Summary of Cancun WTO Summit
by Rachel Thompson, Director of Trade and CSR EMEA, APCO Worldwide
September 14, 2003 - Cancun, Mexico
The breakdown of the Cancun WTO summit today without a concrete result is being interpreted in some quarters, particularly many NGOs, as a serious if not fatal blow to the WTO and the Doha Round. Our assessment is this is incorrect and misses the point of what happened here in Cancun. The WTO has never before attempted a "pro-development" Trade Round nor attempted to conduct any Trade Round in a 3 year time-frame. In aiming to do both at once the Doha Round set its sights extremely high and thus the Cancun meeting has proved, in the words of US Trade Minister Bob Zoellick today, "a bucket of cold water to get us focused on what is negotiable and what isn't" but it is also not a straightforward failure. Instead it could well be the basis for success by concentrating participants on a narrower and more strictly market access agenda in coming weeks and months.
The Conference was terminated mid-afternoon Sunday by the Mexican Chairman when he judged that agreement on the broad (unwieldy) agenda was not in prospect. The trigger for this was the so-called "Singapore issues" of whether to add negotiations on investment, competition policy, trade facilitation (ie customs reforms) and government procurement to the existing negotiating agenda. These four issues, pushed relentlessly by the EU, Japan and Korea, were opposed by African countries and India; whilst the Doha mandate required unanimity to proceed with them. The Chairman's text produced on Saturday gave the green light to all of them albeit with slightly different procedures (ie reflecting the EU position). The unanimity requirement created a flashpoint overnight that overshadowed even the difficulties in agriculture.
Therefore on Sunday morning the Chairman convened a small group consultation of around 30 countries representing the spectrum of views, at which the EU eventually signalled that to assist overall agreement it could drop its insistence on investment and competition negotiations. Unfortunately this probably came 24 hours too late to galvanise adjustments in others’ negotiating positions. Instead, several African countries insisted that none of these 4 "Singapore issues" could proceed while Korea insisted that all 4 must proceed. After several hours to get to this point – which is seen here in Cancun tonight as a major negotiating blunder by both Korea and the African group - the Chairman decided there was no point continuing the conference into extra time as no consensus was likely on this point and thus overall. Under WTO procedures such judgement calls are for the Conference Chairman, and within two hours the conference had been concluded without adoption of detailed frameworks for conducting the second half of the Doha Round.
There has been some questioning and criticism here of the Chairman for perhaps prematurely closing the Conference this afternoon. However, privately it is accepted that he has probably done the Doha Round a favour, by exposing the endless posturing in lieu of negotiations on whether to incorporate these issues, and thus potentially dealing a decisive blow to a long-running, divisive and inconclusive argument over them that was slowing other key areas of negotiations. In the aftermath tonight the EU emphasised that its offer to drop its insistence on investment and competition negotiations remains on the table, as does its concessions in the agriculture topic. This in itself helps clear away two key obstacles that have already delayed the Doha Round this year.
The next steps agreed tonight are that Ministers have charged their senior officials from capitals with the task of restarting negotiations in Geneva on the basis of the state of play reached in Cancun. They have been directed to achieve this no later than mid-December. It is expected that events today will concentrate minds on salvaging the Round and, by dropping at least 2 of the "Singapore issues", on bridging remaining gaps and moving into the next phase on the core market access business of agriculture, industrial goods and services.
Agriculture was of course very difficult here in Cancun but it is striking that, for the first time ever, the breakdown of a GATT/WTO Ministerial was not over this topic (as was the case in Geneva 1982, Montreal 1988, Brussels 1990 and Seattle 1999). Instead there were genuine negotiations in the past three days, and the Saturday text while going close to the edge of acceptable for the EU and not yet far enough for the Cairns Group and the new developing country bloc G22, was seen by all of them as an important achievement that needs to be preserved as the basis of further work. Furthermore, it is indisputable that there is no time to lose in restarting the agriculture part of the negotiations because in December the "peace clause" from the last Trade Round (under which countries refrain from WTO dispute action on subsidy issues) will expire; putting the US and EU in legal jeopardy unless they can buy an extension via concrete progress that satisfies the most ambitious demandeurs of agricultural reform.
There remain a number of hurdles in agriculture, including the US and EU determination to shelter key parts of the 2002 Farm Bill and the 2003 CAP reform from major wind-downs in specific areas (including tariff quotas, direct payment caps, and an end date for eliminating all export subsidies); but the major achievement at Cancun was the emergence alongside the Cairns Group of a broader group of developing countries (the G22) that includes India and China, to join the fight for major reform by the US and EU. This has seriously rattled the two major powers, and a lot of time was wasted at this Conference as they tried to belittle the importance of the new group dynamics before grasping reality and getting down to business. If not for the tactical blunder of the EU in not folding its hand early enough on investment negotiations, and then by Korea and the Africans in compounding that; it is possible that an unprecedented agriculture reform framework could have been agreed here. Now it will need to be agreed in the next ten weeks in Geneva. Together with the adoption of agriculture trade reform as "the new debt relief" campaign by many NGOs worldwide, the G22-Cairns Group push should ensure that pressure on the US and EU does not abate despite the inconclusive result in Cancun.
That said, the most serious casualty of events in Cancun is the overall deadline for concluding the Doha Round by January 2005. That is now inconceivable, in part because it will take 18 months to conclude the detailed market access negotiations even if the Cancun frameworks are indeed settled by December; and in part because of the spate of elections due next year, including India, South Africa, a number of EU countries, and of course the United States. The Doha Round is above all an effort to do something for global poverty reduction by overcoming entrenched domestic sectional interests, whose influence peaks in election run-ups. This applies in particular to the US, whose rhetoric in Cancun about its "jobs and trade deficit crisis" is highly reminiscent of the 1980s – the last time the trade system faced the real prospect of disintegration.
The other issues on the Cancun agenda while not easy in themselves have been by reason of the drama here over investment and agriculture relegated to the solvable category. The test for the next several weeks is whether the "cold water" shock of what happened here today – where success that was within reach slipped away through a combination of tactical arrogance, complacency and naivety – concentrates the participants on what stands to be lost compared to what could be gained. As many participants said tonight, no deal here is better than a bad deal, but now we have to achieve a good deal.