves do not implement at home.

Not since the days of Ronald Reagan…has US trade policy reveled in such staunch protectionism.

Cognizant that North-South tensions were approaching a boiling point, Mr. Derbez convened a meeting of about 30 ministers. Derbez proposed that both sides begin to resolve their differences there, beginning with a discussion on trade facilitation and government procurement, two of the less contentious of the Singapore Issues. Derbez adjourned the meeting for a few hours to allow nations to consult with their constituencies. Instead of mere preparation for the Derbez proposal, however, during the break an extemporaneous meeting was bravely convened, with over 60 WTO members belonging to the African Union, the ACP (African, Caribbean and Pacific group of countries) and the LDCs (Least Developed Countries) in attendance The meeting resulted in a firm decision: the bloc would not compromise on the Singapore Issues.

When the larger meeting reconvened, the ACP-LDC-AU alliances (led by the representatives from Botswana, Kenya and Nigeria) stated their position—the two Singapore Issues on the agenda were not open for debate. Meanwhile, South Korea and Japan refused to drop the other two Singapore Issues from the agenda. This unbridgeable disagreement would lead to the complete collapse of the Cancún Ministerial Conference.

Mr. Derbez decided to close the Ministerial in the early evening with a short official statement on the breakdown of negotiations. His words reverberated throughout the streets of Cancún and resulted in instant celebration and jubilation on behalf of the hundreds of NGO observers, as well as the tens of thousands of protesters that came to Cancún.

Media misinformation

It should not be surprising that a great deal of misinformation was distributed over the airwaves and daily presses around the world. For instance, it was often reported that the WTO talks in Cancún collapsed because of agriculture. This was not the case—the talks collapsed around the Singapore Issues.

Similarly, coverage also reflected the sentiment, characteristic of many US commentators, that third world stubbornness caused the collapse of the talks. Take for example, the recent comments of Alan Oxley, who served as Australia's ambassador to the General Agreement on Tariffs and Trade (GATT), the WTO’s predecessor organization: “There is now a large group of them in the WTO. They behave as if they are in the United Nations.” The same implication of collapse at the hands of a hysterical third world may be found in Zoellick’s widely published accusation that poor nations were looking for “a freebie.”

“India did not break Cancún. Africa broke Cancún.”

A fundamental misunderstanding of the basic dynamics of global trade and finance underlies these basic and misinformed arguments. The developed countries of the North have long dominated debates on world trade, and it wasn’t until there was resistance within the northern countries themselves (i.e. 1999 in Seattle), that finance ministers from the South finally started showing some backbone.

One has to look to the independent media to find analyses that acknowledge the relationship between a history of domination and the goals of poor countries. Consider, for instance, the following statement from Walden Bello, executive director of the Bangkok-based research and advocacy organization Focus on the Global South:

…the collapse represented a victory for people throughout the world, not a “missed opportunity” for a global deal between North and South. Doha was never a “development round.” And what little promise it offered for development had been betrayed long before Cancún. Not even the most optimistic developing country came to Cancún expecting some concessions from the big rich countries in the interest of development. Most developing country governments came to Cancún with a defensive stance. The big challenge was not that of forging a historic New Deal but that of preventing the US and the EU from imposing new demands on the developing countries while escaping any multilateral disciplines on their trade regimes. [1]

Perhaps it was the same lack of ability in perceiving the dynamics of power that led many to falsely attribute the collapse to the leadership of the negotiating blocs which have recently formed to represent the interests of poor countries. The Group of 21 and Group of 15 were singled out in particular, with India acting as a centerpiece for exaggerated claims of the groups’ power. A statement by the Confederation of Indian Industry put it clearly: “India did not break Cancún. Africa broke Cancún. Gratifyingly, the G-15 and G-21 alliances of the developing countries remained intact right through.” The statement proclaimed further that the northern developed countries “misunderstood that the countries of Asia, Africa and Latin America wanted to express their views and it was, in fact, Africa which rose in revolt against the Singapore Issues of investment, trade facilitation and government procurement.”

…the goals set in Doha 2001 for the year 2005 will likely not be met.

The mass media also frequently reported that demonstrations had nothing to do with Cancun’s collapse. For instance, one British news service led one of its reports as follows: “The failure of the World Trade Organization (WTO) talks in Cancún, Mexico, this time was not due to demonstrations, protests, and public pressure from outside. Rather, the failure came from within the organization and its members.” [2]

Even the New York Times (February 17, 2003) itself acknowledged that in the wake of unprecedented anti-war protests against the invasion of Iraq, global public opinion was now the “second superpower” next to the United States. To fail to acknowledge this formidable and growing presence—a presence evidenced by the attendance of over 100,000 people at the three annual world social forums in Sao Paulo, Brazil—is to overlook the very real and growing power of grassroots movements and organizations all over the world.

Implications for the future

The most immediate implication of the failed WTO talks in Cancún was that the goals set in Doha 2001 for the year 2005 will likely not be met. Others speculate an even bleaker future for the WTO, up to and including its total implosion. As Brazilian Agriculture Minister Roberto Rodrigues stated, “The Seattle disaster and the fact that the Cancún conference was not successful place the WTO at stake.”

As for future US plans, trade representative Zoellick issued a strong message to the poor nations of the world when he stated that the US would “move on multiple fronts” to open up world markets through bilateral and regional agreements. In his words, “we are going to open markets one way or another.”

In fact, the WTO may share in the fate of the United Nations Conference on Trade and Development, continuing to function as an intact-but-largely-ignored global trade institution.

Social movements…are now considering an alliance with the newly formed groups of 21 and 15…

Social movements, meanwhile, are now considering an alliance with the newly formed groups of 21 and 15, through their shared opposition to the dominance of global trade issues by the global North. But as Bello stated, activists will find themselves “ill at ease with the Indian government, which is fundamentalist and neo-liberal, and with the Chinese government, which is authoritarian and neo-liberal.” This caveat represents a deep challenge to supporters of global equity and justice, which will not be easily overcome. However, the formation of such an alliance might open previously unimaginable possibilities for alternative systems of global trade.


1. Walden Bello, Implications of Cancun, Z-Net, September 23, 2003. Full article: http://www.zmag.org/content/showarticle.cfm?SectionID=13&ItemID=4241

2. World News Connection. September 16, 2003, London-based paper notes “wide gap” between industrialized, third world countries, Editorial: The World is Not For Sale.

[14 dec 03]

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