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WTO: Trade Impasse

The World Trade Organization conference in Cancun collapsed when delegates from developing nations walked out. Ray Suarez follows up on the weekend's events with Josette Shiner, a deputy U.S. trade representative, and Richard Bernal, the lead negotiator for the Caribbean countries at the meetings.

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  • SIMON MARKS:

    This is what it looked like when the World Trade Organization meeting collapsed in Cancun. There was pandemonium in the convention center as delegates suddenly spilled out of meetings and were engulfed by the world's press.

  • RAFIDAH AZIZ, Trade Minister, Malaysia:

    There is no agreement because there is no consensus. Just no consensus to launch negotiations —

  • SIMON MARKS:

    Though "Singapore issues"– so-called because they were first raised during a WTO Meeting in Singapore– called for new rules on international investment, competition and government procurement. The developing nations say they would expand the WTO'S agenda to the benefit of western business, and they wanted this meeting to see progress first on the issue of agricultural subsidies. While more than half the world's population lives on less than 2 U.S. dollars a day… ( cow mooing ) …for every cow in Europe, farmers earn more than that: $2.50 per day in subsidies that the world's poorest nations want to see phased out. Closed-door meetings saw some progress with the developed world offering to phase out first the subsidies that most directly affect the world's poorest nations. But with no movement on the Singapore issues, the U.S. trade representative angrily blamed the developing world for intransigence that brought the talks' collapse.

  • ROBERT ZOELLICK, U.S. Trade Representative:

    We tried to caution that too many were spending too much time pontificating, not negotiating. Whether developed or developing, there were can-do countries here and there were won't-do countries. The harsh rhetoric of the "won't do" overwhelmed and concerted efforts of the "can-do." ( Applause )

  • SIMON MARKS:

    Leaders of the developing world said they too were disappointed by the failure to strike a deal, though they didn't look entirely disheartened at a closing news conference. Cancun saw the emergence of a new coalition of agricultural exporters like Argentina and Ecuador and developing countries like India, more than 20 nations in all, that are confronting the U.S. and Europe over what they see as distortions in the global trading system.

  • ALEC ERWIN:

    I don't think that the current system of subsidies can continue. There's no question that in the discussions that we held, we reached various stages of analysis and I think that everyone realizes that the world economy needs freer and fairer trade and agriculture and we must see what we achieved in this meeting as important.

  • SIMON MARKS:

    This meeting was supposed to mark the midpoint on the road to a comprehensive global trade agreement that is due to be signed by January, 2005, but there is very little optimism now that the deal can be struck on schedule, and as delegates leave Cancun, one of the big unanswered questions is whether the new coalition that has emerged here will remain united. George Yeo isn't sure. He's the trade minister from Singapore. He served as one of the conference facilitators, mediating talks on agriculture between the coalition and Europe and the USA.

  • GEORGE YEO:

    The delay will be for at least two years, probably by much more.

  • SIMON MARKS:

    So is the round dead?

  • GEORGE YEO:

    The round is not dead; the round is still on the table but progressing it now will not be useful.

  • SIMON MARKS:

    Among those hoping the trade round is dead, some of the anti-globalization protesters who gathered in Cancun and who were outside the conference center celebrating the failure of delegates inside to strike a deal. But all week long, they were largely restricted to a protest zone several miles from the conference center. A South Korean farmer committed suicide to demonstrate his opposition to WTO policies, but amid tight security, the protesters were unable to have the impacts they enjoyed in Seattle four years ago.

  • MANGALESO KUBELE, South African Demonstrator:

    Any position they're taking inside there, they didn't consult the poor, they are making it for the rich.

  • SIMON MARKS:

    The protest movement has been diluted in part because some non- governmental organizations have abandoned the barricades and are working with the WTO instead. OXFAM, whose representatives spent the week lobbying and cajoling delegates inside the conference center, bemoaned the talks' collapse. But other non-governmental organizations were happy to see the meetings end in disarray, arguing no deal is better for the developing world than a bad deal. Next, the WTO will convene a meeting in Geneva before the end of the year. Negotiators have an enormous gulf to bridge if the trade round that began in Doha in 2001 is to have any future.

  • JIM LEHRER:

    Ray Suarez takes it from there.

  • RAY SUAREZ:

    A closer look now at the outcome at Cancun and its potential impact. Ambassador Josette Shiner is a deputy U.S. Trade representative who participated in the Cancun talks, and Richard Bernal was the lead negotiator for Caribbean countries during this weekend's talks.

  • RAY SUAREZ:

    So from your vantage point, Ambassador Shiner, you were down there, what happened? Why didn't you get another step down the road to an agreement that's supposed to be done by the end of next year?

  • JOSETTA SHINER:

    Well, first of all, these talks are very important for global economic growth, very important for American workers that often face barriers of three, four, five hundred percent for their goods around the world and very important for the world's poor. The World Bank estimates that if it were successful we could live 300 million people out of poverty with the result of these talks. What happened was they technically collapsed on some issues very important to the European Union. They were not the United States issues. But also we saw many nations there unable to move beyond rhetoric to negotiation. So many countries were expressing the need for ambitious results, they wanted to attack rather than move forward. And frankly, we got very late into the negotiations before we could start really sitting down and trying to solve the problems to move ahead.

  • RAY SUAREZ:

    Richard Bernal, from your view, why did it break up before moving further down the row toward a deal?

  • RICHARD BERNAL:

    First of all, it's a missed opportunity to have the trade liberalization in yen which would be good for the global economy but particularly for developing economies. The reason that the meeting broke down is that the material which came from Geneva had major differences both at the technical and conceptual level. It was asking a great deal of the ministers, in two or three days to bridge those gaps. The meeting did not find consensus, and no one group should be blamed. We all needed to show more flexibility. The European and Japanese concern for the inclusion of what is called a Singapore issues, competition, policies, government, procurement investment and trade facilitation, was the issue where we couldn't find consensus. And because we couldn't get past that, we never got to unraveling the difficulties in agriculture, which was even more contentious.

  • RAY SUAREZ:

    But it sounds from a lot of the words that came in reaction out of the breakup of the meeting that a lot of the developing countries allowed the countries that depend on agricultural exports, said there ended up to be nothing to talk about, that the wealthy countries of the world weren't ready to move, so it couldn't do anything but break up.

  • RICHARD BERNAL:

    The agricultural proposals came very late, they came just a few days before the Cancun meeting and reflected a lot of effort by the European Union and the U.S. to bridge their differences. That offer was viewed by developing countries as not generous enough, it did not sufficiently remove trade distorting subsidies and domestic support, which would provide more market access for the exports of developing countries. Therefore, these countries felt in the light of an ungenerous offer for their key sector, agricultural exports to be asked to take on additional issues which Europe and Japan wanted was asking too much.

  • RAY SUAREZ:

    Did the United States go to Cancun ready to cut those subsidies that were the bane of so many agricultural countries at the meeting?

  • JOSETTA SHINER:

    Ray, I just think Richard doesn't have the record straight. The United States offered way back in the spring to cut agricultural subsidies by up to 50 percent. We offered to cut export subsidies to zero; we offered to cut market access, the tax that is paid, drastically. We offered that early on. What happened when we came into Cancun is that a lot of developing countries got bad advice from OXFAM and others telling them that it wasn't enough, not to negotiate, they needed to sit down and negotiate. This was just the opening offer. In the last round, the Uruguay round, the subsidies were only cut 20 percent. Our opening offer was almost 50 percent. So we needed to sit down and negotiate. What happens now is because of the delay, these subsidies, the cut in them will be put off for years. So these countries needed this, the United States needed this, the workers and farmers around the world needed this, and now we have a delay. I think they got some really bad advice, and those who were protesting are not helping the world's poor.

  • RAY SUAREZ:

    Is that right, Richard Bernal, that a lot of delegations came already knowing they weren't ready to make a deal?

  • RICHARD BERNAL:

    No, that's absolutely not correct. Developing countries came well prepared. And let me just state for the record, developing countries have become a lot more sophisticated. They don't depend on NGO's like OXFAM to define their position. Certainly in the Caribbean, we had no input from NGO's; we did our own work. We had help from the WTO, et cetera. So these positions are not NGO created positions. Governments thought through this carefully and as far as developing countries concerned this was not a good enough offer. We feel that much more needs to be done, we feel in fact it is the more developed, richer countries who can afford to make these concessions because you're dealing with extremely poor countries, vulnerable countries and very small countries and the offer was just not good enough.

    Developing countries came there wanting a deal because they can benefit from a trade system which creates more opportunities for them. So we were ready to do a deal. The offer was just not good enough.

  • RAY SUAREZ:

    Is this an area where there's a lot of daylight between the European Union and the United States, Ambassador Shiner?

  • JOSETTA SHINER:

    Well, actually, coming into Cancun, the U.S. and EU sat down and tried to show what we would be able to do together, because we are the two country was the most agricultural subsidies, the each U.S. hands are more constrained, so we showed, put forward a proposal that was less ambitious than the United States wanted, but quite ambitious and I think a great starting gate to get the talks going. We felt that what we needed to do was get down to the real negotiations. The sad thing is by Saturday, actually countries were sitting down and trying to work this through. And it's not our intent to place blame. We want to get on with the business of doing this. We just feel sorry that we've had to have this delay, and that now the real business of cutting can't take place for another couple years.

  • RAY SUAREZ:

    Richard Bernal, agricultural got the lion's share of attention, it seems, but there were other things on the table, weren't there, like the ability of investor countries to buy into the economies of developing countries?

  • RICHARD BERNAL:

    There are a range of issues, agricultural is a major sector and a major export avenue for many developing countries. But there are other issues, nonagricultural market access also critical to a range of developing country those are beginning to export manufactured goods. But there are also issues such as trait capacity building and technical assistance, special and differential treatment for developing countries, how small, very small economies should be addressed within the WTO rules. So there are a range of issues. Add to that the new issues which the European Union and Japan want to place. The central fact now that is it's not important pointing fingers, we need to analyze why this broke down, we need to all go back and rethink and come back with better offers, more flexible disposition and a commitment to get this done. This is important, particularly to developing countries, and we have got to find a way to get the momentum going again.

  • RAY SUAREZ:

    Well, the United States, Ambassador, has often said its own sails when it comes to trade policy. Ronald Reagan, for instance, was an adamant free trader and said he wanted to kick off the open to the rest of the world. Is the United States prepared to take some of these agreements out of WTO and make agreements with Mr. Bernal's Caribbean nations, for instance, on things like sugar?

  • JOSETTA SHINER:

    First of all it's true the United States has boldly opened itself and tried to open other markets, and has had great effect. Why is the United States one of the most prosperous countries on earth? We feel it's because of our openness, we're willing to bring in foods and sell goods around the world (a); (b) I'm glad you mentioned Reagan because he initiated the Caribbean Basin Initiative that allows duty free access from all the countries that Richard represents into the United States so, they also could get a leg up in the trading system.

    The United States spends $750 million a year to help developing world nations learn and take advantage of the global economy and global trade. Our partnership with the Caribbean is very deep. Amb. Zoelleck, our trade representative has traveled there repeatedly. Richard and I have met there to help the smaller economies also benefit from global trade. So we feel it's not just for the United States, it for even the smallest countries like El Salvador, Le Soto and others who are really bringing jobs to their people through global trade. So I think the vision has been consistent, actually, from FDR all the way up through Reagan, and as President Bush has said and the protesters really are no friends of the poor. If you talk to these nations, they want more trade, not less, and that's what Cancun is about and I agree with Richard, it was a tragedy that we were unable to get further, but the United States remains complete committed to try to make this work because we believe it's in the interest of our people, but also the world's poorest people.

  • RAY SUAREZ:

    Is this seen by some of your developing world partners as the kind of victory that proves that the developing word can force the issue and slow these things up if need be in order to get a little more of what it wants out of these deals?

  • RICHARD BERNAL:

    This was not a victory for anyone. We all lost because we did not balance the agenda. But no deal is better than a bad deal. And that's essentially what the developing countries felt – that this wasn't a good enough deal. What happened at this meeting is that the increasing sophistication of developing countries, both in terms of the technical preparation and their strategic alliance at the political level paid off, because developing countries had a common position on many broad theme attic issues and were able to subsume the differences on sectoral and product issues sufficiently to operate in unison. And that demonstrates that they no longer will acquiesce or be coerced into accepting a deal which they don't think is fair.

  • RAY SUAREZ:

    Mr. Bernal, Ambassador, thank you both.

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