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WTO Talks Break Down As Poorer Countries Flex Their Muscle

The failure in Cancun was a major blow to the WTO and makes it very difficult for the organization to meet its own deadline for ending the Doha round of global trade negotiations by the end of 2004.

In one of the most dramatic developments at the ministerial conference, a group of developing countries banded together despite differences in their own agendas and demanded large concessions from richer nations, including the slashing of farm subsidies.

“Not only were we able to keep our unity, we were a permanent actor in the negotiations,” said Brazilian Foreign Minister Celso Amorim, who represents one of the countries in the group.

This so-called G21 group now represents 23 countries, including China, India, Indonesia and South Africa.

Australian Trade Minister Mark Vaile, whose country shares many of the group’s criticisms of E.U. and U.S. trade policies, said the emergence of the G21 marked “a significant shift in the dynamic” of the WTO.

Although much of the meeting focused on agriculture subsidies, the talks broke down after poorer countries balked when the European Union led a push for expanding the talks to cover new rules that would govern investment and competition, and cutting red tape that can hold up trade.

Developing countries opposed that initiative and argued that existing trade laws were rigged against them and they could not consider new rules that would be expensive and difficult to implement.

Commenting on the failure of the Cancun meeting and the looming Doha round deadline, WTO Director-General Supachai Panitchpakdi said, “We just cannot allow the round to be derailed.” He added that diplomats would meet in Geneva in December to decide how to proceed with the negotiations.

However, U.S. Trade Representative Robert Zoellick said, “It is hard for me to believe, in the position we are now, that we will be able to finish on time.”

Some countries criticized the meeting’s chairman, Mexican Foreign Minister Luis Ernesto Derbez, for ending the meetings too quickly since progress was reported on cutting subsidies to farmers in some rich countries, such as the United States and nations in the European Union.

Derbez countered there was not enough of a consensus to continue the talks. “I don’t think I made a rash decision. I think I made a rational decision.”

Zoellick said some countries had remained unwilling to negotiate during the talks. “Too many people were spending too much time pontificating, not negotiating,” he said.

Canadian Trade Minister Pierre Pettigrew agreed.

“I see an organization that is really living a culture clash,” he said of the WTO. “Last night, I didn’t feel I was in the WTO. I felt I was in some parliamentary institution where people were far more interested in rhetoric than substance.”

South African Trade Minister Alec Erwin said his country and the other developing nations had simply become more adept at defending their positions.

“There is absolutely no possibility that we merely pontificated or made political statements,” he said. “The hallmark of this new group is its technical competence. I think this is a change in the quality and nature of negotiations.”

International development aid group Oxfam said the breakdown of talks in Cancun was “a missed opportunity” but applauded the increased influence of developing nations.

World trade negotiations will never be the same again,” Oxfam spokesman Phil Bloomer said. “Rich countries overplayed their hand and misjudged the strength of feeling and unity of the developing world who want to make trade fair.”

Officials and commentators in richer countries considered the collapse of talks in Cancun to be a major setback.

“Long-term it is bad for world growth. Only if developing countries grow can they import more from us,” John Llewellyn, global chief economist at investment bank Lehmann Brothers in London, told Reuters.

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