Process and substance caused failure at Cancun

Geneva, 16 Sep (Chakravarthi Raghavan) - As ‘shell-shocked’ trade officials at the WTO, and the principals (the major trading entities) were getting back home from Cancun, from the information provided by those close to the action there (in delegations whose Ministers were in the ‘green room’) and other delegations, and non-governmental groups at Cancun, it would appear that both process and substance caused the failure at Cancun.

And unless both the process, and the procedures of the WTO, are addressed and set right, and attention is paid to substance and the interests of other countries and peoples, and their players, and not merely the mercantile interests of the major countries and their corporations, the WTO trading system cannot be saved.

Everyone appeared to have been taken by surprise when at Cancun, the Mexican Chairman. Foreign Minister Luis Ernesto Derbez closed the conference abruptly, by announcing in the green room that ‘the conference was at an end’ when no deal could be struck on the Singapore issues.

Though there is a tendency to blame him and his inexperience (in handling such a big international conference), it is difficult to believe that Mexico (as the host country) and he could have acted as he did without being sure of the support from, if not at the instance of, the United States and its trade representative, Mr. Robert Zoellick.

Until Derbez abruptly announced the end of the conference, everyone had believed that the meeting would be extended - before Cancun, at a dialogue of Dr.  Supachai Panitchpakdi with NGOs, the Mexican ambassador to the WTO had indicated this in so many words; and all government representatives, NGOs and media had gone to Cancun prepared for this, and had booked their return flights accordingly.

Civil society activists, and some trade diplomats speaking from Cancun after the end of the meeting, said that while the actual process, including the green rooms, were better than at Doha, with countries and groups represented by more or less the spokespersons they wanted, and everyone had an opportunity to go back and consult constituents to get their views, the other processes were not transparent and a combination of elements doomed the meeting.

First and foremost perhaps, were the procedures in the runup to Cancun, and at Cancun itself, where the secretariat which played a key role in the drafting of documents and revision of the drafts and paragraphs, ignored the views of the developing countries (big and small).

Not only were the views expressed by developing country delegations ignored in the draft texts. This was so in the Perez del Castillo draft at Geneva to Cancun (on his claims of authority). And at the Conference, the Chairman’s draft put forward on Saturday afternoon (local time) there, reflected the views of the US and EU, but even the reports and views of the facilitators (chairmen of the committees) from developing countries were ignored.

By all accounts the Ministers from Kenya and Guyana who headed the committees on development and other issues, showed considerable grasp over the details and technicalities, and clearly summed up the debates fairly in their conclusions and reports to the informal HODs.

According to some trade diplomats, after the chairman’s text was issued, and the Kenyan facilitator was congratulated (by some) for the paragraphs in the text, he appears to have remarked that he had not been shown the paragraphs before the issuance of the text.

It is clear that such a behaviour on the part of secretariat officials in ignoring the views of others and showing contempt even for their collectivity, when a developing country minister is the chair/facilitator, is unacceptable, and developing country representatives must demand from the WTO head some accountability for such behaviour.

The fact that the plea of the four or five cotton producing states of Africa for help and for elimination of subsidies on cotton, and compensation for their losses, was just brushed aside, and the US views were reflected in the paragraph on cotton, angered all the African countries, and many other developing countries too.

Many trade diplomats were surprised that while there were hard issues to be resolved, including agriculture, Derbez had taken up in the Green Room the Singapore issues, perhaps the hardest of all.

In a very small ‘green room within a green room’ consultations he had held after the informal HOD over his revised draft (Saturday night), where only a few ministers (without aides) were present, Derbez appears to have asked the ministers from Malaysia and India to compromise on the Singapore issues, by agreeing to launch negotiations on two of the issues (as Derbez had proposed), while the others would be sent back to Geneva for further clarification, but agreeing on modalities along with agriculture and NAMA issues.

Malaysia’s Rafidah Aziz and India’s Arun Jaitley would appear to have stood firm and refused.

And when he convened a bigger green room, Derbez adopted the tactic of taking up in the ‘green room’ first the Singapore issues, putting aside the others like agriculture.

Much has been made of the inability of the countries in the green room from Africa or Caribbean to strike deals and clinch them in the green room, and their having to go back to their constituents and the ‘democratic processes’ there.

However, the EC representing the EU is no different, according to other accounts.

Some European delegation sources reported that when the draft Ministerial text was distributed on 13 September, it was well received by the EU’s 133 Committee (the coordinating body of senior trade officials representing the 15 member states). When Lamy and Fischler consulted them, the members of the 133 Committee decided that as a matter of tactics they should not say it was a ‘good text’, with a view to getting more concessions (presumably from the developing countries).

