Reuters | By Patrick Lannin and Richard Waddington | Sept. 14, 2003
CANCUN, Mexico (Reuters) - Trade talks critical to the health of the world economy collapsed in Mexico on Sunday after poor states refused to bow to a demand from some rich countries for new rules on foreign investment.
Agriculture had been the main bone of contention during the five-day World Trade Organization meeting, but in the end the negotiations crumbled over the insistence of the European Union and some others on writing four new sets of trade rules.
The breakdown of the talks dramatically underscored the growing clout of developing countries, which make up three-quarters of the Geneva-based WTO's membership.
"We are elated that our voice has now been heard," said Philippine Trade Secretary Manuel Roxas.
Poor states, which already felt existing trade laws were rigged against them, had served notice that they could not contemplate new rules that they said would impose unacceptable burdens and impinge on their freedom to make economic policy.
But Malaysia's trade minister, Rafidah Aziz, said rich states had simply refused to heed the warnings. "We have always alerted people that unless they listen to the developing countries ... this is what will happen," she said. "They kept demanding things that others couldn't deliver."
South Korea, Taiwan, Japan and Switzerland had joined the EU in pressing for talks on new rules on investment, competition, government procurement and cutting red tape that holds up trade. The four issues were not of paramount importance to the United States.
The 146 members of the WTO had been hoping to find enough common ground in Cancun to inject fresh impetus into negotiations on a global trade pact for which they had set themselves a deadline of the end of next year.
Martin Redrado, Argentina's chief negotiator at the talks, said this goal was now almost certainly out of reach.
EXCESSIVE DEMANDS
Ministers said they would meet in Geneva once the dust had settled to see whether the talks could be revived.
But with U.S. elections looming in November 2004 and the EU preoccupied by the admission of 10 new members next year, diplomats said it would be difficult to summon up the political energy needed to conclude a deal on time.
"It is successful for developing countries to have put forth their voice in a united and disciplined manner so that what was not heard for the last two years in Geneva has now been heard," Roxas, the Philippine minister said.
The World Bank estimates that a market-opening pact would add as much as $520 billion to global incomes by 2015, lifting 144 million people out of poverty.
In the short term, ministers had stressed that progress in Cancun would be a much-needed confidence booster for the still-fragile global economy. But developing countries had repeatedly said that no deal would be better than a poor deal.
"We think it's a pity. We made big efforts," said Francois Loos, France's trade minister.
Anti-globalization activists who had criticized the proposed trade deal sang "Money can't buy me love" after the talks collapsed and held up banners reading "We won."
Celine Charveriat, an Oxfam trade expert, pinned the blame squarely on rich countries for making excessive demands.
"Rich countries are wrecking the world trade system. Developing countries came here for a deal. They did their homework. They worked in alliances but the EU and the U.S. could not get their acts together," she said.
Trade experts said the risk for poor countries was that powerful rich states would now seek to forge country-to-country trade deals with each other that marginalized developing states that most need the WTO's protection.
Sekou Oumar Tall, an agricultural business leader in Mali, said: "When you have a $100 bill and everyone is fighting over it, tearing it, it is worth nothing at the end.
"We in Africa have lost but the powerful countries have lost too. It is a shame for everyone." (Additional reporting by Kieran Murray and Doug Palmer)Reuters:
