WTO Trade Talks Collapse in Cancun

Developing Countries Revolt Against Unfair Negotiations

By Rick Rowden   Web Exclusive

CANCUN, Mexico – The 5^th Ministerial of the World Trade Organization collapsed Sunday as a sustained revolt by developing countries finished off five days of acrimonious negotiations between the world’s rich and poor countries.  Delegates were unable to broker a world trade agreement as a powerful new coalition of developing countries condemned the two proposed draft Ministerial texts for neglecting to take their expressed concerns into account.

Similar to the failed WTO summit in Seattle in 1999, the trade conference in Cancun was met by 10,000 protesters from throughout Mexico and around the world who held boisterous demonstrations behind police barricades while thousands of nongovernmental organizations (NGOs) worked with developing countries’ delegations inside the convention center to scrutinize trade agreement proposals being negotiated.  

At what is now being dubbed “Seattle at the Beach,” delegates had set out to reach agreements on reducing trade barriers, agricultural subsidies and a host of other contentious issues that have long pitted industrialized and developing countries against one another.   The current round of the trade talks was launched at the last WTO summit in Doha, Qatar in 2001 and was supposed to be concluded by 2005, but now that timeline is in jeopardy.  For the moment talks will continue at a lower level at the WTO's headquarters in Geneva, where the WTO is likely to host what is being called "an extraordinary session" in March 2004. 

Amid sizeable protests on September 10^th, the opening day of the conference, a Korean farmer’s union leader climbed upon the barricades lined with riot police and took his own life in a symbolic action to draw attention to the plight of millions of small farmers in poor countries around the world whose livelihoods are being destroyed by floods of cheaper imported agricultural goods from Japan, the US and the European Union.  

The goal of achieving an agreement on agriculture issues was at the center of the WTO summit.  For many years poor countries and international small farmers’ movements such as Via Campesina have been demanding that the rich countries eliminate government subsidies for their biggest corporate agricultural exporters, who have inundated world markets with cheap produce against which local farmers cannot compete.  Yet despite these repeated demands, two versions of a proposed draft Ministerial text over five days, both heavily influenced by rich countries, failed to eliminate such agricultural subsidies and this left many developing countries feeling outraged and indignant.  Both draft texts would have allowed the rich countries to keep existing levels of subsidies by simply renaming name them into other categories.  Regarding proposals to negotiate reductions in the levels of trade barriers, here too, developing countries condemned the proposed draft Ministerial texts as unfair because these would have allowed the rich countries to lower barriers at much lower rates than would be required of poor countries. 

Early in the conference, a new group of 21 developing countries (G21) formed to resist any agreement on agriculture until the US and EU put forth a draft text they could accept.  Despite intense behind the scenes lobbying by the rich countries, the G21, which includes such major players as India, Brazil, China and South Africa, held its coalition together in a defiant effort that surprised observers.

The EU and US had also been lobbying intensively to introduce four “new issues” into the existing trade negotiations agenda that would have begun talks on an international foreign investment agreement, a government procurement agreement, and accords on competition policy and trade facilitation.  However, during the conference a group 70 developing countries formed and issued a statement in which they made it clear they refused to begin any negotiations on these new issues, which they felt would jeopardize their future ability to regulate foreign investment by global corporations in their domestic economies.   Despite these clearly-stated intentions of the developing countries, the US and EU still successfully pushed to include the new issues in the proposed draft Ministerial texts, again infuriating developing countries and their NGO allies.

Draft texts on industrial tariffs were also rejected by poor countries because these also would have required much more drastic levels of trade barrier reductions for poor countries than required of the rich countries.  A group of 33 developing countries called “The Coalition on Special Products and Special Safeguard Mechanisms” argued for the right of developing countries to permanently retain high levels of trade barriers for certain strategic industries to protect them from being undermined by sudden increases in imports by foreign competitors.   The G33 insisted they need this type of trade protection to support their struggling infant industries just as all of the rich countries had done over the last 200 years of their own successful industrialization process.  However, the proposed draft texts would have eliminated such trade protection for poor countries. 

While rich countries claim they want all countries to have to follow the same trade rules, such logic neglects the vast differences in industrial development between the rich and poorer countries.  “Equal rules for unequal players only perpetuates global inequality,” explained Dr. Rene Ofreneo of the Philippines-based Fair Trade Alliance, who encouraged developing countries to reject the draft texts.

As in Seattle, NGOs and convention delegates from developing countries repeatedly denounced the nontransparent and undemocratic decision-making process within the WTO talks in which the rich and powerful countries bring a few developing countries behind closed doors into so-called “green room negotiations” (named after a green room in the WTO’s Geneva headquarters) where the rich attempt to bully the poor into agreements.

Unlike the WTO meeting in Seattle, however, developing countries in Cancun were much more organized than at any previous international summit.  Three new factors were crucial to the ability of the developing countries to hold their coalitions together.  Firstly, government trade ministries, particularly throughout Africa, had intensified the numbers of both bilateral and multilateral meetings with one another over the last few years, forging personal relationships that were invaluable for greatly improved communication and networking in the face of intense political pressure from rich countries during WTO negotiating sessions. Secondly, many developing countries brought large numbers of parliamentarians from their governments and key policy experts from their NGOs along with them as members of their official country delegations, whom proved invaluable in the process.  Thirdly, psychological support was offered to the delegates by the near-unanimous and instantaneous denunciations of the draft Ministerial texts by thousands of NGOs around the world and the protesters in the streets. 