But when it became clear in the small ‘green room’ meeting in the early hours of Sunday, and in the larger one on Sunday morning, that the opposition to the Singapore issues was strong, Lamy would appear to have decided that he would drop two of the Singapore issues - investment and competition.

But he did not make the offer. He left the ‘green room’ to consult the 133 Committee, and got its green light for this, but “pending the outcome of the negotiations on the rest of the agenda.”

(This meant it would have been conditional on the EC gaining its points on agriculture and other questions.)

[Other reports said that Derbez asked Lamy to take off the agenda some of the Singapore issues, and Lamy agreed to take off investment and competition policy.  However, Rafidah did not agree to transparency in government procurement either, and the trade facilitation issue hung in the air.]

Just as Lamy went back to his 133 Committee to consult, the Africans inside (Kenya, South Africa and Botswana) went back to their constituents. But the Africans refused to any unbundling as a compromise, noting that they had got nothing, not even on cotton, and all the four issues should go back for clarifications, and for modalities to be agreed to on “express consensus basis.”

When they came back and reported this, the Mexican chair announced that this was the end.

Apart from the African countries, Korea and Japan also made clear they did not agree to any ‘unbundling’ of the Singapore issues that the Lamy offer would have meant.

Thus, merely blaming some Africans for inability to cut a deal, perhaps is erroneous. Whether Korea and Japan would have been able to resist if everything else had been settled is not easy to judge. However, Japan has shown an ability to resist on agriculture, and it did not find the US-EU deal acceptable to it, nor did Korea.

EU sources, and others said, that no one still thought that Mexico would close the meeting without any further consultations.

At a meeting of the EU Council of Ministers, they asked Lamy to give it one more try at the HOD. But when he got there, according to the EU delegation sources, he was surprised to find that the final ministerial declaration of Derbez was already on the table, and Derbez said he was not going to negotiate it further.  After allowing two reactions from the floor, he closed the meeting.

The EU delegation sources said that the EU members were surprised by the Derbez move, and did not understand why he decided to start discussions on the Singapore issues, the most contentious, instead of beginning with easy ones and then move on to the difficult ones - the ‘traditional’ GATT/WTO way. They also did not understand why he stopped the negotiations in the green room, when the Europeans thought they had just begun the process.

Why did Derbez act thus, and with whose backing?

Was it the US, which in an election year, wanted to get rid of uncomfortable issues like the cotton one where it was isolated?

There are some who believe that Mexico acted thus in solidarity with Brazil and the rest of Latin America. But those familiar with Mexican strategies and tactics over the post-war period discount this - pointing out that while Mexico often took a position of supporting and pleading the Latin American views with the US, it always compromised when the US offered a deal favourable to Mexico, never mind the views of the others.

It is difficult to judge easily the inner workings behind the final outcome.

Zoellick has angrily responded by criticising the G-21 and the efforts at replicating at the WTO, the UN processes, instead of continuing the WTO/GATT ‘tradition’ - presumably of the secretariat and the chairs producing texts to suit the US, and accepting it.

There are also others who believe that the EU is promoting an explanation of the Derbez style and decision, in an effort to blame him and the developing world, and that the EC itself knowing that it could not yield on agriculture, decided to wreck the conference and blame the developing world.

Several participants said that while the EC did make an offer, to take off the Doha agenda all the Singapore issues except trade facilitation, and the initial inclination of several in the green room was to clinch the deal, it was in fact very conditional on the US-EC agriculture framework deal, and that even then Japan and Korea would not have agreed.

While Lamy and Zoellick have blamed the attempts at participation in decision-making of the entire membership, and former US trade official and subsequently Mike Moore’s deputy Andy Stohler blamed the developing countries for seeking many tiered obligations, but with a full say in decision-making, the fact remains that if all the obligations are binding on all the members in an international system, then all members have to be able to participate and or agree.

The old GATT functioned only because all the obligations were not binding on everyone, and countries could join or not join agreements and codes, without losing their MFN rights.

Those who conceived of the new system of bundling all agreements and making it obligatory for everyone to accept, and on top of it enabled a runaway dispute settlement system (run by the secretariat) to bundle the obligations in a way that are even contrary to the express provisions (the footnote to the goods agreements, for example, brushed aside in the Indonesia car dispute) have to be blamed and held accountable. -SUNS5420

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