Newsweek By Adam Piore; With Rich Thomas in Washington, Rana Foroohar in London and Lara Santoro in Nairobi
He was, one witness recalls, like a football coach delivering a pep talk in the final minutes of a hopeless game. It was Dec. 3, 1999, the last day of the doomed global summit in Seattle. Michael Moore was trying to save the world-trade talks from collapse. Antitrade protesters were battling police in the streets outside, raising tension among the delegates to unbearable levels. Inside the Seattle Civic Center, their talks were breaking down in screaming matches and tears. Rich nations were at loggerheads with the poor, and with each other, over trade barriers against bananas, software, you name it. Moore, the British chairman of the World Trade Organization, was attempting to rally the embattled U.S. delegation, exhausted after three sleepless nights of negotiation. The Americans suggested that Moore sound out trade ministers of developing nations, including Egypt, South Africa and Brazil, for a last stab at compromise. "Every single one told him, 'No way, it's not going to happen', " recalls Gene Sperling, then Bill Clinton's economic adviser. "It just got totally shut down. That was the last conversation in Seattle, but it was in a sense the first conversation of the new round. It was a new era." This week world leaders reconvene in Doha, Qatar, for the first attempt at a free-trade conference in the world refashioned by Seattle. Doha was chosen for its distance from the Western activists who disrupted the last trade summit, but that was before September 11 shifted the concern to Arab terrorists. Now security has been tightened to include armed guards in gas masks and U.S. Navy vessels offshore. But if all goes well, the real action will take place, once again, behind closed doors.
The collapse of talks in Seattle was widely attributed to the street demonstrations, a story line that has inspired activists to descend in force on every global summit since, from Quebec to Genoa. Unfortunately, it's not true. Seattle was doomed, according to insiders who were there, by longstanding disagreements between the rich and poor, between the United States and Europe. Even if no protesters had shown up, the summit likely would have failed in its purpose: to launch the 10th round of international talks on lowering trade barriers since World War II. "The protests and the violence did contribute to a negative mood," says Susan Esserman, former deputy U.S. trade representative and a key member of the Seattle team. "But it's absolutely the case that it was the disagreements that prevented the launch of the round."
Now many of the same conflicts divide the major trading powers as they prepare to try again in Qatar. Above all, America's decades-old joust with Europe over farm subsidies, and demands from the rest of the world for a place in the arena, are still at the heart of the impasse. If Doha has any chance to succeed, it lies in a new sense of urgency, stirred by the global economic downturn, the fact that world trade is on the verge of stagnation after two decades of explosive growth and the desire to avoid another embarrassing final act. "Having failed once in Seattle, trade liberalizers are all the more determined not to fail again," says one current USTR official. "Trade liberalization is a bicycle. Unless you keep it moving forward, gravity will bring it to the ground."
Indeed, failure is the norm. Since World War II, efforts to launch international trade rounds have collapsed as often as not, undone by the complexity of mobilizing so many nations to move in one direction. Seattle was unusually difficult, in part due to the personalities involved. For more than a year, the developing and developed nations had argued over who would be director general of the World Trade Organization. Eventually they decided to split the job: Moore would take the post for three years, to be followed by former Thai deputy prime minister Supachai Panitchpakdi. Moore entered office only three months before Seattle, meaning he could not hold down the agenda, which mushroomed wildly out of control.
Poor nations were eager to correct the perceived injustices of earlier trade talks. In the Uruguay round that ended in late 1994, developing nations had agreed to rules on previously ungoverned fields of trade, often with unforeseen consequences. For example, new protections for intellectual property committed poor nations to respect Western drug patents, blocking them from making generic copies of AIDS drugs and vastly increasing the cost of fighting the epidemic. While that controversy only recently hit the headlines, in the weeks before Seattle demands from more than 100 countries found their way onto the agenda, and many involved changing what was agreed to in Uruguay. The result was a 32-page agenda with 401 disputed items, virtually ensuring that the summit would dissolve in conflict. This time the agenda is vague and brief with only two disputed items, spelling out the conflicting views on international drug-patent protection. "For Doha, unlike Seattle, we have a document that is technically manageable," says Leif Pagrotsky, Sweden's Trade minister. "Whether it will be politically manageable is another question."
The most divisive issues brewing in Doha date to well before Seattle. Protection for farmers is the oldest and toughest. Since the first free-trade round in 1948, negotiators have cut industrial tariffs down to an average of less than 5 percent, but tariffs on agriculture still average 50 percent. The main stumbling block is European and particularly French resistance to exposing those countries' beloved small farms to American agribusiness, a stand that provided much of the 11th-hour drama in Seattle. At 5 a.m. on the final day, U.S. delegates say, they thought agreement had been reached on farm issues, only to be told by the European Union's new chief negotiator, Frenchman Pascal Lamy, that he would have to check with member governments. After an eight-hour absence he returned to say the deal was off. The room fell silent with dismay.
