Developing Nations Flex Their Muscles at The WTO in Cancun - Elinor Wakefield

Last September delegates from the 146 member countries of the World Trade Organisation (WTO) descended on the Mexican resort of Cancun to attend the WTO’s 5 th Ministerial Conference[1]. While officials played down the importance of the meeting – implying it was simply a chance to take stock of progress on the agreements from the last Ministerial conference held in Doha in 2001 – the stakes were actually very high, not least because there had been actually been so little advance on the so-called Doha Development Agenda. In the week before the Cancun meeting, the Economist wrote

“Without a breakthrough in Cancun , the chances of finishing the talks on time by January 2005, or even of concluding them at all, are slim. A failure to reach agreement could be a disaster for the multilateral trading system, the world economy, and most of all, for the world’s poor.”[2]

Nevertheless, on the final day of the conference, the Chairman, Mexico ’s Foreign Secretary, Luis Ernesto Derbez, took the decision to close the meeting without an agreement being reached. Martin Knor of the Third World Network (TWN), an advocacy organisation that follows the WTO closely, reported that

“As news of the breakdown reached the canteen, the lobby and the media room, there were scenes of excitement…Many NGO representatives broke into cheering and singing, as they celebrated the non adoption of what they considered a Text which would have led to adverse consequences.”[3]

What had happened to bring about the failure of the talks? And did failure represent a ‘disaster’, or a genuine cause for jubilation?

While the delegates failed to reach an agreement, there is a broad consensus amongst commentators on why the talks failed. They collapsed because an alliance of developing countries refused to submit to the demand by the EU that negotiations begin on issues currently beyond the remit of the WTO, that is beyond trade in agricultural goods, industrial products, and services. The EU, and to a lesser extent Japan and the US , were keen to broaden the WTO’s mandate to include what are known as the ‘ Singapore issues’: investment, competition policy, government procurement, and trade facilitation. Developing countries, on the other hand, refused to budge from their position that these new areas could only be discussed once the Cancun meeting had reached agreements on trade in agricultural and industrial goods. They argued that many of them did not have the technical or human capacity to negotiate on these new issues, not least while so many unresolved disputes about subsidies and tariffs on agricultural and industrial goods remained.

New alignments of developing countries emerged in the run-up to Cancun which increased their negotiating power at the talks. The Group of 21 (G21), which includes heavyweights such as India , Brazil and South Africa , was firmly against any discussion of the Singapore issues, while another grouping of 32 developing countries emerged as an Alliance for Special Products and Special Safeguard Mechanisms. This alliance argued for stronger Special and Differential treatment (S&D) towards developing countries.[4] In Cancun , the interests of both groupings coalesced, making it much harder than in previous Ministerial Conferences for ‘divide and rule’ tactics to gain agreement on contentious issues. Furthermore, the emergence of these groups contributed legitimacy to their demands. The G21 countries between them, for instance, represent 51 per cent of the world’s population and over 60 per cent of the world’s rural population.

So, the failure of the WTO meeting in Cancun can be attributed to a greater unity of purpose amongst developing countries. But to what extent did the collapse of the talks represent progress towards a fairer trading system for the world’s poor countries?

TWN quotes one Caribbean country’s Minister as saying, before the end of negotiations

“Here we are with 70 or more developing countries speaking up clearly in the consultations, having a consensus document on the Singapore issues, clearly expressed, and the revised [Ministerial] Text just ignores their position and takes the opposite position…Why waste out time engaging seriously in consultations only to find our views not there at all in the draft ?”[5]

In this light, the failure of the talks at Cancun represents not just disagreement over the Singapore issues, but a concerted and successful attempt by developing countries to stand up against what they see as unfair processes at the WTO. If the events of Cancun result in changes to the way WTO agreements are forged, with developing countries’ views being treated with equal weight in the negotiations, the agreements themselves are more likely to represent the interests of poor countries

However, greater power for poor countries at the WTO will only win significant changes in the world trading system if rich countries, such as the US, Japan, and those represented by the EU, retain an interest in participating in the system itself. In this sense, the failure of the WTO meeting at Cancun represents a massive missed opportunity for compromise on issues such as reducing agricultural subsidies and industrial tariffs. The US can afford to go it alone, and negotiate bilateral trade agreements with countries of its choosing, and there is increasing evidence that it is following this path: it signed free-trade agreements with Chile and Singapore in the run up to Cancun , and with five Southern African countries, Morocco , and Australia prior to that. It is much harder for small, poor countries to do the same: a multilateral environment such as the WTO, imperfect as it is, may be the only arena where they have the chance to win access to the markets of rich countries for their products.

Hopefully, the lessons from Cancun can be learnt on all sides, before it is too late.

1. The Ministerial Conference is the highest authority within the WTO which can take decisions on all matters under any of the multilateral trade agreements. The Ministerial conference has to meet at least every two years.

2.The Economist, ‘The Cancun Challenge’, September 4 th 2003

3. Third World Network (TWN) Report, ‘Behind the Collapse of the Cancun Ministerial’, September 14 th 2003

4. Special and differential treatment means provisions which give developing countries special rights and which give developed countries the possibility to treat developing countries more favourably than other WTO Members. These special provisions include, for example, longer time periods for implementing Agreements and commitments or measures to increase trading opportunities for developing countries.

5. Third World Network (TWN) Report, ‘Behind the Collapse of the Cancun Ministerial’, September 14th 2003