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TWN Info Service on WTO Issues (Sept 03/14)

16 September 2003

Third World Network

Dear friends and colleagues

ANALYSIS OF THE COLLAPSE OF THE CANCUN MINISTERIAL

The WTO Fifth Ministerial in Cancun ended in failure without any agreement or Ministerial Declaration.  This reflected a serious polarisation of views and positions, mainly along North-South lines, on many issues: agriculture, NAMA, development and Sngapore issues.

The factors for the collapse are many and complex.  Although the immediate reason was failure to reach agreement on the Singapore issues, the polarisation in the other issues was also very clear.

But the underlying cause was the flawed decision-making system of the WTO and the way Ministerials are organised, managed and run.

Below is an analysis of the collapse of the Cancun meeting.

With best wishes

Martin Khor

TWN

BEHIND THE COLLAPSE OF THE CANCUN MINISTERIAL

TWN Report by Martin Khor, from Cancun 14 Sept 2003.

The WTO’s Fifth Mininsterial Conference in Cancún ended this afternoon without an agreement on the Ministerial Text.

The decision to close the meeting was announced suddenly by the Conference chairman, Mexican Foreign Secretary Luis Ernesto Derbez, during informal consultations involving about 30 countries (dubbed the “Green Room” meeting) when agreement could not be reached on the “Singapore issues.”   The decision to end the meeting, without any substantive Declaration, took participants by surprise as it had been widely expected that the meeting would continue well into the night or the small hours of the morning, or even extended by a day.

A short closing ceremony was held, from which NGOs and the media was barred, and to which each delegation could only send a few representatives.  It was expected to have been at the grand hall where the opening ceremony was attended by 3,000 people.  But the venue was shifted to a much smaller room and many delegates were kept out of this closing ceremony (as well as the last heads-of-delegation (HOD) meeting preceding it) by security guards.

This ruling on attendance was in contrast to that on official closing sessions in all the previous four Ministerials, where all delegates, international organizations, NGOs and media were allowed to be present.

A trade diplomat from an African country complained angrily that she and other delegates were subjected to pushing and shoving by guards trying to keep them from entering the room where the HOD meeting was being held.

“The collapse of the talks must have been embarrassing for the WTO officials and leaders and they must have decided to keep as many people as possible from the closing session to hide the embarrassment,” said another diplomat.  

The closing session adopted a brief and simple Ministerial Statement in lieu of the substantive Ministerial Text that had been under discussion since its first version appeared in Geneva in July.

The Statement expressed appreciation to the host government of Mexico, welcomed Cambodia and Nepal for acceding to the WTO, and said all participants had worked hard to make considerable progress under the Doha mandates, but “more work needs to be done in some key areas to enable us to proceed towards the conclusion of the negotiations.”

The Ministers instructed their officials to continue working on outstanding issues taking fully into account all views expressed in the Conference.  “We ask the Chairman of the General Council, working in close cooperation with the Director General, to coordinate this work and to convene a meeting of the General Council at Senior Officials level no later than 15 December 2003 to take the action necessary at that stage to enable us to move towards a successful and timely conclusion of the negotiations...We will bring with us into this new phase all the valuable work that has been done at this Conference.  In those areas where we have reached a high level of convergence on texts, we undertake to maintain this convergence while working for an acceptable overall outcome.  Notwithstanding this setback, we reaffirm all our Doha Declarations and Decisions and recommit ourselves to working to implement them fully and faithfully.”

From the Statement it is unclear whether the 15 December deadline is meant to complete the negotiations on issues (agriculture and NAMA modalities, and a decision on launching negotiations on Singapore issues on the basis of explicit consensus) that Cancun could not,  Neither is it clear what is the status of the Cancun draft texts when discussions resume in Geneva.

There is indeed a sense of confusion on what actually happened in the last hours of the Cancun conference, whether the talks broke down due to any specific issue or simply the running out of time to resolve the serious divisions on the many key issues, and also how Mr Derbez came to make his decision to close the meeting when he did.

The immediate reason is that there could not be an agreement on the Singapore issues in the exclusive small group consultation known informally as the Green Room meeting.

At the early hours of Sunday, after a long HOD meeting to discuss the revised Ministerial Text, a meeting of nine Ministers (US, EC, Mexico, Brazil, China, India, Malaysia, Kenya, South Africa) was convened by Mr. Derbez lasting from one to three a.m. to discuss the Singapore issues, at which the countries reportedly kept to their known positions.

