The International Herald Tribune | By Brian Knowlton | September 23, 2003 Tuesday
WASHINGTON -- No sooner had the dust begun to settle from the collapse of the recent World Trade Organization talks in Cancun than a variety of officials began raising the specter of a return to the very sort of bilateral trade arrangements that the Cancun talks aspired to replace.
The United States, angered by the failure in Mexico, suggested pointedly that it might seek new agreements like those it concluded with Chile and Singapore almost on the eve of the Cancun conference. Australians say that they will focus this year on a possible new trade deal with the United States.
And while the European Union had refused, since 1999, to open new negotiations for bilateral or regional trade accords, Pascal Lamy, the EU trade commissioner, warned that that might now change. Lamy, who on his way out of Cancun denounced the WTO as "medieval," citing the unwieldiness of a 146-member organization seeking to operate by consensus, warned that the EU might now consider narrower trade deals. "We will have to have a good, hard think amongst ourselves," he told the Financial Times. "Should we maintain multilateralism as our priority, which was the basic tenet of EU commercial policy?
"I am still a firm believer in it," he said. "But circumstances are such that when you get a bit of a shock, we have to make sure that we still all agree" on this approach.
The World Bank has estimated that agreement in Cancun would have added $520 billion to world incomes by 2015, mainly benefiting developing countries.
Some calls are being made already for the quickest possible revival of WTO talks.
And on Sunday, at a Group of 7 ministerial meeting in Dubai, Gordon Brown, Britain's chancellor of the exchequer, said that members of the International Monetary Fund were looking for ways to bridge the sharp divide between rich and poor countries that precipitated the Cancun collapse, the Associated Press reported. He said that the International Monetary and Finance Committee, made up of 24 IMF shareholders that set policy for the fund, was discussing ways to boost aid to developing countries and to grant them more debt relief.
Meanwhile, Patricia Hewitt, the British trade secretary, urged the EU to drop its demand that the WTO negotiate new rules to protect Western investments in developing countries, a key sticking point in Cancun.
But Lamy's aides were quoted as saying that bilateral negotiations could resume as soon as 2005, even if the WTO round that began two years ago in Doha, Qatar, is ongoing. The original deadline for conclusion of the Doha round was Dec. 31, 2004.
The Group of 21 developing countries that coalesced in Cancun exulted in its ability to block the more powerful developed countries. "We are leaving stronger than when we arrived," said Foreign Minister Celso Amorim of Brazil, who became a leader of the movement. Many post-Cancun analyses blame the rich nations for inflexibility on the investment question and a tendency simply to overpower the poor.
Still, even if the Cancun collapse proved to be the "historic turning point" proclaimed by developing country officials, perhaps preventing a bad situation from getting worse, it remained unclear how things necessarily would improve for the poor in the short term.
"It is going to leave most people in the world worse off and, without a doubt, those who will suffer worst are the world's poor," wrote The Economist magazine. If the WTO becomes irrelevant, it added, "the developing world will come to regret the consequences bitterly."
Bob Zoellick, the U.S. trade representative, said bluntly that a failure at Cancun would lead the United States to pursue bilateral agreements even more vigorously.
"We are going to keep opening markets one way or another," he said. "We are not waiting forever. We are moving elsewhere."
The U.S. Congress ratified the free trade agreements with Chile and Singapore this summer, and the United States is exploring an enlargement of the North American Free Trade Agreement to include Central American countries. It is talking to Australia, Morocco, Bahrain and about a dozen other countries, including some in southern Africa, about bilateral trade accords.
Zoellick contends that competition to reach the best possible agreement with the United States, the world's richest country, will lead to lower trade barriers. Others say that it will yield a destructive and chaotic proliferation of trade arrangements.
How hard U.S. trade negotiators push each of the bilateral or regional negotiations will provide some insight to how badly its hopes for working with the WTO have been bruised. With campaigning for the 2004 U.S. presidential elections already under way, some analysts say protectionist calls are more likely to be heard than pleas for multilateralism.
Prime Minister John Howard of Australia said after Cancun he still hoped for a breakthrough on world trade, but he indicated that prospects were much more hopeful for a free trade agreement with the United States this year.
Mark Vaile, the Australian trade minister, insisted that the WTO had suffered more a "stumble" than a "collapse," and remained hopeful of achieving the hoped-for outcome this year. But for now, he added, Australia's objective was to concentrate on seeking bilateral trade accords with the United States, Thailand and perhaps other countries.
Mike Moore, the WTO's first director-general, wrote last week that the Cancun outcome was "disappointing, but not fatal."
It was hardly the first time that multilateral trade talks have failed to stick to an ideal schedule. There may now be a pause to usefully rethink WTO objectives and to retool the organization in ways demonstrably of use to both developed and developing nations.
Sara Fitzgerald, a trade policy analyst at the Heritage Foundation in Washington, said she did not believe anyone was "abandoning hopes for the Doha round." As happened after the failure of the Seattle WTO talks, she said, countries intent on moving forward are likely to come together and lobby others to revive the talks. Realistically, she said, that will also require that "the EU and the U.S. come together and realize they have got to cut domestic subsidies for agriculture."
But Moore's worry about missing deadlines is greater now because of the "gathering momentum of bilateral and regional deals," he wrote in the South China Morning Post.
If talks among WTO officials in Geneva stall in December, Moore wrote, "that gives more impetus to less palatable options," including a resurgence of narrower trade deals that can give rise to hostile trading blocs no more capable of resolving agriculture issues than the WTO has been.
Sir Ronald Sanders, the Antigua and Barbuda trade minister, was quoted as saying that had the poorer countries accepted the proposals of the rich, "We would deserve our people's condemnation. For we would not only have gained no relief for them, we would have condemned them to a life of perpetual underdevelopment."
Persuading developing countries that trade liberalization will benefit them as well as the rich and the rich that their own best bet remains a multilateral approach may be the toughest challenge ahead.The International Herald Tribune:
