WTO Collapse: Trade Deal by 2005 Seen as Unlikely

WTO Cancun Negotiations Collapse; Trade Deal by 2005 Seen as Unlikely

USTR Zoellick faults rhetoric from some developing countries

By Bruce Odessey
Washington File Staff Writer

Cancun, Mexico -- World Trade Organization (WTO) negotiations have collapsed in Cancun, leaving unresolved major issues of opening markets in agriculture, industrial goods and services.

The September 14 failure touched off celebration among protesters and victory statements from some developing country officials. But U.S. officials said the breakdown would hurt developing countries most by delaying world economic recovery and forestalling reduction of poverty.

By all accounts, the proximate cause of the collapse was a failure to overcome wide differences on the first issues taken up for serious negotiation, the so-called Singapore issues of government procurement, trade facilitation, investment and competition (antitrust).

Some delegations, notably those from the European Union (EU) and Japan, favored launching negotiations immediately on all these issues. Several developing countries, however, were against any negotiations on the Singapore issues. Deputy U.S. Trade Representative Josette Shiner, briefing earlier September 14, said that the United States was less interested in moving forward in all four areas but would have liked to see progress on trade facilitation and transparency in government procurement.

The delegates never even reached the point of tackling the more divisive agricultural issues.

By the reckoning of U.S. Trade Representative Robert Zoellick, however, the underlying cause of the collapse was the inability of several developing countries to make the move in time from rhetorical exchanges to give and take for results.

"Some countries will now need to decide whether they want to make a point or whether they want to make progress," Zoellick said at a briefing after the collapse.

Zoellick expressed doubt that the WTO negotiations launched at Doha, Qatar, in 2001 could be completed on schedule by the end of 2004. He added that the United States would vigorously continue negotiating free trade agreements with willing partners.

At the end of December 2003 a provision of the 1994 WTO agriculture agreement called the peace clause is scheduled to expire; the Cancun meeting never considered an extension favored by the United States and EU.

The peace clause prevents WTO challenges to agricultural subsidies under the 1994 subsidies agreement. Whether the expiration will result in a surge of WTO challenges to U.S., EU, Japanese and other agricultural subsidies is not known.

A written statement issued in Washington by Senator Charles Grassley, Republican chairman of the Senate Finance Committee, pointed out that the president's trade promotion authority to negotiate agreements, otherwise known as fast track, is scheduled to expire in June 2005.

"While this authority can be extended," Grassley said, "it is by no means certain that the U.S. Congress will agree to do so."

Meanwhile, the locus of work on the WTO agenda returns to Geneva. All the difficult hurdles remain on opening markets in agriculture, industrial goods and services as well as working out the issues pressed by developing countries such as reform of rules on dumping and subsidies.

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