Inside US Trade | September 19, 2003
The decision by the chairman of the fifth ministerial of the World Trade Organization to end negotiations in Cancun on the subject of the Singapore issues has the effect of allowing the U.S. and other developed countries to avoid being blamed for the collapse of talks, according to informed government and private-sector sources.
In contrast, if negotiations had moved to the contentious subject of agriculture and then failed, it would have been difficult for developed countries to avoid being blamed since the U.S., European Union and Japan were all seeking to protect either agriculture subsidies or high tariffs in the negotiations, sources said.
"It was very understandable for developed countries to decide it was better to finish up before the agriculture discussion," said one informed source. Because the talks ended with members failing to reach a compromise on whether to launch new negotiations on any of the Singapore issues, it is easier to blame developing countries for the collapse of the talks, these sources said. However, Commerce Undersecretary Grant Aldonas this week also criticized the EU for holding on too long to its demands that all four Singapore issues move forward to negotiations (see related story).
Separately, a Geneva delegation source said the decision to end talks on the Singapore issues was also convenient for Brazil and other Latin American countries in the so-called G-21 that took a hard line in Cancun on agriculture in opposition to the approach favored by the U.S. and EU. These countries also could have expected to accept more blame for the collapse of talks if negotiations for a draft declaration had collapsed over agriculture.
Instead, negotiations in Cancun ended mid-afternoon Sept. 14 after African countries refused in a green room meeting to agree to new negotiations on trade facilitation, which was seen as the least controversial of the four Singapore issues. That was the pending compromise after the EU signaled it could leave behind the other three Singapore issues of investment, competition and transparency in government procurement. By breaking the talks off at that time, Mexican Foreign Minister Luis Ernesto Derbez, the chairman of the conference, ensured that negotiators only talked about the proposed agriculture language informally, not in a green room process (Inside U.S. Trade, Special Report, Sept. 15, p. 1).
The European Commission and member states professed surprise at the decision, and made an effort to persuade him to continue the talks by moving on to agriculture, another key section of the declaration. This led to speculation that Derbez may not have fully consulted with all members on his decision. But informed sources said this week that it is difficult to imagine that Derbez made the decision to halt talks without consulting the major WTO members such as the U.S. and EU, sources said. However, these sources were careful to say they had no confirmation of any of these consultations.
Also, a U.S. business source said it was difficult to believe the U.S. and other developed countries made the calculation that ending talks on the Singapore issues would avoid having blame cast toward the U.S. for the collapsed talks. "These things don't go that way," said the source, who added that "split-second decisions" need to be made in such situations, and there is no time to calculate how they will be perceived in the media.
U.S. and EU officials immediately after the collapse and in the days since Sept. 14 have not publicly criticized Derbez's decision. Aldonas in a Sept. 17 interview repeatedly said that he agreed with the decision. "Derbez really did everything he could to try to kept the thing moving forward, and I admire him for that," he said. "I agree with the decision to pull the plug when he did."
Another observer said that Derbez made the right judgment when he broke off the ministerial early because the mood had turned so sour on the Singapore issues that moving on to agriculture as the European Commission had suggested would run the risk of killing the little bit of progress that had been made on language for that section of the declaration.
But a trade diplomat who participated in the failed ministerial in Seattle said negotiators tried to employ a strategy there of moving from issue to issue in the hope of finding agreement on one. But he said even as people were "soldiering on" with that strategy, it became clear that there would be no overall deal.
In his closing press conference in Cancun, Derbez said he addressed the Singapore issues because he felt they posed the most difficult problem that needed to be solved, a point also made by Deputy U.S. Trade Representative Josette Shiner an early afternoon Sept. 14 press conference in Cancun (Inside U.S. Trade, Special Report, Sept. 15, p. 1).
Even though agriculture had not been discussed in a separate green room process, there were some indications of flexibility from the G-21, which early on Sunday floated a paper that moved off its original negotiating position (Inside U.S. Trade, Special Report, Sept. 15, p. 1). That paper still left wide gaps on substantive issues between the G-21, the U.S. and the EU.
For example, one agriculture source said it was positive that in that paper the G-21 for the first time suggested a willingness to agree to new criteria for the "blue box" of support considered less trade distorting because they are linked to production restraints. The U.S. and EU repeatedly argued for this box, which would provide recourse for U.S. and EU subsidies payments that might otherwise have to be cut as part of the amber box of most trade-distorting subsidies. But the revised paper suggested limiting this blue box of support to half the size favored by the U.S. and EU, and then eliminating it over time. The EU depends on having the blue box as expansive as possible to ensure its continued payments under this year's CAP reform (Inside U.S. Trade, Special Report, Sept. 15, p. 4).
Still, Aldonas insisted this week that ministers only discussed the Singapore issues because there had been movement on everything else.
The EU's willingness to concede that negotiations would not be launched on investment and competition will likely leave those issues behind when negotiators resume their work later this year, according to some sources. WTO members will now hold a General Council meeting on Dec. 15 at which delegations will send senior officials to discuss how to proceed with the Doha round, according to the ministerial declaration issued at the conclusion of the ministerial. The declaration says senior officials will decide at that time what needs to be done to achieve a "successful and timely" conclusion of the negotiations without mentioning the current deadline of Jan. 1, 2005. Some sources said it could take as long as two years for the negotiations to resume.
It is also unlikely that members will agree to extend an agriculture provision set to expire by the end of the year, under which members pledge not to bring WTO challenges or domestic countervailing cases against agriculture export and domestic subsidies. The EU has sought to extend the deadline for the "peace clause" expiration, and the U.S. in Cancun signaled a willingness to agree. In addition, an unspecified extension of the peace clause is included in the draft Cancun declaration annex on agriculture.
"I don't see how the General Council could agree" [to extend the peace clause]," one U.S. agriculture source said. She said this was especially disappointing because the U.S. would lose this leverage, seen as effective in getting the EU to agree to deeper concessions, without getting anything in return. The expiration could also lead to a series of WTO challenges next year against various EU and U.S. commodities benefiting from subsidies.
Sources said the Dec. 15 date was necessary to give delegations enough time to get over what they said would be a period of mourning the collapse of talks in Cancun and to allow enough time to prepare for the meeting.
"Most delegations, particularly small ones, will be physically and emotionally exhausted [after Cancun]," said one delegation source. That prevents holding a meeting earlier than mid-December. If the meeting were held later, it would leave little time for members to make significant progress in the first half of 2004, before it might become impossible to proceed because of elections in the U.S., delegation sources said.Inside US Trade:
