Why it ended without finishing

Even the best accounts of the final hours of the Can­cún Min­is­te­r­i­al Meet­ing of WTO seem to avoid answer­ing a cou­ple of obvi­ous ques­tions:

# Why did this dis­agree­ment mean the end of talks for now? There is no lack of dis­agree­ments at Can­cún: after all, that’s why we have negotiations—to bridge the dif­fer­ences Why did this one kill the deal?
# Why did the bloc of African, Car­ribbean and ‘least devel­oped’ coun­tries oppose nego­ti­a­tions on issues such as ‘trade facili­ti­a­tion’? What did they think they had to lose? I’ll give you my view … and I’d real­ly wel­come your views, if you’d like to com­ment.
My own report[⇒ relat­ed sto­ry], yes­ter­day, offered only a quick sum­ma­ry of the events that led the Con­fer­ence Chair­man, Mex­i­can For­eign Min­is­ter Luis Ernesto Der­bez, to “pull the plug”. As I wrote, the final state­ments were still being made. There has now been time to pull togeth­er a more com­plete account from the key del­e­ga­tions in the ‘back rooms’. For a good sum­ma­ry, I rec­om­mend that you take a look at the ICTSD “Bridges(link to the ICTSD website)”:http://www.ictsd.org/ministerial/cancun/wto_daily/ben030915.htm newslet­ter. I have the same under­stand­ing of the sequence of events and the way in which Der­bez seems to have rea­soned that the dead­lock on the “Sin­ga­pore” issues—whether on all four or even on one—killed hopes of a broad agree­ment at Can­cún. To answer my own ques­tions: First, why did this dis­agree­ment mean the end, not the begin­ning, of fur­ther nego­ti­a­tions? The answer, in brief, is that this was not a dis­agree­ment over the sub­stance of some­thing being nego­ti­at­ed but a dis­agree­ment that amount­ed to a refusal to nego­ti­ate at all. The deci­sion of the devel­op­ing coun­tries not to nego­ti­ate on the Sin­ga­pore issues broke the ‘sin­gle under­tak­ing’ prin­ci­ple of the WTO and that, in turn, doomed the Can­cún talks. In what fol­lows I’ll be tak­ing the top­ic of ‘Trade Facili­ti­a­tion’ as an exam­ple of the prob­lem encoun­tered on Sun­day night. But the same remarks apply to the oth­er three ‘Sin­ga­pore’ issues, which had near­ly iden­ti­cal sta­tus in the Doha nego­ti­a­tions (until the EU, in a last minute effort, agreed for its part to pull two of the most con­tentious issues off the table). Ready ? Take a deep breath … The Doha Dec­la­ra­tion states that “nego­ti­a­tions on trade facil­i­ta­tion will take place after the Fifth Ses­sion of the Min­is­te­r­i­al Con­fer­ence on the basis of a deci­sion to be tak­en, by explic­it con­sen­sus, at that Ses­sion on modal­i­ties of nego­ti­a­tions.” Here’s the trans­la­tion of that sen­tence: bq. We (the Trade Min­is­ters gath­ered at Doha) decide that we will, after 2003, start nego­ti­a­tions on the top­ic of “Trade Facil­i­ta­tion”. But first we will reach an agree­ment at our next Min­is­te­r­i­al meet­ing (in Can­cún) on how (the ‘modalities&#8217)to do what we want to do in Trade Facil­i­ta­tion. So the job at Can­cún was to agree on the ‘modal­i­ties’ for the nego­ti­a­tions that had already been launched in a sense—but postponed—in Doha. In the inter­im, the Doha dec­la­ra­tion said, the WTO Goods Coun­cil was to work on improv­ing and clar­i­fy­ing some aspects of ‘trade facil­i­ta­tion’ that have been in the GATT(“The Gen­er­al Agree­ment on Tar­iffs and Trade”) from the begin­ning (1948). The draft Can­cún dec­la­ra­tion[⇒ relat­ed sto­ry] put togeth­er by Ambas­sador Car­los Perez del Castil­lio in Gene­va at the end of August includ­ed some pos­si­ble ‘modal­i­ties’ for nego­ti­a­tion on Trade Facil­i­ta­tion (and for the oth­er ‘Sin­ga­pore’ issues) in Annex G. (My report[⇒ relat­ed sto­ry] of includes a copy of the draft: scroll right to the end for the text of Annex G). They are, to say the least, innocu­ous. They are tight­ly wrapped around with under­tak­ings to take account of the capac­i­ty of devel­op­ing coun­tries to imple­ment any future agree­ment and to help them with tech­ni­cal assis­tance to improve their capac­i­ty to man­age trade facil­i­ta­tion and to absolve least-devel­oped coun­tries of inap­pro­pri­ate oblig­a­tions. In the body of the draft Dec­la­ra­tion itself, there are two alter­na­tive deci­sions on these modal­i­ties: one endors­ing them and one post­pon­ing a deci­sion on the modal­i­ties pend­ing fur­ther exam­i­na­tion. So it has to be said that there was a good oppor­tu­ni­ty to achieve the sub­stan­tial objec­tive of the Doha dec­la­ra­tion on this top­ic: that is, to nego­ti­ate rea­son­able modal­i­ties and even to fur­ther post­pone a deci­sion on fur­ther modal­i­ties. What hap­pened, instead, was that the devel­op­ing coun­try groups declared that they would not nego­ti­ate (not even nego­ti­ate post­pone­ment of the deci­sion on modal­i­ties) on the top­ics at all. The devel­op­ing coun­try dec­la­ra­tion breaks the sin­gle under­tak­ing “principle(link to the WTO site, text of Doha Declaration)”:http://www.wto.org/english/thewto_e/minist_e/min01_e/mindecl_e.htm#organization in the Doha nego­ti­a­tions. What’s that? Briefly, its the agree­ment that almost every top­ic for which there is a nego­ti­at­ing man­date must fig­ure in the final pack­age of agree­ments that con­cludes the nego­ti­at­ing round and that every gov­ern­ment par­tic­i­pat­ing in the round has to be part of the con­sen­sus deci­sion on every top­ic. At first blush, this may seem to be rule that is tough on poor coun­tries or coun­tries that have lim­it­ed capac­i­ty to fol­low the nego­ti­a­tions in every detail. But, at least in prin­ci­ple, the oppo­site is true. What the rule real­ly means is that “noth­ing is agreed until every­thing is agreed”. So until you have all coun­tries, includ­ing devel­op­ing coun­tries ‘on-board’ in the deci­sion on the final pack­age, you don’t have a deci­sion. This is pre­cise­ly the prin­ci­ple that allowed, for exam­ple, India to hold out on the Doha dec­la­ra­tion in 2001, on its own, until the last moment. Its also one of the rea­sons that the Seat­tle Min­is­te­r­i­al meet­ing col­lapsed when the African group refused to con­tin­ue nego­ti­a­tions. There is anoth­er way in which the ‘sin­gle under­tak­ing’ works to pro­tect the inter­ests of the small­er and less pow­er­ful mem­bers of WTO. It ensures that the biggest and most pow­er­ful economies can­not ‘pick and choose’ which agree­ments they are pre­pared to imple­ment. The answer is: they have to imple­ment every­thing, even the agree­ments they don’t like. But it would be disin­gen­u­ous to pre­tend that the sin­gle under­tak­ing is with­out prob­lems. It enforces uni­ver­sal com­pli­ance with the rules but at a price. It puts a lot of pres­sure on devel­op­ing coun­tries that may not ful­ly under­stand the impli­ca­tions of the deci­sions that they have been asked to approve at the end of a long nego­ti­a­tion or who may not have had a chance to eval­u­ate the impact of the agree­ments they are being asked to join. Although the prin­ci­ple gives each devel­op­ing coun­try the right to hold out until it’s hap­py, it takes a lot of guts to resist the arm-twist­ing of the oth­er mem­bers to join the con­sen­sus so that every­one else can move on (or go home). The reac­tion of the devel­op­ing coun­tries, since the 1999 Seat­tle Min­is­te­r­i­al, has been to say, quite ratio­nal­ly: “Well, we’ll respect the prin­ci­ple. But this means that we won’t even start nego­ti­a­tions unless we fig­ure that they are about top­ics of real pri­or­i­ty for us, and we have a rea­son­able chance of fol­low­ing the nego­ti­a­tions in detail. Oth­er­wise, we risk find­ing our­selves being pres­sured into agree­ing to some­thing that doesn’t mat­ter that much to us but which, for all we know could turn out to hurt us, or at best nar­row our options in the future.”