Later that morning, a larger Green Room meeting of about 30 Ministers was convened.  It was meant to discuss all the outstanding issues of the conference with the view to resolving the differences.  Mr Derbez decided to start with the Singapore Issues.  He later explained at a press briefing that he chose this as the first item because it had become the main issue of contention, judging by the reactions to the revised Ministerial Text at the previous night’s HOD.

At the meeting, the developing countries opposed to starting negotiations reiterated their position that further clarification of all the issues should be undertaken.  Derbez reportedly proposed that for two issues (trade facilitation and procurement) negotiations could begin, but that the other two issues (investment and competition) would be dropped from the agenda. 

EC Trade Commissioner Pascal Lamy reportedly agreed that the two issues of investment and competition could be dropped, giving the impression that these would be removed from the WTO altogether (and not just from Doha mandate of starting negotiations on the basis of consensus).  The other two issues would then proceed to negotiations.

Many countries said they had difficulty accepting negotiations on the trade facilitation and procurement. Derbez then adjourned the meeting for more than an hour to enable Ministers to consult with their constituencies on whether they could accept this formula of dropping two issues and negotiating the other two.

During the break, a combined meeting of the ACP, LDC and African Union members decided that they would not change their mandate that negotiations should not start on all four issues.

When the Green Room reconvened, some developing country Ministers (including those representing the ACP-LDC-AU groupings) reported they were unable to accept negotiations on any of the issues.  Korea reportedly said it could not accept the dropping of any issue.  Derbez then said a consensus could not be reached on the Singapore issues, and thus there was no consensus possible for the whole package of issues.  He then made the decision to close the Conference, without having an agreement on any issue, and ended the Green Room meeting.

When news of the breakdown reached the canteen, the lobby and the media room, there were scenes of excitement as everyone tried to find out the actual situation.  Many NGO representatives broke into cheering and singing, as they celebrated the non adoption of what they considered a Text which would have led to adverse consequences.

A HOD meeting was convened, shortly followed by the official closing session.        

The lack of consensus on Singapore issues may have been the immediate cause, but the meeting’s collapse had broader and deeper roots.  For the first three days, the conference focused mainly on the controversial agriculture issue, with the main protagonists being the EU and US on one side, and the G21 developing countries led by Brazil and India on the other side, and a grouping of 32 other developing countries emerging as an Alliance for Special Products and Special Safeguard Mechanism championing stronger S and D elements.

The revised Text, issued at lunchtime on Saturday, had the effect of intensifying rather than reducing the polarization in the Conference.  The developing countries were unhappy that the agriculture text did not answer their concerns.  They were outraged with the sections on Singapore issues, as the views and formal proposals of 70 of them (to continue the clarification process and not launch negotiations) had been swept aside.  And they were also outraged at the poor treatment of the cotton initiative (which had attracted widespread support) in the text, which one Minister proclaimed to be an insult to Africans and unworthy of the WTO.  

The atmosphere was already on the boil when one by one the developing countries took the floor at the HOD meeting to criticize the Text, and at their own regional and national meetings, expressions of their dissatisfaction was even more pronounced.

The issue of the manipulative decision-making process, particularly in the drafting of texts, was then coming to he fore. 

“Here we are with 70 or more developing countries speaking up clearly in the consultations, having a consensus document with language on the Singapore issues, clearly expressed, and the revised Text just ignores their position and takes the opposite position,” said a Carribean country’s Minister on Saturday night, while having a coffee break.  “What kind of organization is this?  Who does it belong to?  Who does the drafting? Who appointed them?  Why waste our time engaging seriously in consultations only to find our views not there at all in the draft?”      

In the end it was the WTO’s untransparent and non-participatory decision-making process that caused the “unmanageable situation” that led to the collapse of the Cancun Ministerial.

In Singapore (1996), most Ministers had been shut out of the negotiations as only 30 countries were invited to the Green Room that operated throughout the meeting.  The uninvited Ministers were angry when they were told at a last informal plenary that they should agree to a Declaration they had no hand in drafting. They reluctantly agreed only after the Director General promised that exclusionary meetings would not happen again.

In Seattle (1999), the Green Rooms operated again from the start to the end of the meeting.  Ministers of the ACP and Africa groups were so outraged at being shut out that they issued a statement they would not join the consensus on any Declaraton.  The talks collapsed.

