Collapse of WTO Talks in Cancun

On the face of it

The factors for the collapse are many and complex, although the immediate reason was failure to reach agreement on the launch of negotiations on the so-called ‘new issues’. Throughout the conference, developing countries remained united in their opposition to the these new agreements which would create rules in the WTO on investment (a blatant attempt at getting market access for multinationals), ‘competition policy’ (a more subtle way to get market access for multinationals), ‘transparency in government procurement’ (a first step in limiting the ability of governments to favour domestic businesses in their purchasing) and ‘trade facilitation’ (simplifying customs procedures).

In the months leading up to the Cancun Ministerial, there was massive opposition to the EU’s proposals to expand the WTO in these new areas of the global economy. This came from the majority of WTO members and a broad-based global civil society movement. In the UK, the Trade Justice Movement, a coalition of 40 development, environment and trade union groups representing over 9 million people, mounted a UK wide campaign calling for the new issues to be dropped.

After three days of discussion in Cancun, the issuing of a draft Ministerial Text intensified the polarisation in the Conference mainly along North-South lines. The text simply did not reflect the views of developing countries.

“Here we are with 70 or more developing countries speaking up clearly in the consultations, and the revised Text just ignores our position and takes the opposite position,” said a Caribbean country’s Minister on Saturday night. “What kind of organization is this? Who does it belong to? Who does the drafting? Who appointed them? Why waste our time engaging seriously in consultations only to find our views not there at all in the draft?”

Panic started to set in and the now famous ‘green room’ process – where a small number of countries meet to thrash out a deal – was initiated. But the EU continued not to budge until the last minute. Only a few hours before the conference was due to finish on Sunday 14, the EU offered to drop three issues, including investment, but it was too little too late.

Following an hour long adjournment, designed to enable ministers to consult with their constituencies, some countries (including those representing the Least Developed Countries, the African Union, and the African, Caribbean and Pacific) reported that they were unable to accept negotiations on any of the four new issues. The Chair of the conference felt that agreement was still too far away and decided to call the conference to a close. The decision to end the meeting, without any substantive Declaration, took participants by surprise. The EU was livid.

Deeper roots

The lack of consensus on the new issues may have been the immediate cause, but the meeting’s collapse had broader and deeper roots. Three days of position taking at the start of the conference saw the continuing rise to prominence of a new grouping of developing countries including Brazil, South Africa, India and China. The so-called Group of 20 (G20) – which expanded to 23 during the conference – united to stand up to the EU and US on reform of agricultural subsidies and tariffs.

The draft Ministerial Text, as well as ignoring objections by developing countries to the new issues, did not address this block’s substantive concerns and proposals on agriculture.

Where next?

As in Seattle, Pascal Lamy, EU Trade Commissioner, labelled the negotiating process ‘medieval’. He called for reforms to the decision-making system of the WTO. Patricia Hewitt, the UK’s head of delegation in Cancun, has made a similar call. They have both neglected to mention that the EU has actively opposed proposals put forward by developing countries after the last Ministerial meeting in Doha on this precise issue.

These statements fail to recognise that the collapse of trade talks in Cancun was largely due to the insistence of the EU to force negotiations on a range of new issues, while ignoring proposals by developing countries which demanded pro-developing country action from the EU in areas such as agriculture.

Cancun was a political victory in the sense that the solidarity among developing countries defeated EU pressure and arrogance. Developing countries were much better prepared and organised (through their own regional and national processes) and better prepared to face the processes and substantive debates. The EU was angry and wounded, it was caught out playing fast and loose with the multilateral trade system in order to win further advantages for its corporate development agenda. The retaliation will begin. The US and the EU will crank up efforts in more ambitious one-on-one free-trade deals outside of the WTO. Furthermore we need to be vigilant, as although new rights for multinationals in the WTO through a new investment agreement may have been fatally wounded or even killed off, they live on in the form of the infamous WTO services agreement (GATS). These negotiations are set to intensify in the coming year. In pre-Cancun statements, EU industry lobbies signalled that expanding countries’ commitments to open up services under the GATS must be a ‘major priority’.

The politics around the collapse are slowly emerging. It has been a hiccup for those anxious to expand corporate globalisation, and the solidarity amongst those countries that said ‘no’, should not be underestimated. Nor should we ignore the supporting role that dissenting voices, here in the UK have played. Cancun is certainly not the last time that those who dominate the global economy will meet behind security fences in order to put their plans in place. Yet Cancun has bruised and confused those behind this agenda in the EU. We must all take advantage of the temporary ‘chaos’ this event has created to push forward a more progressive agenda for the way world trade should work.

See the World Development Movement’s website, www.wdm.org.uk Telephone 020 7274 7630