Which brings me to the answer to my sec­ond ques­tion (remem­ber?): What did devel­op­ing coun­tries think they had to lose in an agree­ment on e.g. Trade Facil­i­ta­tion? I am not sure about this: I need to talk to more peo­ple. The truth is that trade facil­i­ta­tion offers sig­nif­i­cant gains for devel­op­ing coun­tries. For exam­ple, World Bank spon­sored stud­ies in the the APEC region sug­gest that the gains from even par­tial trade lib­er­al­iza­tion are huge. There is every rea­son why this agree­ment would have been a pri­or­i­ty for devel­op­ing coun­tries. It seemed pret­ty unlik­ley from the text in Annex G of the draft Chairman’s text that this agree­ment would be rules bound. It was much more like­ly to be about facil­i­ta­tion than about new and oner­ous oblig­a­tions for devel­op­ing coun­tries and it promised a lot of tech­ni­cal assis­tance to achieve the goals of any new agree­ment (although the WTO mem­bers have a mixed record of deliv­ery on these promis­es). My guess is that some­one sold the devel­op­ing coutries the idea that a poten­tial future agree­ment on trade facil­i­ta­tion would be some­how like the agree­ment on Cus­toms Val­u­a­tion: a mas­sive imple­men­ta­tion project that could have sig­nif­i­cant costs for devel­op­ing coun­tries that chose to imple­ment a ‘Rolls Royce’ mod­el of cus­toms pro­cess­ing.

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