At Doha (2001), many informal consultations were held, and the Ministers and officials were kept busy.  But the drafting of the various versions of the Declaration were undertaken in an untransparent and exclusionary manner, starting with the General Council chair Stuart Harbinson submitting an unpopular draft “under his own responsibility” and ending with a last draft on the last extended day which everyone was urged to adopt as there was no alternative at the late hour.

The practice of Chairs writing and submitting texts “under their own responsibility” became widespread after Doha, even though many developing countries voiced their unhappiness with it, as the major countries found it convenient to get their positions adopted through this undemocratic practice. The drafts for agriculture and NAMA modalities, and later for the Cancun Text itself, were all drawn up by Chairs and not by the members.  All it needed, to suit the interests of the majors, were:  a Chair coming from the circles of the majors or compliant to their views;  a Secretariat willing to condone or promote it;  and a membership that was willing (or unable to successfully object) to be part of the process.

The drafting bv Chairs shifted the WTO from a member-driven to a Chair-driven organization.  Instead of negotiating with one another, members were negotiating with the Chair.

But the drafts, because they usually reflected the views of the powerful minority, lacked the support of most of the developing country members (who were often outraged that the texts were one-sided in favour of the Quads and did not reflect their positions) nor public legitimacy.

In Cancun, this Chair-driven process continued and became the norm.  The appointed (and thus unelected) Facilitators became all powerful as they not only conducted consultations but were responsible for drafting of reports and texts.  The Conference Chair became responsible for the revised Ministerial Text.  

No one among the participants is sure how the drafting is done, or who does it.  It is known that the Secretariat plays a major role.  And when the revised Text came out on Saturday at 1pm, it again revealed biases (some of them blatant) towards the developed countries.

By now, there were only 28 hours to the scheduled end of the Conference.  It was evident from the HOD meeting and later at the Green Rooms that the developing countries were this time much better organized (through their own regional and national processes) and better prepared to face the processes and substantive debates.

An attempt to reproduce a Doha ending (i.e. ram through an unpopular text on ground that there is no alternative, and that a “collapse” of a Ministerial would lead to the breakdown of the trading system and the global economy) would have led to an open revolt by developing countries. 

Thus, the Mexican Minister made a rational decision that the best option is to close the Conference with a simple statement instead of risking a real catastrophe.

With the Cancun Ministerial collapse, the issue of the WTO’s decision-making and text-drafting process has again emerged to the fore.  That the Ministerials are run without rules and proper procedures can no longer be ignored if the system is to survive.

Having a failure rate of two out of three of the most recent Ministerials is not a record any organization can be proud of.

Pascal Lamy, at a closing press conference, himself termed the WTO as having a “medieval organisation” and a “not so rules-based organisation”  But it is one which he has himself used to great effect in Doha to great effect, to ram through the unpopular decision on Singapore issues.

Lamy called for reforms to the decision-making system of the WTO.  He forgot to mention that after the Doha experience, many developing countries had put forward a set of proposals (in February 2002) on establishing procedures for Ministerials and their preparatory process, and that the EU with other developed countries had blocked a decision based on these proposals.

Just a few weeks before Cancun, developing countries again tried to raise the issue of the need to have proper procedures for Ministerials, including for drafting texts.  Several international NGOs also launched a campaign for internal transparency and participation in the WTO.

But these attempts for more democracy in the WTO house were swept aside by the major developed countries.   Their argument had been that Ministers must be given the “flexibility” to run Ministerials the way they want without being hampered by procedures.  In reality, they would like to retain their grip over the drafting of texts and the operation of Green Room meetings, and repeat the Doha experience of pushing developing countries into adopting last-minute Texts. 

If this system continues, then each Ministerial would be a poker game, whose fate depends on last-minute brinkmanship, with powerful countries trying their luck and using various methods to push their way through, and developing countries organizing themselves to resist the pressures.

In Doha it worked for the majors.  In Cancun it didn’t.  If things don’t change, it will be another gamble in Hong Kong or wherever the next Ministerial is held (since the proposal to hold the next Ministerial in Hong Kong was never adopted in Cancun).

Holding the trade system hostage to the poker-like game of brinkmanship is however full fraught with risks, as the record of two failures out of three meetings shows.

The ultimate lesson of Cancun is that the organization must change or perish.

 


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