“When the American or European delegates are calling you crazy to your face behind closed doors, you begin to actually question yourself,” said Jane Nalunga, coordinator of the Southern and Eastern African Trade, Information and Negotiations Institute (SEATINI) and an official member of the Ugandan delegation.  “But when you see all of the world’s NGOs backing up your analysis with their press releases and the thousands chanting in the streets, that gives you the psychological support you need in that moment.”  As a result, a sort of synergy emerged between developing country government officials, their NGO supporters and activists from around the world who were protesting outside.

Throughout the 5 days of the conference NGO activists on the inside of the convention center disrupted press conferences of the WTO Secretariat and the United States Trade Representative in media stunts during which they denounced the proposed trade agreements as unfair to poor countries.

Activists outside the convention center dropped protest banners and peacefully blocked traffic to highlight their concerns.  Although clashes with police characterized some protests, the peaceful symbolic action by demonstrators on September 13^th signaled a new development in the so-called “antiglobalization movement”.  On this day, several thousands of marches approached police barricades and a front line of about 200 women from around the world methodically with bolt cutters to dismantle the three layers of chain-linked barricades over a two-hour period while Mexican police stood by.  Then protesters tied ropes to the tops of the barricade beams, and heaved and hoed together until they pulled the mighty fence over with a celebratory cheer.  After the wall came down, the thousands of protesters immediately sat down peacefully as a group of Korean marchers and others came forward to place hundreds of white and yellow flowers on the ground in front of the fallen fence in a memorial to the fallen Korean labor leader.  In a highly unusual twist of events, protesters praised police for their surprising restraint throughout the protest, noting that the Mexican police accepted the symbolic nature of pulling down the barricades.

Many NGOs and activist organizations from both rich and poor countries alike have long claimed the global trade and finance system favored by rich countries is patently unfair to poor countries.  “Its not globalization per se that people are against,” explained Pushpendra Kumar, who came to Cancun from India, “Rather it is corporate-led globalization that we are against.”   Opponents of the WTO, who also protest against the loan conditions and policy reforms mandated by the World Bank and International Monetary Fund, say that it is global corporations who influence rich countries to push free trade policies and set the rules of the global economy for themselves.  

Critics point to the recent Human Development Report 2003, produced annually by the United Nations Development Program, which detailed that trade liberalization, privatization, deregulation and other market-based policies dominant for the last 20 years are failing the cause of Third World.  The report noted that today 51 developing countries poorer than they were 10 years ago and 21 countries are hungrier.

The defiant tone and unprecedented solidarity among the G21 and other groups of developing countries at the WTO summit was reminiscent of defiant tone of the anti-colonial struggles and Third World activism of the 1960s and 70s.   In that era developing countries broke free of colonial powers in wars of national liberation, created a Non-Aligned Movement of countries that refused to officially line up with either the East or the West during the Cold War, and forged a coalition of 77 nations (G77) in the United Nations General Assembly that forcefully called for a New International Economic Order in which rich countries would raise tax revenues to finance Third World development.  During this era, trade talks and foreign aid negotiations used to occur within the United Nations Conference on Trade and Development (UNCTAD), where the poor countries could negotiate in large blocs and had strength in numbers when dealing with rich countries.

The reemergence of Third World defiance at the WTO talks in Cancun is especially ironic because it was in Cancun where a newly-elected President Ronald Reagan went in 1981 to address another North-South summit between rich and poor countries.  At that meeting, however, rather than acquiescing to Southern demands for the new international economic order, Reagan dismissed those calls as “unrealistic rhetoric” and instead began to push for free trade, free markets and to undermine the political format of the UNCTAD negotiations.  Reagan mobilized a reordering of aid talks from the UN system to the IMF and World Bank, whose structural adjustment loans mandated that poor countries to enact trade liberalization, privatization and deregulation if they wished to access desperately needed development assistance and loans. 

Now, it seems the world has come full circle.  After almost 25 years of free trade and financial liberalization policies that have primarily benefited global investors, the efficacy of these policies for the cause of Third World development has been increasingly challenged.  From the defection of the World Bank’s chief economist, Joseph Stiglitz, to the global protests against IMF, World Bank, WTO and the G8 summits, to the increasing studies on the unflattering progress in human development indicators throughout the poor countries, today’s collapse of the WTO talks in Cancun is yet another indication of a consensus shift emerging in the debate over what policies ought to shape the global economy.

“Despite all-night negotiations and the heavy-handed attempts of the EU and US to break the resolve of the coalitions, developing countries have held their alliances.  If one thing of value has come out of this Ministerial, it has been the challenge to the supremacy of the superpowers within the WTO,” said Aftab Alam Khan of ActionAid Pakistan.   “Now we have to translate this new power into genuine change in the world trading system.”

Rick Rowden is policy director at ActionAid USA in Washington DC.  He is reporting this week from Cancun, Mexico.