Everyone knew that without a farm agreement, all was lost. From day one, it had been seen as the mother of all bargains in Seattle, which needed an inspirational masterstroke to bring delegates together. Nations of Asia, Africa and Latin America had long resented the protocol of trade talks, in which the United States and Europe typically resolved deadlocks by retiring together to a private "green room." In Seattle the outsiders not only packed the agenda with their own demands, they also marched into the green room to press their case directly to U.S. Trade Representative Charlene Barshefsky. Her former aides recall her receiving a long line of trade officials, none as supplicants. Japan and South Korea demanded protection for rice farmers, India came with an armload of complaints and so on.
Outside, the protests were growing violent, with small bands vandalizing stores and fighting riot police. On day two President Clinton spoke to a local paper, hoping to calm the situation. In response to a question, however, Clinton supported protesters' demands for the inclusion of global labor standards in "every trade agreement," backed by sanctions against violators. The off-the-cuff remark hit like a bombshell, becoming topic No. 1 inside the Seattle Civic Center. Delegates carried copies of the newspaper through the hallways. Many were insulted that Western activists would presume to write labor law for developing nations, and infuriated that Clinton would back them up.
The hope among American negotiators was that a farm deal would lighten the mood. Since many Asian and Latin American nations also wanted to lower European farm subsidies, U.S. negotiators figured a deal on that front would help them dicker on others. The Japanese, for example, were trying to roll back U.S. antidumping laws, which protect U.S. steel. Bangladesh and Sri Lanka wanted to speed a phase-out of U.S. quotas on textile imports. But all parties were sticking to their maximum demands. "It became clear to us that until the United States and EU could at least reach an agreement on agriculture, everyone else was going to sit on their hands," recalls Sperling. "Many countries figured, 'Why show your cards and risk antagonizing domestic constituencies if there isn't even a clear signal that a deal's going to happen?' "
In the end, says another senior U.S. negotiator, Seattle collapsed well before most nations had shown how far they would go to compromise. That's still not clear. Trade negotiators from nations like India, Malaysia and Pakistan were also energized by Seattle, and Western experts fear they'll use Doha to launch a new effort to roll back deals made in Uruguay. University of Sussex economics professor Alan Winters says, "The progress we've made in the past 20 years is in danger of being undone."
This time the crucial issue may be drug patents. At one time or another, Thailand, South Africa, India and Brazil have all come under Western pressure to prevent them from taking advantage of the Uruguay promise that they can use generic drugs to fight "public-health emergencies." Now, in light of demand for AIDS drugs, they are demanding broader freedom to make or buy generic drugs, regardless of who holds the patent. In a recent criticism of the drug industry, South African Health Minister Tshabalala Msimang said, "All essential drugs should be accessible and affordable to those in need." Western pharmaceutical companies are lobbying against such a broad interpretation, and several ambassadors to the WTO say this could be a "deal breaker" in Doha.
Resentments in the developing world are as bitter as ever. India's Commerce and Industry Minister Murasoli Maran last week accused the WTO of "exploiting" developing nations and giving them "no role in fixing the agenda" for Doha. Malaysian Trade Minister Rafidah Aziz recently warned that the talks could be doomed by European demands for new internation-al rules on investment, which would prevent developing nations from discriminating between foreign investors.
The rich nations are hardly united, either. In Seattle, says EU spokesman Anthony Gooch, one of Europe's fundamental complaints was "too much focus on agriculture" and not enough on the other issues that Europe wanted to discuss. Those are now on the agenda for Doha. They include investment and competition (dealing, among other things, with a basic definition of what constitutes market dominance) and the environment (which would cover EU efforts to keep out genetically modified foods, including many products from America). In stunningly blunt remarks last week, U.S. Trade Representative Robert Zoellick said that in its "narrow-minded" refusal to budge on farm issues, Japan had shown itself incapable of exercising even "followership" on global trade.
Doha may prove to be a more tense dealmaking environment than Seattle, even with few if any demonstrators. U.S. trade-delegation organizers are providing gas masks, medical kits and a special radio to each American attending. They can use the radios to call for helicopter evacuation to U.S. naval vessels offshore, if need be. Most have backed out after receiving a security briefing, and fewer than 100 Americans are now expected in Doha. At a recent security briefing, says Thea Lee, the AFL-CIO's chief international economist, business people were "nostalgic" for the "basically peaceful protests" in Seattle. "I bet you a million dollars after Doha that Seattle will seem very tame by comparison," says Lee. Here's hoping she's wrong.:
