WTO looks for way forward after Cancun

Tuesday, September 16, 2003

CANCUN, Mexico -- World Trade Organization leaders, crippled by two major defeats in four years, are searching for a way to win back the trust of poor nations and cobble together a global trade treaty that will shape the world's economy for years to come.

Developing countries say they won't take any more bullying from the rich, and want a deal that will help even the poorest.

The demands came amid the surprise collapse of crucial trade negotiations in this Mexican resort. Just as ministers were digging in for an extra day of talks, the meeting's chairman, Mexican Foreign Secretary Luis Ernesto Derbez, suddenly called off negotiations, saying there wasn't enough agreement to move forward.

Developing nations -- some triumphantly -- leaked the news to journalists in the hallways of Cancun's convention center, even as U.S. trade officials gave a news conference explaining how negotiators were trying to move forward.

"Unless they listen to countries, unless they listen to the problems we have in meeting some of the demands of the developing countries, this is what will happen," said Rafidah Aziz, Malaysia's minister for international trade and investment.

The failure of talks will be felt around the world. Rice farmers in Asia and wheat farmers in Kansas were preparing for a decision in Cancun that would have led to the reduction of agricultural subsidies and tariffs.

Some farmers could have been forced out of business, while others -- from poor producers in Africa to large multinationals in the United States -- would have found new markets.

For consumers, the prices on many products would have fallen, unhindered by import tariffs, while other basic food supplies may have become more expensive without the help of subsidies.

Still, during five days of talks in Cancun, ministers spent little time on what was expected to be the main issue: agriculture.

Instead, they argued over whether to launch formal negotiations on several new topics, including rules on foreign investment and competition. Several nations insisted on taking up the talks, while other developing nations refused, saying they could only do one thing at a time.

The failure of the talks makes it nearly impossible for the WTO to reach its main goal: a new global trade treaty by the end of next year.

U.S. officials argued the treaty would have jump-started a sluggish world economy, and U.S. Trade Representative Robert Zoellick accused some countries of "tactics of inflexibility and inflammatory rhetoric."

"A number of countries just thought it was a freebie -- they could just make whatever points they suggested, argue, and not offer and give," he said. "And now they're going to face the cold reality of that strategy, coming home with nothing."

He listed countries -- like China, Uruguay, Sri Lanka and Panama -- that had supported negotiations. And, in an indication that those who stood up to the world's most powerful economy will also be shut out of it, he said U.S. trade officials will pursue negotiations on several bilateral and regional free trade agreements.

The United States is pushing for a free trade agreement that would stretch from Canada to Chile, but the talks in Cancun appeared to have called that into question, also.

Brazil led a bloc of nations that stood up to the United States and Europe in Cancun, and it could do the same during negotiations for a free trade agreement of the Americas later this year in Miami.

The international aid group Oxfam, which worked closely with developing nations to make sure they had a collective voice during the WTO meeting, said the meeting was a lesson for the United States and Europe.

"They can't come to WTO conferences anymore and behave like this," spokesman Sam Barratt said.

Thousands of protesters, many of them farmers who would have been hurt by new trade rules, marched on the meeting and tried to shut it down. They were part of a growing protest movement that gained international fame in 1999 in Seattle, the WTO's last major setback.

At that meeting, street riots and differences between rich and poor nations brought down attempts to launch the same round of trade talks ministers were trying to tackle in Cancun.

WTO Director-General Supachai Panitchpakdi said diplomats would meet in December in Geneva to decide how to proceed, adding the WTO cannot allow talks to be derailed.

"I'm quite disappointed with the way we have to conclude this meeting this way," he said late Sunday in Cancun. "But I'm not discouraged."

U.N. Secretary-General Kofi Annan said he was disappointed at the collapse of the Cancun talks but expressed hope that all sides would return to negotiations.

"Not much was achieved, but I hope that is not the end of the road and that the parties will go back, and reflect, and then come back in a determined fashion to try and fashion an agreement within the next year or so," Annan told reporters on his arrival at U.N. headquarters.

Many wondered how the WTO would proceed when there were such obvious gaps, both between the organization's 146 members and public opinion.

EU Trade Commissioner Pascal acknowledged globalization wasn't an easy sell.

"The benefits of trade opening are spread over millions of people who don't know it," he said. "The costs of trade opening are concentrated over a few constituencies who have a lot of complaining capacity."

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