archives: WTO InfoDeveloping-World 'Victory' May Be a Long-Term Loss
Wall Street Journal, September 16th 2003As Global-Trade Talks Fail, Small Nations Could Have No Forum to Air Concerns
By NEIL KING JR. And SCOTT MILLER
CANCUN, Mexico - Developing countries from Brazil to' Botswana celebrated their collective ability to stand firm against the unwillingness of more powerful and wealthier countries to agree to cut farm subsidies at global-trade talks here. But the victory could prove costly as the U.S. and other big trading partners take their business beyond the World Trade Organization.
The global-trade raund launched in Doha, Qatar, two years ago didn't sink in Cancun. But the wind is clearly out of its sails, and it may be years before events in the U.S., the European Union and elsewhere align to give the effort new impetus.
U.S. trade officials point to rising protectionism in the U.S. and the political sensitivities af the 2004 presidential election as reasons why it may be hard to revive the WTO process. The EU will soon absorb 10 new members, while the current European trade team is set to depart at the end af next year.
If the push to lower trade barriers through the WTO drags on without resolution, analysts say hardest hit will be the smaller developing nations that have nowhere else to address the problems plaguing their economies, be it American cotton subsidies or the high tariffs of their neighbors. Worst off will be poor African and Asian countries, ranging from Mali to Bangladesh, that offer few attractions as free-trade partners in the way of markets or goods.
The U.S. was quick to remind the other 145 WTO members that Washington plans to press on with trade liberalization through bilateral deals negotiated with other countries ar regions. The U.S. is trying to hammer out free-trade deals with 14 countries, including five in Central America. As the talks broke down here, U.S. officials said more countries stepped forward to ask for bilateral trade deals.
"We're going to move elsewhere," U.S. Trade Representative Robert Zoellick said after the talks fell apart. "We'll always be there to engage in [the WTO], but I'm also not waiting forever."
In Asia, China and Japan are moving to' negotiate regional free-trade deals with blocs of their neighbors, a movement that could accelerate post-Cancun.
Brazil, the leader of a new bloc of larger developing countries, proclaimed that the "real start" of negotiations on revamping the world's farm system had begun. Dubbed the Group of 22, the Brazilian-led alliance was clearly proud of its cohesion here, despite a membership that spans the spectrum from free-trade to protectionist. Other groupings of African, Caribbean and Asian nations also held firm in their opposition to wealthier country aims, which included approval of trade-enhancing measures such as investment rules and antitrust policies. "Not only were we able to keep our unity; but we were also permanent actors in the negotiations and we increased our numbers," said Celso Amorim, Brazil's foreign minister. Philippine Trade Secretary , Manuel Roxas said the group "was elated that our voice has now been heard."
But other diplomats and industry representatives are skeptical that countries such as Brazil and India can turn their insurgency into a constructive force while trying to build momentum within the WTO. What is unclear is whether agricultural-policy offers on the table will be there when the talks resume.
The Brazilians and others "missed the opportunity to cut our subsidies," Mr. Zoellick said. "They were there to be cut," but Brazil and others showed little willingness to make concessions of their own, he said. One paradox of Cancun is the negotiations unraveled over an aim that nearly everyone agreed would benefit poorer countries: better customs rules. During a grueling three-hour session Sunday, ministers from India and Malaysia balked at discussing new rules on foreign investment, antitrust, or transparency in government procurement, all issues of interest to the Europeans and Japan.
The last hope for compromise then hinged on whether developing countries would agree to negotiate ways to reduce bureaucratic delays that often hang up imports for weeks. The WTO itself argued outdated customs rules often impede trade in poor countries more than high import duties. Others have estimated customs procedures could add nearly 1% fo the economies of countries across Asia.
But Botswana, as a spokesman for dozens of African and Caribbean countries, said no. With that, ministers called off the Cancun talks, contending. that the divisions among the countries were too deep to resolve. The talks ended before ministers could huddle in earnest over the toughest issue, agriculture.
The Europeans, dedicated multilateralists, may be the most at a loss about what comes next. The EU held off on new bilateral trade deals until the Doha round was completed, putting all its trade chips in the WTO process. Pascal Lamy, the EU's top trade negotiator, must review that strategy, but switching gears could provoke stiff political opposition. Nick Clegg, a trade specialist in the European Parlhiment, said bilateral deals don't add up for the EU, which also seeks to use trade deals to advance global environmental and investment rules.
The collapse of the trade talks here has also provoked calls for change within the WTO. Mr. Lamy called the body "a medieval institution ... that needs to be revamped, strongly." Noting the speeches and political grandstanding that dominated much of the activity here, Canadian Trade Minister: Pierre Pettigrew said, "I felt like I was at a U.N. parliamentary session."
Some trade experts say the Cancun experience provided further evidence that the multilateral negotiating process is too unwieldy. Clayton Yeutter, a former U.S. trade representative and agriculture secretary, said he could foresee a quiet effort by the U.S. and the E.U. to create a group of 18 or so industrial developed nations to take the lead in holding a serie of mini-ministerial meetings during the next year or two to find consensus on specific trade issues, rather than an overarching world trade deal. He said Cancun is another indication that the high-profile WTO meetings, which also provide a showcase for anti-free trade demonstrators, aren't workable.
"My hypothesis is that we'll never have another multilateral round. The trade ministers. will say, 'Let's not go through this again'", Mr. Yeutter said.
No real fixes within the WTO itself are likely. The WTO runs by consensus: Even the smallest country has the power to nix an agreement. If anything, the developing nations' newfound muscle will make agreement within the eightyear-old trade body even tougher.
- Michael Schroeder in Washington contributed to this article.
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