Enlaces News #5 (October 2003)

WTO Ministerial in Cancún: What Happened and What’s Next?

On September 14, 2004, a hot Sunday afternoon in the resort city of Cancún, temperatures were rising in the WTO ministerial meetings. Toward the end of the day, a simmering conflict on agricultural subsidies combined with a sharp conflict over the scope of the talks to boil over and end the negotiations. There are many interpretations as to what exactly happened and why, but it is clear that the echoes of Cancún will reverberate through future trade talks- both bilateral and multi-lateral.

Agriculture occupied the center stage for the negotiations at Cancun. In keeping with the notion that this ministerial was a “development” round, some observers hoped that developed countries would seize the opportunity to reduce subsidies and address other inequities that harm developing country farmers. However, just a few days before the opening of the Cancun meeting, the chairman tabled a “compromise” document that clearly represented a closed-door deal between the US and Europe and offered little to poor countries.

The drafted agriculture document was a hard pill to swallow for developing countries for several reasons. First, its gradual approach to subsidy reduction essentially maintained the ability of the US and Europe to use specific tariffs and domestic subsidies to protect their agriculture sectors. Second, the document obviously emerged from private meetings between the EU and the US, making it clear that developing countries still occupy a second-class position in the WTO. Third, it failed to address any of the points of concern that the developing countries had raised earlier this year. Meanwhile, as the protests in Cancún graphically demonstrated, small farmers were becoming increasingly desperate and willing to stand up and demand action from their governments.

As the formal negotiations opened, a group of 21 nations, led by Brazil, India, and China offered a counter-proposal that proposed substantially greater subsidy cuts. The “group of 21” represents a diverse group of large and small countries. It includes some of the most important emerging markets in the world and its citizens comprise more than half of the world’s population.

Negotiators from both the EU and the US initially failed to realize the gravity of the alternative proposal. Several EU negotiators privately stated that they expected the coalition to collapse as the negotiations proceeded to specifics. With every day that it did not collapse, the prospect of reaching an agriculture agreement grew dimmer.

One-Two Punch of Agriculture and “New Issues”

As tensions mounted in the agricultural negotiations, the United States continued to push for parallel negotiation on the so-called “Singapore Issues” or “new issues.” The “new issues” include government procurement, investment rules, and transparency procedures that are particularly sensitive for developing countries in that they will restrict the ways in which governments carry out domestic policy. These issues have been proposed for WTO action since 1996, but developing countries have blocked their inclusion in recent rounds.

Many WTO critics do not even think these issues fall within the purview of the WTO. They argue that the WTO should focus on setting the rules for trade and stay out of intervention in domestic policy and/or leave it to other international bodies. In Cancun, many developing countries viewed the pressure for opening up new issues as an attempt to distract attention from the agriculture negotiations.

By Sunday afternoon, tensions were extremely high. A group of African delegates walked out of the meeting on “new issues” and announced to the press that the ministerial was over. Soon after, Minister Derbez from Mexico who was chairing the meeting became frustrated and threw in the towel. Although the blow-up happened during the discussions on transparency, it is best understood as a cumulative lack of agreement, with the final straw coming during the new issues debate. Since the WTO operates on consensus, if members refuse to conclude a meeting it is unable to continue negotiations on any issue.

What next?

In the hours and days following the failure of the Cancún ministerial, experts are scrambling to understand its long-term implications. Predictions range from the demise of the WTO, to a refocusing on bilateral deals like NAFTA and FTAA, to business-as-usual back in Geneva, as soon as hubub dies down. What is certain is that something unprecedented happened in Cancun. In the eyes of many people living in developing countries, Cancún represents the first time that their governments stood together to defend the interests of the people.

Some business analysts have dismissed the outcome as just so much posturing. They suggest that the US and Europe will revert to bilateral negotiations and no other countries will be able to resist their economic might. However, it would be unwise to diminish the symbolic importance of the show of solidarity among less developed nations in Cancún. Countries like Brazil and India are under increasing domestic pressure to stand up to what many people view as the all-consuming juggernaut of unfettered globalization. The day after negotiations broke down in Cancún, Brazil announced that it would move ahead with a South American trading block before the end of this year, in anticipation of negotiations for the US-backed Free Trade Area of the Americas. In recent days, members of the Group of 21 have pledged to continue to negotiate as a block.

Messages from Civil Society at Cancún

Profound frustration with the results of the current economic globalization model stood out as the overwhelming message from civil society organizations participating in protests and forums in Cancun. Rural people from all over the world, including busloads of farmers from Mexico, converged on Cancún and clamored to be heard. Perhaps no image better captures the level of desperation and despair than that of the tragic death of the Korean farmer, Lee Hyung Hae, who stabbed himself when police prevented him from crossing the barricade to speak his message directly to the WTO delegates.

Cancún’s natural setting, combined with the overwhelming police presence largely succeeded in preserving the physical isolation of the official meetings. Few non-accredited NGOs penetrated the miles of roadblocks and steel barriers on the one road into the conference zone. However, the delegates could not ignore the messages from the protests—the globalized world of communication brought the voices and images of the street into every hotel room on a constant basis.

Fair Trade- Trading with Values at the Center

For three days during the Ministerial, an exciting parallel event attracted more than 700 people from around the world. The Fair Trade Fair and Symposium offered an alternative to the often-polarized debates on trade. The Symposium brought together producers, exporters, importers and retailers from around the world who are developing a new vision for trade in which both producers and consumers benefit. The fundamental premise of the fair trade movement is that “fair” trade rules can benefit both producers and consumers. If producers can obtain a decent price for their goods, it will allow them to invest in their families and their communities. Consumers gain through access to high quality products and the knowledge that they are contributing to sustainable economic growth. The process remains relatively cost effective by cutting out some of the middlemen from the value chain. While this movement started in Europe, the US fair trade market has been growing at an astonishing 46% per year for the past several years.

Enlaces in Cancún

As part of our campaign to encourage immigrants to use their consumer power to reinforce their values, Enlaces América participated in the Fair Trade Fair with a booth displaying the materials of four of the Chicago area’s Mexican Hometown Federations. We met hundreds of people, and made contacts with producer organizations that are interested in exporting products directly to the Mexican population in Chicago.

Our other interest in attending the Cancún ministerial was to raise awareness of the inter-connected nature of trade, development, human rights, and migration. Our work with immigrant organizations in Chicago and elsewhere has convinced us that globalization will continue to fail to help the poor and disenfranchised, unless and until we develop models for integration that take people and communities into account. The results of the Cancún ministerial strongly reinforced that perception.


Article written by Amy Shannon, Associate Director of Enlaces América