Moving beyond Cancún

The multilateral trading system is under great strain. But the system is alive and will gain in significance after the setback at Cancún, argues Supachai Panitchpakdi, Director-General of the World Trade Organization.

A great deal of the media coverage of the Cancún ministerial conference focused on the "collapse of the round" and in some more extreme cases "the end of the WTO." Frankly, the reports of our demise have been greatly exaggerated.

Without question, the meeting in Cancún was a disappointment. We did not achieve all that we set out to achieve. But it was not the death knell of the Doha Development Agenda, nor has it consigned the WTO to a period of irrelevance or dormancy, as such analysis would lead us to believe.

The Cancún meeting was an opportunity for WTO ministers to give political momentum and direction to the Doha Development Agenda to bring it to a timely conclusion by the set deadline of 1 January 2005. It was not intended to be the end of negotiations – a make or break situation – but an important milestone in the process.

What we were hoping to achieve was agreement on a text which would serve as a roadmap for the final phase of the negotiations. A text drafted by Mexico’s foreign minister, Luis Ernesto Derbez, who chaired the conference, was put on the table and member governments were in agreement with about three-quarters of that text. The key areas of divergence were, and remain, agriculture, non-agricultural market access, and the so-called Singapore issues of trade and investment, trade and competition, transparency in government procurement and trade facilitation. We tried to bridge the gaps where positions remained apart, though in the end it was not enough, and time ran out.

But we saw a lot of flexibility and the overwhelming message I have heard since is of a strong commitment and determination to get the negotiations back on track. APEC ministers meeting in Bangkok in October 2003 reaffirmed their commitment to the process and said work should recommence on the basis of the Derbez text. Many other governments have echoed this call, including African delegations, who have urged everyone to return to the table in a spirit of flexibility and co-operation.

This indicates to me that Cancún has served as a wake-up call by provoking some reflection among members about what the world would look like without a strong and dynamic multilateral trading system, indeed, without a successful Doha Development Agenda.

While some non-governmental organisations – and even some delegations – briefly celebrated the collapse in Cancún, I can assure you that no one is celebrating now. There is a sharp realisation that failure to restart the talks means that the US$1 billion a day spent on farm subsidies in OECD countries will continue unabated. Foot-dragging in the negotiations means the benefits that would accrue to developing and developed countries alike from liberalisation of trade will remain out of reach. It also means that the trade rules whose revision is needed to ensure their continued relevance in a 21st century economy will remain as they are. The inequities of the trading system that have become apparent will not be addressed.

The absence of a commitment to global trade liberalisation would further damage confidence in our already fragile global economy. Global investment flows in 2002 fell for the third consecutive year to US$651 billion – half the peak reached in 2000. Trade flows recovered last year after a dramatic drop in 2001, but they are still well below levels achieved in 2000. Moreover, our economists have recently forecast that trade expansion in 2003 will be little more than 3%, or less than half the annual figures from the 1990s.

Failure to make progress in the Doha round means that regional and bilateral arrangements could assume even greater proportions. Regional deals can be helpful if they are open and move forward in tandem with global trade liberalisation. But they are not a substitute. They are, by their very nature, discriminatory. None have really succeeded in opening markets in sensitive areas like agriculture. They add to the complexities of doing business by creating a multiplicity of rules. And the poorest countries tend to get left out in the cold.

We may also see a rise in dispute settlement activity. While this is an important signal of confidence in the system, it also indicates that there are disagreements under the new system that need to be worked out.

All of this seems to have sunk in with ministers around the world and I am impressed with the statements of support that have emerged from capitals. But it is now time to turn talk into action. At the end of the Cancún meeting, ministers reaffirmed their commitment to the Doha Development Agenda and gave us until 15 December to decide how to move forward. Since then, I have met with roughly 50 ministers and spoken to many more on the telephone. Together with our General Council chairman, Carlos Pérez del Castillo, I have held consultations with Geneva ambassadors on the four issues we believe we must address before and during the meetings which will take place the week of 15 December – agriculture, nonagriculture market access, the Singapore issues and cotton subsidies.

Perhaps against the grain of public expectation, these talks have gone well. We are seeking to achieve what we could not achieve in Cancún: a decision on how to proceed with the Singapore issues and cotton, and a framework for continuing negotiations on both agriculture and nonagriculture market access. It's a tall order to be sure, but we need to keep ambition levels high. At the very least, we expect to have the negotiations back on track by the beginning of 2004 with a solid textual basis for future negotiations.

The trading system has faced difficulties in the past and no doubt it will face setbacks and difficulties in the future. It is only when we consider what the consequences of not keeping this negotiation on the road might be, that we realise we must go on working to advance the arrangements we have painstakingly built up for over half a century. It is a fight we cannot afford to lose.

© OECD Observer No. 240/241, December 2003

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